Uruguay’s net debt reached half of GDP in 2021

RIO DE JANEIRO, BRAZIL – “By late September, the public sector’s total gross debt stood at US$42.655 billion, equivalent to 74.9% of GDP, which in the year to September was estimated at US$56.991 billion.”

“If external assets (excluding counterpart of bank reserve requirements, which are contingent liabilities) and assets with residents are subtracted from the gross debt, the result is US$28.354 billion, or 49.8% of GDP,” explained the report prepared by economist Javier de Haedo.

According to the document, the figures represent moderate growth compared to the end of 2020, after that year all indicators “jumped” considerably both in Uruguay and worldwide, as a result of the sharp falls recorded in GDP and higher fiscal deficits, which were in turn a consequence of the impact of the pandemic on economic activity and its response by means of fiscal expansions.

According to the UCU report, in 2020, gross debt increased from 60.8% to 74.4% of GDP, while net debt rose from 39.9% to 48.6%. In 2020, GDP fell 5.9% and the fiscal deficit rose 1.5 percentage points to 5.9% of GDP, due to the drop in economic activity and the “Covid effect” estimated at 1.1% of GDP by the Ministry of Economy and Finance (MEF).

However, “this exceptional deterioration in the ratio of public debt to GDP followed a very important one that occurred in previous years, with low economic growth rates and high fiscal imbalances,” the report noted.

“After public debt hit lows relative to GDP in late 2013, there was a 6-year sequence of increases in that ratio. In the case of gross debt, it rose from 53.3% to the aforementioned 60.8% of GDP by late 2019, and in the case of net debt, it rose from 29.6% to 39.9% of GDP between 2013 and 2019,” the document detailed.

Finally, the Economic Situation Monitor noted that for the coming years, the government’s plans are aimed at stabilizing the debt-to-GDP ratio, along with further fiscal improvement and strong economic growth.

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