Uruguay | The problem is not the level of public debt but the ability to pay

Summary

Although the capacity to pay, as expressed by the debt-to-GDP ratios, does not seem unsustainable, the government should promote fiscal consolidation in order to prevent the debt from continuing to increase after 2022, ensuring sustainability in the medium term and the preservation of the Investor Grade.

Key points

• Key points:
• In Uruguay, public debt fell nominally by USD 4.64 billion from the peak of USD 40.52 billion in March 2018.
• Uruguay's payment capacity, as expressed by the Debt-to-GDP ratio, has tended to weaken due to the stagnation of the economy. In 2020 it will worsen due to the expected fall of -3.1% of GDP.
• Despite the negative global environment of high uncertainty and volatility since the outbreak of the Covid-19 pandemic, Uruguay managed to launch a major long-term issue, mostly in domestic currency.

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