EX-99.D 2 ex99-d.htm

 

 

Exhibit 99.D

 

Description of
República Oriental del Uruguay
May 24, 2017

 

D-1

 

 

TABLE OF CONTENTS

 

  PAGE
   
Introduction D-3
Summary D-5
República Oriental Del Uruguay D-6
The Economy D-11
Gross Domestic Product and Structure of the Economy D-17
Foreign Merchandise Trade D-30
Foreign Trade on Services D-34
Balance of Payments D-36
Monetary Policy and Inflation D-40
The Banking Sector D-45
Securities Markets D-53
Public Sector Finances D-54
Fiscal Policy D-58
Public Sector Debt D-61
Tables and Supplemental Information D-72

 

D-2

 

 

INTRODUCTION

 

All references in this document to the “government” are to the government of the República Oriental del Uruguay (“Uruguay” or the “Republic”) and references to the “central government” are to the central government of Uruguay (which includes governmental agencies and subdivisions and excludes financial and non-financial public sector institutions). All references in this document to the “consolidated public sector” are to the central government and financial and non-financial public sector institutions, excluding Banco de la República Oriental del Uruguay and Banco Hipotecario.

 

The terms set forth below have the following meanings for the purposes of this document:

 

Gross domestic product, or GDP, means the total value of final products and services produced in Uruguay during the relevant period, using nominal prices. Real GDP instead measures GDP based on 2005 prices (in accordance with the Integral Revision of the National Accounts published by Banco Central del Uruguay (“Banco Central”) in March 2009) to eliminate distortions introduced by changes in relative prices.

 

Imports are calculated based upon (1) for purposes of foreign trade, statistics reported to Uruguayan customs upon entry of goods into Uruguay on a cost, insurance and freight included basis (referred to as CIF basis) and (2) for purposes of balance of payments, statistics collected on a free on board basis at a given departure location (referred to as FOB basis).

 

Exports are calculated based upon (1) for purposes of foreign trade, statistics reported to Uruguayan customs upon departure of goods from Uruguay on a free on board, or FOB, basis and (2) for purposes of balance of payments, statistics collected on a FOB basis.

 

Rate of inflation or inflation rate is measured by the December to December percentage change in the consumer price index or CPI, unless otherwise specified. The CPI is calculated on a weighted basket of consumer goods and services using a monthly averaging method. December to December rates are calculated by comparing the indices for the latest December against the indices for the prior December.

 

References herein to “US$,” “$,” “U.S. dollars” or “dollars” are to United States dollars. References herein to “Uruguayan pesos,” “pesos,” or “Ps.” are to the lawful currency of Uruguay. Unless otherwise stated, Uruguay has converted historical amounts translated into U.S. dollars or pesos at historical annual average exchange rates. References to “Euro” or “€” are to the lawful currency of the Member States of the European Union that have adopted the single currency in accordance with the treaty establishing the European Community, as amended by the Treaty on European Union. References to “JPY” or “yen” or “¥” are to Japanese yen. Translations of pesos to dollars, Euros or yen (or dollars to Euros or yen) have been made for the convenience of the reader only and should not be construed as a representation that the amounts in question have been, could have been or could be converted into dollars, euros or yen at any particular rate or at all. References herein to “UIs” are to Unidades Indexadas. UIs are inflation-indexed monetary units. The UI is calculated by the National Institute of Statistics (Instituto Nacional de Estadística or INE) as provided and published monthly in advance for each day from the 6th day of each month to the 5th day of the following month by INE and Banco Central del Uruguay. The UI changes on a daily basis to reflect changes in the consumer price index (Indice de Precios al Consumo or IPC), which is measured by the INE. The UI for each day is set in advance based on changes in previous months’ inflation.

 

References herein to the Uruguayan “public sector” includes the central government, Central Bank, public enterprises, local governments and other public sector entities.

 

The Federal Reserve Bank of New York does not report a noon buying rate for Uruguayan pesos.

 

The fiscal year of the government ends December 31. Accordingly, all annual information presented herein is based upon January 1 to December 31 periods, unless otherwise indicated. Totals in some tables in this document may differ from the sum of the individual items in those tables due to rounding.

 

D-3

 

 

Uruguay’s official financial and economic statistics are subject to a review process by Banco Central and the Uruguay National Statistics Institute. Accordingly, the financial and economic information in this document may be subsequently adjusted or revised. Certain of the information and data contained herein for 2013, 2014, 2015, 2016 and 2017 is preliminary, and subject to further adjustment or revision. The government believes that this practice is substantially similar to the practices of many industrialized nations. The government does not expect revisions to be material, but cannot assure you that material changes will not be made.

 

Historically, deposits of the non-financial public sector held with Uruguay’s banking system were deducted from Uruguay’s gross public sector debt. According to the methodology adopted by the government in March 2013, deposits of the non-financial public sector held with Uruguay’s banking system are not deducted from Uruguay’s gross public sector debt and are recorded as non-financial public sector assets. Data for prior years has been restated following this methodology.

 

D-4

 

 

SUMMARY

                          
  

2012

 

2013

 

2014

 

2015

 

2016(1)

   (in millions of US$, except as otherwise indicated)
    
THE ECONOMY                         
GDP (in millions of US$ at nominal prices)(2)  US$ 51,238  US$ 57,482  US$ 57,277  US$ 53,273(1)  US$ 52,556
Real GDP (in thousands of constant 2005 pesos)(2)   Ps.  618,174  Ps. 646,842  Ps. 667,792  Ps. 670,268(1)  Ps. 680,010
% change from prior year     3.5%    4.6%    3.2%    0.4%(1)    1.5%
Consumer price index or CPI (annual rate of change)     7.5%    8.5%    8.3%    9.4%    8.1%
Wholesale price index or WPI (annual rate of change)     5.9%    6.3%    10.6%    6.6%    (1.9%)%
Unemployment rate (annual average)(3)     6.5%    6.5%    6.6%    7.5%    7.9%
Balance of payments(4)                           
Trade balance (merchandise)     (2,361.3)    (1,352.0)(1)    (908.7)(1)    (242.3)(1)    343.1
Current account     (2,592.9)    (2,861.3)(1)    (2,576.1)(1)    (1,139.0)(1)    (117.4)
Capital and financial account net     6,286.1    4,720.7(1)    4,035.1(1)    (68.5)(1)    (208.3)
Errors and omissions(5)     (406.2)    1,063.6(1)    (99) (1)    (580.4)(1)    (1,840.3)
Overall balance of payments excluding impact of gold valuation adjustment     3,287.0    2,923.0(1)    1,360.0(1)    (1,787.9) (1)    (2,166.0)
Change in Banco Central international
reserve assets (period end) 
    (3,287.0)    (2,923.0)(1)    (1,360.0)(1)    1,787.9(1)    2,166.0
Banco Central international reserve assets (period end)(6)     13,605(7)    16,290(8)    17,555(9)    15,634(10)    13,472(11)
                          
PUBLIC FINANCE                         
Non-Financial Public Sector Revenues     14,200    16,948    16,669(1)    15,462(1)    15,471
Non-Financial Public Sector Primary Expenditures     14,319    16,735    16,869(1)    15,343(1)    15,770
Public Sector Primary Balance     (82)    222    (354)(1)    (9)(1)    (286)
Public Sector Overall Balance (surplus/(deficit))     (1,380)    (1,335)    (1,984)(1)    (1,906)(1)    (2,301)
                          
PUBLIC DEBT                         
                          
Consolidated public sector debt                         
Debt with non-residents(12)     16,246    17,559    18,406    18,058    17,146
Debt with residents     14,887    15,543    15,120    13,338    16,178
Total     31,133    33,102    33,525    31,396    33,324
As a % of GDP     60.6%    57.5%    58.5%    58.7%    63.2%
Consolidated public sector external debt service                         
Amortizations     1,896    3,211    3,305    2.965    671
Interest payments     575    691    731    809    844
Total     2,471    3,902    4,036    3,774    1,515
As a % of exports of goods and services     18.3%    28.4%    29.5%    30.9%    13.3%

 

 

(1)Preliminary data.

(2)Figures are not adjusted by purchasing power.

(3)Unemployment population as percentage of the labor force.

(4)Calculated in accordance with the methodology set forth in the IMF Balance of Payments Manual (Fifth Edition).

(5)Constitutes a residual item, which is periodically revised as additional information regarding the current and capital and financial accounts becomes available.

(6)As presented in this chart, gold reserves have been valued at their corresponding market prices as of December 31, 2012, 2013, 2014, 2015 and 2016.

(7)This amount includes US$3,969 million of reserves and voluntary deposits of the Uruguayan banking system with Banco Central, including US$1,642 million of other public sector financial institutions.

(8)This amount includes US$5,299 million of reserves and voluntary deposits of the Uruguayan banking system with Banco Central, including US$2,184 million of other public sector financial institutions.

(9)This amount includes US$6,768 million of reserves and voluntary deposits of the Uruguayan banking system with Banco Central, including US$2,771 million of public sector financial institutions.

(10)This amount includes US$6,584 million of reserves and voluntary deposits of the Uruguayan banking system with Banco Central, including US$2,457 million of public sector financial institutions.

(11)This amount includes US$5,542 million of reserves and voluntary deposits of the Uruguayan banking system with Banco Central, including US$2,481 million of public sector financial institutions.

(12)Excludes interest on non-resident banking deposits.

Source: Banco Central

 

D-5

 

 

REPÚBLICA ORIENTAL DEL URUGUAY

 

Territory and Population

 

Uruguay is located in the southern, subtropical zone of South America, bordering Argentina to the west and Brazil to the northeast. Its territory covers an area of approximately 176,000 square kilometers with a 500-kilometer coastline along the Atlantic Ocean and the Río de la Plata. Uruguay’s major cities are Montevideo, the nation’s capital and main port, Paysandú, Salto and Las Piedras.

 

According to the 2011 national census, Uruguay’s population of approximately 3.3 million is primarily of European origin and has a literacy rate above 98%. Approximately 95% of the population lives in urban areas and about 40% of the population resides in the Montevideo metropolitan area. The population growth rate averaged 0.2% per year for the period from 1985 to 2011, and is the lowest in South America. Uruguay is generally considered a high-income country. The following table sets forth comparative gross national income (“GNI”) figures and selected other comparative statistics as of December 31, 2015, unless otherwise indicated.

 

  

Uruguay

 

Brazil

 

Chile

 

Venezuela

 

Mexico

 

United

States

                               
Per capita GNI(1)    US$ 15,720  US$ 9,990  US$ 14,100    n.a  US$ 9,710  US$ 55,980
PPP GNI per capita(2)   US$ 20,220  US$ 15,900  US$ 21,570  US$ 17,140  US$ 16,710  US$ 55,860
Life expectancy at birth(3)     77    75    82    74    77    79
Adult literacy rate(4)(5)     98.4%    92.6%    97.3%    95.4%    94.4%    n.a.
Infant mortality per 1000 live births(4)     9    15    7    13    11    6

 

 

n.a. = not available.

 

(1)World Bank Atlas method.

(2)Current US$, adjusted for purchasing power parity.

(3)In years.

(4)Percentage of people ages 15 and older.

(5)2015 data. CEPAL does not prepare statistics on the United States’ adult literacy rate.

Source: The World Bank - World Development Indicators database and CEPAL.

 

Constitution, Government and Political Parties

 

Uruguay is organized politically as a republic and is geographically divided into 19 departments (districts). The 1967 Constitution, which was last amended in 2004, provides for a presidential system of government composed of three branches: executive, legislative, and judiciary. The president heads the executive branch and is chief of staff and commander of the armed forces. The president is elected by direct popular vote for a period of five years and may not seek re-election for consecutive terms. Under Uruguay’s electoral system established under the 1996 constitutional reform, each political party selects a single candidate for presidential elections. If no candidate wins more than 50% of the vote in the first round of elections, a run-off between the two leading candidates is held. The legislative branch is composed of a 31-member Senate and a 99-member Chamber of Deputies, which together constitute the Congress. Members of Congress are elected every five years by direct popular vote under a system of proportional representation. The Supreme Court is composed of five judges appointed for 10-year terms by the Congress. The Supreme Court has jurisdiction over selected constitutional matters and appellate jurisdiction over decisions rendered by lower courts. Uruguay’s judicial system consists of trial and appellate courts with jurisdiction in each case over civil, criminal, family and labor matters. In addition, Uruguay has an administrative court system with jurisdiction over a number of public sector matters.

 

Uruguay has been a democratic country throughout most of its history since it became an independent nation in 1825. The country’s democratic tradition was interrupted twice during the last century: once briefly in the 1930s and again during the period from 1973 to 1985. In June 1973, a military junta took over power, dissolved Congress, and suspended all voting activity. Military rule continued until November 1984, when democratic elections were held and voters elected Julio María Sanguinetti as president.

 

Politics in Uruguay are dominated by three political parties: the Frente Amplio (Broad Front), the Partido Colorado and the Partido Nacional. Since appearing on Uruguay’s political landscape in 1971 as a coalition of, among others, the Christian Democratic, Socialist and Communist parties, the Frente Amplio gained increasing support and, in October 2004, won victories in the presidential and the congressional elections.

 

D-6

 

 

Until the 2004 presidential and congressional elections, Uruguay’s two traditional political parties, the Partido Colorado and the Partido Nacional, had alternated holding the presidential office. Each of these two parties is composed of multiple political factions, typically with different political orientations, but without strong ideological differences. The Partido Colorado and the Partido Nacional, which were formed in the 1830s, are both market-oriented and favor trade liberalization and reducing the government’s role in the economy, although some factions within each of those parties favor moderate trade protection and some degree of government intervention. Traditionally, the Partido Nacional has had a strong rural constituency, while the Partido Colorado has drawn most of its support from urban areas. The Frente Amplio advocates a moderate social welfare platform. The Partido Independiente is a center-left group which split from the Frente Amplio prior to the 1989 elections. A fifth political party, the Unidad Popular, is a left-wing party formed in 2013 by several smaller left-wing political groups.

 

Presidential elections were held on October 26, 2014. Mr. Tabaré Vázquez Rosas from Frente Amplio (who was president between 2005 and 2010) received 47.81% of the votes cast, Mr. Luis Lacalle Pou from Partido Nacional received 30.88% of the votes cast, and Mr. Pedro Bordaberry from Partido Colorado received 12.89% of the votes cast. Based on these results, Mr. Vázquez Rosas and Mr. Lacalle Pou participated in the runoff election on November 30, 2014, and Mr. Tabaré Vázquez Rosas of the Frente Amplio won the national presidential election with 52.8% of the votes cast. Mr. Vázquez Rosas took office for a second non-consecutive term on March 1, 2015, succeeding Mr. José Alberto Mujica Cordano, who is also a member of Frente Amplio.

 

In the congressional elections also held on October 26, 2014, the Frente Amplio retained a majority of both houses of Congress. The congressional representation of each of the five parties elected for the 2015-2020 term is as follows:

 

  

Senate 

  

Chamber of Deputies

 
   Seats   %   Seats   % 
Frente Amplio    15    51.6%   50    50.5%
Partido Nacional    10    32.2    32    32.3 
Partido Colorado    4    12.9    13    13.1 
Partido Independiente    1    3.2    3    3.03 
Unidad Popular            1    1.01 
Total(1)    31    100%   99    100%

 

 

(1)The Vice President, currently Mr. Raúl Fernando Sendic Rodríguez of the Frente Amplio, occupies the thirty-first seat in the Senate.

 

Although the Frente Amplio retained majorities in both houses of Congress, the ruling party has expressed an intention to seek consensus with the Partido Colorado, the Partido Nacional, the Partido Independiente and Unidad Popular with respect to key areas of government, including macroeconomic and social policies, education and foreign relations.

 

Since 2005, the Frente Amplio maintains the following goals of economic policy:

 

reaching a sustainable level of economic growth supported by a steady development of Uruguay’s productive capacity and productivity;

 

reducing unemployment and improving the quality of employment; and

 

advancing the quality of life of the population, focusing on the urgent need to improve the living conditions of the poorest segments of the population.

 

D-7

 

 

Foreign Policy and Membership in International and Regional Organizations

 

Uruguay has had no significant regional or international conflicts in recent years. The Republic has focused its foreign policy on international economic, political and legal issues and on the development of international arrangements aimed at improving economic cooperation among nations, conflict resolution and international law. Uruguay maintains diplomatic relations with 172 countries and is a member of 105 international organizations, including:

 

the United Nations (founding member), including many of its specialized agencies;

 

the Organization of American States;

 

the World Trade Organization;

 

the International Monetary Fund or the IMF;

 

the International Bank for Reconstruction and Development or the World Bank;

 

the International Finance Corporation;

 

the Multilateral Investment Guaranty Agency;

 

the International Centre for Settlement of Investment Disputes;

 

the Inter-American Development Bank or the IADB;

 

the Inter-American Investment Corporation; and

 

the Corporación Andina de Fomento or the CAF.

 

Uruguay maintains close ties to its neighboring countries and participates in several regional arrangements designed to promote cooperation in trade and investment. It has been the host country for the Latin American Integration Association, a regional external trade association that includes ten South American countries in addition to Mexico, Cuba, Panamá and Nicaragua since its creation in 1960.

 

In March 1991, the governments of Argentina, Brazil, Paraguay and Uruguay signed the Mercosur Treaty. Under the Mercosur Treaty, these four countries originally pledged:

 

(1)to create a full common market in goods, services and factors of production by eliminating or significantly reducing, in some cases over a period of years, import duties, tariffs and other barriers to trade among members; and

 

(2)to establish common external tariffs for trade with non-members.

 

In December 1994, the four members of Mercosur signed an agreement establishing January 1, 1995 as the deadline for the implementation of a common external tariff intended to transform the region into a customs union. The common external tariff regime became effective on January 1, 2001. However, it was also agreed that each member country would be entitled to take exceptions to the common external tariff for a transitional period scheduled to end in 2008 for Argentina and Brazil, and in 2010 for Paraguay and Uruguay. These periods have recently been extended, allowing Argentina and Brazil to maintain their list of exceptions until December 31, 2021, Uruguay until December 31, 2022 and Paraguay until December 31, 2023. Accordingly, the full implementation of a customs union has been deferred. See “The Economy—The Mercosur Agreements.”

 

In July 2012, Mercosur members (other than Paraguay) admitted the Republic of Venezuela as a full member of Mercosur. In December 2013, Paraguay acknowledged the admission of Venezuela as a full member of Mercosur. In July 2015, Bolivia signed a Protocol to become a full member of Mercosur. The Protocol provides that Bolivia will gradually adopt the regulations of Mercosur over a period of four years following the entry into force of the Protocol. Within the same period of time, Bolivia is expected to adopt the Mercosur Common Nomenclature (NCM), the Common External Tariff and Mercosur’s Origin Regime. In December 2016, Venezuela’s status as a full member was temporarily suspended by the other Mercosur members, after it was considered to have failed to implement Mercosur regulations, in accordance with the undertakings assumed in 2012 in connection with its admission to Mercosur.

 

D-8

 

 

Since the establishment of Mercosur, the following trade agreements have become effective for Mercosur members:

 

Year Signed Year Effective Country/Economic
Region
Description of
Agreement
1996 1996 Chile Free trade zone starting in 2014
1996 1997 Bolivia Free trade zone starting in 2006
2003 2005 Colombia, Ecuador and Venezuela Gradual free trade zone for certain goods until 2020
2005 2006 Peru Gradual free trade zone for certain goods until 2021
2006 2008 Cuba Tariff elimination for certain goods
2007 2009 Israel Gradual free trade zone for certain goods until 2019.
2004 2009 India Tariff reduction for certain goods
2008 2016 Southern African Customs Union (“SACU”) Tariff reduction for certain goods

 

In December 1995, Mercosur and the European Union signed a framework agreement for the development of free trade. While the parties have made progress in several areas, Mercosur conditioned the agreement upon the European Union making significant concessions with respect to trade in agricultural products and the EU’s common agricultural policy, at least insofar as it impacts Mercosur and negotiations were discontinued in 2004. Negotiations were re-launched in 2010. Mercosur and the EU exchanged proposals on the open issues in May 2016 and have resumed negotiations in October 2016.

 

Mercosur also initiated negotiations for the establishment of a free trade zone with the European Free Trade Association (“EFTA”). In January 2017, representatives of Mercosur and EFTA announced the commencement of negotiations in the World Economic Forum’s Annual Meeting in Davos. In February 2017, Mercosur and EFTA approved the agenda and structure of the negotiations. The first round is scheduled to take place in Buenos Aires in June 2017.

 

Mercosur and the United States, which had suspended negotiations in 2004, sought to resume negotiations relating to the hemisphere-wide Free-Trade of the Americas Agreement (FTAA) pursuant to the 1991 “Four Plus One” Agreement. The negotiations revealed important differences between the parties, and there can be no assurance that an agreement will be reached within the near term, as originally contemplated.

 

Significant trade imbalances among Mercosur countries developed over time as a result of various factors. These imbalances have prompted discussions and negotiations among the member states that to date have not resulted in the convergence of the national economies, an objective stated on several occasions pursued. Argentina’s crisis in 2001 and its long-lasting effects have adversely affected trade within Mercosur and with non-Mercosur countries and the timely implementation by Mercosur of the objectives set forth in the Mercosur Treaty of 1991, in particular the customs union. It also triggered the adoption of various safeguard measures and caused indefinite delays in Mercosur’s ability to achieve the macroeconomic coordination and stability sought by its member states. Uruguay continues to support the long-term objectives contemplated in the Mercosur Treaty, while pursuing measures intended to maximize access to export markets by Uruguayan products in the short and medium-term.

 

D-9

 

 

Uruguay has entered into bilateral treaties related to trade and investment, including the following:

 

Year
Signed
Year
Effective
Country/Economic Region Descriptions of Agreement
2003 2004 United Mexican States Free Trade Agreement
2004 2007 Iran Bilateral Trade Framework Agreement
2005 2006 United States of America Bilateral Investment Promotion Treaty
2007 2007 United States of America Trade and Investment Framework Agreement
2008 2011 United States of America Cooperation Agreement in Science and Technology
2008 India Bilateral Investment Treaty
2008 2009 Venezuela Economic Cooperation Agreement
2010 2012 Chile Bilateral Investment Treaty
2009 2011 South Korea Bilateral Investment Treaty
2009 2012 Chile Public Procurement Agreement
2009 2012 Vietnam Bilateral Investment Treaty
2015 2017 Japan Bilateral Investment Treaty
2016 Chile Free Trade Agreement

 

In March 2009, Uruguay and Brazil signed an energy cooperation agreement for the development of an electrical transmission line, to facilitate interconnectivity of both countries’ energy networks. A line with a transmission capacity of 500MW was completed in 2016 and on May 2, 2017, Uruguay began exporting electricity to Brazil. See “Gross Domestic Product and Structure of the Economy—Principal Sectors of the Economy—Electricity, Gas and Water.”

 

D-10

 

 

THE ECONOMY

 

History and Background

 

In the 1980s, Uruguay’s economy was affected by a crisis of its financial system, followed by a severe recession. A deterioration in its external debt to GDP and exports ratios led the Republic to negotiate a rescheduling of its maturing debt obligations within the framework of the Brady Plan in 1991. In the early 1990s, the government took steps to increase private sector involvement in the economy (including foreign investment in previously restricted areas), and reduced the size and influence of the public sector in the economy. Following a modest 0.9% increase in real GDP in 1990, a new recovery began in mid-1991, and real GDP increased steadily between 1991 and 1994 at an average cumulative annual rate of 5.2%.

 

The economic liberalization policies of the 1990s, while stimulating improvements in productivity and economic growth, also increased the exposure of Uruguay’s economy to regional and international economic developments. The absence of capital controls facilitated a gradual dollarization of the assets and liabilities of the banking system. A loss of investor confidence in certain countries in the region, capital flight and a resulting contraction of economic activity followed the Mexican peso devaluation in December 1994. Argentina, one of Uruguay’s principal trading partners and sources of direct foreign investment, was particularly affected. The contraction in aggregate demand in neighboring countries, particularly Argentina, was coupled with a decrease in Uruguay’s private demand and public sector investment. In 1995, real GDP contracted by 1.4% as compared to 1994. Uruguay’s economy recovered with real GDP growth of 5.0% on average from 1996 to 1998 fueled mainly by increased exports and growth in gross fixed investment, particularly private sector investment, which in turn stimulated private consumption. During this period, the financial and insurance services sector grew in real terms and as a percentage of GDP.

 

The Mercosur Agreements

 

The execution and implementation of Mercosur represented Uruguay’s single most important foreign trade endeavor, as it was expected to offer Uruguayan companies access to a common market of approximately 200 million people. On January 1, 2000, internal tariff rates among Mercosur countries were reduced to zero, with the exception of sugar and automobiles.

 

With the establishment of the common external tariff in January 1995, the members of Mercosur agreed to cause a gradual convergence of their respective external trade regulations over a five-year period. A common external tariff became effective on January 1, 2001. However, each member of the Mercosur retained some degree of flexibility intended to gradually allow certain industries to enhance their competitiveness, and had the ability to take specific exceptions to the common external tariff (initially 300 each) over a transitional period. Argentina and Brazil are currently entitled to 100 exceptions each and Uruguay and Paraguay are currently entitled to 225 and 649 exceptions, respectively. With respect to imports of capital goods, telecommunications and information technology products of non-Mercosur origin, the members of Mercosur agreed that all of them could take exception from the common external tariff, Argentina and Brazil until 2021 and Uruguay and Paraguay until 2022 and 2023, respectively, and Venezuela until 2022 (although Venezuela’s membership was suspended in December 2016). The Mercosur member states agreed to coordinate policies in certain areas, including agriculture, industry, transport and trade in services, to reduce or eliminate imbalances, and several working groups are currently engaged in policy coordination negotiations.

 

The devaluation of the Argentine peso in January 2002, and other measures taken by the Argentine government during this period (including unilateral increases in import tariffs on consumer goods and the elimination of import tariffs on capital goods, for non-Mercosur products) adversely affected trade within Mercosur and with non-Mercosur countries and the timely implementation by Mercosur of the objectives set forth in the Mercosur Treaty of 1991, in particular the customs union. Uruguay maintains certain duties affecting imports of certain Argentine products whose producers are entitled to regional or sectorial subsidies. It also caused indefinite delays in Mercosur’s ability to achieve the macroeconomic coordination and stability sought by the December 2000 understanding on common macroeconomic targets. Uruguay continues to support the long-term objectives contemplated in the Mercosur Treaty and the December 2000 understanding, recognizing the short and medium-term need to maximize access to other export markets by Uruguayan products.

 

D-11

 

 

Certain barriers to the comprehensive regional integration initiated by Mercosur continue to exist. Fitosanitary border inspections and other bureaucratic border procedures still lack uniformity among Mercosur member countries and are onerous in many instances, causing delays in trade. Rules on intellectual property, antitrust and the environment, among other things, are different in each of the Mercosur countries, and while certain mechanisms for dispute resolution and cooperation have been established, comprehensive mechanisms are still under development. In December 2002, Mercosur approved common antitrust procedures implementing a 1996 Antitrust protocol. This agreement constitutes a step towards the elimination of antidumping claims among members. Trade in services, such as financial and banking services, has not been uniformly liberalized, with countries like Uruguay having a financial system which is open to non-Uruguayan participants while countries like Brazil allow only limited participation of non-Brazilian banks in their financial system. Roads, bridges and railways must also be developed to further facilitate trade. In December 1997, the Mercosur members agreed to a framework agreement for the liberalization of the provision of services, access to markets and freedom of establishment. The members of the Mercosur meet annually to negotiate the implementation of the 1997 framework agreement. A protocol regarding the provision of services entered into effect in December 2005 and was ratified by Argentina, Brazil, Paraguay and Uruguay. The liberalization is expected to be effected gradually on the basis of negotiation rounds intended to result in eliminating restrictions by segments with a view to reaching complete liberalization. As of May 3, 2017, seven negotiation rounds had been held, but no liberalization of services, access to market or establishment has been accomplished to date.

 

1999-2002: Recession and Crisis in the Banking System

 

Between 1999 and 2002, a series of external factors, including most significantly the economic crisis that affected Argentina severely in 2001 and 2002, had material adverse consequences for Uruguay’s economy, affecting local demand, exports and the consolidated balance of the public sector.

 

In 2002, Uruguay’s economy experienced its most significant setback since 1982, with real GDP contracting by 11.0%. The proximate causes of Uruguay’s 2002 economic crisis were associated with Argentina’s economic crisis during that time. Uruguay’s fiscal imbalances, its dependence on Argentina and Brazil as its principal trading partners and sources of foreign revenues, and rigidities that limited the ability of the economy to absorb and adapt to external factors, added to the severity of the crisis.

 

Uruguay’s banking system confronted its worst crisis since 1982-83. At December 31, 2002, total U.S. dollar deposits of the non-financial private sector with the banking system (excluding off-shore institutions) were US$7.3 billion (of which US$2.4 billion were of non-residents), compared to US$14.2 billion as of December 31, 2001 (of which US$6.6 billion were of non-residents). In the second quarter of 2002, a deposit outflow affected Uruguay’s financial system leading first to the suspension of Banco Galicia de Uruguay, or BGU, and Banco Comercial, Uruguay’s two largest private banks (both affiliated with Argentine banks) and soon thereafter to the closure of Banco Montevideo/La Caja Obrera, Uruguay’s third largest private bank in June 2002. Although the government received approximately US$500.0 million from the IMF on June 29, 2002, and provided liquidity assistance to the local banks, confidence in the Uruguayan financial system continued to erode.

 

The Uruguayan authorities sought the financial assistance of the IMF, the World Bank and the IADB to safeguard Uruguay’s payment and financial system. On August 4, 2002, Congress passed Law 17,523, known as the Law for the Strengthening of the Financial System. The law (i) provided for the establishment of a fund for the stability of the Uruguayan banking system, the Fondo de Estabilidad del Sistema Bancario, or FESB, (ii) extended to three years the maturities of all U.S. dollar-denominated time deposits held with Banco de la República and Banco Hipotecario, (iii) transferred foreign currency-denominated liabilities of Banco Hipotecario to Banco de la República, and (iv) facilitated the liquidation of insolvent banks.

 

In furtherance of the economic program agreed with the IMF, in December 2002, Congress enacted amendments to the banking law aimed at strengthening the banking system. Following the enactment of these amendments, the government completed the reorganization of Banco Comercial, Banco Montevideo and La Caja Obrera into a new commercial bank, Nuevo Banco Comercial. The non-recoverable assets of the three liquidated banks are held by liquidation funds, and the proceeds have been earmarked to satisfy deposits of the liquidated banks that were not assumed by Nuevo Banco Comercial.

 

D-12

 

 

Between January 1, 2002 and February 28, 2003, depositors withdrew approximately US$6.8 billion from the Uruguayan banking system. Banks responded to depositors’ demands by withdrawing approximately US$1.1 billion in reserves and voluntary deposits held with Banco Central and reducing to practically none the availability of credit. The financial system received assistance for approximately US$2.0 billion from the Uruguayan authorities.

 

In 2002, the government adopted a series of initiatives intended to reduce the deficit of the public sector. It relied on access to funding by the IMF and other multilateral agencies to shore up Banco Central’s international reserve assets with the expectation that confidence in the banking system would thereby be restored.

 

The 2002 economic crisis had profound effects on Uruguay’s monetary and exchange rate policy. The continued devaluation of the Argentine peso and growing uncertainties as to the future of the Brazilian economy increased the risk of a speculative run on the peso. On June 19, 2002, Banco Central allowed the peso to float, abandoning the “crawling peg” system. The devaluation of the peso accelerated in July 2002, dropping to its lowest value of Ps. 32.33 per US$1.00 on September 10, 2002. The depreciation of the peso resulted in Uruguay’s foreign currency-denominated debt to GDP ratio rising to 89.1% as of December 31, 2002, while the foreign currency-denominated debt service to exports ratio for 2002 was 33.6%.

 

The decrease in tax collections attributable to the contraction of GDP, together with the increase in debt service requirements (measured as a percentage of GDP) caused primarily by the devaluation (nearly all of Uruguay’s debt was denominated in foreign currency), practically neutralized the savings achieved by the central government in 2002. As a result, the consolidated public sector deficit for 2002 was approximately 4.1% of GDP. Nevertheless, by reducing expenditures (excluding interest payments), Uruguay’s public sector generated a primary surplus equal to 0.5% of GDP.

 

2003-2016: Recovery and Economic Growth

 

Uruguay’s economy stabilized during the second quarter of 2003 and began to recover, recording an annual real GDP growth of 0.8% and 5.0% in 2003 and 2004, respectively. This improvement was mainly a result of an increase in external demand driven primarily by Argentina’s economic recovery, an increase in the prices of commodities exported by Uruguay, the opening of the U.S. market to Uruguayan beef exports and a recovery in domestic demand spurred by improved consumer and investor confidence. Between 2005 and 2010 GDP grew at an average rate of 6.2%, and continued to grow at rates of 5.2% in 2011, 3.5% in 2012, 4.6% in 2013 and 3.2% in 2014. Commencing in 2015, the rate of economic growth decelerated reflecting the impact of slower economic growth and recession affecting Uruguay’s main regional trade partners and a decrease in the prices of Uruguay’s export commodities. Real GDP grew by 0.4% in 2015 and 1.5% in 2016.

 

In 2012, domestic private consumption grew by 5.0% compared to 2011 and represented 67.2% of GDP. In 2013, domestic private consumption grew by 5.2% compared to 2012 and represented 66.5% of GDP. In 2014, domestic private consumption grew by 4.2% compared to 2013 and represented 67.1% of GDP. In 2015, domestic private consumption decreased 0.5% compared to 2014 and represented 66.8% of GDP. In 2016, domestic private consumption grew by 0.7% compared to 2015 and represented 65.7% of GDP.

 

In 2012, gross fixed investment increased by 18.5% compared to 2011, representing 22.2% of GDP, with private gross fixed investment increasing by 22.2%. In 2013, gross fixed investment increased by 4.3.% compared to 2012, representing 21.8% of GDP, with private gross fixed investment increasing by 2.7%. In 2014, gross fixed investment increased by 2.6% compared to 2013, representing 21.4% of GDP, driven by public gross fixed investment since private gross fixed investment decreased by 0.8%. In 2015, gross fixed investment (both public and private) decreased by 7.7% compared to 2014, representing 19.9% of GDP. In 2016, gross fixed investments increased by 0.9% compared to 2015, representing 18.9% of GDP. Gross domestic savings represented 16.9% of GDP in 2012, 16.5% of GDP in 2013, 16.0% of GDP in 2014, 16.8 % of GDP in 2015 and 17.6% of GDP in 2016.

 

Exports of goods and services grew by 3.1% in 2012, 0.2% in 2013 and 1.9% in 2014, but decreased by 1.2% in 2015 and 1.4% in 2016. Imports of goods and services increased by 13.5% in 2012, 3.5% in 2013 and 0.5% in 2014, but decreased by 7.4% in 2015 and 2.9% in 2016.

 

D-13

 

 

Deposits held by the non-financial private sector with the banking system (excluding deposits held with off-shore banks and financial houses), stood at US$23.2 billion at December 31, 2012, US$25.3 billion at December 31, 2013, US$26.9 billion at December 31, 2014, US$27.9 billion at December 31, 2015 and US$28.2 billion at December 31, 2016. Approximately 77.3% of those deposits were denominated in foreign currencies (primarily U.S. dollars) as of December 31, 2016, compared to 81.9% as of December 31, 2015. Foreign currency deposits held by non-residents decreased by approximately US$1.0 billion in 2016, following the implementation by Argentina of its tax amnesty. In 2010 and 2011 the annual rate of consumer price inflation was 6.9% and 8.6%, respectively, decreasing to 7.5% in 2012. The annual rate of consumer price inflation reached 8.5% in 2013, 8.3% in 2014, 9.4% in 2015 and 8.1% in 2016. The rate of inflation for the twelve-month period ended April 30, 2017, was 6.5%, as measured by the consumer price index. For a discussion of Uruguay’s current monetary policy see “Monetary Policy and Inflation—Monetary Policy.”

 

The Economic Policies of the Vázquez Administration

 

The Vázquez administration has continued to prioritize macroeconomic stability and adjusted existing policies to the extent needed to pursue its main objectives, which include:

 

maintaining a prudent fiscal stance, which it recognizes as a condition to long term fiscal sustainability; and

 

strengthening commercial and political relationships with the Mercosur member countries while continuing to promote opportunities for Uruguayan exports and foreign direct investment in Uruguay in the context of bilateral arrangements that are consistent with the Mercosur agreements.

 

In December  2015, President Vázquez signed into law the five-year budget for the period 2015-2019. The budget reflects the government’s priorities of achieving long-term growth and debt-sustainability objectives while continuing to invest in infrastructure and maintaining social spending. See “Fiscal Policy—Budget.”

 

The Vázquez administration has announced the implementation of a “Sistema Nacional Integrado de Cuidados” (National Care System) to promote and gradually implement public policies addressing the needs of people that are not in a position to fend for themselves, including early childhood through the age of three, disabled people and elders who cannot fend for themselves.

 

Privatizations

 

While privatizations have not been a major focus of Uruguay’s economic policy, the government has divested or privatized certain state-owned enterprises, such as the gas company servicing Montevideo in 1993, and has taken measures to transfer certain activities, such as sewage, garbage collection, maintenance and the administration of certain ports and airports, to the private sector through concessions and other similar arrangements. Legislation has also been enacted enabling the government to open various components of the telecommunications and energy and gas sectors to private investment. Proceeds from privatizations have not been material to date.

 

The government is committed to improving the competitiveness of the Uruguayan economy and encouraging private investment by continuing to open a number of areas of the economy previously reserved to public sector enterprises to private investment. Through the Administración Nacional de Telecomunicaciones, or ANTEL, the local telecommunications company, several revenue sharing arrangements with private companies for the installation and operation of certain new telecommunication facilities have been implemented. In February 2001, Congress approved the licensing of cellular phone services and data transmission to private sector providers and opening of the telecommunications sector (other than local fixed line services but including long distance) to private sector providers. In December 2002 and May 2004, licenses were granted to foreign telecommunications companies, to provide mobile telephone services. The government has also approved the provision of long distance international telephone services by 17 companies in competition with ANTEL.

 

The government also granted the Corporación Nacional Para el Desarrollo, or CND, a state-owned investment corporation, overall responsibility for the administration of a program of public works to be undertaken between 2003 and 2018. CND currently owns the concessions as well as 100% of the shares of Corporación Vial del Uruguay S.A, or CVU, a special-purpose company responsible for the projects. CVU and private companies have to date signed 99 contracts for investments of approximately US$500 million for the construction of bridges and highways.

 

D-14

 

 

In 2001, the government issued a decree approving the provision of postal services by private sector entities in competition with the state-owned postal service. There are numerous companies currently operating in the Uruguayan postal service market.

 

In September 2003, the government granted a 30-year concession to Puerta del Sur S.A. for the management and administration of the Montevideo airport.

 

In July 2007, the government sold 75% of the equity of Pluna Airlines to Leadgate Investment Corporation (45%) and to Sociedad Aeronáutica Oriental S.A. (30%), and retained a 25% stake in the airline. The new company was called Pluna Líneas Aéreas S.A. In 2011, Pluna incurred severe losses, and its liquidity and financial condition deteriorated severely. On June 15, 2012, Leadgate—the controlling shareholder—transferred all of its shares in Pluna to a trust under the surveillance of the Uruguayan government. In July 2012, Pluna suspended all flights and initiated a judicial reorganization procedure. Thereafter, Congress passed Law No. 18,931 to reorganize the operations of the airline, including by disposing Pluna’s assets. In October 2012, through a trust created pursuant to Law No. 18,931, the government conducted an auction for the sale of seven of Pluna’s aircrafts. The auction was initially awarded to Cosmo S.A., a company organized under the laws of Spain, however, the transaction was not completed. In December 2013, the Supreme Court of Uruguay declared several provisions of Law No. 18,931 unconstitutional. As a result, the transfer of the Pluna aircrafts to the trust was reversed and they remained property subject to liquidation by Pluna’s receiver until their sale in 2014 to Strategic Air Finance (SAF) for US$77 million.

 

At this time the government has no plans to privatize any public sector enterprises.

 

In July 2015, the government announced a plan to improve the infrastructure of roads and highways. The program seeks to repair and improve 1,300 kilometers of roads, of which 160 kilometers will comprise new roads. The project entails a US$650 million investment over five years, mostly under the public-private partnership regime. In 2015 and 2016, investments of approximately US$180 million and US$144 million, respectively, were made in the rehabilitation of roads.

 

For a description of government participation in Uruguayan economy see “Gross Domestic Product and Structure of the Economy—Role of the State in the Economy.”

 

Environment

 

The principal environmental concerns in Uruguay consist of industrial and urban pollution of water and soil. The Uruguayan Constitution provides for the right to a clean environment and Congress has enacted enabling legislation for the protection of the environment, including legislation which created the Ministry of Housing, Zoning and the Environment (Ministerio de Vivienda, Ordenamiento Territorial y Medio Ambiente) in 1990. Under a 1994 environmental law, potentially hazardous projects must be approved by the Ministry of Housing, Zoning and the Environment prior to their implementation. In addition to the Ministry of Housing, Zoning and the Environment, environmental supervision and regulation is carried out by many of the departments of the central government and state and municipal governments. In March 2000, Congress enacted a law creating a National System of Protected Natural Areas and granting the government the authority to incorporate, by decree, areas into this system and limit or prohibit certain activities within and around these protected areas.

 

Uruguay has received financing from the IADB for purposes of improving municipal infrastructure services for garbage collection and sewage treatment. The government currently requires environmental studies to be presented in connection with any proposals for construction and other projects. In addition, all projects financed by the IADB currently require environmental impact studies. Beginning in the late 1980s, Uruguay also received a series of loans from the IADB to undertake the cleaning up of Montevideo’s coast, including the shoreline along the Río de la Plata.

 

In May 2006, Argentina brought a claim to the International Court of Justice (“ICJ”) against Uruguay under the Treaty of the Uruguay River, alleging that by authorizing the construction of certain pulp mills in the Fray Bentos region, along the shores of the Uruguay river, Uruguay failed to honor its obligations under the treaty.

 

D-15

 

 

On April 20 2010, the ICJ issued its final ruling on this dispute. Although the ICJ ruled that Uruguay breached certain procedural obligations under the Treaty of the Uruguay River, it did not find that any of the environmental damages claimed by Argentina had been proved and did not impose any remedial sanction on Uruguay. On August 30, 2010, Uruguay and Argentina signed an agreement providing for the creation of a technical committee within the Administrative Commission of the Uruguay River (“CARP”). This committee was created to monitor the Uruguay river and the industrial and agricultural businesses and cities on both margins of the Uruguay river that discharge effluents into the river.

 

D-16

 

 

GROSS DOMESTIC PRODUCT AND STRUCTURE OF THE ECONOMY

 

The following tables set forth information regarding GDP and expenditures for the periods indicated. The figures included in the table entitled “Gross Domestic Product by Expenditure” are based on current (nominal) prices for each year, whereas the percentage figures included in the table entitled “Change in Gross Domestic Product by Expenditure” are based on 2005 prices (in accordance with the Integral Revision of the National Accounts published by Banco Central in March 2009) to eliminate distortions introduced by changes in relative prices.

 

GDP and Expenditures

(millions of 2005 pesos, except as otherwise indicated)

 

    2012    2013    2014    2015(1)    2016(1) 
GDP   Ps. 618,174   Ps.646,842   Ps.667,792   Ps.670,268   Ps.680,010 
Imports of goods and services    244,489    251,369    253,271    234,871    227,985 
Total supply of goods and services    862,664    898,211    921,063    905,139    907,995 
Exports of goods and services    190,536    190,419    197,112    195,929    193,193 
Total goods and services available for domestic expenditures   Ps.

 672,128

   Ps.

707,792

   Ps.

723,952

   Ps.

709,210

   Ps.

714,801

 
Allocation of total goods and services:                         
Consumption (public and private)    526,492    555,204    571,347    570,406    574,968 
Gross investment (public and private)    145,636    152,588    152,604    138,805    139,834 
Total domestic expenditures   Ps.

672,128

   Ps.

707,792

   Ps.

723,952

   Ps.

709,210

   Ps.

714,801

 
GDP growth (%) (2)    3.5%   4.6%   3.2%   0.4%   1.5%

 

 
(1)Preliminary data.

(2)% change from previous year, 2005 prices.

Source: Banco Central.

 

Gross Domestic Product by Expenditure
(% of total nominal GDP, unless otherwise indicated)

 

   

2012

 

2013

 

2014

 

2015(1)

 

2016(1)

 
Government consumption    13.3 %   13.5 %   13.7 %   13.8 %   14.5 %  
Private consumption    67.0     67.0     67.1     66.8               65.7    
Gross fixed investment    22.2     21.8     21.4     19.8     18.9    
Public sector (% of gross fixed investment)    3.8     4.2     4.9     4.6       4.5    
Private sector (% of gross fixed investment)    18.3     17.6     16.6     15.2               14.4    
Exports of goods and services    25.9     23.4     23.5     22.5     21.4    
Imports of goods and services    29.1     26.4     25.5     22.9     20.2    
Savings    16.9     16.5     16.0     16.8     17.6    

 

 

(1)        Preliminary data.

Source: Banco Central.

 

Change in Gross Domestic Product by Expenditure
(% change from previous year except as otherwise indicated, 2005 prices)

 

    2012  2013  2014  2015(1)  2016(1)
Government consumption   6.0%  4.9%  2.5%  2.2%  1.6%
Private consumption   4.9   5.5   3.0   (0.5)  0.7 
Gross fixed investment   18.2   3.8   2.4   (9.2)  0.9 
Public sector (% of gross fixed investment)   0.5   13.6   28.7   (12.2)  7.9 
Private sector (% of gross fixed investment)   21.9   2.1   (2.8)  (8.5)  (0.8)
Exports of goods and services   3.6   (0.1)  3.5   (0.6)  (1.4)
Imports of goods and services   13.6   2.8   0.8   (7.3)  (2.9)

 

 

(1)        Preliminary data.

Source: Banco Central.

 

D-17 

 

 

Principal Sectors of the Economy

 

The Uruguayan economy relies heavily on services, including the commerce, restaurants and hotels sector, which involves a wide range of tourism services, the financial and insurance sector, the real estate and business services sector and the government sector.

 

In 2016, GDP increased by 1.5% in real terms, after growing by 0.4% in 2015, 3.2% in 2014, 4.6% in 2013 and 3.5% in 2012, in each case with respect to the prior year. In 2016, services accounted for approximately 59.7% of GDP, while the manufacturing and agriculture, livestock and fishing sectors together accounted for 18.8% of GDP.

 

GDP growth in 2016 was driven mainly by growth in several sectors. The most significant sectors that contributed to GDP growth in 2016 were transportation, storage and communications, and electricity, gas and water. The transportation, storage and communications sector grew by 6.5% in real terms with respect to 2015, mainly as a result of the growth in the telecommunications sector attributable to an increase in the use of data services. The electricity, gas and water supply sector grew by 15.6% in real terms compared to 2015, due to an increase in the generation of electricity using renewable sources.

 

The following tables set forth the components of Uruguay’s GDP and their respective growth rates for the periods indicated. The discussion of the various sectors follows the order in which the sectors are presented in the tables. The percentages and figures included in the table entitled “Gross Domestic Product by Sector” are based on current (nominal) prices for each period, whereas the percentage figures included in the table entitled “Change in Gross Domestic Product by Sector” are based on 2005 prices to eliminate distortions introduced by changes in relative prices.

 

Gross Domestic Product by Sector
(in millions of US$ and % of GDP, nominal prices)

 

   2012  2013  2014   2015(1)  2016(1)
Agriculture, livestock and fishing   US$4,161    8.1%  US$4,378    7.6%  US$3,858    6.7%  US$3,266    6.1%  US$3,162    6.0%
Mining    225    0.4    283    0.5    264    0.5    228    0.4    228    0.4 
Manufacturing    6,237    12.2    6,476    11.3    6,955    12.1    7,055    13.2    6,695    12.7 
Electricity, gas and water    534    1.0    1,279    2.2    1,341    2.3    1,181    2.2    1,406    2.7 
Construction    4,718    9.2    5,568    9.7    5,588    9.8    5,089    9.6    5,003    9.5 
Commerce, restaurants and hotels    7,111    13.9    7,896    13.7    7,677    13.4    6,945    13.0    6,826    13.0 
Transportation, storage and communications    3,353    6.5    3,443    6.0    3,268    5.7    2,979    5.6    2,717    5.2 
Real estate and business services    8,118    15.8    9,251    16.1    9,342    16.3    8,939    16.8    8,804    16.8 
Financial and insurance services    2,275    4.4    2,523    4.4    2,550    4.5    2,447    4.6    2,527    4.8 
Services of the government    5,071    9.9    5,830    10.1    5,971    10.4    5,640    10.6    5,780    11.0 
Other community, social and personal services    4,475    8.7    5,029    8.7    5,040    8.8    4,654    8.7    4,731    9.0 
Net adjustments for payments made by financial institutions and import tariffs    4,958    9.7    5,525    9.6    5,423    9.5    4,849    9.1    4,677    8.9 
GDP (in millions of US$ at nominal prices)(2)   US$51,238    100.0%  US$57,482    100.0%  US$57,277    100.0%  US$53,273    100.0%  US$52,556    100.0%
GDP per capita   US$14,954        US$16,709        US$16,584        US$15,365        US$15,101      

 

 

(1)        Preliminary data.

(2)        Figures are not adjusted by purchasing power.

Source: Banco Central.

 

D-18 

 

 

Change in Gross Domestic Product by Sector
(% change from previous year, 2005 prices)

 

   2012  2013  2014  2015(1)  2016(1)
Agriculture, livestock and fishing    (0.8)%   2.0%   0.3%   (1.2)%   0.7%
Mining    (2.3)   2.5    (10.8)   (15.5)   7.8 
Manufacturing    (3.9)   1.2    4.2    4.9    0.4 
Electricity, gas and water    (21.9)   54.7    15.7    (6.7)   15.6 
Construction    16.3    0.9    0.7    (6.1)   (3.9)
Commerce, restaurants and hotels    5.6    8.0    (0.6)   (4.0)   (1.6)
Transportation, storage and communications    10.0    6.9    7.4    4.8    6.5 
Real estate, business, financial and insurance services    5.3    4.0    3.7    2.7    0.5 
Other services(2)    1.5    2.7    2.9    0.1    (0.6)
Total GDP    3.5%   4.6%   3.2%   0.4%   1.5%

 

 

(1) Preliminary data.
(2) Includes public sector services and other services.

Source: Banco Central.

 

Agriculture, Livestock and Fishing

 

Uruguay’s territory consists primarily of vast plains, which, combined with its temperate climate, make the country well suited for agriculture and livestock. In 2012, the sector contracted by 0.8% compared to 2011, mainly due to a decrease in agricultural production as a result of the combined effect of lower prices and lower demand, in particular external demand. This decrease was partially offset by a 3.2% growth in cattle production and a 4.4% growth in milk production. In 2013, the sector grew by 2.0% mainly due to the increase in agricultural production fueled by high international commodity prices and favorable weather conditions, especially for wheat and soybean. In 2014, the sector grew by 0.3% due to the increase in cattle production, which mitigated the adverse impact of a decrease in the production of wheat and soybean. In 2015, the sector contracted by 1.2%, mainly due to the decrease in agricultural production which offset increases in forestry and cattle production. In 2016, the sector grew by 0.7%, as a result of increases in cattle slaughter and exports of live cattle, which was partially offset by the decrease in cereals and oil and milk production.

 

In 2012, cereal and oil production increased by 0.3%, mainly as a result of an increase in soybean production. In 2013, cereal and oil production increased by 12.2%, mainly as a result of an increase in the production of both wheat and soybean. In 2014, cereal and oil production decreased by 13.7%, mainly as a result of decreased production of wheat and soybean. In 2015, cereal and oil production decreased by 9.4%, mainly as a result of decrease in rice and soybean production. In 2016, cereal and oil production decreased by 3.2%, mainly as a result of decrease in wheat and soybean production.

 

Milk production grew by 4.4% and 3.4% in 2012 and 2013, respectively, in each case with respect to the prior year. Milk production decreased by 0.7% in 2014 and by 2.2% in 2015 in each case with respect to the prior year. In 2016, milk production decreased by an additional 10.5% compared to 2015 as a result of a drop in international prices. Livestock production grew 3.0% in 2012, with respect to the prior year. In 2013, livestock production decreased by 1.4% compared to 2012. In 2014 and 2015, livestock production recovered, growing 1.2% and 4.3%, respectively. In 2016, livestock production grew by 4.1%, mainly due to opportunities created in the export market, primarily in Asia.

 

D-19 

 

 

The following table sets forth the production of selected primary goods for the periods indicated.

 

Selected Primary Goods Production
(in millions of US$, except as otherwise indicated)

 

   2012  2013  2014  2015(1)  2016(1)
Cereals and oil products   US$3,223   US$3,463   US$2,607   US$2,016   US$1,911 
Rice    376    395    361    285    256 
Wheat    387    692    342    258    137 
Soybean    1,697    1,629    1,306    858    911 
Pastures    383    409    370    374    350 
Vegetables and fruits    622    653    641    555    606 
Milk    732    846    846    583    488 
Livestock    2,445    2,436    2,342    2,375    2,224 
Cattle    1,950    1,886    1,868    1,884    1,824 
Wool    77    82    75    65    61 
Forestry    261    318    379    435    419 
 Total agricultural and livestock production   US$7,283   US$7,717   US$6,815   US$5,963   US$5,647 
                          
Cattle (in thousands of heads slaughtered)    2,116    2,009    2,115    2,212    2,471 
Milk (in millions of liters)    1,936    2,018    2,014    1,974    1,775 
Wool (in tons)    32,402    30,984    27,693    23,419    23,419 

 

 

(1)  Preliminary data.

Source: Banco Central.

 

The following tables set forth percentage changes from prior years for agricultural and livestock production for the periods indicated, based on 2005 prices to eliminate distortions attributable to changes in relative prices.

 

Agricultural and Livestock Production
(% change from previous year, 2005 prices)

 

   2012  2013  2014  2015(1)  2016(1)
Cereals and oil products    0.3%   12.2%   (13.7)%   (9.4)%   (3.2)%
Rice    (7.3)   1.2    (1.0)   (1.6)   1.6 
Wheat    (49.8)   63.4    (43.5)   1.1    (32.4)
Soybean    39.0    7.1    (8.2)   (20.0)   (2.6)
Pastures    2.0    6.5    (4.0)   3.0    0.0 
Vegetables and fruits    4.5    (12.1)   7.5    (5.0)   1.3 
Milk    4.4    3.4    (0.7)   (2.2)   (10.5)
Livestock    3.0    (1.4)   1.2    4.3    4.1 
Cattle    3.2    (2.3)   4.2    3.7    6.0 
Wool    2.2    10.7    (10.6)   (15.9)   0.0 
Forestry    (6.0)   12.2    38.9    17.3    2.5 
Total agricultural and livestock production    1.6%   4.9%   (3.3)%   (1.5)%   (0.4)%

 

 

(1)  Preliminary data.

Source: Banco Central.

 

Mining

 

The mining sector mainly consists of stone and sand quarries. These products are used primarily in construction. Other contributors to the mining sector include smaller operations for the mining of gold and semi-precious stones, such as agate and amethyst. Mining has remained relatively constant as a percentage of GDP from 2012 through 2016 at approximately 0.4%.Uruguay has no known oil or natural gas reserves, although exploratory work has been undertaken in the coastal region. Several projects have been developed in Uruguay over the past years for the mining of nickel, copper and diamonds, without any findings.

 

In October 2012, the government submitted a bill to Congress proposing the enactment of a law regulating large-scale mining projects (Ley de Minería de Gran Porte). In September 2013, Congress passed the law, which sets the conditions under which large mining exploitation concessions will be granted. The law defines large-scale mining projects as those: (i) occupying an area of at least 400 hectares, (ii) involving an investment of at least UI 830 million or (iii) having an annual commercialization value (in exports or sales in the domestic market) in excess of UI 830 million. It also established the Inter-generational Sovereign Investment Fund (Fondo Soberano Intergeneracional de Inversión) to foster the sustainable development of large-scale mining without compromising equal rights of future generations. The Inter-generational Sovereign Investment Fund will receive 70% of total government mining revenues while the remaining 30% will constitute budgetary revenues. The latter will be used to finance infrastructure, housing and social works, productive activities and educational projects and to enhance the technical capabilities of enforcement agencies in charge of monitoring these projects.

 

D-20 

 

 

Manufacturing

 

Manufacturing is an important sector of Uruguay’s economy, accounting for 12.7% of GDP in 2016. In 2012, manufacturing decreased by 3.9% in real terms compared to 2011, driven mainly by a decrease in wood and textiles production. In 2013, the manufacturing sector grew by 1.2% in real terms compared to 2012, primarily as a result of increased production of wood, pulp, paper and oil and refined products. In 2014, this sector grew by 4.2% mainly due to increased production of paper pulp following the start of the Colonia “Montes del Plata” paper pulp mill’s operations in the third quarter of 2014. In 2015, manufacturing grew by 4.9% compared to 2014, mainly due to increased production of pulp, paper and oil and refined products. In 2016, manufacturing grew by 0.4%, in real terms, compared to 2015, mainly due to increased processed meat and paper pulp production.

 

The following tables set forth information regarding goods production for the periods indicated.

 

Selected Manufacturing Goods Production
(in millions of US$)

 

   2012  2013  2014  2015 (1)  2016 (1)
Foodstuffs:                         
Processed meats   US$3,161   US$3,139   US$3,380   US$3,224   US$3,101 
Dairy products    1,478    1,682    1,758    1,332    1,133 
Wheat and rice mills    785    827    836    640    705 
Baked goods    1,025    1,159    1,179    1,092    1,072 
Other foodstuffs    1,600    1,567    1,614    1,539    1,503 
Total foodstuffs    8,049    8,374    8,767    7,827    7,514 
Beverages    935    959    876    777    753 
Tobacco    160    150    168    143    131 
Textiles    717    686    571    476    407 
Leather goods    327    355    390    360    360 
Wood, pulp and paper    1,548    1,679    1,866    2,157    2,087 
Chemicals    2,447    2,557    2,472    2,399    2,266 
Oil and refined products    1,998    2,058    1,872    1,661    1,687 
Machinery    1,081    1,068    1,125    960    903 
Other industries    2,003    2,308    2,178    1,817    1,448 
Total   US$19,265   US$20,194   US$20,285   US$18,577   US$17,556 

 

 

(1)  Preliminary data.

Source: Estimates based on data of Banco Central and the National Statistics Institute.

 

D-21 

 

 

Manufacturing Production
(% change from previous year, 2005 prices)

 

   2012  2013  2014  2015(1)  2016(1)
Foodstuffs:                         
Processed meats    6.4%   (0.3)%   4.5%   2.8%   4.4%
Dairy products    7.5    1.2    3.0    (6.6)   (3.5)
Wheat and rice mills    (2.9)   1.5    0.5    (13.4)   18.1 
Baked goods    1.0    1.5    1.7    (0.9)   (1.3)
Total foodstuffs    2.5    (0.4)   2.9    (0.2)   2.6 
Beverages    3.8    (0.4)   (5.1)   (5.5)   (1.4)
Tobacco    (4.6)   (7.7)   8.1    (13.1)   (4.6)
Textiles    (10.4)   (6.8)   (14.3)   (13.3)   (13.1)
Leather goods    (0.4)   0.8    4.5    2.8    4.4 
Wood, pulp and paper    (2.4)   6.9    25.2    25.4    3.2 
Chemicals    2.0    3.4    (1.0)   1.1    (2.3)
Oil and refined products    10.9    4.3    (4.9)   7.9    7.3 
Machinery    3.7    (4.1)   4.4    (6.5)   (1.4)
Total    0.8%   2.3%   2.6%   1.8%   (0.1)%

 

 

(1)  Preliminary data.
Source: Banco Central.

 

Electricity, Gas and Water

 

Energy consumption in Uruguay consists of oil and gas, electricity and wood. Electricity is produced primarily from hydroelectric sources and is provided by Usinas y Transmisiones Eléctricas or UTE, a state-owned entity. Electricity can be imported freely and Uruguay has imported electricity from Argentina and Brazil. In March 2009, Uruguay and Brazil agreed to build an electrical transmission line between San Carlos (Uruguay) and Candiota (Brazil), with an intermediate frequency converter in Cerro Largo (Uruguay), with financing provided by the Structural Funds of the Mercosur, the CAF and the National Treasury of Brazil. The building of the line, with a transmission capacity of 500MW, was completed in 2016 and Uruguay made its first exports of electricity to Brazil in May 2017. Uruguay also exports elecricity to Argentina. Uruguay imports all of its oil and gas supplies from various international sources and has a state-owned oil refining company, ANCAP. Uruguay’s economy is therefore vulnerable to increases in international oil prices. With a view to reducing oil imports, ANCAP invested in biodiesel plants that became operative in 2009. To increase its fuel transportation capacity, ANCAP has also recently invested in vessels. ANCAP also awarded private sector enterprises with hydrocarbon exploration and exploitation contracts in on-shore and off-shore Uruguayan areas. Natural gas can be imported freely, and its distribution and transportation have been opened to private investment. The government is considering different actions aimed at increasing the supply of liquid natural gas (LNG) in Uruguay to diversify the energy matrix and obtain a stable supply of natural gas. See “—Role of the State in the Economy.”

 

The electricity, gas and water sector’s performance has varied over the past five years, mainly as a result of the electricity sector’s performance, which in turn depends on the type of electricity generated (thermoelectric and/or hydroelectric). In each of 2011 and 2012, droughts affected the Uruguayan basin and the electricity, gas and water sector contracted in real terms by 24.2% and 21.9%, respectively, as electricity generation turned to hydrocarbon-based facilities. In 2013 and 2014, the electricity, gas and water sector grew by 54.7%, and 15.7% respectively, in real terms, driven primarily by an increase in rainfall, which allowed UTE to increase its supply of hydroelectricity. The generation cost of hydroelectric energy is significantly lower than the cost for thermoelectric energy, as a result, the lower generation cost prompted an improvement in the performance of this sector. In 2015, the sector contracted by 6.7%, in real terms, as electricity generation shifted back to hydrocarbon-based facilities due to water shortages caused by droughts. In 2016, the sector grew by 15.6%, in real terms, driven primarily by an increase in the generation of electricity using renewable sources, primarily wind farms.

 

Construction

 

In 2012, the construction sector grew by 16.3%, mainly due to investment in the construction of a new paper pulp mill in the city of Colonia del Sacramento. In 2013 and 2014, the construction sector grew by 0.9% and 0.7% in real terms, respectively, as compared to the prior year. The slower growth in 2013 and 2014 is mainly attributable to the completion of the construction of the “Montes de Plata” paper pulp mill in Colonia, which became operational in the third quarter of 2014. In 2015, the sector contracted by 6.1% mainly due to a decrease both in public and private sector investments. In 2016, the construction sector contracted by 3.9%, in real terms, mainly due to a decrease in the level of public and private investments.

 

D-22 

 

 

Commerce, Restaurants and Hotels

 

In 2012 and 2013, the commerce, restaurants and hotels sector grew by 5.6% and 8.0% in real terms, respectively, driven primarily by an increase in wholesale and retail trade services (mainly involving imported goods). In 2014 and 2015, the sector decreased by 0.6% and 4.0% in real terms, respectively, mainly as a result of a deceleration in wholesale services (driven by lower imports of goods) in both years, a decrease in sales of motor vehicles in 2014 and a decrease in retail sales in 2015. The commerce, restaurants and hotels sector accounted for 13.0% of GDP in 2015 compared to 13.4% of GDP in 2014. In 2016, the sector decreased by 1.6%, in real terms, and accounted for 13.0% of GDP.

 

Transportation, Storage and Communications

 

In 2012, the transportation, storage and communications sectors grew by 10.0% in real terms, mainly due to an increase in communications (as a result of the continued investment in mobile technologies). The increase in 2012 was partially offset by a decrease in transportation, mainly as a result of the discontinuation of Pluna’s activities. In 2013, 2014 and 2015, the sector grew by 6.9%, 7.4% and 4.8% in real terms, respectively, primarily driven by an increase in telecommunications services. In 2016, the sector grew by 6.5% in real terms, mainly due to an increase in the telecommunications sector attributable to an increase in the use of data services.

 

Real Estate, Business, Financial and Insurance Services

 

The real estate, business, financial and insurance services sector grew by 17.2% in the 2012-2016 period. This growth was driven primarily by the financial and insurance services sector and by the business services segment, as a result of a trend in the manufacturing sector to sub-contract administrative, maintenance and cleaning services. Real estate services also grew during this period driven by tourism rentals and purchases.

 

Uruguay established a strong reputation as a regional financial center in the early 1980s, primarily due to its free foreign exchange and capital markets, which were liberalized in 1974, its banking and tax reporting secrecy legislation, and its low tax rates. During periods of economic turmoil in the region, such as 1995, 1998 and 2001, Uruguay’s financial sector saw deposits from foreign sources increase as depositors sought a safer haven for their savings.

 

Beginning in 2002, Uruguay’s financial sector was significantly affected by Argentina’s crisis. Large withdrawals of deposits during 2002 significantly exceeded the liquidity of four private banks (including the two largest private banks which were branches of Argentine based banks), which ceased to operate and entered a liquidation stage. Through multilateral financial support from the IMF, the World Bank and the IADB, the government was able to provide the necessary liquidity to government-owned banks and to the three largest private banks to honor sight deposits existing as of July 30, 2002, thereby mitigating to some extent the impact of the crisis of the banking sector on the economy as a whole.

 

The financial and insurance services sector’s contribution to GDP has grown at a slower pace since 2002 compared to other sectors of the economy. However, since 2008, the financial and insurance services sector’s contribution to GDP has improved.

 

The real estate and business sector accounted for approximately 16.8% of GDP in 2016. The financial and insurance services sector accounted for approximately 4.8% of GDP in 2016

 

D-23 

 

 

Role of the State in the Economy

 

The government continues to participate in the economy through state ownership of certain companies. The government, however, has emphasized its willingness to prepare state-owned companies for competition, as it takes measures to reduce further barriers to trade and to deregulate markets. It has also stated its intention to draw clearer distinctions between the role of the state as a regulator and as a shareholder or owner of commercial enterprises. In that respect, a number of regulatory entities were created to monitor the telecommunications, water, electricity, railway freight, oil and sanitation sectors. Since 1999, legislation has been passed to allow the private sector to participate in the provision of telephone (other than fixed line) and railroad services, in the administration of maritime ports, in the importation and distribution of natural gas and in certain other areas of the economy previously restricted to the public sector. In addition, in 2011, the government enacted Law No. 18,786, creating and regulating public-private participation contracts for infrastructure and related services. This law establishes a new type of arrangement designed to allow private investors and the government to invest in different areas of the economy, primarily the energy and infrastructure sectors, requiring significant investments.

 

At present, the government owns:

 

1.the local telecommunications company (ANTEL);

 

2.the electric power utility (UTE);

 

3.the oil refinery company (ANCAP);

 

4.the water and sewage authority, Obras Sanitarias del Estado (OSE);

 

5.Administración Nacional de Puertos (ANP), which operates most of Uruguay’s ports;

 

6.Administración de Ferrocarriles del Estado (AFE), which operates railway freight services;

 

7.Banco de la República and Banco Hipotecario (state-owned financial institutions);

 

8.Banco de Seguros del Estado (an insurance company); and

 

9.Administración Nacional de Correos, a postal services company that competes with several private sector companies.

 

ANTEL has been the traditional provider of domestic and international long-distance telephone services in Uruguay and is also the major provider of internet services in Uruguay. ANTEL also provides basic telephone service in localities outside major urban areas, and has developed rural telephone services.

 

UTE provides electric power and services to Uruguay. With the exception of Salto Grande, a bi-national hydroelectric facility jointly owned by the Uruguayan and Argentine governments, UTE owns and operates all of the hydroelectric generation plants in Uruguay. It also owns and operates several thermoelectric and gas facilities and all of Uruguay’s electricity transmission assets. UTE currently provides all of the domestic electricity services in Uruguay, although under recent legislative measures and presidential decrees the private sector may engage in generation activities and industrial consumers should soon be able to purchase energy directly from foreign sources taking advantage of interconnection arrangements with Brazil and Argentina. To complement traditional energy sources, UTE is implementing actions to develop wind power. These actions include launching bidding processes for the construction, operation and maintenance of wind farms. UTE is also financing with its own resources the development of seven wind farms with an installed generation capacity of 553 MW. As of December 2016, the installed wind power generation capacity was approximately 1,211 MW, representing approximately 31% of the country’s installed generation capacity. For more information about electricity production in Uruguay, see “— Electricity, Gas and Water.”

 

ANCAP is the national oil refinery, responsible for processing the crude oil imported by Uruguay and marketing refined products. Uruguay has no known oil reserves.

 

In May 2008, the government enacted Decree 239/08 creating the “Uruguay Round 2009” program to be implemented by the national oil refinery ANCAP aimed at awarding private sector enterprises with hydrocarbon exploration and exploitation contracts in off-shore Uruguayan areas, totaling approximately 74,000 square meters. The areas were divided into 11 blocks, each ranging between 4,000 and 8,000 square kilometers in water depths between 50 and 1,450 meters, situated in the Punta del Este basin, the southernmost region of the Pelotas basin and the Oriental del Plata basin. On December 9, 2009, under the “Uruguay Round 2009” program, ANCAP granted hydrocarbon exploration and exploitation contracts to a consortium comprising YPF S.A. (formerly, Repsol YPF) (40%), Petroleo Brasileiro (40%) and Galp Energía (20%) to explore blocks 3 and 4 located in the Punta del Este basin. ANCAP has reserved the right to perform exploratory work in other blocks.

 

D-24 

 

 

In September 2011, the government enacted Decree 259/11 creating the “Uruguay Round II” program to be implemented by ANCAP, aimed at awarding hydrocarbon exploration and exploitation contracts to private sector companies in off-shore areas. In March 2012, ANCAP received 19 offers for off-shore oil exploration and exploitation over eight of the 15 blocks offered. These eight blocks cover more than 50% of the total area offered and were awarded to the British Petroleum and British Gas (UK), Total (France) and the Tullow Oil (Ireland). On October 5, 2012, ANCAP entered into a contract with these companies, committing to invest approximately US$1.6 billion in the aggregate in exploration and development activities without recourse to ANCAP or the government for any risks and costs incurred in connection with activities associated with the project. ANCAP and the government intend to implement a third round of auctions (the “Uruguay Round III”) seeking to award new exploration and exploitation contracts to private companies in other off-shore areas.

 

In April 2013, ANCAP authorized three international companies to commence oil and gas on-shore exploration in the north of the country. Total, Geoquim S.A. and Petrina were awarded these exploration and exploitation concessions, involving an aggregate investment of US$4.2 million.

 

In addition, ANCAP, and privately owned companies run the gas transportation and distribution business within a regulatory framework based on the granting of concessions, contracts and decrees by the government. Uruguay imports all the natural gas it consumes.

 

On January 4, 2016, Congress approved the capitalization of UIs 5.7 billion of claims held by the government against ANCAP.

 

To diversify the energy matrix and obtain a constant supply of natural gas, the government is considering different actions for the production of LNG in Uruguay. In August 2012, Uruguay initiated an international bidding process for the construction and operation of Gas Sayago, a LNG regasification facility in Montevideo with a processing capacity of 10 million cubic meters of gas per day and a storage capacity of 267 million cubic meters. The regasification plant, once operational, is expected to inject natural gas to the local distribution network for homes, industries, transportation and electrical energy generation. In May 2013, the government awarded a 20-year concession to Gas Sayago S.A. (owned by UTE and ANCAP) and Gas Natural Licuado del Sur S.A. (“GNLS”), a consortium comprised of GDF Suez S.A. and the Japanese company Marubeni, for the construction and operation of Gas Sayago. The terms of the award required the LNG regasification facility to be operative in 2016. The agreement between Gas Sayago S.A. and GNLS was terminated in September 2015 following an impossibility to perform by GNLS’s subcontractor, OAS S.A. Under the terms of that same agreement, the Republic was paid U.S.$100 million by GNLS on account of such termination. At this stage, Gas Sayago S.A. is seeking to identify possible partners with strategic capabilities to build and operate of the terminal.

 

OSE is Uruguay’s largest water company, providing water and sanitation services to all of the country and sewage services outside Montevideo.

 

For a description of the functions and operations of Banco de la República and of Banco Hipotecario, see “The Banking Sector.”

 

In December 2012, the government announced the first project under the public-private participation framework involving the construction, operation and maintenance of a prison with capacity for approximately 2,000 inmates. This project will require an estimated investment of US$100 million. As of April 2017, there were three additional significant infrastructure projects under review involving roads (with investments estimated at US$ 549 million), railway (with investments estimated at US$120 million) and educational infrastructure works (with investments estimated at US$432 million).

 

D-25 

 

 

Results of Non-Financial State-Owned Enterprises

 

During the past ten years, non-financial state-owned enterprises have in the aggregate recorded operating profits in spite of the slowdowns experienced in the energy sector, affecting mainly ANCAP and UTE, during 2008. In 2008, UTE’s costs of operations were adversely affected by the combination of high oil prices and a severe drought, which heavily affected UTE’s results given the impossibility of fully passing the increased generation costs on to consumers. Record high crude oil prices during 2008 also impacted on ANCAP’s oil refinery costs generating an operating deficit during 2008. This situation was reversed in 2009 and both enterprises recorded a surplus.

 

In 2011, ANCAP recorded losses mainly as a consequence of the partial absorption by ANCAP of the increased cost of crude oil imports (the balance being covered by the Energy Stabilization Fund created in 2010). In addition, in a context of high oil prices, ANCAP’s refinery plant was shut down for several weeks to build a desulfuration facility, which in turn required ANCAP to import additional volumes of refined products. In 2011, UTE recorded gains, although significantly lower than in 2010, as a consequence of the increased cost of fuel power generation.

 

In 2012, due to adverse weather conditions UTE was unable to meet demand for electricity through hydro-generation. As a result, UTE relied on fuel power stations, which caused a substantial increase in electricity generation costs, adversely affecting UTE’s results of operations, although the adverse impact was less significant compared to 2011.

 

Normal weather conditions in 2013 and 2014 and lower operating costs in 2015 allowed UTE to improve its results of operations and make contributions to the Energy Stabilization Fund. In 2016, ANCAP had a net profit of approximately US$11 million.

 

The following table sets forth selected financial data for the principal state-owned enterprises as of the dates and for the periods indicated.

 

Principal Public Sector Enterprises

(in millions of US$)(1)

 

  

Total Assets

 

Total Liabilities

 

Net Profits (Losses)

 

Percentage of
State Ownership

ANCAP    1,969    1,237    11    100%
ANP    773    114    52    100%
AFE(2)    147    33    (20)   100%
ANTEL    1,563    259    72    100%
OSE    1,566    488    (16)   100%
UTE    8,016    3,778    418    100%
                      

 

 

(1) Data as of and for the year ended December 31, 2016. Converted into U.S. dollars at the rate of Ps. 29.256 per US$1.00, the market rate on December 31, 2016.
(2) Preliminary data.
Source: Financial statements of each public enterprise.

 

Employment, Labor and Wages

 

Employment

 

The employment rate decreased from 59.9% in 2012 to 58.4% in 2016. Unemployment rose from 6.5% in 2012 to 7.8% in 2016. The 2015 economic slowdown in Uruguay explains the increase in the nationwide unemployment rate.

 

D-26 

 

 

The following table sets forth certain information regarding employment and labor in Uruguay as of the dates indicated.

 

Employment and Labor

(% by population)

 

   As of December 31,
   2012  2013  2014  2015  2016
Nationwide:               
 Participation rate(1) (2)     64.0%   63.6%   64.7%   63.8%   63.4%
 Employment rate(3)     59.9    59.5    60.4    59.0    58.4 
 Unemployment rate(4)     6.5    6.5    6.6    7.5    7.9 
Montevideo:                          
 Participation rate(1) (2)     66.2    65.1    66.4    65.7    65.8 
 Employment rate(3)           61.6    60.9    62.0    60.6    60.4 
 Unemployment rate(4)     6.8    6.5    6.7    7.8    8.2 
 
(1)To be considered employed, a person above the minimum age requirement (14 years old) must have worked at least one hour with remuneration or fifteen hours without remuneration during the preceding week.

(2)Labor force as a percentage of the total population above the minimum age requirement.

(3)Employment as a percentage of the total population above the minimum age requirement.

(4)Unemployed population as percentage of the labor force.

Sources: Instituto Nacional de Estadística (INE) and Banco Central.

 

The composition of employment by activities in Uruguay generally reflects the composition by activities of the GDP. Unionized labor in Uruguay is concentrated primarily in the public sector and the manufacturing, construction and financial services sectors of the economy.

 

The following table sets forth information regarding the percentage of the labor force by sector of the economy for the periods indicated.

 

Labor force (1)
(% by sector)

 

  

2012

 

2013

 

2014

 

2015

 

2016

Agriculture, livestock, fishing and mining    8.8%   9.6%   9.4%   9.0%   8.4%
Manufacturing, electricity, gas and water, and construction services    21.0    21.3    20.8    20.3    19.9 
Services    70.3    69.1    69.8    70.7    71.7 
Total    100.0%   100.0%   100.0%   100.0%   100.0%
 

(1)       Data refers to total country population.

Source: Instituto Nacional de Estadística (INE).

 

Since Uruguay’s return to democratic rule, unions have declined in power and importance. Nonetheless, strikes and other actions by unions have occurred on occasion, normally in the form of general, one-day strikes. In cases of strikes which threaten to have a material adverse effect on private or public sector functions, the government can declare that the labor functions which are the subject of the strike provide “essential services” to the country, thereby making the strike illegal. In various instances during the past ten years, the government has threatened to disband or in fact disbanded strikes on the basis that the services provided were essential to the country. According to the “Indice de conflictividad laboral” (labor conflict index) published by Universidad Católica del Uruguay, in 2011 and 2012, conflicts decreased with respect to previous years. In 2013, the index increased as a consequence of some general strikes and a rise in sectorial conflicts. In 2014, conflicts decreased compared to 2013, registering a single general strike in 2014 and reaching the lowest level in the last five years. In 2015, the labor conflict index increased compared to 2014 mainly due to the labor unions’ general opposition to measures contemplated in the five-year budget of the Vázquez administration that are designed to reduce the public sector deficit and the impact of the 2015 economic slowdown. On July 14, 2016, the principal labor unions declared a general strike in opposition to certain of the fiscal policies being implemented by the Vázquez administration.

 

D-27 

 

 

Wages

 

The following table sets forth information about wages for the periods indicated.

 

Average Real Wages
(annual average % change from previous year,
unless otherwise indicated)

 

   2012  2013  2014  2015  2016
Average real wages    4.2%   3.0%   3.4%   1.6%   1.6%
Public sector    3.4    2.1    2.2    0.9    1.9 
Private sector    4.7    3.5    4.0    1.9    1.4 
 

Source: Instituto Nacional de Estadística (INE).

 

Since 2005, increases in real wages have been discussed within the context of a collective bargaining mechanism involving the principal sectors of the economy, with government participation in the negotiations and frequently providing for backward-indexation of wages. In 2012, real wages increased by 4.2% on average, with an increase in public sector real wages of 3.4% and an increase in private sector real wages of 4.7%. In 2013, real wages increased by 3.0% on average, with an increase in public sector real wages of 2.1% and an increase in private sector real wages of 3.5%. In 2014, real wages increased by 3.4% on average, with an increase in public sector real wages of 2.2% and an increase in private sector real wages of 4.0%. In 2015, real wages increased by 1.6% on average, with an increase in public sector real wages of 0.9% and an increase in private sector real wages of 1.9%. In 2016, real wages increased by 1.6% on average, with an increase in public sector real wages of 1.9% and an increase in private sector real wages of 1.4%. Under the collective bargaining rules, each private sector of the economy negotiates wage increases twice a year while the public sector does it once a year. In 2016, the government began proposing forward-indexation of wages, as opposed to previous years.

 

Poverty and Income Distribution

 

Poverty levels in Uruguay have decreased sharply in recent years due to the economic recovery. According to the most recent estimates of the National Statistics Institute, the percentage of Uruguayan urban households with an income below the minimum amount needed to purchase essential food and non-food requirements was 6.2% in 2016, compared to 8.4% in 2012.

 

While Uruguay has disparities in the distribution of wealth and income, which decreased in recent years, such disparities are of a lesser magnitude than those of other Latin American nations such as Brazil, Colombia or Chile. As set forth in the table below, in 2016, 27.0% of the income in households in Uruguay was concentrated in the hands of the top 10.0% of the economically active population as compared to 44.2% of the income in urban households for Brazil and 42% for Colombia in 2014 and 41.8% for Chile in 2013, which is the most recent year for which information was available.

 

The following table outlines the data on income distribution for the periods indicated.

 

Evolution of Income Distribution of Urban Households Population of Uruguay
(% of national income)

 

Income Group  2012  2013  2014  2015  2016
Lowest 40%    18.4%   18.3%   18.5%   18.5%   18.8%
Next 30%    27.0    26.3    26.3    26.3    26.4 
Next 20%    28.6    28.0    28.0    27.9    27.8 
Highest 10%    26.2    27.4    27.2    27.3    27.0 
Total    100.0%   100.0%   100.0%   100.0%   100.0%
 

Source: Instituto Nacional de Estadísticas.

 

D-28 

 

 

The government has sought to address problems relating to poverty through health care accessibility and other measures. See “The Economy—The Economic Policies of the Vázquez Administration.” Uruguay has a public health system that gives access to services on a sliding-scale basis, where fees are based on a citizen’s ability to pay, and guarantees medical care for workers. The government also maintains funds for the extraordinary medical expenses of the needy.

 

D-29 

 

 

FOREIGN MERCHANDISE TRADE

 

Uruguay’s exports primarily comprise commodities (farm products, such as meat and grains, and paper pulp).

 

In 2012, merchandise exports increased by 7.5% (measured in U.S. dollars) compared to 2011, mainly due to an increase in exports of agricultural products and processed meats. In 2013, merchandise exports increased by 4.1% (measured in U.S. dollars) compared to 2012, as a result of an increase in exports of agricultural products, dairy products and paper pulp. In 2014, merchandise exports increased by 1.0% (measured in U.S. dollars) compared to 2013, as a result of an increase in exports of processed meats and paper pulp. In 2015, merchandise exports decreased by 11.6% (measured in U.S. dollars) compared to 2014, mainly as a result of a decrease in export prices of agricultural products, processed meats, dairy products and wheat and rice mills and, to a lesser extent, of a 0.5% decrease in the aggregate volume of exports. In 2016, merchandise exports decreased by 7.4% (measured in U.S. dollars) compared to 2015, mainly as a result of a decrease in exports of agricultural products.

 

In 2012, merchandise imports increased by 8.6% (measured in U.S. dollars) compared to 2011, mainly due to an increase in imports of intermediate and consumer goods. In 2013, merchandise imports slightly decreased by 0.1% (measured in U.S. dollars) compared to 2012, as a result of a decrease in imports of intermediate goods. In 2014, merchandise imports decreased by 1.3% (measured in U.S. dollars) compared to 2013, as a result of a decrease in imports of intermediate goods, which more than offset decreases in imports of capital goods and, to a lesser extent, consumer goods. In 2015, merchandise imports decreased by 17.4% (measured in U.S. dollars) compared to 2014, mainly as a result of decreases in imports of intermediate goods, but also with decreased imports of consumer goods and capital goods. In 2016, merchandise imports decreased by 14.3% (measured in U.S. dollars) compared to 2015, mainly as a result of a decrease in exports of intermediate goods.

 

A significant portion of Uruguay’s merchandise trade has involved its neighbors and principal trading partners, Argentina and Brazil. With the initial consolidation of the Mercosur in the 1990s, Brazil and Argentina became Uruguay’s principal trading partners. By 1998, those two countries together accounted for more than 50% of Uruguay’s exports. This regional concentration has subjected Uruguay’s economy to the volatility that has characterized the economies of Uruguay’s neighbors. To mitigate the adverse impact on Uruguay’s foreign trade resulting from imbalances that develop within Mercosur, the government has actively promoted Uruguayan exports in markets outside Mercosur within the framework of regional as well as bilateral agreements. See “República Oriental del Uruguay — Foreign Policy and Membership in International and Regional Organizations.” The increased competitiveness of Uruguayan exports in the global economy since 2002 resulted in exports to the region becoming less significant as a percentage of Uruguay’s total exports.

 

Mercosur member states remain the main destination of Uruguay’s exports and source of its imports. Exports to Argentina and Brazil accounted for 22.9% of total exports in 2012, 22.0 % in 2013, 20.4% in 2014, 17.1% in 2015 and 19.7% in 2016. Even more significantly, Argentina and Brazil accounted for 32.9% of total imports in 2012, 30.0% in 2013, 29.7% in 2014, 30.1% in 2015 and 31.3% in 2016. In 2013, exports to Brazil included plastics, milk and dairy products, cereals and motor vehicles, and exports to Argentina included motor vehicles, machinery, paper, medical equipment and plastics. The primary destination of milk and dairy products continued to be Venezuela, followed by Brazil and Russia. In 2014, exports to Brazil included plastics, motor vehicles, meat, cereals and milk and dairy products, and exports to Argentina included motor vehicles, electrical energy, parts of vehicles and machinery. Venezuela remained the primary destination of milk and dairy products, followed by Brazil, Russia and China. In 2015, exports to Brazil, which declined significantly compared to prior years, included milk and dairy products, plastics, meat and motor vehicles, exports to Argentina included pulp, wire and plastics and exports to Venezuela consisted mainly of milk and dairy products and chemicals. In 2016, exports to Brazil included milk and dairy products, plastics and cereals, exports to Argentina included wire, motor vehicles and parts, and chemicals, and exports to Venezuela consisted mainly of chemicals and rice.

 

The United States is another of Uruguay’s major trading partners. The United States has attracted an increasing percentage of Uruguay’s total merchandise exports in recent years. In 2012, the weight of exports to the United States increased to 3.4% of total exports, while imports from the United States decreased slightly to 8.9% of total imports. In 2013, the weight of exports to the United States increased to 3.5% of total exports, whereas imports from the United States decreased to 8.7% of total imports. In 2014, the weight of exports to the United States increased to 4.2% of total exports, while imports from the United States decreased slightly to 9.4% of total imports. In 2015, the weight of exports to the United States increased to 5.9% of total exports, while imports from the United States decreased slightly to 9.0% of total imports. In 2016, exports to the United States decreased to 5.4% of total exports while imports from the United States accounted for 6.9% of total imports.

 

D-30 

 

 

In 2012, merchandise exports totaled US$9.6 billion, representing a 7.5% increase compared to 2011, driven by a significant increase in non-traditional exports, which more than offset a decrease in traditional exports compared to 2011. In 2013, merchandise exports totaled US$10.0 billion, representing a 4.1% increase compared to 2012, due to an increase in non-traditional exports which, as in 2012, more than offset a decrease in traditional exports. In 2014, merchandise exports totaled US$10.1 billion, representing a 0.7% increase compared to 2013, mainly due to an increase in certain traditional exports (cattle, processed meats and paper pulp). Beginning in 2015, exports of paper pulp increased significantly, compensating for decreased exports of other goods. In 2015, merchandise exports totaled US$8.9 billion, representing a 11.3% decrease compared to 2014, mainly due to a decrease in the price of non-traditional exports. Exports of paper pulp accounted for 14.1% of Uruguay’s total exports in 2015. In 2016, merchandise exports totaled US$8.3 billion, representing a 7.4% decrease compared to 2015, primarily due to a decrease in non-traditional exports. Exports of paper pulp accounted for 16.1% of Uruguay’s total exports in 2016.

 

Merchandise exports have historically been concentrated on agriculturally based traditional and manufactured products, such as wool, meat, rice, textiles and more recently, paper pulp. Uruguay was first declared free of foot and mouth disease in 1995. This measure granted Uruguay access to broader markets and allowed it to obtain higher prices for its beef. Uruguay’s traditional export markets include Brazil, Chile, Israel and the European Union. Since 2008, paper pulp accounts for a significant portion of Uruguay’s exports. The government has promoted pulp mills to increase and diversify exports, increase productivity and long-term prospects for Uruguay’s economy. See “Balance of Payments—Foreign Investment.” In 2012, exports of agricultural products, dairy products and wheat and rice increased by 63.9%, 13.9% and 10.3%, respectively, compared to 2011; however, exports of motor vehicles and parts, paper pulp and textile decreased by 54.8%, 14.4% and 15.0%, respectively, each as compared to 2011. In 2013, exports of motor vehicles and parts, agricultural products and paper pulp increased by 109.4%, 18.2% and 17%, respectively, each as compared to 2012. Exports of oil and refined products, however, decreased 73.0%, compared to 2012. In 2014, exports of oil and refined products, paper pulp and leather goods increased by 150.0%, 23.8% and 17.6%, respectively, compared to 2013; however, exports of agricultural products and dairy products decreased by 12.5%, and 8.9%, respectively, each as compared to 2013. In 2015 exports of paper pulp and other foodstuffs increased by 41.9% and 8.7%, respectively, compared to 2014, while exports of agricultural products, dairy products and wheat and rice decreased by 33.3%, 23.7% and 32.2%, respectively, each as compared to 2014. In 2016, exports of oil and refined products, wheat and rice, and chemicals increased by 54.5%, 13.1% and 9.7%, respectively, each as compared to 2015, while exports of motor vehicles and parts, plastic products, agricultural products and textiles decreased by 58.3%, 21.6%, 18.6% and 15.3%, respectively, each as compared to 2015.

 

Imports have increased over time and become more diverse due to a combination of factors, including increased production and economic activity and the reduction of tariff and non-tariff import barriers In 2012, total imports increased by 8.6% compared to 2011, of which 22.8% represented consumer goods, 63.8% intermediate goods and 13.4% capital goods. In 2013, total imports decreased by 0.1% compared to 2012, of which 24.3% represented consumer goods, 59.1% intermediate goods and 16.6% capital goods. In 2014, total imports decreased by 1.3% compared to 2013, of which 25.5% represented consumer goods, 56.1% intermediate goods and 18.4% capital goods. In 2015, total imports decreased by 17.4% compared to 2014, of which 28.3% represented consumer goods, 52.6% intermediate goods and 19.1% capital goods. In 2016, total imports decreased by 14.3% compared to 2015, of which 30.7% represented consumer goods, 50.1% intermediate goods and 19.1% capital goods.

 

D-31 

 

 

The following tables set forth information on exports and imports for the periods indicated.

 

Merchandise Trade
(in millions of US$ and % of total exports/imports)

 

  

2012

  2013  2014  2015(1)  2016(1)
EXPORTS (FOB)               
Agricultural products   US$2,026    21.1%  US$2,395    24.0%  US$2,096    20.8%  US$1,396    15.7%  US$1,137    13.8%
Processed meats    1,821    19.0    1,706    17.1    1,872    18.6    1,763    19.8    1,755    21.3 
Dairy products    788    8.2    894    8.9    814    8.1    623    7.0    563    6.8 
Wheat and rice mills    535    5.6    505    5.1    518    5.1    350    3.9    396    4.8 
Other foodstuffs    624    6.5    621    6.2    654    6.5    711    8.0    698    8.5 
Textiles    204    2.1    196    2.0    190    1.9    190    2.2    161    1.9 
Leather goods    244    2.5    267    2.7    314    3.1    294    3.3    276    3.3 
Paper pulp    611    6.4    715    7.2    885    8.8    1,255    14.1    1,247    16.1 
Chemicals    558    5.8    549    5.5    530    5.3    517    5.8    567    6.9 
Oil and refined products    89    0.9    24    0.2    60    0.6    22    0.2    34    0.4 
Plastic products    210    2.2    196    2.0    194    1.9    148    1.7    116    1.4 
Motor vehicles and parts    139    1.4    291    2.9    286    2.8    156    2.8    65    0.8 
Other    1,745    18.2    1,631    16.3    1,678    16.6    1,488    15.7    1,242    14.0 
Total exports   US$9,594    100.0%  US$9,990    100.0%  US$10,090    100.0%  US$8,913    100.0%  US$8,257    100.0%
IMPORTS (CIF)                                                  
Consumer goods   US$2,653    22.8%  US$2,825    24.3%  US$2,929    25.5%  US$2,683    28.3%  US$2,500    30.7%
Intermediate goods    7,438    63.8    6,833    59.1    6,440    56.1    4,991    52.6    4,079    50.1 
Capital goods    1,560    13.4    1,933    16.6    2,115    18.4    1,815    19.1    1,557    19.1 
Total imports   US$11,652    100.0%  US$11,642    100.0%  US$11,485    100.0%  US$9,489    100.0%   8,137    100.0%
Merchandise trade balance   US$(2,361)       US$(1,352)       US$(909)       US$(242)       US$343      

 

 

(1) Preliminary data
Source: Banco Central.

 

D-32 

 

Geographical Distribution of Merchandise Trade
(in millions of US$ and % of total exports/imports)

 

  

2012

 

2013

 

2014

 

2015(1)

 

2016(1)

EXPORTS (FOB)                                                  
Americas:                                                  
Argentina   US$504    5.3   US$493    4.9%  US$440    4.3%  US$390    4.4%  US$429    5.2%
Brazil    1,688    17.6    1,711    17.1    1,609    15.9    1,134    12.7    1,201    14.5 
United States    324    3.4    352    3.5    417    4.1    525    5.9    447    5.4 
Other    1,301    13.6    1,205    12.1    1,316    13.0    1,062    11.9    852    10.3 
Total Americas    3,817    39.8    3,760    37.6    3,783    37.4    3,111    34.9    2,928    35.5 
Europe:                                                  
European Union:                                                  
France    33    0.3    33    0.3    38    0.4    37    0.4    32    0.4 
Germany    256    2.7    312    3.1    292    2.9    257    2.9    217    2.6 
Italy    130    1.4    145    1.5    131    1.3    81    0.9    80    1.0 
United Kingdom    118    1.2    86    0.9    87    0.9    70    0.8    62    0.7 
Other EU    445    4.6    499    5.0    460    4.5    430    4.8    515    6.2 
Total EU    982    10.2    1,075    10.8    1,008    10.0    874    9.8    906    11.0 
EFTA(2) and other    637    6.6    469    4.7    434    4.3    322    3.6    392    4.7 
Total Europe    1,619    16.9    1,544    15.5    1,442    14.2    1,196    13.4    1,298    15.7 
Africa    334    3.5    290    2.9    218    2.2    201    2.3    130    1.6 
Asia    1,138    11.9    1,584    15.9    1,543    15.2    1,336    15.0    1,140    13.8 
Middle East    380    4.0    425    4.3    524    5.2    335    3.8    216    2.6 
Free Trade Zone(3)    885    9.2    923    9.2    997    9.8    1,232    13.8    1,222    14.8 
Other    1,421    14.8    1,464    14.7    1,619    16.0    1,501    16.8    1,323    16.0 
Total   US$9,594    100.0%  US$9,989    100.0%  US$10,126    100.0%  US$8,913    100.0%  US$8,257    100.0%
IMPORTS (CIF)                                                  
Americas:                                                  
Argentina   US$1,741    14.9   US$1,656    14.2%  US$1,458    12.7   US$1,235    13.0%  US$1,084    13.3%
Brazil    2,097    18.0    1,836    15.8    1,948    17.0    1,626    17.1    1,462    18.0 
United States    1,041    8.9    1,010    8.7    1,083    9.4    850    9.0    561    6.9 
Other    1,523    13.1    1,232    10.6    1,237    10.8    812    8.6    668    8.2 
Total Americas    6,402    54.9    5,733    49.2    5,726    49.9    4,523    47.7    3,776    46.4 
Europe:                                                  
European Union:                                                  
France    189    1.6    241    2.1    196    1.7    130    1.4    109    1.3 
Germany    248    2.1    294    2.5    468    4.1    404    4.3    386    4.7 
Italy    153    1.3    193    1.7    181    1.6    160    1.7    132    1.6 
United Kingdom    98    0.8    164    1.4    86    0.7    180    1.9    148    1.8 
Other EU    679    5.8    684    5.9    765    6.7    727    7.7    686    8.4 
Total EU    1,367    11.7    1,576    13.5    1,695    14.8    1,602    16.9    1,461    18.0 
EFTA(2) and other    771    6.6    248    2.1    161    1.4    171    1.8    147    1.8 
Total Europe    2,137    18.3    1,824    15.7    1,857    16.2    1,773    18.7    1,608    19.8 
Africa    399    3.4    951    8.2    765    6.7    474    5.0    533    6.5 
Asia.    2.467    0.0    2,853    24.5    2,969    25.8    2,587    27.3    2,089    25.7 
Middle East    100    0.9    217    1.9    118    1.0    100    1.1    93    1.1 
Other    161    1.4    65    0.6    50    0.4    33    0.3    38    0.5 
Total   US$11,652    100.0%  US$11,642    100.0%  US$11,485    100.0   US$9,489    100.0%  US$8,137    100.0%

 

 

(1) Preliminary data.

(2) European Free Trade Association. 

(3) Reflects exports from Uruguay to the free trade zones within its territory, for further export, typically as part of a manufactured good comprising inputs produced in third countries, to destinations of which Uruguay does not maintain statistics. 

Source: Banco Central.

 

D-33 

 

 

FOREIGN TRADE ON SERVICES

 

Uruguay’s services trade has traditionally been heavily concentrated on Argentina and Brazil and has been driven principally by tourism, transportation and financial services and, since 2007, transactions made from free economic zones.

 

In 2012, gross tourism receipts and the number of tourist arrivals decreased by 5.8% and 3.9%, respectively. In 2013, gross tourism receipts and the number of tourist arrivals decreased by 7.5% and 1.1%, respectively, reflecting Argentina’s deteriorating economic conditions, which caused the number of tourists from Argentina to decrease by 6.5%.

 

In 2014, gross tourism receipts decreased by 8.4% and the number of tourist arrivals decreased by 0.2%, mainly due to a 10.2% reduction in tourists arriving from Argentina. However, the increase of tourists from Brazil (16.4%) and Europe (8.5%) partially offset the decline in tourism originated in Argentina.

 

In 2015, gross tourism receipts increased by 0.3% and the number of tourist arrivals increased by 5.5%, mainly driven by a 15.3% increase in tourists arriving from Argentina. In 2016, gross tourism receipts increased by 3.3% and the number of tourist arrivals increased by 12.3%, mainly driven by an increase in tourists arriving from Argentina.

 

Revenues from Tourism

 

   

Number of
Tourist Arrivals 

(in thousands) 

  

Gross Tourism
Receipts 

(in millions of US$) 

 
2012    2,846    2,076 
2013    2,815    1,922 
2014    2,810    1,760 
2015    2,965    1,766 
2016    3,328    1,824 
            
             

 

Source: Banco Central.

           

 

 

 

 

The following table sets forth the percentage of tourist arrivals from Argentina, Brazil and other countries for the periods indicated.

 

Tourist Arrivals
(% by country)

 

   2012  2013  2014  2015  2016
Argentina     62.0%   58.5%   52.7%   57.6%   64.3%
Brazil     13.9    14.0%   16.4%   14.5%   13.0%
Other     24.1    27.5%   30.9%   28.0%   22.7%
Total     100.0%   100.0%   100.0%   100.0%   100.0%

 

 

Sources: Banco Central and the Ministry of Tourism.

 

 D-34

 

 

Until the 2002 banking crisis, financial and insurance services, primarily banking and corporate services, contributed to the growth in services exports. Deposits by non-residents with the financial sector totaled approximately US$6.6 billion at December 31, 2001. In 2002, deposits by non-residents with the financial sector decreased significantly to less than US$2.3 billion at December 31, 2002, including approximately US$1.2 billion held with BGU, Banco de Crédito, Banco Montevideo and Banco Comercial, all of which had their operations suspended and have since been liquidated or, in the case of BGU, closed. Following the banking crisis in 2002, deposits by non-residents recovered, reaching US$3.6 billion as of December 2016, representing 16% of total foreign currency deposits held by the non-financial private sector with the Uruguayan banking system (excluding deposits held with banks in liquidation). In 2012, as part of Uruguay’s efforts to enhance tax transparency, Congress enacted a law to improve access to information regarding share ownership of Uruguayan companies. This law created a registry to be held with Banco Central where every holder of bearer shares of a Uruguayan company will have to be registered. In addition, in 2012 the tax authorities of Uruguay and Argentina entered into a cooperation agreement to facilitate sharing of tax information. This agreement was ratified by Congress in January 2013. Similar agreements were concluded with Iceland, Denmark, Norway and Canada (in 2012, 2013 and 2014, respectively).

 

 D-35

 

 

BALANCE OF PAYMENTS

 

In 2016, Uruguay’s balance of payments registered a deficit of US$2.2 billion compared to a deficit of US$1.8 billion in 2015, a surplus of US$1.4 billion in 2014, a surplus of US$2.9 billion in 2013 and a surplus of US$3.3 billion in 2012. Banco Central’s international reserve assets stood at US$13.5 billion at December 31, 2016, US$15.6 billion at December 31, 2015, US$17.5 billion at December 31, 2014, US$16.3 billion at December 31, 2013 and US$13.6 billion at December 31, 2012.

 

Balance of Payments(1)
(in millions of US$)

 

   2012  2013(2)  2014(2)  2015(2)  2016(2)
Current Account                         
Merchandise trade balance  US$(2,361.3)  US$(1,352.0)  US$(908.7)  US$(242.3)  US$343.1 
Exports   9,915.8    10,256.9    10,342.9    9,091.9    8,383.9 
Imports   (12,277.1)   (11,608.9)   (11,251.6)   (9,334.2)   (8,040.8)
Services, net   1,189.4    241.4    142.5    476.2    699.1 
Interests and dividends   (1,536.4)   (1,880.9)   (1,940.8)   (1,493.7)   (1,281.3)
Current transfers(3)   115.5    130.2    130.9    120.7    121.7 
Total current account  US$(2,592.9)  US$(2,861.3)  US$(2,576.1)  US$(1,139.0)  US$(117.4)
                          
Capital and Financial Account                         
Capital transfers  US$40.0   US$201.2   US$12.0   US$159.0   US$0 
Direct Investment   2,539.0    3,026.9    2,148.4    1,292.6    956.9 
Portfolio Investment(4)   1,643.2    2,770.1    1,125.5    (219.4)   (2,315.0)
Other medium and long term capital   52.8    (348.9)   231.4    280.9    115.0 
Other short term capital   2,011.2    (928.4)   517.8    (1,581.6)   1,034.7 
Total capital and financial account, net  US$6,286.1   US$4,720.7   US$4,035.1   US$(68.5)  US$(208.3)
                          
Errors and Omissions(5)  US$(406.2)  US$1,063.6   US$(99.0)  US$(580.4)  US$(1,840.3)
Total balance of payments  US$3,287.0   US$2,923.0   US$1,360.0