URUGUAY PAYS 2006 DEBT TO THE INTERNATIONAL MONETARY FUND AHEAD OF SCHEDULE.
Uruguay's government announced plans to repay the US$630 million it owes the International Monetary Fund (IMF) in 2006 ahead of schedule, advancing its payment cycle to the lender and saving millions on interest payments. The move by Uruguay follows recent efforts by neighboring Brazil and Argentina to rid themselves of US$25 billion in obligations to the IMF and could signal that Uruguay will be liquidating its remaining US$1.6 billion in outstanding debt sooner than previously planned. Observers from the IMF saw the payment as a sign that Uruguay was leaving behind the deep economic crisis that began in 2001 as recession struck neighboring economic powers Argentina and Brazil (see NotiSur, 2001-06-29, 2001-07-20, 2001-08-10, 2001-12-14, and 2002-01-11).
Uruguay joins regional effort to reduce IMF debts
The move by Uruguay follows much grander, more ambitious debt liquidation efforts by Brazil and Argentina, economic giants in comparison with their tiny neighbor. In December, Brazil paid off its total US$15.5 billion debt, the largest payment ever made by a member country to the IMF (see NotiSur, 2006-01-13). Earlier in 2005, Brazil declined to renew an agreement with the IMF (see NotiSur, 2005-04-15). In January, Argentine President Nestor Kirchner announced the early and full repayment of US$9.75 billion in debt to the IMF, calling it a step by Argentina to gain "financial independence" from the international lenders whom he and many Argentines partially blame for the economic crisis that started in 2001.
The early payments would save Uruguay US$8.4 million in interest, Economy Minister Danilo Astori said at a news conference, where he joined Agustin Carstens, the IMF's deputy managing director, the fund's third-highest official. Astori also said that the government had gained US$24 million in savings over three months by the cancellation of high-interest loans with the IDB and the World Bank, loans that the country agreed to during the crisis of 2002. Those loans would have expired in 2007 if Uruguay had not zeroed them out.
Astori said the measures would represent a "reduction" in the "vulnerability" that such a high debt load would represent. Astori said, in all, the government had saved US$34 million in interest by accelerating payments.
Carstens praised Uruguay's progress since the crisis, saying the country had embarked on a "successful" economic restructuring plan that was triggering robust growth for the third straight year.
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