RESTRICTED Report No. WH-205a

This report was prepared for use within the Bank and its affiliated organizations.

Public Disclosure Authorized They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized

CURRENT ECONOMIC POSITION

AND PROSPECTS

OF

URUGUAY Public Disclosure Authorized

February 8, 1971 Public Disclosure Authorized

South America Department CURRENCY EQUIVALENTS

US$1.00 250.00 pesos 1 peso (Ur$) US$0.00o4 1 million pesos US$4,000.00 CURRENT ECONOMIC POSITION AND PROSPECTS OF URUGUAY

TABLE OF CONTENTS

Page No.

BASIC DATA .. e..*@.**.***********...*.. ******** i-ii

SUIMIARY AND CONCLUSIONS ...... i-vi

I. THE PRODUCTIVE SECTORS ...... *** 1

A. Agriculture ... 22...... *** B, Livestock ...... se...... 5...... C. Fishing 00o0**..Ooeoeooooooeeoooe@*s*v..0...... 10 D. Manufacturing Industry ...... 12 E. Tourism ee¢*ee@@es@eo*e...... 00...... 0....00..... 17

II. PRICES, WAGES AND POPULATION ...... o 22

III. AVAILABILITY AND USE OF RESOURCES *...... * 25

IV. PUBLIC SECTOR INVESTMENT AND ITS FINANCING o ...... 27

V. 1IDNETARY MAKAGE11ENT ...... 37

VI. BAILANCE OF PAYMENTS 4.2...... ****......

STATISTICAL APPENDIX

This report updates information given in the last Economic Report on Uruguay (WH-198a, March 1970). It is based on the findings of an Updating Mission to Uruguay in August 1970 and of a subsequent visit in November 1970. The Mission was composed of Mr. Roger P. Hipskind (Chief of Mission), Mr. Gerhard Thiebach (General Economist), Mrs. Doreen Calvo (Tourism) and Mr. E. Anthony Hope (Public External Debt).

BASIC DATA

Area: 187,000 square kilometers (72,000 square miles)

Population (1969): 2.85 million Rates of growth 1.2 per annum

Gross National Product (1968): 1.7 billion of U.S. dollars

GNP per Capita: US$595

Gross Fixed Investment as % of GDP, 1969: 14.6

National Savings as % of GNP (1969): 13.8

Annual Rate of Growth in GDP: 1946/50-1951/55: 4.3 1956/o0-1961/65: 0.3 1966: 3.3 1967: -6.7 1968: 1.2 1969: 5.3

Output by Sectors, 1969: Livestock 11.5% Crops 4.1% Manufacturing 24.3% Construction 4.0%

Transport and Commerce 22.3% Communications, Electricity, Gas, Water and Sanitary Service 3.4% Housing 5.9% Other Services 224.5%

Total 100.0%

Consolidated Cash Operations of the Central Government (in millions of Pesos) 1969:

Revenues 61,802 Current Expenditures -66,202 Surplus/Deficit - -4,,400 Capital Expenditures -8,290 Overall Deficit -12,690 Financing (Net) 12,690 (a) Monetary Authorities 8,311 (b) Treasury Bills 773 (c) Treasury Bonds 3,474 (d) Other 132

Money, Prices and Exchange Rate: Money Supply Cost of Living Index Exchange Rate In million of current Percent (Percent Change, Pesos/US$ Percent Pesos Change Dec.-Dec.) End of Year Change 1966 21,378 32.5 49.3 75.88 26.7 1967 41, 773 95.4 135.9 200.00 163.5 1968 67,207 60.9 66.3 250.00 25.0 1969 98,084 24.2 14.5 250.00 _ Balance of Payments in Millions of U.S. Dollars (1969): Exports of Goods and Services 257.8 Imports of Goods and Services -240.4 Resource GAP (- = inflow) 17.4 Interest Payments -14.3 Other Factor Income -15.6 Donations and Transfer Payments 10.9 Current Account Balance -1.6 Official Donations 1.1 Foreign Direct Investments - Loan Disbursements 57.2 Loan Amortizations -37.7 Short-Term (Net) 3.3 Other Transactions -2.7 Net Short-Term Reserves 19.6

Net INF Position, June 1970: (- debt) $-4.5 million Commodity Concentration: 1960 1965 1969 Wool 51.6% 47.3% 33.6% Meat 23.8% 31.8% 31.0% Hides 12.2% 8.3% 11.9% Foreign Exchange Reserves, June 1970 Central Bank and Banco de la Republica (in millions of U.S. dollars)

Gross: 215.3 Net: 189.4 External Public Debt: December 31, 1969: US$320.1 million

External Public Debt Service Ratio, 1970: 23.1%

SUMIARY AND CONCITUSIONS

1. In 1969 and 1970 the econoniy of Uruguay began to emerge from a prolonged period of absolute stagnation. The Government of President Pacheco Areco achieved an impressive degree of economic recovery as the result of a thoroughgoing reform of the all-important livestock sector, successful implementation of difficult stabilization and incomes policies and the establishment of a greater degree of socio-economic consensus than had existed for Uruguay in many years. One of the most remarkable aspects of recent Uruguayan performance is the rapidity with which short-term debt in the form of rescheduled commercial and financial arrears accumulated in the mid "sixties" has been amortized. This has been accomplished through large net transfers of resources abroad, initially as the result of de- pressed import demand but more recently as the result of a sharp upturn in exports. Both in terms of internal reforms and long-term balance of payments outlook, Uruguay appeared to have made great progress in estab- lishing the basis for a period of sustained economic growth.

2. During the second half of 1970, however, Uruguay experienced a resurgence of capital flight such as that which caused the above-mentioned accumulation of commercial arrears in the mid-sixties. The initial stimulus of this movement was probably the Argentine exchange rate devaluation of June 1970. Primarily as the result of capital flight Uruguay's net foreign reserves appear to have declined by about US$60 million over the year, or to the equivalent of less than two months' imports. The authorities have temporarily countered this drain on liquid working balances by refinancing, on very short-term, payments due against compensatory debt. Obviously, however, the econozmy could not long tolerate continuation of capital flight of the magnitude experienced in 1970.

3. Uruguay's GDP is estimated to have grown in real terms by 5.3 percent in 1969. Admittedly, the response of crop production to favorable climatic conditions after a year of bad weather together with that of wheat growers, in particular, to a very high support price was partially responsible for this growth in output. On the other hand, improved price incentives to pastoral producers in the impact of Government incomes policy on internal demand (in the form of higher real wages) and the pro- ductivity of industrial labor also played a very important role in raising the level of economic activity. Despite direct price controls, improved tax administration and very high real financial costs, the profitability of industrial enterprise appears to have improved with utilization of excess capacity. In fact, with investment in fixed capital having in- creased by an estimated 32 percent in real terms in 1969 and capital goods imports up to US$46.7 million and to an estimated US$64.1 million during 1969 and 1970, respectively, as compared to an average US$24.2 million during the 1965-68 period, there is considerable evidence that the private sector was beginning to respond to Government policies by replacing obsolete equipment.

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4. iIost of the important social indicators have been moving in the right direction. Unemployment in Yontevideo was down to an estimated 7.2 percent during the last quarter of 1969 as compared to 10 percent during the first quarter of that year. TWage rates were up by as much as 11 per- cent in real terms during 1969 over the previous year and appear to have maintained this higher level in 1970. These developments contributed to an improvement in the psychological climate prevailing amongst the working classes, except for bank and slaughterhouse workers' strikes associated with needs for structural reform in these sectors, the historically volatile Uruguayan labor force has been relatively tranquil since mid-1969.

5. Uruguay's cost of living index rose 9.8 percent over the first six months of 1970 as compared to rises of 63.7 and 7.8 percent during equivalent periods in 1968 and 1969, respectively. Price increase over 1970 as a whole, largely resulting from public tariff and other adjustments, should be about 20 percent, somewhat higher than in 1969 but still only a fraction of the increases required in the 1965-68 period. More than half of the increase in price level which has transpired since the outset of 1969 is attributable to corrective adjustments in consumers' meat and milk prices, rentals (which were formerly frozen), petroleum products prices and electricity and water rates. Although wages were increased by 13 percent nominally, at the outset of 1970 more than half of the increased unit cost of labor has been absorbed by improved productivity. Yonetary expansion recently has not been an inflationary factor. In 1970, public sector operations were contractionary as the housing authority accumulated large balances of unspent earmarked taxes and the Central Government held its total cash deficit to 1.4 percent of GDP and financed about half of it with net sales of Treasury bonds and bills. On the other hand, initial attempts to reform the structure of the internal financial market late in 1970 in order to reduce exorbitant credit costs apparently did contribute to the above-mentioned problem of capital flight.

6. Exports and imports in 1969 exceeded 1968 levels by 12 and 24 percent, respectively and, in 1970 appeared to be about 15 and 18 percent greater than in 1969. Despite debt service ratios ranging up to 23 percent (1970) resulting from rapid amortization of the rescheduled commercial and financial arrears accumulated during the 196h-66 period, Uruguay increased its net foreign reserves to the equivalent of about five months' imports by the end of 1969. Unfortunately these gains were sharply reversed by the reserve loss experienced in 1970. In view of its favorable long-term export prospects, however, Uruguay, with appropriate balance of payments and internal financial policies, should be able to reduce from 23.1 percent in 1970 to 3.5 percent in 1976 the ratio of service on its presently existing debt. Moreover, even if new debt is incurred in the amount of US$270 million over the 1970-76 period, i.e., in the amount thought to be needed to support a steady 4 percent rate of economic growth, the debt service ratio would be likely to fall below 8 percent by 1976--while net reserves are gradually built-up to the equivalent of four months' imports. Beef, which is expected to account for about 43 percent of Uruguay's exports by 1976 is benefiting from favorable world demand and price conditions and--more importantly--from programs to increase Uruguayan beef production and value-added in processing now effectively underway.

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7. The reappearance of dynamism in the Uruguayaleconomy within the context of a relatively stable price environment has been very encouraging. However, in addition to the short-term balance of payments difficulties there remain several problems of an economic nature which obstruct the attainment of sustained growth.- One of the most important of these problems has to do with the availability of credit to the commodity producing sector and has three dimensions: (a) the stock of bank credit, wbich declined from the equivalent of 34.7 percent of GDP in 1964 to 11.5 percent in 1969; (b) the price of credit, which for a large portion of the total, occupies a 45-50 percent range in nominal terms (about 25-30 percent in real terms); and (c) enormous variations in the cost of credit to different classes of borrowers. Needed are a modification of Government policies related to the structure of the financial sector which would increase the willingness of savers to hold peso claims against the banking system at reasonable rates of return, reduction of the presently excessive tax burden on bank loan principal and rationa4ization of the subsidization and allocation of official credit. These reforms would narrow the range of variations in credit cost and tend to bring average costs more in line with stabilization goals. In 1970, the authorities attempted to induce savers to increase their claims against the banking system by prohibiting the operaticn of a parallel financial market paying very high lenders' interest rates. However, by failing to undertake simultaneously appropriate balance of payments measures the authorities appear not only to have exacerbated the problem of capital flight, but also to have introduced great uncertainty into the financial market and to have thwarted the goal of substantially reducing interest rates.

8. Although public sector savings improved significantly in 1970 as the result of increases in Central Government taxes and public sector tariffs, the institution of a new tax to finance the N4ational Housing Plan and the redimensioning of the role of the Government in the meat packing industry, savings performance is likely to deteriorate in 1971 and to be unlikely to finance more than half--at best--of public sector investments presently contemplated for the 1971-76 period unless public revenues and/or efficiency is significantly increased. Although substantial inflows of external credit can be anticipated, the residual public sector resource gap--if financed by domestic credit--would make it difficult to meet adequately the demand for credit of the commodity producing sectors. Barring major efforts to increase public savings, therefore, the public sector should scale down its plans for investment in housing and/or construction of transport infrastructure.

9. The existing mechanisms for coordinating public sector activity do not permit the Government to implement a comprehensive public sector investment program or to maintain consolidated data on public sector financial performance. The public sector urgently needs to improve its ability to allocate scarce public sector investment resources efficiently

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and to coordinate fiscal and public sector investment policies with monetary policy and the credit needs of the commodity producing sectors. As indicated, one issue which will require particular attention in this respect is the earmarking of about 19 percent of total public sector in- vestment resources for application by the National Housing Plan. Such application of so large a volume of resources has not been systematically evaluated in the light of competing needs for investment resources in the public and private sectors. Another issue requiring special attention is the lack of control over the contracting of external credits by various public agencies. The exercise of such control is required in order to limit new debt to that which is really necessary, to obtain best possible terms on new debt necessarily incurred, to assure that the local resource component of total project financing, in fact, will be available and to permit the monetary authorities to maintain an adequate record of debt service obligations for purposes of foreign exchange budgeting.

10. Wihile the need for export diversification and the cost dis- advantage of Uruguay's industrial products vis-a-vis the livestock producers may justify some subsidization of the FOB prices of Uruguay's "non-traditional" industrial exports along the lines of the tax credits presently conceded such exports at the weighted average rate of 21 percent, a general adjustment in the relationship of internal to external prices will have to be made if export earnings are to be maintained at adequate levels. Despite the high fiscal cost of existing export subsidies some producers of non-traditional exports are beginning to complain about losses on export sales. Wore importantly, changing relative price levels in Uruguay, Brazil and Argentina could impede the large net influx of tourisru from these neighboring countries which Uruguay traditionally has enjoyed. These problems may not be as immediate as is the need to staunch capital flight which occurred in 1970. Certainly by the end of 1971, however, the disparity between internal and external price levels is likely to be as manifest in the behavior of exchange inflows as it recently has been in that of exchange outflows, especially in view of the 21 percent general wage increase authorized in December 1970.

11. This report projects an average annual growth rate of almost 4 percent for Uruguay over the 1970-76 period. The 4 percent growth target would permit consumption to increase at an annual average real rate of 3.8 percent. This would facilitate the visible improvement in living standards which is necessary to maintenance of a national con- sensus in support of development efforts. Uruguay's demographic growth rate is 1.2 percent annually. Thus, per capita consumption would increase at an annual rate of 2.6 percent over the projection period compared to an average annual decrease of 0.7 percent over the past decade.

12. To achieve this growth rate, investment in fixed capital would have to average approximately 16 percent of GDP as compared to 11 percent in 1965-68 and to 14.6 percent in 1969. About 25 percent of such invest- ment would be made directly by the public sector, indicating that the bulk of the increase in investment activity would have to be forthcoming from the rest of the economy and demonstrating the great need of the latter for access to adequate credit resources as well as for appropriate price incentives.

13. After very large increases in import levels during the 1969-70 period, total imports are expected to have to increase at an average annual pace of 7.2 percent during 1971-76. Imports of intermediate goods will probably have to increase more rapidly than other imports, including those of capital goods which were already at a very high level in 1970. Exports, on the other hand, are projected to increase at an average annual rate of 6.6 percent. With wool exports stagnant, the leading role will be played by beef exports which, as indicated, should benefit from increases in the exportable surplus, improvement in the quality and selectivity of processed beef cuts and continuing--but modest--in- creases in world prices. Although exports other than beef and wool would only account for 37 percent of the total by the end of the projection period, increases in such exports would constitute some 44 percent of the total projected absolute increase in comiodity export earnings, indicating the importance which should be attached to their development. The principal commodities involved in this increase are leather products (tanned leather and shoes), textiles and clothing, cement and, possibly, fish products. Although tourism is a very important component of total goods and non-factor services exports, tourism earnings are not expected to increase significantly until the end of the projection period. Over the long run, however, tourism may become a major growth sector. This may call for substantial investments during the 1970's.

14. With Uruguay apparently having registered a small favorable balance in its goods and non-factor services account in 1970, the slightly more rapid growth in imports than in exports projected for subsequent years will keep the need for net inflows of savings from abroad within a moderate range. On the other hand, the schedule of service on Uruguay's existing external debt net of probable disbursements from loans already in the pipeline is such as to leave Uruguay with a residual external financial gap of about US$166 million over the 1971-76 period.

15. Although the formulation of respective projects is far from complete, the Government at least presently contemplates a number of undertakings which should be suitable for external financing of sufficient magnitude to satisfy these resource requirements. Many of these projects-- such as those for pasture and slaughterhouse development--call for repassinrL external credit resources to the private sector. Of projects involving direct public sector investment, the most important are those improving the nation's electricity generating capacity, road network (including tourism infrastructure), cement production capacity and crude petroleum offloading and processing facilities.

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16. As indicated, success in obtaining such credits on favorable terms would permit the Government to reduce the ratio of service on Government and Government guaranteed debt to goods and non-factor services export earnings from 23 percent in 1969 to about 8 percent in 1976. The possibility of obtaining such credit will depend heavily on the Government's economic performance, particularly with respect to the balance of payments, but also in terms of continuing to provide adequate price incentives to the commodity producing sectors, avoiding excessive recourse to internal credit and making needed structural reforms in the public and financial sectors.

17. The 4 percent growth rate projected in this report may turn out to be excessively conservative and a higher growth rate is possible. In addition to uncertainty as to short-term prospects created by present exchange rate policy, the main constraints are in the field of identi- fication, preparation and coordination of investment projects, and in mobilization of domestic savings. It is the success in the progressive alleviation of these constraints which will determine the speed with which economic growth is resumed.

I. PRODUCTIVE SECTORS

1. During the first decade following World War II, Uruguayan GDP grew at an average annual rate of 4.8 percent as the economy profited from high world prices for its pastoral product exports and invested heavily in the installation of light, import substituting industries under the umbrella of absolute or near absolute protection. By virtue of having neglected the development of livestock or any other export producing sector, Uruguay was ill prepared to deal with the decline in beef and wool prices which followed the termination of hostilities in Korea. Uruguay's cattle and sheep population have remained almost constant at 8 and 23 million head respectively since World War II and exports of related manufactures such as textiles, clothing, tanned leather, shoes, etc. until recently contributed insignificantly to the balance of payments. Afflicted by declining exports and imports, accel- erating inflation, successive financial crises and growing labor unrest, the economy stagnated almost absolutely between 1955 and 1968, as per capita GDP declined by about 15 percent in real terms.

2. Over the 12 months ending in June 1968, the rate of inflation peaked at about 183 percent. At this point the Government initiated a program of price stabilization and economic recovery by imposing a system of direct wage and price controls on the economy which has subsequently held inflation to a maximum annual rate of 20 percent. Within this frame- work of price controls the Government has moved to restore producers' incentives by correcting distortions in relative prices, undertaking various institutional reforms, reducing the dependency of the Central Government on export taxation and creating a system of tax rebates ("reintegros") for non-traditional exports. At the same time, authorized wage adjustments have been such as gradually to increase wage rates in real terms vis-a-vis the low level at which they troughed in 1968 and to substantially reduce labor unrest.

3. Thus, in 1969 Uruguay's gross domestic product grew by an esti- mated 5.3 percent. About 30 percent of the growth achieved in 1969 was attributable to a 52 percent increase in crop production, in turn reflecting good weather and, particularly in the case of wheat, a massive increase in hectarage. However, value-added in livestock production increased by about 5.5 percent during the year as beef producers responded favorably to im- prove price incentives while value-added in manufacturing increased by an estimated 4.8 percent as man hours lost to strikes were reduced and entre- preneurs responded to a firming up of internal demand and to the incentives provided by the Government to producers of non-traditional exports. The very favorable response to the Government's program in the livestock and industrial sectors, combined with a sharp increase in demand for capital goods imports, give some reason to believe that Uruguay may be able to enter a period of steady growth.

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DO-MESTIC PRODUCT BY PRODUCT CATEGORY (Index 1961 = 100)

Weight Category (1969) 1967 1968 1969 1969/68

Agriculture 15.6 88.6 87.9 101.1 15 0< Livest ci2/ (11-4) (87-9) (96.4) (101.7) (5.5%) Crops l (4.2) (90.4) (65.4) (99-5) (52.1%)

Manufacturing 24.3 105.4 110.5 115.8 4.8% Construction 4.0 76.4 77.5 77.5 4.8,o Service Sectors 56.1 99.6 99.7 103.2 3.5%

GDP 100.0 97.8 99.0 104.2 5.3%

i/ Sub-sectoral distribution of agricultural value-added in 1969 estimated by Bank staff. Crops include hunting and fishing.

Source: Central Bank.

A. AGRICULTURE

4. Hectarage planted in wi,nter crops (wheat, oats, barley and lin- seed) more than doubled in 1968A1as farmers responded to the establishment of a very high support price for wheat, and to favorable climatic conditions. Wheat is a key component of crop production and largely accounts for the wide fluctuations in the output of this subsector. Local wheat consumption amounts to about 400,000 tons annually and, when surpluses are available, Uruguay has been able to export about 60,000 tons per year to Brazil as payment in kind against a rescheduled debt arising from an old bilateral payments agreement. In 1968, however, Uruguay had to import about 200,000 tons of wheat (with PL 480 financing) not only because of bad weather experienced in the previous year but also because of a drastic decline in hectarage; the two factors--weather and hectarage--being positively inter-related.

I/ i.e. planting for the 1969 harvest.

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5. Probably less than 10 percent of Uruguay's soils are more suit- able for crop than for pastoral production. Thus the Government of Uru- guay has determined in principle that wheat production for export should not be encouraged. The Government establishes support prices for wheat, as well as for sugar beets, cane and for grapes. With limited storage and financial capability, implementation of the wheat support price is restricted to crop financing by the Bank of the Republic, which extends credit to wheat producers at a subsidized interest rate of 7 percent per annum in amounts equal to 80 percent of estimated crop value and repayable in kind at the support price. Despite its wheat production policy, however, the Government set the wheat support price at the equivalent of US$6.40 per 100 kilos for the 1969 crop and at an even higher level of US$7.40 per 100 kilos for the 1970 crop. At this latter level the support price is about 50 percent higher than the CIF cost of Argentine wheat delivered in Uruguay.

6. Since much of the wheat is sold directly to the millers who not only fail to observe the support price but also delay payment for 90 or 120 days, wheat producers regard the support price as fictitious and, for the 1970 harvest have reduced hectarage by about 40 percent. Pricing policy, the impact on costs of imported inputs of the Government's policy of very irregular exchange rate adjustment, and unpredictable climatic conditions tend to make the profitability of crop production a very widely fluctuating variable as is shown by the following table which gives real values of per hectare crop yields deflated in the first instance by the index of wholesale prices, and in the second by an index of inputs used in crop production.

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REAL VALUE OF PER HECTARE YIELDS OF SELECTED CEREALS & OILSEEDS (thousands 1961 Pesos)

1964 1965 1966 1967 1968 1969

As per Wholesale Price Index

Wheat 49.1 62.3 70.8 47.0 30.7 46.1 Corn 64.5 49.3 18.6 69.0 46.2 28.7 Linseed 38.4 55.9 43.6 46.9 56.0 61.2 Sunflower 630 71.9 31.4 53.2 33.6 33.4 As per Input Price Index Wheat 47.4 40.8 47.1 34.4 28.0 47.5 Corn 62.3 32.3 12.4 30.4 42.2 29.6 Linseed 37.1 36.6 29.0 34.3 51.1 63.1 Sunflower 60.9 47.1 20.9 38.9 30.6 34.5

Source: Table 7.4 Statistical Appendix.

7. For 1970, crop and horticultural production is expected to exceed that of 1969 by about 2 percent. Continuing good weather means that wheat production will fall only about 15 percent short of the 1969 level despite the 40 percent decrease in hectarage while plantings for other crops-- particularly linseed and corn--have substantially increased (see Table 7.3, Statistical Appendix). However, the relative efficiency--or inefficiency-- of Uruguayan crop production, limited internal demand and the world market situation all raise doubts as to the extent to which resources ought to be directed to this subsector as opposed to livestock production or even production in other sectors. Involved are the allocation of scarce internal credit, public investment and foreign exchange resources. In Uruguay grain and oilseed yields per hectare are low by world standards, with the exception of rice (see Table 7.5 Statistical Appendix). Increased production effi- ciency and ability to compete in world markets without excessive Government subsidization would probably require very substantial investment in irri- gation facilities, flood control, fertilizer, pesticide and agricultural machinery. According to the 1966 agricultural census only about 15 per- cent of the crop area was fertilized and only about 4 percent irrigated. While total precipitation is adequate in overall volume, the fact that it falls in concentrated and variable periods makes productivity highly unpredictable and farm budgeting very difficult.

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8. At present the Government of Uruguay is conducting a national soils survey which was originally designed to permit the implementation of a new tax on imputed agricultural income but which has been expanded in scope to include the establishment of agro-pastoral production prior- ities. Once established--presumably in 1971--these priorities are expected to serve as the basis for the allocation of credit, foreign exchange and Government investment resources to the agro-pastoral sector.

B. LIVESTOCK

9. Both recent developments--internal structural reforms and external price improvements-and long-term prospects--in terms of factor endowment and external markets--for pastoral production in Uruguay are much more favorable than for crop production. Of about 16.5 million hectares devoted to agro-pastoral production some 15 million hectares are used for the production of livestock. Wool, beef and hides account for about 75 percent of Uruguay's export earnings which, in turn, presently represent 14.5 percent of GDP. Unfortunately, livestock production had stagnated over the last 15 years as the world buyers' market prevailing for wool and Uruguayan export taxation and internal beef pricing and processing policies discouraged the kind of investment that would have increased the intensivity of livestock production. In 1969, however, the Government began a series of reforms which will rationalize the meat packing industry, maintain internal consumers' beef prices at appropriate levels and gradually eliminate taxation of beef and wool exports as such. Together with a firming up of world beef prices, these measures have greatly improved inducements for investment designed to increase the carrying capacity of Uruguay's pastures. Returns to wool producers remain low, largely because of the world price situation but, since most ranchers have options with respect to the mix of their beef, mutton and wool output, low world wool prices are not seen as a barrier to the development of Uruguay's livestock sector.

DISTRIBUTION OF LAND USED FOR LIVESTOCK PRODUCTION (1966 millions of hectares)

Natural Pasture 13.2 Fertilized Natural Pasture 0.2 Seeded Natural Pasture 0.1 Annual Forage Crops 0.5 Permanent Pasture 0.3 Stubble and Forest 0.7

Source: 1966 Agricultural Census.

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10. The above table shows that with practically all available land in use Uruguayan ranchers had done very little to improve the carrying capacity of their natural pastures. The situation has improved somewhat since 1966, largely as the result of Uruguay's Agro-pastoral Plan, which--with the help of IBRD financing-has provided loans and technical assistance to ranchers investing in pasture improvement. By 1969, it is estimated that improved pastures increased from the 500,000 or 600,000 hectares indicated above to 1,100,000 hectares. IIore importantly, however, the operation of the Agro-pastoral Plan has provided an insti- tutional framework for testing the viability of pasture improvement in Uruguay and for demonstrating such viability to the ranchers. With the bulk of land in agro-pastoral use held in very large units (see Table 7.6, Statistical Appendix) ranchers have been able to satisfy their income expectations through extensive production practices which require very little personal effort. Increases in ranchgate prices are thus not necessarily a sufficient inducement; there is a great need for demon- strating the differential income effect of investment in pasture improve- ment which the Agro-pastoral Plan is striving to meet.

11. In May 1969--at the respective prices then prevailing--an IBRD Livestock Appraisal Mission estimated that the financial rate of return on new investment in pasture improvement was approximately 7 percent. This compares with real rates of return of 15 percent and more which investors can obtain in Uruguay's financial markets. Amongst the principal reasons for this low rate of return to investment in pasture improvement were: (a) the exorbitant share taken by Uruguayan slaughterhouses of the price for processed meat; and

(b) a lh percent tax on beef exports which served the dual purpose of providing revenue to the Central Government and of holding down internal consumers' beef prices.

12. Between mid-1969 and mid-1970 farmgate beef prices increased by approximately 80 percent, while input costs probably did not increase by more than 10-15 percent. Over this same period, external beef prices rose by about 25 percent. The contrast between movements in ranchgate and external beef prices--at least in the case of exported beef--is accounted for by reduction in the share going to the slaughterhouses from about 29 to about 10 percent of the export price and of the export retentions tax from about 14 to about 6 percent of the export price.

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BREAKDON OF EXPORT PRICE FOR BEEF (US$/Ton Dead Weight)

May 1969 August 1970

Export Beef Price 460 575

IMinus: Export Tax 65 40

Slaughterhouse Share 134 60

Ranchgate Price 261 477

13. Over this same period, internal consumers' beef prices increased by about 35 percent. This is roughly the equivalent of the percentage in- crease in the after-tax export beef price. Until August 3, 1970 there were lags in consumer price adjustments owing to the functioning of Uruguay's mechanism for directly controlling all internal prices. As of that date, however, a Presidential decree provided that consumers' beef prices be automatically adjusted every two months in proportion to any change which may have taken place in FOB export prices. The new system was inaugurated with a 12.7 percent increase in consumer prices (incorporated in the overall 35 percent increase mentioned above). In addition, the new system prohibits the exportation of certain lower quality cuts and the sale for internal consumption of certain higher qu.lity cuts. It thus joins with recent modifications of the export tax /as well as with an ongoing program to re- equip the slaughterhouses in the Government ts effort to improve the quality as well as the quantity of Uruguayan beef exports.

~/ The beef export tax was formerly applied on an ad valorem basis to arbitrarily assessed export values which varied by cut, extent of processing and destination of beef. In September 1969, ho-wever, the export tax was changed to a specific levy against meat tonnage exported. Thus, the high quality, more highly processed and more expensive cuts bear a lower tax--percentage wise--than do the cheaper ones. Note also that with world meat prices continuing to increase fairly rapidly the Government, late in 1970, increased the specific levy on meat exports first from US$40 to US$60 per ton and then to US$80 per ton. This was done both to soften the impact of rising world prices on internal consumers' prices and to provide additional revenues to the Treasury in view of the difficult 1971 budget outlook. With rising world prices, however, beef producers' prices were not adversely affected by these tax hikes.

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14. Ranchgate wool prices, on the other hand, dropped by about 24 percent between the cutset of the 1969 clip (October 1969) and mid-1970. While increasing intermediaries' costs have been a factor, world prices were a more important determinant of this decline. World prices for Uruguayan type greasy wool dropped by about 15 percent subsequent to the 1969 clip after having declined by about 20 percent between the 1968 and 1969 clips. For integrated ranches producing both beef and wool, however, the increase in the price of the former together with the near- stability of input prices more than compensated for the decline in ranch- gate wool prices. Thus an IBRD Livestock Project Supervision Mvlission which visited Uruguay in July 1970 calculated that the financial rate of return on new investment in pasture improvement at input and output prices then prevailing was 28 percent. This represents a remarkable improvement with respect to the 7 percent rate of return registered in May 1969 and even with respect to the 21 percent rate of return calculated at input and output prices prevailing in October 1969.17

g/ Moreover, as of October 1, 1970, producers' wool prices improved with the coming into full effect of the progressive tax on imputed personal agricultural income. As of this date the wool export tax was not only reduced from about 22 to 11 percent, ad valorem, but was also trans- formed into a form of withholding or pay-as-you-go against the income tax. The immediate result was to increase ranchgate wool prices by about 24 percent. This improvement, which coincided with the advent of the 1970 wool clip, apparently was sufficient to avoid a threatened stockpiling of the clip since wool exports during the last quarter of the year are reported to have proceeded at a normal pace.

BREAKDOWN OF GREASY WOOL EXFORT PRICE

Amount (US$) Aug. 1970 Oct. 1970 Export Price (10 kg.) 10.50 10.50 Export Tax 2.26 - Withheld Income Tax - 1.13 Internal Taxes 1.41a/ 1.41 Intermediation 2.18 2.18 Ranchgate Price 4.65 5.78

i/ Constituted of about 20 separate taxes, most of them earmarked, as for various social security agencies (Caja de las Barracas de la Lana). Note that scoured wool and wool tops exports enjoy reductions of about 50 and 85 percent, respectively of these tax liabilities. Source: Secretariado Uruguayo de la Lana (SUL).

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15. The increase in consumers' beef prices and the reorganization of the slaughterhouse industry which have been so important to the improvement of livestock sector investment incentives represent very difficult and significant reforms effected at some political risk by the Government. Margins charged by all of Uruguay's slaughterhouses had formerly been fixed officially at levels determined in accordance with the costs of the Government-owned Frigorifico Nacional (FRIGONAL). Even at former margins, however, FRIGONAL required Central Government subsidies to cover the very high costs resulting from a personnel surplus amounting to about 50 percent in the case of administrative personnel and to rates of remuneration much higher than those in the rest of the industry. In 1968, FRIGONTAL subsidies amounted to almost 2 percent of Central Government resources (see table 5.5, Statistical Appendix). Under these circumstances FRIGONAL's access to live beef had to be assured by according it a monopoly on the supply of beef to Montevideo which contains about 50 percent of Uruguay's total population. Ranchgate beef prices started rising midway in 1969 when, during a prolonged strike of FRIGONAL personnel, the Government suspended the Montevideo mono- poly and other slaughterhouses, which could operate profitably at much lower margins, were left free to bid up such prices. Subsequently, FRIGONAJLs monopoly was permanently terminated and most of its redundant personnel transferred to other public agencies or retired as part of the slaughterhouse reorganization program.

16. lMidway in 1969 the United Kingdom imposed a ban on imports of Uruguayan beef owing to unsatisfactory sanitary conditions. At about the same time and for the same reason, the U.S. Department of Agriculture cancelled certifications conceded to various Uruguayan slaughterhouses of eligibility to export beef to the United States. While these impedi- ments have not slowed the pace of Uruguayan beef exports--which are now going primarily to Italy, Germany, Spain and Eastern Europe--they do indicate a need to improve slaughterhouse hygiene. The Government is now engaged in establishing meat inspection, hygiene control and animal disease control services and in improving hygiene in the slaughterhouses. Six such slaughterhouses are expected to be included on the United Kingdom's accepted list by December 1970.

17. In addition to improved hygiene, slaughterhouse modernization is necessary if Uruguay is to produce the specialty cuts necessary to maintain access to foreign markets for its beef. Accordingly, the Gov- ernment has undertaken a plant modernization program and anticipates Inter-American Development Bank financing for this important effort. In fact, a number of private slaughterhouses have already invested in new equipment in anticipation of this financing. At present some of these firms are in financial difficulty and may even have bid up ranchgate beef prices excessively in an effort to generate a sufficient cash flow to meet payments on short-term credit. Thus the Government had to impose a 20-day ban on beef slaughter ending August 3, 1970 in order to avoid herd depletion.

- 10 -

18. Despite vast improvement in the last two years, two significant problems continue to impede the developmelnt of the livestock sector. One has to do with the availability and cost of credit. Pasture and herd devel- opment are such that the purchase of feeder steers and their fattening are essential to maintain an adequate cash flow during the development process. In any event, the rancher should have access to adequate working capital financing at reasonable cost. However, in Uruguay, ranchers have been paying annual interest rates of 45 to 50 percent-.20 to 25 percent in real terms--for short-term financing from the commercial banks. Even for Agro- pastoral Plan investment credits, ranchers are now paying an excessive price: the mechanism of adjusting the value of credits for inflation suffers from deficiencies. Modification of the adjustment mechanism to limit the percentage of adjustment to that registered by changes in a general price index whenever such changes are less than those in producers' prices is being discussed in order to relieve ranchers of the burden of paying an excessive price for these credits. This modification--as signif- icant as it is--will not resolve the problem of the cost of ranch working capital, however, which depends upon a basic reform of Uruguay's financial market (see paras. 85, 86) and some reordering of resource allocation priorities.

19. Although ranchgate wool prices may not presently serve as a disincentive to investment in pasture improvement, the Government will probably be required to improve them at the outset of the 1971 clip and, in any case, will be forced to raise wool prices at some point in the future if the output of the sector is not to be disrupted. This second major problem for the pastoral sector is related to distortion in the general relationship between internal and external prices. The effective exchange rate applicable to wool exports (i.e., exchange rate times one minus the rate of the wool export tax) has increased by 65 percent as wool export taxes gradually have been reduced. On the other hand, however rural labor costs have increased by about 80 percent since April 1968P and intermediaries' costs have also gone up.

C. FISHING

20. Compared with about 66 kilos of beef, it has been estimated that the average Uruguayan eats 18 kilos of mutton, 8 kilos of pork, 2.5 kilos of chicken and about 4.2 kilos of fish annually. The relatively low per

1/ Direccion de Estadistica y Censos: Indice de los Ingresos Corrientes del Sector Privado para el Interior del Pais. 2/ See Table 7.7, Statistical Appendix, for estimate of per capita beef consumption in 1969. Consumption of mutton, pork, chicken and fish in 1970 was estimated by the IDB in connection with a study entitled: "The Uruguayan Agricultural Sector: Priorities for Government Policies, Investment Programs, and Projects"; Washington, April 1970.

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capita consumption of fish is especially noteworthy in view of the prolific fish population of Uruguay's coastal waters. Improved Uruguayan fish pro- duction could increase the country's exportable surplus of beef and provide a new source of export earnings. The existing national fishing fleet is capable of handling an annual catch of about 16,500 metric tons. 90YP (Servicio Oceanografico y de Pesca)--the autonomous Uruguayan Government entity responsible for implementing the nation's fishing laws as well as for operating a portion of its fishing fleet--estimates that internal fish consumption could be raised to 33,000 tons by 1975 or to an annual per capita level of 10.8 kilos if an adequate supply of quality fish products were assured and appropriate internal pricing policies followed.

21. SOYP, therefore, has formulated a US$3.8 million project for installing a fishing terminal at the port of MIontevideo capable of processing 30,000 tons of fish annually and for appropriately expanding the fishing fleet. The Montevideo terminal would fillet and freeze fish and produce as oy-products fish oil and fish meal./ In addition to this project, there are at least two others designed to increase Uruguay's exports of fish products. One calls for conversion of Swift and Company's former dock and meat packing plant at Punta de Lobos into a fish processing faci]ity which would produce canned fish and frozen fish fillets for export.gX The cost of this project is estimated at only US$0.5 million. The second fish export project calls for the construction of a new processing plant at La Paloma on the Uruguayan coast about halfway between Montevideo and the border with Brazil at a cost of US$5.0 million.W Export markets for the produce of these two plants are thought to be available in Asia, Africa, the United States and Brazil. Together with about 30,000 tons of fish supplied annually, to the internal market, the three projects propose to export annually about 55,000 tons of canned, frozen, dried and salted fish and fish flour, which--at current world prices--would add US$20-25 million to Uruguay's export earnings. Studies of the fishing grounds off Uruguay's coasts indicate that the population of fish in these waters is much more than adequate to supply these three projects.

22. Uruguay's inability to date to take significant advantage of its fisheries resources is at least partially attributable to the conflict inherent in SOYPts position as both a regulatory agency and commercial operator in this field. This has impeded the obtention of official and/or private financing for fisheries investment. Another important factor has been subsidization of the internal consumer's beef price which has dis- couraged internal demand for fish products, as well as for other substitute

M/ SOYP, Proyecto Terminal Pesquero, Montevideo, 1969. g/ Hector Cavalli and Associates of EFCSA (Establecimientos Frigorificos del Cerro, S.A.). A Study. . .for. . .a Project for a Fishery Base at Punta de Lobos. j Project formulated by Pescarina, S.A., a private corporation established in 1964.

- 12 - sources of protein. However, the recent reforms of consumer beef pricing and relevant institutional policies (see para. 13) probably have increased greatly the economic feasibility of investment in the fishing industry.

D. MANUFACTURING INDUSTRY

23. Uruguay's manufacturing sector accounts for about 24 percent of is esti- its gross domestic product. In 1969, value-added by this sector mated to have increased by 4.8 percent in real terms. Data on output volume by sub-sector in 1969 indicate that sectoral growth was led by the food processing, beverage and cigarette industries, reflecting higher levels of (processed) beef exports and recent increases in internal demand. Demand for such perishable goods was probably most immediately elastic to the income effect of reduced time lost through strikes, reduced unemployment and higher real wage rates experienced in 1969 and thus far in 1970.

GRDSS VOLUME OF INDUSTRIAL PRODUCT (Index 1961 - 10O)

Weight by Valuq (1966) 1967 1968 1969 1969/1968

Food Products .204 105.5 119.9 130.7 9.0% Textiles .154 105.0 111.0 97.7 -12.0 Beverages .087 102.2 108.8 137.4 26.3 Non-MIetallic Minerals Products .072 103.7 121.8 117.9 -3.2 Shoes and Clothing .065 133.5 145.0 128.9 -11.1 Chemical Products .o65 121.0 103.3 112.5 8.9 Petroleum Products .049 105.8 106.3 114.6 7.8 Electrical Equipment .033 62.5 55.6 62.4 12.2 Tobacco Products .031 109.5 94.2 110.1 16.9 Printing and Related Industries .024 89.4 102.4 111.3 8.7 Paper and Paper Products .021 140.9 140.9 153.1 8.7 Metallurgical Products .019 73.9 68.1 71.7 5.3 Rubber Products .019 68.5 58.3 62.0 6.3 Other .157 99.0 102.7 113.8 10.8 Total 1.000 103.3 107.6 113.0 5.0

%/ Estimates of gross volume by sub-sector are available through 1969 while estimates of gross value are available through 1968 only. by g/ In order to give an idea of the distribution of industrial output product value rather than by volume respective value weights-for 1966, considered to be a typical year--are shown here.

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24. Textile and clothing manufacturers interviewed by Bank staff indicated that demand for clothing has been slower to recuperate from the decline brought about late in 1968 by the wage and price control policy adopted in June of that year. Now, however, the textile mills and the larger clothing manufacturers appear to be operating at normal capacity, with only the smaller and more specialized clothesmakers still in difficulties. The chemical products (largely fertilizer), petroleum refining and cement industries are operating at full capacity, with ANCAP (state petroleum, cement and alcohol enterprise) having recently expanded its refining capacity and constructing a new cement plant which will in- crease total cement production capacity by about 50 percent. Interestingly, Uruguay, which is exporting 80,000 tons of cement--or 16 percent of total national output--annually to Brazil, reportedly rejected orders for an additional 120,000 tons from that country owing to capacity limitations.

25. Hard goods industries (electro-domestics, tires, intermediate metal products, etc.) are still producing at a fraction of originally installed capacity which, in most cases, dates from the 1940's and 1950's when the Uruguayan economy was growing rapidly, per capita income (which had declined from 1955 through 1968 by about 15 percent) was very high by international standards and the Government offered the additional inducement of absolute or near-absolute protection. However, over the intervening years, failure to replace amortized equipment and gradual reduction of employment levels in specific industries have substantially reduced effective capacity and placed these firms in a position where they can break even or profit slightly at levels of demand now prevailing.

26. Recently, the Faculty of Economic Sciences of Uruguay's National University estimated the excess capacity of the industrial sector at almost 50 percent of total capacity. However, this estimate probably does not take into account the obsolescence of much of the sectors' capital equip- ment or the reduced labor force with which it is now operating. In 1969 it is estimated that fixed investment was up by about 32 percent in real terms to 14.6 percent of GDP, the highest fixed investment coefficient since 1962. Much of this increased investment was in the form of capital goods imports which--in 1969-wiere up by 90 percent vis-a-vis 1968. More- over, during the first six months of 1970, capital goods imports were 69 percent greater than during the equivalent period in 1969. Thus, the indication is very strong that--in many lines-existing effective capacity is being fully utilized and enterprises are beginning to re-equip themselves. Aside from a resurgence of internal demand, relative price stability and relative labor tranquility, enterprises are also responding favorably to a series of important export incentives which the Government has provided, (see para. 89).

27. Despite these favorable developments, however, Uruguay's indus- trial sector confronts a series of problems which impede its development. These include:

(a) the shortage and high cost of working capital and investment financing;

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(b) an excessive theoretical level of taxation (including social security taxes or contributions);

(c) structural inefficiencies (i.e. smallness of scale, multi- plicity of individual enterprises, excess capacity in some cases), resulting largely from excessive protection; and

(d) Government policy conflicts whereby pricing policies-- particularly as they apply to the external sector--are tending to obstruct export expansion and diversification.

28. The situation of the slaughterhouses has already been discussed. Although they are experiencing short-term financial problems as well as difficulties with the final disposition of the old Frigorifico Nacional in Montevideo, the slaughterhouse reorganization problem appears to be likely to prepare most of these enterprises adequately to compete in foreign markets (see paras. 16 and 17). Other enterprises in the food processing sub-sector-namelys the flour mills and oilseed processors-- however, are in difficult straits, Uruguay's 55 flour mills are capable of processing 750,000 tons of wheat per year in contrast to the 400,000 tons of internal demand to which their market is limited. Moreover, flour prices have been kept frozen by the Government's price control agency since June 1969, despite sharp increases in wheat support prices. As mentioned (see para. 6), the mills, in consequence, have been forced to ignore wheat support prices and to delay payment to producers in order to minimize their losses. Processors of edible oils and linseed oil, producing for the local market and for export, respectively, have not been troubled by price con- trols, but their capacity is substantially in excess of Uruguay's production of sunflower seed, peanuts and flax which, in addition, is of fairly poor quality.

29. Textile producers benefit from a variety of special sources of credit_/from export subsidies ranging from 8 to 25 percent of the FOB values of respective products and from exemption of duties incident on imported inputs used in production for export. The larger textile mills are presently operating on a two-shift, five-day work week basis. Expansion of their operations essentially depends on increased exports of products ranging from yarn to finished cloth. In 1969, exports of textiles by Uru- guayan mills amounted to US$3.3 million. Despite export subsidies, however, the mills are beginning to suffer a cost squeeze in their export production; at least one mill is accepting losses on its export sales in order to retain its export markets until such time as the effective exchange rate applicable to such exports is adjusted.

1/ Including: siX- months wool purchase credits made available by the com- mercial banks at an annual interest rate of 20 percent on the basis of a special line of Central Bank rediscounts; six months pre-export financing available from the Bank of the Republic at 11 percent interest and from the commercial banks at 18 percent interest on the basis of Central Bank rediscounts; and six months suppliers: credits covering input imports avail.able at 8_10 percent interest (given no movement of the exchange rate).

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30. The tarming industry is composed of some 29 enterprises which produced about 2.5 to 4 million square meters of tanned leather in 1969 of which about 70 percent--or the equivalent of US$15.8 million--was exported. This export value was 90 percent greater than in 1968 and 216 percent greater than average annual exports in 1964-67. The tanning industry also benefits from special credit facilitiesi as well as from export subsidies ranging from 22 to 27 percent of respective FOB values and from duty-free admission of imported inputs. Since some US$8.1 mil- lion in untanned hides were exported by Uruguay in 1969 and in view of the anticipated increase in beef production, the tanning industry may well have the potential to increase its contribution to Uruguay's export earnings. It is troubled by smallness of scale, however, since of the 29 tanning plants, one accounts for approximately half of total output.

31. The Uruguayan shoe industry offers the prospects of a much greater degree of value-added in export of leather products. There are some 400 establishments in Uruguay producing shoes of which all but approximately 15 may be regarded as cottage industry. These 15, however, have organized a shoe producers' organization and have just begun to export their product in rather small lots to the U.S. market. Their potential is interesting in that even at the low average price of US$4 per pair, the equivalent in shoes of the volume of tann2 leather exported in 1969 would have a value almost five times as great.J In anticipation of increased exports, Uruguayan shoe producers have recently ordered US$500,000 in new equipment which is expected to be delivered in 1970-71. The industry presently operates on somewhat less than a one- shift basis but, utilizing this new equipment on a two-shift basis, it is estimated by the shoe manufacturers association that output could be increased from its present level of about 6 million to about 30 million pairs annually. The new equipment will enable the industry to improve the styling and quality of its product while collaboration amongst the various producers will permit export of a standard product in the past. Even at a level of 20 million pairs annually, Uruguay would still be in the position of a residual supplier of shoes to the world market, con- sidering that the U.S. alone imports some 200 million pairs annually. The Government of Uruguay has established a 35 percent export subsidy for shoes and will permit the tanning industry to continue to benefit from duty exemptions on imported inputs utilized in the production of tanned leather subsequently employed in the manufacture of shoes for export. To be worked out are the details of transferring from the tanners to the shoemakers without loss to the former the benefits of export subsidization and special export credit facilities.

g/ Preembarkation export credits at 18 percent interest refinanced by the Central Bank; post-embarkation credits at 15 percent interest financed by local branches of foreign banks, and suppliers' credit financing of imported inputs. j/ The average value of Uruguay's tanned leather exports is approximately Us$6 per square meter. From 1 m2 of tanned leather 7 pairs of shoes can be produced. At an average price of US$4 per pair, the shoe equivalent of 1 m2 of leather would value US$28 or 4.7 times as much.

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32. The situation of Uruguay's import substitution industries is typified by one of its three producers of electro-domestics. Having invested substantially in plant expansion in the mid-fifties, this enter- prise found itself producing at 16 percent of capacity (if two shifts taken as normal) in mid-1969. Subsequently, however, increased internal demand enabled it to increase the level of its operations to 26 percent of capacity by mid-1970. In 1970 the enterprise expects to make a small profit after eight years of substantial losses. Continuing low capacity utilization has been offset--inter alia--by reduction of the labor force to 30 percent of its peak level and by great improvement in labor relations in the last two years. The enterprise is presently exporting about 18 percent of its output under LAFTA complementation agreements. * Its export subsidies range from 25 to 27 percent of respective FOB values,- enabling the enterprise to break even on its export sales. Despite access to a certain amount of relatively cheap swap-financed working capital and to a small volume of subsidized pre-embarkation export credit, the enterprise pays a weighted average interest rate of about 30 percent for its credit, such interest payments amounting to about 11 percent of its gross sales. Since the institution of wage and price controls in mid-1968, the firm has been authorized to make one 5 percent adjustment in its prices compared to increases of about 17 percent in its wage rates. Despite its difficulties, this firm regards the present economic outlook as favorable.

33. Corporate enterprises operating in Uruguay's industrial sector currently bear--inter alia--the following principal taxes: (a) a 20 per- cent corporate income tax; (b) a 2 percent stamp tax on all invoices and other transactions documents; (c) a 10 percent value-added sales tax; (d) a 6 percent tax on commercial bank credit which is effectively passed on to the borrower; and (e) various taxes and charges on imports not used in production for export which amount--in toto--to 30-40 percent of CIF values. In addition, payrolls bear social security taxes of about 42 and 24 percent representing employers' and workers' contributions, respectively, while vacations pay plus the 13th month Christmas bonus represent another 22 to 24 percent of base pay. Most firms calculate the total theoretical incidence of social security burdens on workers' takehome pay at approxi- mately 100 percent.

34. Of course, evasion of both tax and social security legislation has been widespread and formerly was encouraged by the lack of monetary correction of fiscal debts or other reasonable penalty. In 1969, however, the Government introduced penalties of 14 percent in the first month and 4 percent per month thereafter on arrears in sales tax payments and sub- sequently has moved to enforce payment of this particular tax, even entering into agreements with many enterprises, whereby they gradually liquidate sales tax arrears. The Government continues to be unable to enforce equitably social security and many other taxes, however, so that firms in an exposed position--particularly those firms seeking to benefit from fiscal incentives and official credit facilities--are likely to bear

1/ Since about 15 percent by value of these exports is constituted by inputs imported duty free, the export subsidies actually amount to 29 and 31 percent, respectively, on value added in Uruguay.

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a disproportionate and excessive share of the tax burden. Moreover, late in 1970 the Government reduced the monthly penalty on arrears in sales tax payments from 4 to 2 percent; unless borrowerst interest rates are sharply reduced, non-payment of sales taxes will once again be a relatively cheap source of working capital finance.

35. As is evident from the foregoing paragraphs, there is great disparity between the costs of official credit and of credit covering dollar denominated transactions, on the one hand, and of peso denominated commercial bank and parallel financial market credit on the other. The problems of Uruguay's financial market are discussed in detail in paras. 74 through 86. It suffices to note here that the divergencies in financial costs are very large and the application of subsidized credit is insufficiently coordinated with national economic priorities.

36. Finally, Government policy conflicts, such as that between the drive to promote exports and external pricing policy will also have to be resolved if steady development of the industrial sector is to proceed. It should be noted that the cost advantage of Uruguayan livestock producers--particularly beef producers and processors--vis-a-vis producers of most industrial products may justify some export sub- sidization along the lines of the existing system (see para. 93) in order that exports be diversified. However, it is not clear that Uruguay's fiscal system has been improved to the point of being able to bear the cost of such subsidization. Moreover, some producers of non-traditional export products are already complaining about internal costs and sub- stantial additional increases in such costs are in prospect for 1971 (see para. 47). Thus, the increase in export subsidies which will be required over the next year if non-traditional exports are not to be adversely affected by maintenance of the present exchange rate may be very expensive for the Government.

E. TOURISM

37. Uruguay enjoys the natural advantages of abundant tourist attrac- tions and geographical location between two major tourist supplier markets, Argentina and Brazil. Principal tourist attractions are exceptionally good beaches, summer climate, a receptive public and a whole range of largely unexploited sporting and recreational possibilities. At times, but not currently, favorable price level relationships have provided an important inducement for tourism in Uruguay. Montevideo flourishes as a tourist center when relative price levels favor shopping in Uruguay. Casinos are another attraction which have induced weekend traffic from Buenos Aires across the Rio de la Plata to river resorts such as Carmelo and Colonia. The main summer resort destination, however, is Punta del Este, which was an exclusive summer-home location for high-income Argen- tines before automobile production and income growth made the Uruguayan coast accessible to middle-income tourists. Two other main resorts are

- 18 -

Piriapolis and Atlantida. The development of these three areas has occurred because of their proximity, by existing transport modes, to Buenos Aires. The whole of the coast from Punta del Este to the Bra- zilian border at Chuy, has magnificent beaches which are only now being considered for development because of recent improvement in road access from Brazil and the growing mobility of increasing number of Argentines travelling by car. Uruguay now is essentially a destination for regional tourists; extra-regional tourists, mainly from the USA, visit Montevideo and Punta del Este as brief stop-overs on inclusive tours of South America. Lack of facilities are probably the chief reason why Uruguay has not developed as a center for conventions or group travel.

38. Tourist numbers grew rapidly from 21,000 in 1956 to 600,000 in 1965 but have increased slowly in subsequent years, i.e., to 620,000 in 1969. About one third of tourists arrive in January and February, and nearly 50 percent in the three months December-February, the school and summer holiday period in Argentina. Tourists are fairly evenly distributed in other months, with a trough in June. Argentine tourists, at 450,000 have not grown from their 1965 level and account for a declining, albeit predominant, share. The bulk of Argentine tourists are from the greater Buenos Aires area. Brazilian tourists, increasing in recent years because of improvements in road connections, now account for some 12 percent of total tourists.

39. Means of transport from Brazil are frequent flights, long- distance bus services and private car. Although there a number of access routes, the main road entry point for Brazilian tourists is Chuy. Brazilian tourists are mainly from the states of Rio Grande do Sul and Sao Paulo. Major modes of transport from Buenos Aires to Uruguay are (a) by air with frequent flights to Montevideo throughout the year and to Punta del Este during the summer; (b) by overnight passenger boat to Montevideo; (c) by 'aliscafol, i.e. hydrofoil, to Colonia, for passengers only; and (d) by ferry to Colonia, which is the only means of transporting private cars. The latter river crossings are the most heavily utilized means of travel whether combined with private car or bus. Very recently, a second-hand ferry has been acquired to relieve the peak season pressure on the Colonia-Buenos Aires ferry. Significantly, two bridges are to be built during the next five years to improve access across the River Uru- guay at Fray Bentos and Paysandu, which should tap new tourist markets in Argentina's interior. While Brazilians can travel freely to Uruguay, Argentine travelers must now make arrangements ahead of time to secure reservations on some vehicle that will cross the wide mouth of the river. Ease of travel within Argentina, financing plans for domestic holidays, superior organization and facilities in resort areas within Argentina, as well as unfavorable exchange rates, are considered to be the main reasons for stagnation in growth of tourism from Argentina to Uruguay in recent years.

- 19 -

40. While th,le true financial situation of Uruguay's hotels is not clear, it seems fairly certain that occupancy rates-and profits--are following a downward trend. The reasons are various: they include the near stagnation in overall tourist numbers, shorter average lengths of stay, and increasing preference for non-hotel accommodation, e.g., owned or rented cottages,cond6minium apartments, and even caravans (trailers) and camping. The most crucial problem is the brevity of the summer season. Uruguay has not explored to a significant extent solutions developed elsewhere for the common and acute problem of tourism seasonality, such as the low-cost summer village and a network of camping sites.

41. The quality of hotel accommodation generally in Uruguay is poor. No sizeable convention hotels exist and only one hotel is classified internationally as a first-class hotel. Most hotels are family enter- prises, operated without orthodox accounting. Most hotels do not have a restaurant. In both Montevideo and Piriapolis many hotel owners rent their buildings, until recently at frozen and, therefore, nominal rents. The almost total absence of bank credit for both working capital and investment needs has left hoteliers dependent on their own liquidity and/or the parallel financial market at very high real interest rates. Very little new hotel construction has been begun in Uruguay in the past ten years. Undoubtedly, the present supply of hotel accommodation in Montevideo especially,but even in the resort areas too, does not induce tourism. However, given the low average annual occupancy rates, the serious question that arises is to what extent new hotels would be financially viable.

42. Presently, tourist expenditures contribute about US$45 million ' to the balance of payments which is the equivalent of some 18 percent of total goods and non-factor services exports. No attempt has been made to calculate direct and indirect employment in and by hotels and tourist services. Since most hotels are family enterprises without restaurants, direct wage-paid employment per room must be low. However, given the low import content of food supplied to tourists and of the bulk of hotel con- struction, the linkage effect between the hotels and the commodity produc- ing sectors must be strong.

43. In the long term there is no question that Uruguay's tourism potential is enormous. Regional tourism is booming in southern South America. Income growth, automobile production, road transport improvements, and more frequent and cheaper air travel within the region provide an impetus to that boom. Argentina's lack of sufficient beaches and warm

7/ Estimated on the basis of tentative data of average daily tourist expenditures of US$15 (of Which 66 percent is spent on food and accommodation and 25 percent on purchases) and average length of stay of about five days.

- 20 - sea for its growing greater Buenos Aires area will continue to create demand for Uruguay's facilities. The construction of bridges across the Uruguay River and connecting road improvements will give residents of Argentina's interior direct and easy road access to these beaches for the first time. The improvement in connections with Brazil makes Uruguay an inevitable corridor to Argentina for Brazilian traffic and it rests with local initiative to induce these travellers to stay in Uruguay. On a wider plane, developments in international air travel and Uruguay's reverse climatic conditions with North America and Europe open up the possibility of international resorts on the coast, quite apart from specialized travel for fishing (both river and deep sea) and hunting (deer and wild boar). In the short term, however, the prospects are not bright for significantly increasing the size of tourism traffic. The short-run constraints on growth of tourism to Uruguay are:

(i) the inconvenience of road access to and from Argentina;

(ii) lack of strong, efficient institutions in the public sector to organize, administer and promote tourism;

(iii) lack of entrepreneurship in the private sector;

(iv) lack of financing and incentives for hotel improvement and construction particularly for tourism development in new or declining tourist areas with potential;

(v) the need to extend the tourism season and create non- resort tourist attractions outside the summer season; and

(vi) the higher internal price level presently prevailing in Uruguay, vis-a-vis Brazil and Argentina. The next tourist season, i.e., December-February 1970-71, is likely to be adversely affected by this.

44. Looking toward the future the following series of projects has been tentatively identified (by Bank staff) as qnes which would make an important contribution to tourism development:

(i) Construction of a bridge across the River Plate between Buenos Aires and Colonia. While such a bridge would pro- vide a very strong impetus for Uruguayan tourism, its feasibility obviously depends on the entire spectrum of economic inter-relationships between Uruguay and Argentina and even Brazil. Thus, the justification of such a project would require a broad study of actual and potential traffic interflows between Uruguay, Argentina and Brazil.

1/ With the exception of a tentative allocation of funds for unspecified infrastructural projects related to tourism in the investment program of the Ministry of Public Works, the Government has made no definite plans for tourism investment.

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(ii) Other Infrastructure: Road improvement and the construction of combined national and inter-city bus terminals in Monte- video and Punta del Este. Improvements in the road net- work would facilitate tourist travel within Uruguay. The construction of a bus terminal in lMontevideo should be combined with the improvement of road entry points to the city and possibly an internal ring road. Urgently needed is a national campaign to sign-post major and tourist highways to facilitate the mobility of tourists within Uruguay.

(iii) A hotel training school, which could possibly be expanded to include training for other tourist services;

(iv) The development of resort areas at Santa Teresa on the route to Brazil and Carmelo across the river from Buenos Aires have been and are being respectively the subject of prefeasibility studies. Development of both these resort areas would seem economically viable.

(v) The establishment of a tourism development financing facility; although a portion of an industrial development credit recently made available by the IDB to Uruguay's Bank of the Republic (BROU) is earmarked for repassing to the hotel sector, total investment capital requirements are believed to greatly exceed these resources. A better institutional framework for channelling loan funds into the development of tourism superstructure is probably required. The provision of incentives for hotel financing should include special priorities for the development of those types of accommodation that specifically cope with the seasonality problem.

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II. PRICES, WAGES AND POPULATION

45. From about 10 percent annually at the outset of the "sixties" annual increases in the cost of living accelerated to 136 percent during 1967. Despite the adoption of a tight monetary and fiscal program in 1968, prices rose by 63.7 percent during the first semester of that year, reflecting the cost push effect of: (a) wage adjustments which were being granted as frequently as quarterly and in amounts proportionate to intervening price level increases; and (b) anticipatory price adjust- ments on the part of entrepreneurs. Recognizing that the inflation was no longer susceptible to indirect controls, the Government-despite strong political opposition--decreed a temporary wage and price freeze in June 1968. Thus, during the second semester, 1968, the cost of living rose only 1.6 percent and, by December, the Government was able to secure the legislative support necessary to create an agency to administer direct price controls and to advise the President on incomes policy. Subsequently, this agency (COPRIN-the Council on Productivity, Prices and Incomes) has prohibited private sector internal sales price adjustments except for those specifically authorized for individual firms. Such adjustments have been designed to reduce profit margins prevailing in June 1968--which, in many cases, were probably excessive--and to finance wage adjustments largely from these profit margins as well as from in- creases in productivity which have taken place. Thus, the system has tended to redistribute income in favor of the worker. Also, with respect to adjustment of prices previously administered by the Gov- ernment (i.e. those of the autonomous agencies, consumer beef prices, etc.), COPRIN advises the President as to their justification and to their secondary effects.

46. In 1969, the cost of living increased 14.5 percent and during the first 11 months of 1970 it increased at roughly the same annual rate. Of the 25.7 percent increase in the cost of living which took place during the 18 months following December 1968, about 14 percentage points (i.e. some 55 percent) were accounted for by corrective adjustments in: (a) consumers' beef prices (1.4%); (b) passenger-transport (including bus and railway fares, gasoline, etc.--l.5%); and (c) housing (including rentals, water and electricity charges, etc.-11.1%).)1

P/ Rentals, which had previously been frozen--reducing real rental values to ridiculous levels and discouraging construction-were liberated to a certain extent at the outset of 1969. For an illustration of changes in price of public utilities and of agri- cultural and pastoral products relative to the general price level see Table 9.6, Statistical Appendix.

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PERCENTAGE CHA1NGE IN THE COST OF LIVING (Over six-month periods)

June 1964 13.2 December 1964 19.7 June 1965 25.2 December 1965 50.1 June 1966 23.9 December 1966 20.5 June 1967 36.5 December 1967 72.8 June 1968 63.7 December 1968 1.6 June 1969 7.8 December 1969 6.2 June 1970 9.8

Source: Direcci6n General de Estadistica y Censos. h7. For 1971 the Government originally hoped to limit wage adjustments to about 15 percent and the overall price increase to 10 percent. In December 1970, however, a general wage increase of approximately 22 percent was authorized and the Government effected large adjustments in several directly administered prices such as those for milk and beef (the latter being required by rising external prices despite the above-mentioned increases in the beef export tax). Thus, it was anticipated that the cost of living would rise by 5 percent in December and by about 20 percent for 1970 as a whole. M4oreover, the Government was forced to increase its target for price level increase in 1971 to 15 percent. Even this less ambitious 1971 target will require the Government to attempt to hold increases in general sales prices to about 7 percent, thereby putting additional pressure on productive enterprises already in financial difficulties.

48. Since wage adjustments had been determined by collective bargaining with individual employers in an irregular pattern throughout the year, the wage freeze of June 1968 left great disparities between the wages of workers who had recently negotiated adjustments and those who had not. Consequently, partial adjustments were conceded in September 1968, December 1968 and April 1969 to workers whose last adjustments antidated January 1968, April 1968 and June 1968, respectively, in order to eliminate these disparities.

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Then in 1969, a general 13 percent adjustment was conceded,-/along with which COPRIN permitted general private sector price increases of 3 percent at the producer level and 5 percent at the retail level. Also COPRIN has announced that it will permit wage increases for the employees of individual enterprises equal to percentages of demonstrated improvement in per worker productivity up to a maximum of 10 percent. To date few, if any, such special adjustments have been conceded. Nevertheless, since such special adjustments are not to be accompaniedby any additional increase in prices, the redistributional thrust of the Government's incomes policy is clear.

49. According to data compiled by the Central Bank for the national accounts, (see Table 9.5, Statistical Appendix) real wage rates in manu- facturing, construction, commerce and government were all within +.5 per- cent of 1961 levels in 1967. In 1968, however, with the wage freeze, these rates declined, on average, by about 15 percent. For 1969, Central Bank data, show real wage rates in manufacturing, construction and commerce up 5.2 percent, on average, and as of March 1970, up 7.2 percent vis-a-vis March 1969. A more widely based index inaugurated by the Direccion General de Estadistica y Censos in 1968 for purposes of implementing the incomes' policy (see Table 94, Statistical Appendix) shows real wage rates nation- wide and in the Public Sector up by 11.2 and 11.4 percent respectively, in 1969. For the first semester 1970, this same index shows real wage rate declines of 005 and 3.4 percent nationwide and for the Public Sector, respectively, vis-a-vis the first semester 1969.

50. It seems clear, therefore, that following a sharp decline in 1968 there was recovery in real wage rates in 1969 which, in most cases, is being maintained in 1970. The impact of these rates on demand has un- doubtedly been substantially augmented by reduced time lost through strikes and by a reduction in unemployment. There are no data on the former phe- nomenon but the fact that strikes were formerly commonly associated with collective negotiation of wage contracts which ceased midway in 1968 plus the very few strikes occurring subsequently certainly support this assertion. Moreover, a sample of Mlontevideo households taken by the Direccion General de Estadistica y Censos shows unemployment declining from 8.4 percent of the labor force in the fourth quarter, 1968 to 7.2 percent in the fourth quarter, 1969.

51. Uruguay's 1.2 percent rate of population growth has somewhat alleviated the impact of economic stagnation in the past and is likely to assist in translating economic growth into higher per capita incomes in the future (see Table 1.1, Statistical Appendix). In fact, at rapid

17 Actually, wage rates were increased by 7 percent while employers were required to increase contributions for family allowance payments by an amount equal to 6 percent of payrolls. Thus, increases in total remunerations of individual workers ranged widely, depending upon family size.

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rates of growth, Uruguay might well encounter a severe manpower constraint in the fairly near future despite the level of employment now prevailing and the advanced educational attainments of its population. While the Gov- ernment of Uruguay allows the use of public health facilities for family planning activities and there is no barrier to commercial distribution of contraceptive devices, the main form of birth control appears to be abortion. In Uruguay, abortions reportedly outnumber live births three to one.L.

III. AVAILABILITY AND USE OF RESOURCES

52. After having grown at an annual rate of 4.8 percent during the decade following World War II, Uruguay's gross domestic product failed to increase during the 1956-68 period and, in per capita terms, declined by about 15 percent. During the decade of 4.8 percent growth, fixed invest- ment averaged 21.5 percent of GDP. During 1961-64, with inflation beginning to accelerate and capital flight becoming an important factor, fixed in- vestment averaged 14el percent of GDP. In the 1965-68 period the average fixed investment ratio dropped to U percelit as the country approached hyperinflation and then entered the first--and most stringent--phase of the present stabilization program. This latter period saw capital flight reach a peak level of about US$95 million or the equivalent of about 6 per- cent of GDP with the banking crisis of 1965. Subsequently, the Government amortized rapidly the rescheduled commercial arrears accumulated during the peak years of capital flight; this was accompanied by depressed import demand and import controls. The fact that imports averaged only 11.6 per- cent of GDP in 1965-68 as compared to 14.9 percent in 1961-64 and to 19 percent in 1946-55, however, meant that Uruguay was transferring abroad more than 20 percent of its domestic savings which, by then had become very sparse. The 11 percent average fixed investment ratio of 1965-68 probably was insufficient to maintain constant the productive capacity of the country. (See Tables 2.4 through 2.7, Statistical Appendix).

53. With 5.3 percent increase in GDP of 1969 the import coefficient rose to 13.3 percent as capital goods imports increased by 90 percent vis-a- vis 1968, while fixed investments are estimated to have increased by 32 percent in real terms to 14.6 percent of GDP. Despite the increase in imports in 1969 Uruguay still registered a positive trade balance, so that the sharp rise in fixed investment during the year was financed entirely from increased domestic savings. For 1969, the domestic savings ratio is estimated at 15.5 percent of GDP as compared to an average 13.8 percent over the 1961-68 period. About 48 percent of the 1969 increase in Uruguay's domestic product was saved. lf IPPF, Family Planning in Five Continents April 1970.

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54. Over the past decade there has been little change in the com- position of Uruguay's domestic product by sector of origin (see Table 2.3, Statistical Appendix). In the future, some change can be anticipated as agricultural output can be expected to increase approximately in proportion to demographic growth while production of wool and mutton together remain relatively stable and the average annual 6 percent increase in beef output (including herd growth) projected by this report is reflected largely by increased output of the industrial sector. For the 1970-76 period a sustained rate of growth of approximately 4 percent annually is entirely feasible. Higher growth rates are possible; the problems here are Uruguay's diminutive internal market and constraints on the rate at which production of exportable commodities could be expanded. M4ore immediately, the chief obstacle is the limitations on the capacity to absorb investment resources. Underlying the 4 percent total growth target are projected growth paths of about 3, 4.5 and 4 percent for the primary, secondary and service sectors of the economy, respectively. The leading role assigned to the secondary sector depends heavily on improvement of value-added in the elaboration of pastoral and related products, largely for export, as well as upon the sharp increase in housing construction which appears to be in the making (see para. 63) and upon increases in internal demand for manufactured consumer hard goods.

55. IWith needed increases in the productive capacity of the industrial sector related primarily to the processing of pastoral products, the capital requirements of the projected 4 percent growth rate are not expected to be proportionate to those of the first post-World War II decade when growth was primarily a function of the installation of capital-intensive, import substituting industry. Thus, the fixed investment coefficient is expected to level off at about 16 percent of GDP. Throughout the projection period, Uruguay's trade balance is expected to be approximately neutral as needed inflows of official loans will enable Uruguay, primarily, to reduce its heavy burden of short-term debt. Consequently, domestic savings are expected to have to increase to approximately 16 percent of GDP or at an average real rate of about 5 percent annually. This would permit per capita consumption to increase at the annual average real rate of about 2.6 percent. During the past decade, per capita consumption has decreased at an average annual rate of about 0.7 percent in real terms. The required investment and savings would be substantially larger if the target growth rate was 6 raised significantly. The implications of such a higher growth target-- percent per annum--are briefly examined below, (para. 104).

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IV. PUBLIC SECTOR I1fESTi;!T AiND ITS FINANCING

56. Uruguay has no public sector investment program as such. The constitution calls for the preparation of a five-year public sector in- vestment budget at the onset of each five-year presidential term and for and authorized its annual updating0 Such a budget was formulated in 1968 by the legislature. For the decentralized agencies and even for the Central Government this budget has never served as more than a gerneral guideline because--in the case of the decentralized agencies--of the lack of any central coordination or control and--in the case of the Central Government--of the scarcity of investment financing. In fact, the lack of coordination and control has been so severe as to prevent the formu- lation of consolidated public sector financial data or any other com- prehensive record of public sector investment. The following, therefore, represent IBRD staff estimates of public sector operations based on piecemeal data obtained from the various public agencies.

570 Total public sector investment--including investment in housing and in pasture improvement financed indirectly by the repassing of public funds to the private sector--increased from an estimated 314 percent of GDP on average during 1965-67 to 3.9 percent during 1968-70. Public in- vestment has been concentrated in economic infrastructure--especially roads and in other public works, electricity and telephones. An important part of it has also gone into the productive sectors--cement production, housing. petroleum refining and pasture improvement--however, as well as into If existing needs are taken as a criterion, public investment in electric energy generation and distribution and in railway transport have been in- adequate since electricity shortages may now be said to constrain the growth of economic activity while the operational inefficiency of the rail- power way network has been exacerbated by the obsolescence of its motive and rolling stock and the very poor condition of its right of way. In con- trast, the highway network at the moment appears to meet Uruguayan needs.

58. For the 1971-76 period the tentative investment plans of the various public entities would increase total public investment as a per- centage of GDP to about 5.4 percent. This ratio would be somewhat higher during the first half of the projection period than during the second elec- owing primarily to the anticipated annual pattern of investments in tricity generation and distribution (see Table 2.7, Statistical Appendix). Besides electricity, the other principal elements of the large projected increase in public investment are the housing plan, expansion of the tele- phone network, road construction, cement plant expansion, installation of a new floating dock and pipeline for offloading crude petroleum, construction of bridges over the Uruguay river, the pasture improvement program, modern- ization and reequipment of the Port of Montevideo and construction of the SOYP fishing terminal.

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PUBLIC SECTOR INVESTMENTS Composition and Share of GDP

1965-67 1968-70 1971-73 1974-76

Economic Infrastructure 72.0 65.2 60.3 60.0

Public Works-./ 26.0 31.9 21.3 21.8 Electricity and Telephones (UTE) 37.4 27.4 29.0 31.5 Railways (AFE) 4.3 - 3.2 3.3 Ports (ANP) 0.8 2.8 4.4 0.9 Water and Sewage (OSE) 1.3 3.1 2.4 2.5 Airlines (PLUNA) 0.6 - - - Municipal Transport (AMDET) 1.6 - - -

Productive Sectors 9.9 17.6 14.2 16.0

Cement, Petroleum Products, Alcohol (ANCAP) 5.2 13.0 7.1 8.3 Fishing (SOYP) - 0.1 1.5 1.5 Meat Packing (FRIGONAL) 0.5 0.2 - - Plan Agropecuario 4.2 4.3 5.6 6.2 Social Infrastructure 7.4 5.6 19.7 18.0 National Housing Plan2/ 7.2 4.5 19.7 18.0 Agrarian Resettlement (INC) 0.2 1.1 - - Other 10.7 11.6 5.8 6.0

Central Govern nt3/ - 6.6 3.9 4.0 Municipalities 10.7 5.0 1.9 2.0

Total Public Investment 100.0 100.0 100.0 100.0

Total Public Investment as Percent of GDP 3.4 3.9 5.8 4.9

1/ Includes buildings and hydrographic works constructed for other public entities. Major component, however, is roads. 2/ Besides the National Housing Plan formulated in 1969, this category includes investments in housing by the Instituto Nacional de Vivienda (INVE) and by the National Mortgage Bank (loans net of repayments). 3/ Includes investments for education, military and police equipment and other miscellaneous. 4/ Includes investments in housing which, after 1970, are shown under the National Housing Plan.

Source: Table 5.8, Statistical Appendix.

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59. UTE, the state electricity and telephone company, now has reliable generating capacity of about 464L in its main system; 236 MW is provided by two hydroelectric plants on the Rio Negro and the remainder by thermal plants in Montevideo. This total includes an 80 Wblthermal unit installed in 1970. It also assumes adequate run-off in the Rio Negro which, however, is subject to extreme irregularity and has required energy rationing in the past. Maximum demand against this sytem in 1969 was 389 MW, which means that prior to the installation of the latest thermal unit there was no reserve, even for maintenance. Annual increases in electricity con- sumption have averaged 3.1 percent over the last five years. Considering restraints on supply experienced during this period, UTE estimates that demand can be expected to increase at least twice as rapidly as the rate of economic growth in the future. Assuming the 4 percent economic growth rate projected by this report, therefore, electricity demand could be expected to reach at least 617 NW by 1976.

60. The most immediate of UTE's investment projects calls for installation of another 100 MWr thermal unit in Montevideo for entry into operation by 1973 together with rehabilitation of the Montevideo distri- bution network which is presently subject to energy losses of about 19 percent. For the future UTE is contemplating a third, 370 NW, hydro development on the Rio Negro, additional thermal plants, high voltage electricity inter-connection with Argentina and a 1,500 to 2,000 MW inter- national hydro development on the Uruguay River at Salto Grande. Because of the need to import all of the petroleum used to fuel its thermal gener- ating facilities, UTE is inclined to favor hydro projects, but intends to employ an international consulting firm to carry out a system study in order to determine the most efficient way to develop generating capacity. The work of this firm is expected to be completed by mid-1971. Even with installation of an additional thermal unit by 1973, Uruguay may well experience electricity shortages over the next few years, especially if the economy begins to develop rapidly. 61. UTE presently operates about 150,000 telephone lines and has a backlog of 65,000 applications. Its telecommunications investment program calls for 10 percent average annual increases in telephone lines, instal- lation of microwave links to Brazil and formation of a national telex network.

62. About 30 percent of the investment outlays contemplated by the M4inistry of Public Works, are for well identified projects to: (a) complete and/or improve the paving of a main longitudinal highway (No. 26) and two transversal highway links with Brazil (Nos. 5 and 9); (b) construct bridges over the Uruguay River (at Fray Bentos and Paysandu); and (c) construct new buildings for the t1 Universidad de Trabajo.11 Most of the remainder has not been projectized, however. While substantial investment in feeder roads and in infrastructure related to tourism (such as divided highway links between Punta del Este, Montevideo, and Colonia) may be justified (see para. 44), it is very important that construction projects be adequately scrutinized in view of the sparcity of public sector savings.

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63. This same reservation is even more applicable to proposed in- vestments under the National Housing Flan, the third largest category of proposed public investment outlays. A 2 percent tax on payrolls was created by Law 13,728 of January 17, 1969 and earmarked for the Housing Plan. To date very little of this money has been spent so that about Ur$4 to 5 billion in unspent payroll tax resources is expected to have accumulated in the account of the Housing Plan by the end of 1970. For 1971 and 1972, however, DINAVI (Direccion Nacional de Vivienda), the Plan's executive agency, hopes to finance the construction of 8,965 units with 6 total outlays of about Ur$1 billion.S At an average of five persons per house, this program would rehouse approximately 1.5 percent of Uruguay's population within two years. While housing investment of this magnitude might be justified the fact that there is no consolidated public sector program means that it has not been examined adequately in the light either of other prospective public sector investments or of the resource require- ments of the commodity producing sectors. Unfortunately, the earmarking of the 2 percent payroll tax means that funds accruing from this source cannot be applied other than to housing by the public sector unless the Housing Law is changed.

64. The investment program of ANCAP calls for construction of the second stage of the Paysandu cement plant and for installation of a floating petroleum dock and related pipeline and terminal facilities. In its first stage--just being completed--the Paysandu cement plant has a 120,000 ton annual capacity. Second stage construction will increase Paysandu capacity to 270,000 tons and installed national capacity from 620,000 to 770,000 tons. Uruguay is now exporting 80,000 tons of cement annually to Brazil and, reportedly, has rejected orders for an additional 120,000 tons because of capacity limits. With the lack of limestone in southern Brazil giving Uruguay a natural advantage in supplying that area and with the increased internal demand implicit in the Housing Plan, the Paysandu expansion project appears entirely justified. The same may also be said of the floating petroleum dock, to be located off the coast east of Punta del Este, which is designed to permit shipment of crude oil to Uruguay by supertanker. Reportedly, shipment by supertanker will reduce the freight on 2 million tons of crude oil imported annually by Uruguay from uS$5.60 to US$3 per ton. Dredging of a deep channel 70 kms. long is said to be required if supertankers were to be able to off-load in the Port of Montevideo.

65. The projected allocation of investment resources to AFE represents a best guess as to the minimum of motive power, rolling stock and track renovation required to keep the railway operating on approximately its present scale.

1/ Besides the 2 percent payroll tax and other tax revenues, DINAVI counts on floating indexed bonds and on attracting deposits in indexed accounts. Expenditure of these funds is excluded from the above table.

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66. Central Government financial data provide a good index of the savings capacity of the public sector as a whole, especially since the operating deficits of the decentralized agencies are largely financed by the Central Government. The fiscal performance of the Central Government has improved markedly in the last three years. Compared to cash deficits averaging 2.1 percent of GDP over the 1965-67 period--which may be regarded as the nadir of Uruguay's fiscal performance--the cash deficit was held to 0.4 percent of GDP in 1968. This was accomplished by virtue of con- siderable austerity on the expenditure side--particularly with respect to investment outlays--and of a sharp increase in beef and wool export taxes made possible by the large exchange rate devaluations of November 1967 (from Ur$100 to Ur$200/US$) and April 1968 (to Ur$250/US$). In 1969, the Government increased its wage bill by almost 50 percent in nominal terms and its investments from the equivalent of 0.6 to 1.2 percent of GDP. With no exchange devaluation, it was forced to reduce beef and wool export taxes. Although this reduction was partially offset by im- proved administration of regular taxes, a cash deficit equal to about 2.6 percent of GDP was generated. For 1970, however, despite additional reduction in export taxes and substantial increases in material purchases and investment outlays, the Central Government expects to hold its cash deficit to 0.5 percent of GDP. This progress is essentially attributable to continued improvement of regular tax administration and--more importantly-- to a fourfold increase in petroleum products taxes. Even in 1968 and 1970, however, the current savings of the Central Government--after subsidies or current transfers to the decentralized agencies but before amortization payments-amounted to only about 0.5 percent of GDP and considerable internal borrowing was required.

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CENTRAL GOVERNMENT CASH FLOW (in billions of Current Pesos and as Percentage of GDP)

Actual Actual Budgeted 1968 1969 1970

Revenues 48.3 12.6 61.8 12.6 83.8 14.3

Export Retentions 9.4 2.5 5.7 1.2 4.5 0.8 Import Surcharges 2.5 0.6 4.1 0.8 5.0 0.8 Regular Taxes 36.4 9.5 52.0 10.6 74.3 12.7 Current Expenditures 45.9 12.0 66.2 13.5 80.7 13.8 Salaries 29.1 7.6 43.4 8.8 50.1 8.6 Social Security 2i6 0.7 5.2 1.1 6.6 1.1 M4aterials and Services 5.0 1.3 8.5 1.7 12.4 2.1 Subsidies 7.6 2.0 7.2 1.5 9.2 1.6 Interest 1.6 0.4 1.9 0.4 2.5 0.4

Current Surplus 2.4 0.6 -4.4 -0.9 3.0 0.5 Capital Expenditures 4.2 1.0 8.3 1.7 11.0 1.9

Amortizatiop 1.7 0.4 2.4 0.5 2.6 0.4 Investmentls 2.5 0.6 5.9 1.2 8.4 1.5 Financing2/ 1.8 0.4 12.7 2.6 8.0 1.4 Net Treasury Bills 2.4 0.8 0.5 Net Treasury Bonds 1.0 3.5 3.8 Monetary Authorities -1.6 8.3 3.1 Other - -0.1 o.6

1/ Excludes that portion of Ministry of Public Works road construction projects financed by the IBRD and IDB. Also excludes the capital out- lays of the Agro-pastoral Development Plan whose current costs are funded by the Central Government. 2/ Includes use of certain AID and PL-480 counterpart funds allocated through the Central Bank to the Central Government's investment budget. Source: Ministry of Economy and Finance.

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67. For 1971, the proposed budget submitted to Congress might have increased current savings slightly despite the loss of about half of wool export tax revenues (see para. 14). Current expenditures were to be reduced slightly as a percentage of GDP and the revenue coefficient was to have been held constant as the result of:

(a) a special provision permitting holders of anonymous assets in the parallel financial market and abroad to declare (legalize) their holdings upon payment of a one-time, 8 percent tax;

(b) imposition of a tax (additional to the 2 percent stamp tax) on parallel financial market transactions;

(c) continued application of the specific, US$40/ton, beef export tax;

(d) increased national lottery revenues resulting from the recent prohibition of private lotteries; and

(e) continued improvement of tax administration resulting from the use of additional staff, data processing equipment, etc.

68. The draft budget was changed significantly by Congressional amend- ments eliminating the tax measures directed to the parallel financial market and increasing the originally proposed civil service salary adjustment as well as the level of transfer payments to the State Railway (AFE) and to the municipalities. These amendments will increase the current expend- itures of the Central Government by about Ur$4.4 billion or 4.5 percent over the originally proposed amount. However, after his vetoes of these amendments were overridden by Congress, the President-authorized several revenue measures which--all other things being equal--would offset current expenditure increases. In addition to the already mentioned adjustment of the specific beef export tax from US$40 to US$80 per ton which is expected to yield Ur$1.5 billion in additional revenues, these measures include: (a) an increase of 5 percentage points in all import surcharges (expected to yield about Ur$2.4 billion in additional revenues); and (b) an increase of about 12.5 percent in the rate of the taxes on petro- leum products (expected to yield about Ur$0.9 billion in additional revenues). Unfortunately, the elasticity of the overall tax structure to changes in money GDP is likely to be significantly impaired in 1971 owing to the above-mentioned reduction of the penalty on tax arrears (see para. 34). Also, there remains pending a question as to the extent to which revenues from beef export and petroleum products taxes will be pre-empted by earmarking arrangements; such earmarking tending to exacerbate the problem of the cash deficit if not the level of current account savings.

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For 1971, therefore, it seems appropriate to make alternative projections of Central Government fiscal performance, the first, assuming no decline in tax elasticity or effective increases in tax earmarking and the second illustrating the effect of a deterioration of tax administration and the effective earmarking of all beef export and petroleum products tax revenues.

1970 1971 Amended Budget Original First Second Budgeted _Budget Alternative Alternative

Val. GDP Val. GDP Val. GDP Val. GDP Revenues 83.8 14.3 99.7 14.3 100.5 14.4 96.5 13.8

Export Retentions 4.5 0.8 2.4 0.4 3.6 o.5 3.6 0.5 Import Surcharges 5.o 0.8 4.9 0.7 7.3 1.1 7.3 1.1 Regular Taxes 74.3 12.7 92.4 13.2 89.6 12.8 85.6 12.2

Current Expenditures 80.7 13.8 94.6 13.6 99.2 14.2 99.2 14.2

Wages and Social Security 56.7 9.7 68.4 9.8 71.6 10.3 71.6 10.3 Materials and Services 12.4 2.1 13.9 2.0 14.9 2.1 14.9 2.1 Subsidies 9.2 1.6 9.5 1.4 9.9 1.4 9.9 1.4 Interest 2.5 0.4 2.8 0.4 2.8 0.4 2.8 0.4

Current Surplus 3.0 o.5 5.1 0.7 1.3 0.2 -3.6 -0.4

Capital Expenditures 11.0 1.9 10.2 1.5 10.2 1.5 15.0 2.1

Amortization 2.6 0.4 2.9 0.4 2.9 0.4 2.9 0.4 Investment 8.4 1.5 7.3 1.1 7.3 1.1 12.1 1.7

Cash Deficit -8.0 1.4 -5.1 0.7 -8.9 -1.3 -17.7 -2.5

Source: Ministry of Economy and Finance and staff estimates.

69. The savings of the entire public sector are estimated to have increased from an average 0.8 percent of GDP in the 1965-69 period to 3.5 percent in 1970. (See Table 5.8, Statistical Appendix). In addition to reasonable Central Government performance in 1970 this remarkable improvement reflects: introduction of the 2 percent payroll tax to finance the Housing Plan; very large increases in water, electricity and other rates (see Table 9.3, Statistical Appendix); and reduction in the operating deficit of FRIGONAL (see para. 15). However, even if the efficiency of Central Government tax administration does not deteriorate in 1971 and pro- jections of payroll tax yields and electricity sales are borne out, public sector savings will decline substantially in 1971.

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70. Projecting public savings at 1971 levels over the entire 1971-76 period and subtracting from them amortization payments on debt already contracted, however, yields an average annual resource gap equal to about 2.9 percent of GDP or to more than half of investment totals now contemplated. External financing being sought by the public sector would fill only about 45 percent of this gap (see Table 5.8, Statistical Appendix).

PROJECTED PUBLIC SECTOR INVESTMENT AND ITS FINANCING (percentages of GDP)

1965-69 1970 1971-76

Total Public Investment 3.5 4.3 5.3

Public Sector Savings 0 3.5 3.0

Central GovernmentLV 1.2 2.4 1.9 Other -0.4 1.1 1.1 Financial Gap 2.7 0.8 2.3

Net External Resources o.6 -0.1 0.7 Outflow n.a. -0.9 -o.6 Inflow n.a. 0.8 1.3 Residual Gap 2.1 0.9 1.6

1/ These figures represent Central Government savings before transfers to other entities. Note also variation in Central Government savings as a percentage of GDP from level shown in table following para. 68, which results from use of varying deflators for investment and other line items in constant value national account series (see footnote 2 to Table 5.8, Statistical Appendix).

Source: Table 5.8, Statistical Appendix.

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71. I4oreover, this forecast should be regarded as being optimistic since it assumes--inter-alia-no deterioration in the efficiency of Central Government tax administration, maintenance of a rate of return on UTE assets of about 10 percent and realization of the revenue projections of the Housing Plan (payroll tax). Developments with regard to all of these factors will be crucially important as will avoidance of any deterioration in the position of other Government entities.

72. In this context it is important to emphasize the position of the railway network (AFE) which is the most deficitary of Uruguayts autonomous entities, having achieved an operating ratio of 2.9 in 1969 and receiving operating subsidies totalling about 2.3 percent of Central Government current expenditures in 1970. An exhaustive SOFRERAIL study of 1959 and an INGEROUTE transport system study of 1967 had recommended a series of reforms such as: 25 percent personnel reduction (AFE currently employs about 10,000 people); elimination of a number of branch lines, stations and passenger services; administrative reorganization; maintenance reorganization; and modification of accounting and tariff procedures so as to permit identification and coverage of marginal costs. In 1969 these studies were updated by an Uru- guayan engineer and a brief list of short-run economy measures was formulated as part of a minimum program of track, motive power and rolling stock reno- vation. One representative recommendation was that 40 kms. of track between Durazno and Trinidad which had been without rail service for two years be lifted so as to provide urgently needed rail and sleeper replacements for other sections of track. When interviewed, the AFE directorate said that they lacked sufficient political support to take decisions as to this or any other economy or reform measure. The only discernable progress with respect to AFE is that personnel have been reduced by about 5 percent in the last two years through attrition. Strengthening of AFE's financial position would permit much needed improvement in railway freight service beyond the minimum renovation requirements represented by the above investment projections. In Uruguay, rail is the most economic mode of transporting bulk cargo, such as cement and cereals, as well as livestock. 73. The residual (after external financing) public sector resource gap of 1.6 percent of GDP projected here for the 1971-76 period is somewhat smaller than the gap actually experienced during the 1965-69 period, but still represents substantial preemption of internal credit resources. This demand for credit on the part of the public sector must be considered in the light of the large extent to which commodity producing activities are incorporated in that sector; this factor tending to justify allocation of a greater share of internal credit resources to the public sector than would otherwise be the case. Nevertheless, barring some improvement in public sector savings--the most appropriate sources thereof being improvement in the efficiency of deficitary agencies such as the State Railway or increases in Central Government taxation--existing public sector investment plans should be scaled down. The proposed magnitude of the housing program lacks adequate justification and a portion of respective payroll tax resources should probably be rechannelled to the commodity producing sectors by the banking system as has been the case in 1970. Also, a large portion of the total investment outlay projected by the Niinistry of Public Works has not been projectized and may be unjustified (see footnote 3 to Table 5.8, Statistical Appendix).

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V. MDNETARY MANAGEMENT

74. In Uruguay the operations of the banking system are controlled by the Central Bank which--in 1967--replaced the Bank of the Republic (BROU) as the nation's bank of issue. The Bank of the Republic had con- sisted of two departments, the Issue Department and the Banking Depart- ment; the latter being both the nation's largest commercial bank and the fiscal agent of the public sector. Since 1967 the Central Bank has taken over additional regulatory functions from the BROU, such as the handling of most official exchange transactions and the custody of commercial bank reserve deposits. The BROU not only remains the depository of public sector funds, however, but is also free of reserve requirements and other credit controls. Thus the Central Bank and the BROU are taken together as the nation's monetary authority for purposes of this analysis. 75. Commercial banks in Uruguay are 44 in number (of which 8 are foreign) with a total of 372 branches. The number of commercial banks has declined drastically since the banking crisis of 1965. Pr or to that crisis there were 80 commercial banks with 511 branches.lJ

76. From December 1964 until December 1968 the banking systemls monetary liabilities to the private sector (i.e. the money supply) de- creased from 31.6 to 20.3 percent of GDP. This decline in the liquidity coefficient represents continuation of a trend which has accompanied the acceleration of inflation in Uruguay. Although expanding rapidly in nominal terms--and occasionally constituting a leading factor in the inflationary process--the money supply simply failed to keep up with the rate of inflation. Also, in more recent years, loss of confidence in the Peso made the public unwilling to hold peso claims against the banks so that, while currency in circulation only declined from 9.4 to 8.2 percent of GDP over the 1964-68 period, peso sight and time deposits declined from 17.2 to 7.4 percent of GDP.

77. In 1969 there was some reversal of this trend, owing principally to the large currency issue required to finance the Treasury deficit of that year, as the liquidity coefficient rose to 20 percent of GDP. That the monetary expansion of 1969 did not exert pressure on the price level despite the fact that much of it was used to finance the Treasury is probably attributable to wage and price controls and to the need of the economy for additional liquidity.

1/ Uruguay's banking system also includes two additional official banks, the National Mortgage Bank and the Postal Savings Bank. These banks are very small in relation to the banking system and their operations are incorporated in this analysis only in terms of their net position with the monetary authorities. In that respect they are treated as part of the net credit of the monetary authorities to the public sector.

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78. The main impact of the relative decline in Uruguay's money supply has been on the supply of credit to the private sector and on the operations of the commercial banks. Outstanding private sector credit dropped from the equivalent of 34.7 percent of GDP at the end of 1964 to 11.5 percent at the end of 1969. Over this same period commercial bank credit to the private sector dropped from 21.1 to 7.1 percent of GDP. The decline in commercial bank operations has resulted in a sharp rise in average banking costs which has been exacerbated by the imposition of a 6 percent tax on bank loans. The authorities had sought to reduce banking costs by encouraging mergers and branch closures. Although the total number of branches, in fact, has been sharply reduced, the number of bank employees has not declined proportionately because of the very high cost of indemnifying discharged employees.

79. From 1967 until early 1970 the monetary authorities sought to implement a conservative policy which assumed that any increase in domestic credit in excess of the targeted rate of increase in money GDP would induce inflation and/or capital flight. In addition to commercial bank average reserve requirements of 40 percent on Peso sight deposits, 20 percent in Peso time deposits and 16 percent on foreign currency depositsi/ the monetary authorities imposed a stringent system of directed credit on the banks. Currently, the system has two principal elements: (a) specific credit lines for which 80-100 percent Central Bank refinancing is available have been established for special purposes as wool clip purchase, preembarkation export financing, purchase of locally produced capital equipment, purchase of wheat by the flour mills, etc.; and (b) subjection of the balance of the commercial banks' loan portfolios to maximum limits set for each individual bank.

80. The trend of relative decline in the stock of bank credit to the private sector was sharply reversed in 1970 as the result of relaxation of the above-mentioned ceilings on bank loan portfolios and other factors. A projection based on movements in the accounts of the Monetary Authorities through November and on those of the commercial banks through September shows bank credit to the private sector expanding by 48 percent during 1970 and reaching a level equal to 14.4 percent of GDP by the end of the year. This private sector credit expansion was not financed by a proportionate increase in the supply of money and quasi money which is expected to decline slightly as a percentage of GDP over the year. Rather, it was accaopanied by a sharp contraction in the stock of credit to the public sector (on account of the build-up in the deposits of the housing plan) and by massive deterioration in Uruguay's net foreign reserves as Government policies failed to induce private savers to increase their claims against the banking system. Much of the increase in private sector credit during 1970 was accounted for by the Bank of the Republic as it repassed accumulating public sector deposits to the private sector; the share of this agency in the total stock of bank credit to the private sector appears to have increased from about 38 to about 43 percent during the year.

1/ During the first three quarters of 1970 increases in commercial bank deposits above end-1969 levels were also subject to a special marginal reserve requirement of 20 percent additional to the basic average reserve requirements.

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POSITION OF THE MDNETARY AUTHORITIES AND COMMERCIAL BANKS (Year-end Values Expressed as Percentages of GDP)

1964 1965 1966 1967 1968 1969 1970

MONETARY AUTHORITIES Net Foreign Reserves -0.2 -2.5 - 0.6 2.7 2.9 1.3

Net Domestic Credit 14.0 20.1 13.1 13.8 7.9 9.7 9.5 a. To Public Sector (net) Jj7 L.0O 3.2 414 0-73 770 1-7 b. To Private Banks (net) 0.6 -5.4 -3.0 -8.3 -3.0 -2.0 -1.9 c. To Private Sector (gross) 13.6 10.6 8.4 8.2 5.2 4.4 6.2 d. Miscellaneous Accounts (net) -3.6 10.7 4.5 9.5 5.2 4.9 3.4 Mqonetary Liabilitiesl/ 13.8 17.6 13.1 14.4 10.6 12.6 10.8

COMMERCIAL BANKS Net Foreign Reserves -1.5 -5.7 -3.7 -5.9 -4.1 -3.3 -2.8 Position with Monetary Authorities-/ 0.9 8.4 4.0 7.5 3.8 3.1 2.5 Net Domestic Credit 19.6 12.3 9.3 10.2 8.2 8.4 9.4 a. To Public Sector (net) O.4 0.2 0.3 0.9 0.700. 0.7 b. To Private Sector (gross) 21.1 15.3 10.0 9.4 6.9 7.1 8.2 c. Miscellaneous Accounts (net) -1.9 -3.2 -1.2 -0.1 0.5 o.6 0.5

Monetary Liabilities 19.0 15.0 9.5 11.8 7.9 8.2 9.1 CONSOLIDATED BANKING SYSTEMl Net Foreign Reserves -1.7 -8.2 -3.7 -5.3 -1.4 -0.4 -1.5 Net Domestic Credit 33.3 39.0 25.2 30.3 19.0 20.4 20.7 a. To Public Sector (net) T7 _4.2 73.5 5.3 1.3 3.1 2.5 b. To Private Sector (gross) 34.7 25.9 18.4 17.6 12.1 11.5 14.4 c. Miscellaneous Accounts (net) -5.2 8.9 3.3 7.4 5.6 5.8 3.8

Money SupplyY3 31.6 30.8 21.5 25.0 17.6 20.0 19.2 a. Currency 9.4 11.6 9.3 10-7. -ET 10.3 b. Sight Deposits 5.0 6.2 3.8 5.8 3.8 3.9 c. Time Deposits 12.2 9.1 5.6 5.0 3.6 4.1 d. Foreign Currency Deposits 5.0 3.9 2.8 3.4 2.0 1.7 1/ Includes cash in commercial banks vaults. 2/ Includes vault cash which is excluded from the Monetary Authorities' state- ment as to net position with banks. Also, this is the position reported by the commercial banks so that its various elements do not necessarily agree with the accounts of the MXonetary Authorities. 3/ Excludes cash in ccmmercial bank vaults. Source: Tables 6.1 to 6.3, Statistical Appendix.

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81. Data on the banking system give a misleading picture of total credit availability in Uruguay owing to the operation of a parallel financial market which has financed a rapidly increasing portion of the working capital requirements of the economy. Lacking confidence in the Peso, Uruguayan savers tended to exchange their peso denominated claims against the banking system either for dollar denominated assets or for peso denominated claims against this parallel market which offered them lenderst interest rates commensurate with their anticipations as to inflation and/or exchange devaluation. Although unable to quantify the volume of loans outstanding in this market, commercial bankers and the monetary authorities agreed that parallel market transactions exceeded those of the commercial banks in value as of mid-1970. Parallel market transactions usually take the form of the sale of promissory notes through the intermediation of a notary public. Parallel market financing is concentrated in the commercial and industrial sectors while the commercial banks concentrate on the pastoral sector and related industrial credit and on dollar denominated trade financing, and the Bank of the Republic on subsidized crop and other special financing. Recent bankruptcies among retail firms reveal financial liabilities distributed about 10 to 1 as between parallel vs. bank creditors.

82. With suppliers of funds to Uruguay's parallel financial market demanding lenders' interest rates commensurate with their anticipations as to the stability of the Peso, commercial bank administrative costs very high owing to their declining ability to capture local savings and commercial bank loans subjected to a 6 percent tax, the cost of credit to the borrower is presently so great as to obstruct both stabilization and economic devel- opment. Nominal borrowers' interest rates did not decline significantly when annual rates of inflation were reduced from a peak annual level of 183 percent to the 15 and 20 percent increases of 1969 and 1970. In mid-1970 parallel market interest rates ranged from about 24 to about 50 percent per year and with the exception of officially rediscounted and dollar denominated credits, commercial bank borrowers' interest rates occupied approximately the same range.

83. In addition to its failure to improve savings performance and reduce the excessive cost of most credit, Uruguayan financial management has also yielded extreme variation in the cost of officially funded as opposed to privately funded credit. As the depository of public sector funds, the BROU can afford to lend at negative real interest rates. Thus it charges 7 percent for its wheat crop financing and no more than about 20 percent on any of its other loans financed from internal resources. The Central Bank charges 8 to 12 percent on its special rediscounts and permits the commercial banks to charge an 8 to 10 point margin on such credits. In contrast with these subsidized interest rates--ranging from 7 to 22 percent--the cost of most parallel and commercial bank credit--as indicated-ranged between 45 and 50 percent. Moreover, there is no evident correlation between these enormous variations in credit cost and national economic priorities.

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84. The relaxation of ceilings on commrercial bank loan portfolios midway in 1970 was made contingent on the banks effecting this expansion at borrowers' interest rates of no more than 24 percent. Despite the reduc- tion of average administrative costs implicit in portfolio expansion, the banks were unable to adhere to this limit because of the high depositors' interest rates required to attract the savings needed to finance these additional loans away from the parallel market.

85. Confronted with this fact, the authorities decided to force funds to flow from the parallel to the bank market by prohibiting all new parallel market loans of less than three-year term. However, this measure did not take into account the difficulty of controlling capital flight. In other words, faced with prohibitive restrictions on parallel operations, the supplier of funds would be more likely to exchange his peso claims for dollars than to accept a relatively low interest rate from the banks. Conversely, were the banks to pay a high enough interest rate to overcome the tendency to move into dollars, bank financial charges could not be expected to decline significantly. Added to these factors was reluctance on the part of parallel lenders to identify their assets, a reluctance which might have been overcome had special provision in the 1971 budget law permitting such lenders to legalize their assets being approved (see para. 67). Thus, the prohibition of short-term parallel market operations apparently contributed to the problem of capital flight experienced late in the year. In order to forestall such capital flight the authorities subsequently imposed a moratorium on repayments of parallel market debt, agreeing to refinance such debt at a 24 percent borrower's interest rate with delayed reimbursement of parallel market lenders. Whether this measure will achieve its purpose remains to be seen. 86. At this stage, it is impossible to distinguish the roles played with regard to the large overall 1970 credit expansion by efforts designed to restrict the parallel market, by general relaxation of specific limits on comme rial bank loan portfolios and by the activities of the Bank of the Republic in relending public sector deposits. Also lacking is any clear information on the impact of parallel market reform on those enterprises which formerly depended upon this market for working capital. One thing, however, is very clear; with the elimination of the function formerly performed by the parallel market in reconciling disparities between internal and external prices for the supplier of funds, the channelling of internal savings into productive activities will continue to be disrupted until such time as the Government succeeds in correcting this disparity. Certainly it is doubtful that any alternative approach such as the refinancing described above, can simultaneously succeed in both staunching capital flight and reducing interest rates.

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VI. BAlANCE OF PAYMENTS

87. Uruguay has registered positive trade balances since the mid- sixties despite stagnation of its total exports until 1969. Imports declined from about 15 percent of GDP during the first half of the decade to 11.6 percent in the 1965-68 period. Most negatively affected were capital goods imports which dropped from an average annual level of Ur$50.1 million during 1960-64 to Ur$29.1 million during 1965-68. Trends in both exports and imports were reversed in 1969, however. Exports increased by about 12 percent in that year as beef almost overtook wool as Uruguay's principal export, as leather processors, textile manufacturers and other industrial producers responded to fiscal incentives conceded to exporters of non-traditional products and as substantial exportable surpluses of wheat and linseed oil and expellers were produced. Imports increased by about 24 percent during the year, chiefly on account of capital goods imports which were up by about 90 percent vis-a-vis 1968 and by about 10 percent vis-a-vis the average 1960-64 level.

88. Surpluses on trade account have helped Uruguay repay rapidly the rescheduled commercial arrears and financial credits (from private foreign banks) accumulated during the mid-sixties as the result of accelerating inflation, delays in exchange rate adjustment, internal finan- cial crises and very substantial capital flight. Service on such debt brought Uruguay's debt service ratio to an average level of 20.4 percent of earnings from goods and non-factor services exports during the 1967-69 period. In addition to positive trade balances, disbursements from U.S. Government (primarily PL-480 food credits), IBRD and IDB loans, averaging about US$20 million annually, have helped Uruguay reduce its short-term re- scheduled debt.

89. By end 1969, Uruguay's net foreign reserves stood at US$104.4 million, the equivalent of five months' imports of goods and non-factor services during that year. Within this favorable overall net reserve positions the operating balance in convertible currencies of the monetary authorities stood at only US$19.2 million, the equivalent of less than one month's imports. Most of the authorities convertible assets were held in gold (US$168.4 million) of which about one-half (US$80 million) was pledged as collateral against external loans. The heavy interest cost of Uruguay's gold holdings--in terms of both interest foregone and interest paid on debts against which gold is pledged--is a good indication of the gold holding propensity of the country. This propensity, in turn, reflects the openness of Uruguay's exchange and financial-system whereby a substantial portion of the country's exchange earnings-.-namely, those from tourism-are free of any effective surrender requirement, local banks maintain substantial dollar-dominated accounts and residents are free--de facto--to hold dollar claims either locally or abroad.

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90. In 1970, Uruguay's net foreign reserves appear to have declined by about US$60 million as opposed to the US$0.7 million decline originally projected by the Government._/ The original projection made allowance for US$51.9 million in debt amortization--of which US$31.5 million against debt held by the monetary authorities--during the year and, on this account, would have represented very good performance. The massive shortfall from this target is primarily attributable to capital flight which appears to have amounted to approximately US$55 million during the year and second- arily to a somewhat higher than anticipated level of imports. All other balance of payments elements appear to be on target. The us$60 million decline reduces Uruguay's net foreign reserves to US$44.44 million or the equivalent of only 1.6 months' goods and non-factor services imports in 1970. In order to restore liquid working balances in foreign exchange the monetary authorities apparently were forced to roll-over, on very short-term, payments coming due on debt owed by them as well as to secure new short-term credits. Whether or not the reserve liabilities accumulated in this fashion will subsequently be refinanced on longer term is as yet unknown.

1/ Or a surplus of US$29.2 million according to the IiMF definition of net foreign reserves which includes in the reserve position debts of more than one year term for which the monetary authorities are liable.

BALANCE OF PAYMENTS (US$ millions)

1965 1966 1967 1968 1969 1970

I. Exports of Goods and Non-Factor Services 252.5 248.0 218.0 237.1 257.8 288.0 Merchandise (FOB) 196.3 190.3 159.8 179.3 200.3 230.0 Tourism 45.0 45.0 45.0 45.0 45.0 45.0 Non-Factor Services 11.2 12.7 13.2 12.8 12.5 13.0 II. Imports of Goods and Non-Factor Services -168.3 -179.2 -209.6 -196.6 -240.4 -282.0 Merchandise (FOB) -123.1 -132.2 7-147. -135.9 -167.8 -200.0 Tourism -19.0 -18.0 -18.0 -18.0 -20.0 -22.0 Non-Factor Services -26.2 -29.0 -44.0 -42.7 -52.6 -60.0 III. Resource Surplus 84.2 68.8 8.4 40.5 17.4 6.o IV. Net Factor Income Payments -15.4 -19.2 -25.8 -24.2 -29.9 -26.0 Profits Remittance -10.2 -10.6h -159 -14.1 -15. -11.4 Interest Payments -5.2 -8.6 -9.9 -10.1 -14.3 -14.6 V. Private Donations and Current Government Transfers (net) 2.6 6.8 9.9 7.1 10.9 13.0 VI. Current Account Balance 71.4 56.4 -7.6 23.4 -1.6 -7.0 VII. Official Loans (net) 24.4 14.5 12.8 2.1 19.5 -16.3 Disbursements 36.2 36.4 47.2 I0.9 57.2 36 Amortization -11.8 -21.9 -34.4 -38.8 -37.7 -51.9

VIII. Other Capital (net) -12.6 1.5 12.3 -4.4 4.4 9.3 IX. IMF Special Drawing Rights - _ - 9.2 X. Capital Account Balance 11.8 16.0 25.1 -2.3 23.9 2.2 XI. Errors and Omissions -90.1 -50.7 -41.0 -34.9 -2.7 -55.2

XII. Net Foreign Reserves 6.9 -21.7 23.5 13.8 -19.6 60.0 (-= increase) l/ The errors and omissions item primarily represents capital flight. 2/ This is the IBRD definition of net foreign reserves which includes the foreign reserves of both the monetary authorities and the commercial banks but ex- cludes from the reserve liabilities of the former all foreign loans of more than one year term. Thus the rescheduled arrears and financial credits for which the authorities are liable are not included in this definition. The IIF definition of the authorities' net foreign reserves--which does include rescheduled arrears and financial credits--gives a better picture of progress made in reducing these liabilities; by this definition the authorities' foreign reserves have increased from a net negative US$19.3 million at end- 1965 to a net positive Us$58.7 by end-1967 (see Table 3.7, Statistical Appendix). Source: Table 3.1, Statistical Appendix.

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91. Imports in 1970 are expected to be 18 percent greater than in 1969. Capital goods imports appear to have increased by about 15 percent vis-a-vis 1969 levels while, unlike 1969 when they increased only slightly more than proportionately with GDP, intermediate goods imports were about 30 percent greater in 1970 than in the previous year. Confronted with massive capital flight and what they may regard as spec-alative accumulation of import inventories, and having adamantly rejected any adjustment of the exchange rate, the authorities may determine to increase import restrictions. In fact, the percentage point increase in import surcharges recently effected by the Government already constitutes a step in this direction, although the increase appears to have been designed pr'imarily to increase fiscal revenues. Uruguay's imports are subjected to a complicated system of restraints and exemptions therefrom designed to: (a) extract tax revenues; (b) afford a high level of protection to local industry; (c) stimulate export industries; and (d) control overall import demand for purposes of exchange rationing. The list includes:

(i) an 18 percent ad valorem general import tax from which most raw materials and other inputs, capital goods and official (Government) imports are totally or partially exempt;

(ii) consular fees averaging about 11.5 percent ad valorem of CIF values in the case of most imports;

(iii) ad valorem surcharges on CIF values ranging from 10 to 300 percent from which most raw materials, inputs used in production for export, capital goods, and certain goods transported in Uruguayan bottoms are exempt;

(iv) import prepayments held by the authorities for six months and ranging in amount from 50 to 400 percent of respective CIF values; exempt entirely from such prepayments are imports by Government entities, imports financed by official external lenders and imports otherwise enjoying fiscal or tariff benefits such as inputs used for export production. For remaining imports, the surcharge system is utilized: (a) to discourage private sector imports of capital goods either financed on terms of less than three years and/or not specifically authorized by the Central Bank; and (b) to avoid speculative accumulation of primary and inter- mediate goods inventories. Pursuant to this latter motive the authorities established prepayment free import quotas of which only about 60 percent were utilized in 1969. With identical quotas established for 1970 importers of primary and intermediate goods still enjoy considerable leeway to accumulate inventories./

1/ Uruguay also has a schedule of import duties applied either specifically in pesos or ad valorem against arbitrarily fixed values. However, lags in adjustment of specific levies and arbitrary values have rendered this schedule almost meaningless.

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92. In 1970 exports exceeded 1969 levels by about 15 percent. The trend of increasing reliance on beef exports and decreasing reliance on wool exports is intensified. The volume of beef exports which had increased from an average level of 66,000 tons during the 1963-67 period to 12h,000 tons in 1969 reached an estimated 150,000 tons in 1970. Also, after dropping in 1968, the average price of Urugiayan beef exports subsequently improved markedly, not only as the result of higher world prices but also as a result of improvement in the cuts of meat being exported by Uruguayan slaughter- houses. During the first five months of 1970 the average price per ton of Uruguayan beef exports was US$520 as compared to US$420 during the same period in 1969. For 1970 as a whole, the average price for beef exports is expected to reach US$566 per ton. In view of the stagnating volume of Uru- guayan wool production and of recent declines in the world price for Uruguayan greasy wool, overall improvement in export performance has also been dependent on promotion of a number of products designated as non-traditional, princi- pally: tanned leather, horticultural products, woolen and other textiles and cement.

93. The principal element in the system of fiscal incentives created to stimulate non-traditional exports is the so-called "'Reintegro"r which-- in effect--is a tax credit certificate whose value is calculated to make the product internationally competitive given the level of internal production costs. In 1969, US$28.7 million (14.1 percent of total export earnings) was yielded by export of products against which "Reintegros" were paid at an average rate of 21 percent. In addition to the "Reintegro", however, exports of non-traditional products are also exempt from import surcharges, duties and consular fees otherwise incident on imported inputs. In 1969 such exemptions were valued at US$5.9 million. Finally, non-traditional exports are exempt from the 10 percent value-added sales tax. The price to the Central Governiment for these exports in terms of revenues foregone was approximately Ur$4 billion or 6.5 percent of total revenues.

94. For the 1971-76 period a 6.6 percent average annual increase in commodity export earnings has been projected by Bank staff. The most important element is beef, exports of which are expected to increase from US$8LL rillion in 1970 to US$143.5 million in 1976. The volume of l,ruguay's expo4_lahle beef surplus is expected to rise from 150,000 tols in 1970 to 191,0YX) tons in 1976 in accordance with the increases in tc;; nat:ojnal beef out)Lvt procected by Bank staff in connection with the Agrop S! ral Plan pastuxre imzrovements program (see Table 7.8, Statistical Ap1e^;ac`i.x) Local beef consu:-;?-tion, which apparently declined in 1970 to about 53 kg., per capita as a result of the impact of high world prices on sales for export and of a very sharp increase in internal consumers' prices on internal demand would be permitted by this forecast to increase from 60 kg. per capita in 1971 to 65 kg. per capita in 1976 in line with expected real increases in consumer purchasing power. At the latter level, Uruguayan per capita beef consumption would approximately equal the levels prevailing in 1966-69.

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Together with this increase in the volume of beef exports an average annual increase of 5 percent in real export prices is also assumed. Of this 5 percent, two percentage points are attributable to anticipated average annual real increases in world beef prices and three percentage points to increases in value-added in Uruguay in accordance with the aim of the slaughterhouse reorganization program to improve the quality and selectivity of the cuts of beef exported. The validity of this projection depends upon maintenance of appropriate internal pricing policies as well as upon improve- ments in sanitation and slaughterhouse reorganization now underway. Assurming these improvements are carried out, Uruguay should have no difficulty in selling its exportable beef surplus in the European and U.S. markets.

95. Wool exports are projected to remain constant at the us$68 million level anticipated for 1970. There may be some shifts in volume and price factors especially if Uruguay succeeds in processing more of its wool into wool tops. Also, Uruguay may find it profitable to substitute mutton or lamb for a portion of some of its wool exports. On the whole, however, the outlook is such that this overall value is unlikely to increase signi- ficantly.

96. Exports of hides, including hides in the processed form of either tanned leather or shoes are projected to increase in value from US$24 mil- lion in 1970 to US$50 million in 1976 or at an average annual rate of about 13 percent. This forecast may well be excessively conservative since the Uruguayan shoe industry apparently will have the equipment and material permitting it to export at least US$80 million in shoes annually by 1976 (see para. 31). On the other hand, if all of Uruguay's exportable surplus of cattle leather is exported as tanned leather at current export prices, total earnings from leather exports (including sheep leather exports) would only amount to US$30 to 35 million by 1976.

97. Exports of other agricultural and industrial products are expected to increase in value from US$54 million in 1970 to US$75.5 million in 1976 or at an average annual rate of about 5.8 percent. This category is made up primarily of linseed oil and expellers, cereals, horticultural products, fish, cement, textiles, clothing and various industrial products such as tires and electrical equipment. Exports of linseed oil and expellers are expected to remain at their current level of approximately US$10 to 12 mil- lion while, on balance, exportable wheat surpluses are not expected to be produced. On the other hand, Uruguay enjoys important natural advantages in the production of fish, fruit, and textiles for export and has an estab- lished market for cement in Brazil.

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FOB COIflDITY FXPORTSJ 1955-76 (in US$ =mil-lI^oT

W Agricultural industrial Wool Meat lHides-/ Products Products Total

A C T U A L 1955/59 93.8 18.2 12.3 24.2 16.3 164.8 1960/64 82.1 39.5 17.0 13.3 8.4 160.3 1965/69 79.8 53.8 17.7 17.4 14.3 183.0 1967 78.9 40O4 14.4 13.4 11.6 158.7 1968 78.0 60.3 16.5 7.2 17.2 179.2 1969 67.4 62,1 23.9 26.5 20.4 200.3 1970 (Est.) 68.0 84.0 24.0 30.0 24.0 230.0

P R O J E C T E D

1971 68.O 90.9 27.0 31.0 25.1 242.0 1972 68.0 99.6 32.0 32.0 28.4 260.0 1973 68.0 109.8 36.0 33.0 30.2 277.0 1974 68.0 119.7 40.0 34.0 33.3 295.0 1975 68.0 143.7 44.0 35-0 36.3 327.0 1976 68.0 143.5 5000 36,o 39.5 337.0

1/ Projected exports include processed hides, shoes, etc.

Source: Central Bank of Uruguay and IBRD staff estimates.

98. Tourism earnings, which are estimated to have accounted for about 18 percent of Uruguay's goods and non-factor services exports since 1965 probably will not increase in the very near future. Not only are present conditions unpropitious for any such increase, but considerable investment in tourism infrastructure and superstructure is probably required if a significant increase in tourism is to be stimulated (see para. 40 to 44). However, external financing for such investment probably could be obtained readily if appropriate projects can be formulated. Therefore, modest in- creases in gross tourism earnings of about 3 percent annually are projected for 1973 and 1974 and somewhat more ambitious increases of 5 percent annually are projected for 1975 and 1976.

99. After increasing by 24 and 18 percent, respectively, in 1969 and 1970 commodity imports expected to increase at an average annual rate of 7.2 percent during the 1971-76 period. By the end of the projection period the import coefficient is expected to amount to approximately 16.1 percent as compared to 14.9 percent in the 1961-64 period.

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100. Historically, capital goods imports have equalled approximately half of investment in equipment which, in turn, has tended to amount to about 50 percent of total fixed investment in Uruguay. Capital goods imports almost reached this expected level in 1970. Consequently, they are expected to increase only slightly more than proportionately with real GDP over the 1971-76 period.

101. For projection purposes imports of intermediate goods have been disaggregated into imports of raw materials, construction materials, fuels and lubricants and other intermediates such as parts. Historically, raw materials imports have averaged approximately 30 percent of value-added in Uruguay's manufacturing sector. In 1970, even with the sharp increase now in prospect for that year, raw materials imports will fall well short of the 30 percent level. For the 1971-76 period, therefore, raw materials imports-which constitute the bulk of the intermediate category--are expected to increase more than twice as rapidly as the level of value-added in manufac- turing. With some variations among the sub-categories other intermediate goods imports are expected to increase slightly more than proportionately with GDP as are imports of consumer goods.

IMPORTS FOB BY MMOR CATEGORY (in US$ million)

1965-69 Average 1970 1971 1972 1973 1974 1975 1976 1977 Consumer Goods 13.3 19.0 20.6 21.6 22.6 23.4 24.6 25.7

Intermediate Goods 75.3 91.2 103.0 113.1 123.4 134.2 148.2 162.6

Raw Materials 57.9 71.1 81.5 90.8 100.6 110.8 123.8 137.5 Construction Materials 4.7 6.4 7.0 7.3 7.5 7.7 8.1 8.4 Other 12.7 13.7 14.5 15.0 15.3 15.7 16.3 16.7 Fuels and Lubricants 24.0 25.7 27.8 29.2 30.5 31.8 33.5 35.1

Capital Goods 28.7 64.1 68.6 71.1 73.5 75.6 78.7 81.6 128.2

TOTAL 141.3 200.0 220.0 235.0 250.0 265.0 285.0 305.0

Source: Central Bank of Uruguay and IBRD staff estimates.

- 50 -

102. Uruguay's export prospects are such that import levels consistent with a 4 percent annual economic growth path should be readily sustainable. Realization of the above import, export and tourism projections would be consistent with goods and non-factor services balances ranging tightly around zero over the 1971-76 period. However, a need for substantial ex- ternal financing is created by the heavy debt amortization schedule con- fronting Uruguay during the early years of the projection period. New external financing presently contemplated by the Government should be more than sufficient to cover Uruguay's residual external resource require- ments. Moreover, given adequate economic performance by the Government, it should be available on terms which would substantially improve Uruguay's external debt structure. (See Table 4.5, Statistical Appendix, Which gives a list of the projects for which external financing is likely to be made available together with a forecast of disbursements from these loans.)

- 51 -

PROJECTED NET RESOURCE FLOWS (in US$ million)

1970 1971 1972 1973 1974 1975 1976

Goods and Non-Factor Services (Resource Gap) 6.0 -6.0 -4.5 -6.0 -6.5 -5.o 6.o

Factor Income and Other Payments -13.0 -11.1 -8.4 -4.5 -2.2 -1.1 -0.1 Current Account Balance -7.0 -17.1 -12.9 -10.5 -8.7 3.9 5.9 Long-Term Loans -24.9 -36.6 -43.7 -32.9 -15.4 -9.1 -9.1 (Contracted as of 12/31/69) Disbursements 27.0 12.9 4.5 1.4 1.4 1.4 1.4 Amortization -51.9 -49.5 -48.2 -34.3 -16.8 -10.5 -10.5 Other Capital -36.7 3.2 3.2 3.2 3.2 3.5 3.5

Residual Gap -68.6 -50.5 -53.4 -40.2 -20.0 -1.7 0.3

New Loans 8.6 22.7 57.0 62.1 55.9 46.6 25.0 Disbursements (97.) (21.-1) (050.9 .2)67)(75) (T70) (ITT7) Amortization and Interest (-) (-1.4) (-3.9) (-5.1) (-9.3) (-14.2) (-16.7)

Change in Reservesi/ -60.0 -27.8 -6.4 21.9 35.0 44.9 25.3 (- = decrease)

1/ If amortization of loans of more than one year term for which the monetary authorities are liable were included in the net reserve position, this position would show the following changes (see Tables 3.5 and 3.6, Statistical Appendix): Year US$ million (- decrease)

1970 -28.5 1971 3.7 1972 20.8 1973 40.1 1974 38.2 1975 44.9 1976 25.3

Source: Table 3.1, Statistical Appendix.

- 52 -

103. The ratio of service on Uruguay's existing official external debt to earnings from its exports of goods and non-factor services will decline from 23.1 percent in 1970 to 3.5 percent in 1976. Assuming that needed additional loan inflows are forthcoming as projected, the total debt service ratio should amount to 7.6 percent in 1976. Moreover, Uruguay's net foreign reserves would increase from the equivalent of about 1.6 months, goods and non-factor services imports as of the end of 1970 to the equiva- lent of about four months' imports by the end of 1976. From the point of view of debt service capacity, therefore, the projection of a 4 percent economic growth rate for Uruguay is conservative, indicating that constraints upon growth probably have more to do with the capacity to generate suitable projects and appropriate levels of internal savings. 104. If an economic growth path of approximately 6 percent were pursued, imports could be expected to increase at an average annual rate of 9.8 per- cent during the 1971-76 period, on the basis of the same relationships identified in paras. 99-101. Assuming that export growth could not be accelerated beyond the rate projected in para. 94, this higher import bill would generate an external financial gap requiring some US$500 million in additional gross loan inflows if reserves are to be held at the same absolute level expected to prevail at the end of 1970. If these funds are obtained at 8 percent interest and 15-year amortization, the debt service ratio could be expected to amount to 21.7 percent in 1976 (in contrast to 7.6 percent projected above). Despite the widening of the external gap, the domestic savings ratio would have to increase to about 20.5 percent as compared to the 16 percent consistent with 4 percent growth. This would require Uruguay to save some 32 percent of the real increase in GDP over the 1970-76 period as compared to the 18.9 marginal savings rate implicit in the 4 percent growth path.

105. It is difficult to envisage at the present time the savings effort of this magnitude, although substantial improvements are possible. Also, the status of project identification, preparation and coordination is such that the large increase in investment expenditure, which would be associated with a 6 percent growth target, will talce some time to material- ize. 106. Uruguay's success in mobilizing the internal and external resources needed to achieve sustained and sufficiently rapid growth will depend upon resolution of the problems identified in this report as well as upon continuation of a number of policies already undertaken by the Government such as those regarding consumers' beef prices, reorganization of the meat processing industry and maintenance of an adequate rate of return on the assets of UTE, the public sector's most important investor. The most immediate economic problem confronting the Government is the need for resolving its short-term balance of payments difficulties. Uruguay cannot tolerate continued capital flight of the magnitude experienced in 1970 and even its current exchange earnings are likely to be obstructed if balance of payments management'is not improved. The problem of servicing the very short-term external debt accumulated by the monetary authorities in 1970 in order to maintain international liquidity has not been dealt with in the context of the foregoing debt projections: rather, these pro- jections assume that the authorities will improve their policies and that reflows of flight capital will enable them to establish an adequate liquidity position without being forced to seek a large scale debt rescheduling which could significantly alter Uruguay's economic prospects.

107. In the category of other policy issues still to be resolved are:

(a) assurance of an adequate overall level of public sector savings;

(b) assurance of an adequate supply of credit to the commodity producing sectors at reasonable costs and without uneconomic disparities in such costs; and (c) improvement in the coordination of public sector activities, with particular regard to the efficient allocation of invest- ment resources, formulation of investment projects and control over external borrowing.

108. Considering that the Government was faced at the outset of its program of economic recovery with the lack of any consensus in Uruguayan society as to development objectives and how they should be pursued, the economic progress it has made to date is remarkable. Hopefully, the Gov- emmnent will be able to continue to make progress with the lirnitation of impediments to economic growth.

STATISTICAL APPENDIX

Table Number

1. POPULATION

1.1 Uruguay Population

2. NATIONAL ACCOUNTS

2.1 Gross Domestic Product by Sector of Origin, 1961-69 2.2 Gross Domestic Product by Sector of Origin, 1969-76 2.3 Gross Domestic Product by Sector of Origin (Composition and Percent Change), 1961-76 2.4 Availability and Use of Resources (in current Pesos), 1961-69 2.5 Availability and Use of Resources (in 1968 Pesos), 1961-69 2.6 Availability and Use of Resources (in 1968 Pesos), 1969-76 2.7 Availability and Use of Resources (Composition and Percent Change), 1961-76

3. BALANCE OF PAYMENTS AND EXTERNAL TRADE

3.1 Balance of Payments, 1965-76 3.2 Exports (FOB), 1960-69 3.3 Imports (CIF), 1960-69 3.4 Export Prices, 1960-69 3.5 Net Foreign Reserves, 1964-70 (June) 3.6 Net Foreign Reserves, 1964-76

4. EXTERNAL DEBT

4.1 External Public Debt Outstanding as of December 31, 1969 4.2 Estimated Future Service Payments on External Public Debt Outstanding as of December 31, 1969 4.3 Past Transactions on External Public Debt, 1965-69 4.4 External Public Sector Debt, 1964-69 4.5 Possible Commitments and Disbursements of External Loans, 1970-76

Table Nuhmber

5. PUBLIC SECTOR FINANCES

5.1 Consolidation Cash Operations of Central Government of Uruguay and of Subordinate Funds, 1961-69 5.2 Estimated Distribution of Central Government Cash Expenditures, 1961-70 5.3 Central Government Revenues by Source - Excluding Earmarked Revenues, 1961-69 5.4 Central Government Revenues by Source - Including Earmarked Revenues, 1961-69 5.5 Cash Operations of Principal Autonomous Entities ald I.unicipality of Montevideo 5.6 Cash Operations of Social Security Bank of Uruguay 1964-69 5.7 Estimated Consolidation of Cash Operations of Central Government, Decentralized Agencies and Municipality of Montevideo, 1965-69 Estimated Investment and Investment Financing of Uruguay's Public Sector (in 1968 Pesos), 1965-76

6. MONETARY STATISTICS

6.1 Operations of the Monetary Authorities, 1964-70 602 Operations of the Commercial Banks, 1964-70 6.3 Consolidated Operations of the Banking System, 1964-70

7. AGRICULTURAL STATISTICS

7.1 Agro-Pastoral Product at Constant 1961 M4arket Prices, 1961-68 7.2 Gross Volume of Agro-Pastoral Product (1961 = 100), 1962-69 7.3 Main Agricultural Crops, 1963/64 - 1970/71 7.4 Real Values of Yields per Hectare of Selected Crops, 1964-69 7.5 Comparison of Crop Yields in Uruguay and Other Countries 7.6 Land Tenure and Use in 1966 7.7 Production, Consumption and Exports of Beef, 1951-70 7.e Projection of Beef Output

Table Number

8. INDUSTRIAL STATISTICS

8.1 Gross Volume of Industrial Output, 1961-69 8.2 Industrial Product at Constant 1961 Market Prices, 1961-68

9. PRICES AND WAGES

9.1 Cost of Living in Montevideo, 1961-70 9.2 National Wholesale Price Index of Uruguay, 1961-70 9.3 Indices of Nominal and Real Public Utility Prices, 1962-70 9.4 Indices of Nominal and Real Wage Levels (Compiled by Ministry of Finance and Economr), 1968-70 9.5 Indices of Nominal and Real Wage Levels (Compiled for National Accounts), 1961-70 9.6 Indices of Annual Cost and Price Averages, 1964-70

Table 1.1: URUGUAY POPULATION

Infant Mortality Crude Birth Crude Death Rate of Population Total (Deaths to child- Year Rate Rate Growth Population ren under 1 year per (Per Thousand Population) (% per year) (in 000's) thousand live births)

1960 22 9 1.5 2,536- 1963 22 9 1.3 2,649 19614 2,682 1965 22 9 1. 2,715 31 1966 2,7149 43- 1967 1.2 2,783 1968 2,818 1969 2,852 1970 21 9 1. 2,886 1971 2,921 1972 2,956 1973 1.2 2,991 1974 3,0272/ 1975 3,063- 1976 1.2 3,100

1980 1.2 3,247 1990 1.2 3,658

2000 1.2 4,121

1/ Fourth Uruguayan Census taken in 1963. 2/ United Nations,World Population Prospects as assessed in 1968 (medium variant projection). 3/ OAS, Datos Basicos de Poblacion en America Latina, 1970. Sources: See footnotes.

-able 2.1: GROSS DOMESTIC PRODUCT BY SECTOR OF ORIGIN, 1961-69 (millions of 1968 Uruguayan Pesos)

1961 1962 1963 1964 1965 1966 1967 1968 1969 P

I. 55427 4r,a44y 56,338 52,475 55,581 60,719 49,101 48.720 1. ,estock 40,259 33,242 39,810 41,786 38,408 2. 41,356 35,396 38,795 40,934 I4,s14,924 114,052 16,397 10,468 16,863 19,051 13,418 9,638 3. aridz.r :-`ishini 14,756 244 155 131 221. 310 312 287 287 334 II. seccnia. 94,209 91,370 88,917 96,466 95,121 97,980 93,851 97.915 10191.9 1. -an-ac aring 75,467 75,578 74,798 82,394 81,429 82,478 79,533 2. Corstr_ction 83,396 87,392 18,742 15,792 14,119 14,072 13,692 15,502 14,318 14,519 14,519 TJ,. Se - 195-,cO 19C,5S7 189.169 197,714 199.422 202,74194,35 195,215 201. 36 '. C01rterCe 56,679 57,816 49,014 52,479 50,957 49,528 49,888 2. Trais:-rt 50,221 26,114 26,182 24,058 27,232 27,098 27,433 24,908 24,236 3. catiiCc tr.s 2,903 3,149 3,372 3,660 3,605 3,796 4. Ie-:tr2ct!y, Gas, 3,773 3,819 12,262 Wa`er, Sanitation 6,097 6,635 6,657 7,G80 6,903 7,346 7,637 5. .c 7,661 1 19,303 19,679 19,927 20,152 20,329 20,553 20,7.30 20,929 21,132 &. COt - 84,664 85,606 86,141 86,811 90,448 94,355 87,999 88,3_9 S8,343 Grass rcsDc tc Prcduct at Factor Cost 345,396 3 334,424 346,355 350,124 361,h40 337,887 341,850 3871 ITdirect Taxes Yirus Subsidies 41 40,194 39,790 41,401 41,869 43,299 40,194 40,841 0,098 GOross Domestic Product at Market Prices 386,595 378,050 374,214 387,756 391,993 404,739 378081 362,691 402 .569

I/ Prelir1-nary eztimates; note that disaggregation of primary product in 1969 was estimated by Bank staff the basis phvysical volume. on of data on gross

Saurce: Central Bank. Table 2.2; GROSS DC"TSTIC PROD'vUCT BY SECTv. OF ORIGE4, 1969-76 (millions of 196v Uruaguayan Pesos)

1969 1970 1971 1972 1973 1974 1975 1976

I. Primary 56,024 57.477 59,O1 60,593 62,358 64,118 66,160 67,919

1. Livestiock 40,934 42,121 43,343 [4,600 45,893 47,224 48,593 50,&02 2. Agriculture 14,756 15,022 15,337 15,659 1$5988 16,324 16,667 17,017 3. hunting and Fishing 334 334 334 334 477 57G 900 930v

IT. Secondary 101,911 1 111,289 116.297 121,530 126,999 132,714 13;z,5

1. Manufacturing 87,392 91,325 95,,38 99,669 103,966 103,557 113,350 11, 35 2. Construction 1i4,519 15,172 15,931 16,728 17,564 18,W42 19,3641 20,332

III. Services 201,936 209,025 216,995 226.091 235,212 2hL,7L7 25L,L25 26L,327

Gross Domestic Product at Factor Ccst 359,871 372.999 _8'7,298 02,981 L19,1C0 435, 8-4 V3,299 271.L32

Indirect Taxes Yinr.-s Svrsid-es 443.098 4669L36 ,265 50217 52,226 5L,315 6 ,!37 Gross Donestic Product at Market Prices 1i02,969 17,692 1.33.7701. 151,266 L69,317 188,090 507,61. 527,919

Source: Staff estimates. Table 2.3: GROSS DOMETIC PRODUCT BY SECTOR OF ORIGIN (Composition and Percent Change)

COMPOSITION AVERAGE ATUAL RATE OF CHANGE 1961 1965 1969 1973 1976 1965/19=1 1969/1965 1973/1969 1976/1973

I. Primary 14.3 14.2 13.9 13.3 12.9 0.1 0.2 2.7 2.9

1. Livestock 10.4 9.8 10.1 9.3 9.5 -1.1 1.6 2.9 2.9 2. CroDs 3.8 4.3 3.7 3.4 3.2 3.1 -3.0 2.0 2.1 3. Hunting and Fishing 0.1 0.1 0.1 0.1 0.2 6.2 1.9 9.3 23.6

II. Secondary 24.4 24.3 25.3 25.9 26.3 0.2 1.7 4.5 4.5

1. Nazaf acturing 19.5 20.8 21.7 22.2 22.4 1.9 1.8 4.4 4.4 2. Construction 4.9 3.5 3.6 3.7 3.9 -6.1 1.5 4.9 4.9

III. Services 50.6 50.8 50.1 50.1 50.1 0.5 0.3 3.9 4.0

Gross Daoestic Product at Factor Cost 89.3 89.3 89.3 89.3 89.3 0.3 0.7 3.9 4.0

ir4irect Tayes Minuis Su',sidies 10.7 10.7 10.7 10.7 10.7 0.4 0.7 3.9 4.0

Gross Donestic Product at Vark'et Pr-ices 100.0 100.0 100.0 100.0 100.0 0.3 0.7 3.9 4.0

Source: Tables 2.1, 22, Statistical Appendix. Table 2.4: A'iAI:A2ThLF MD USE CF RTSOUR.CES (mrllions cirraznt Pesos)

1966 1967 1 9 5 1969 1961 1962 1963 1964 1965

16?,2C6 352,6?i 451,2 173C 18.793 22.jO1 32,542 52,364 9.30 I. -Gross 'omestic Pro±act -2,729 -5,663 -7,_75 -70 -81 -140 -265 -474 -1,235 1. Ret Fac'vorSav-vce Paymen.ta-V/ 93,192 164,477 377,C23 433,729 17,234 18,712 22,161 32,277 51,890 2. Grcss National Product 56 -. 07 -7 197 74L -76 -60 -3,121 -u.9L- II. Resources Can (+ - in-low) 11,972 2.,121 L6,C'CO &,_ 3C 2,723 3,013 2,365 4,024 6,641 1. Iocrts (includ-ng non-factor 3ervtces) / -16,120 -24,C35 -55,451 --6,25C -2,526 -2,269 -2,?41 -4,054 -9,762 2. - Zxports (iincluding no-n-factor serv,ces)3/ 9,,252 '67.292 4 20 ' _. 17,5C'0 2,537 22,2Ž5 32,12 4?.243 III. Avai';be Resources 3922,257 - .C_0 l,659 16,657 19,185 28,564 6;,779 IV. Ccn'- to n 7C,313 i22,613 2c1,2,o 3;,,212- 12,7S1 1L,o41 16,1.2 22s,L02 36,072 Sector 12,966 23,371n5,3:- 71,?., 1. Pri.ate 1,823 2,616 3,043 4,462 7,653 2. Public Sector 11,53 2C,203 43 17 6L r6',7 2.8?2 2,350 3,010 3,618 5,118 V. 7fl.e3trn- 10,56 21,333 u4,5D3 65,5:5 2,766 2.939 2,876 3,387 5,549 1. Fixed Investrent Private Sector Public Sector 955 -5CC -1,329 -62C 126 -59 164 231 -431 2. Chage in Stocks 23.7l7 52' 6_ _7 2.695 2.136 3,116 3,678 8,239 15,651 VT. Doestiz_ Sav-nes 1%,J23 2C c-369% 572 2,625 2,055 2,976 3,L13 7,765 4 VI1. National Savinzs

$ 10575uszS 234/233 254/35 10.98/js$ 14.30JUSS 16.64/u35 30,76/us$- 62.j/ w 1. At average of rznthly average sellers' exchange rates 2/ At Ws.gh.ed average annual exchange rates actually applicable to , ort3 except for 1965 and 1969 wher. average of monthly 66.531/05 115.03/cs5 23, s 25^0,-S3 11.54l0s5 11.26/U33 14.73/5S3 18.25/05 39.4L6,US average rates applied 3/ At we:g:'ted average an-ual exchanga rates actually applicable to eaorts exte;t for 1963 and 1969 when 65.0C0/(45 113.25/23$ 234/253 253,103 11. 9/033 11.56/U5$ 14.22/U3$ 17.75/US$ ;3.66/USS average rates applied Source: Central Bark of Urug,uay. Table 2.5: AVAILABILITY AND USE CF RESOURCES (in millions of 1068 Pesos)

1961 1962 1963 1964 1965 1966 1967 1968 1969

I. Gross Domestic Product 386,595 378,080 374,214 387,756 391,993 404,739 378,081 382,691 402.969

1. Net Factor Service Payments'/ -1,610 -1,862 -2,446 -4,018 -3,816 -4,577 -6,151 -5,663 -6,687 2. Gross National Product 384,985 376,218 371,768 383,738 388,177 400,162 371,930 377,028 396,282

II. Resources Gap (+ = inflow) 101 16,253 -1,334 -2,415 -20,863 -16,403 -2,003 -9,477 -3,892

1. Imports (including non-factor services)- 55,654 65,869 50,924 55,478 41,701 42,723 49,971 46,oo4 53,764 2. Exports (including non-factor services)jV -55,553 -49,616 -52,258 -57,893 -62,564 -59,126 -51,974 -55,481 -57,656

III. Available Resources (I + II) 386,696 394,333 372,880 385,341 371,130 388,336 376,078 373,214 399,077

IV. Consumption 324,745 334,306 320,078 340,313 331,891 346,371 331,814 330,040 340,580

1. Private SectorY 283,592 291,240 277,553 296,144 284,323 294,571 286,163 281,236 290,662 2. Public Sector 41,153 43,066 42,525 44,169 47,568 51,800 45,651 48,804 49,918

V. Investment 61,951 60,027 52,802 45,o28 39,239 41,965 44264 43,17 58,497

1. Fixed Investment 60,026 61,371 50,434 43,836 41,362 39,994 45,028 44,503 58,894 a. Private Sector (48,300) (49,635) (38,521) (35,766) (30,489) (32,125) (28,554) (32,4.48) (44,339) b. Pablic Sector.'/ (11,726) (11,716) (11,913) (8,070) (10,873) (7,869) (16,474) (12,055) (14,555)

2. Change in Stocks 1,925 -1,344 2,368 1,192 -2,123 1,971 -764 -1,329 -397

VI. Domestic Savings (V - II) 61,850 54,136534774 47,443 60,102 58,368 46,267 52,651 62,389

VII. National Savings (VI + I-1) 60,240 4,912 51,690 43,425 56,286 53,791 ,116 6988 55.702

1 Staff estimates. Respective balance of payments data from Table 3.1 were translated into Pesos at the average 1968 rate for import and export transactions of Ur$234/US$. For years other than 1968, respective Peso values were deflated by the U.S. wholesale price index, 1968 = 100. 2/ Residual. / Prior to 1965 source is Central Bank; subsequently, values represent staff estimates shown in Table 5.8, Statistical Appendix (exclusive of Plan Agropecuario and National Housing Plan investments.)

Source: Central Bank of Paraguay. Table 2.6: AVAILABILITY AND USE OF RESOURCES, 1969-76 (millions of 1968 Pesos)

1969 1970 1971 1972 1973 1974 1975 1976

I. Gross Domestic Product 402,969 417,692 433,704 451,266 469,317 488,090 507,614 527,919

1. Net Factor Payments-/ -6,687 -5,568 -5,461 -4,990 -4,498 -4,733 -5,033 -5,097 2. Gross National Product 396,282 412,124 428,243 446,276 464,819 483,357 502,581 522,822

II. Resources Gap (+ = inflow) -3,892 =,285 1,285 964 1,285 1,392 -1,070 -1,285

1. Imports (including non-factor services)/I 53,764 60,396 65,536 69,070 73,353 77,637 82,563 85,133 2. Minus: Exports (including non-factor services)!- -57,656 -61,681 -64,251 -68,106 -72,068 -76,245 -83,633 -86,418

III. Available Resources (I + II) 399.077 416,407 434,989 452,230 470,602 489,482 506,544 526,634

IV. Consumption 340.580 352,357 364,538 379.819 395,297 411,170 425,103 441,959

V. Investment 58,497 64,050 70.451 72,411 75,305 78,312 81,441 84.675

1. Fixed Investment 58,894 64,050 70,2249 72,204 75,092 78,094 81,218 84,467 a. Private Secto 1 (44,339) (47,891) (53,545) (52,387) (53,464) (57,407) (61,841) (67,667) b. Public Sector-. (14,555) (16,159) (16,704) (19,817) (21,628) (20,687) (19,377) (16,803)

2. Change in Stocks3/ -397 - 202 207 213 218 223 208

VI. Domestic Savings (V - II) 62.389 65.335 69,166 71,447 74,020 76,920 82,511 85,960

VII. National Savings (V - I-1) 55.702 59,767 6 6457 69,522 72,187 77.478 80.863

/ Peso values calculated using the Ur$234/US$ 1968 exchange rate were deflated by the 1969 change in the U.S. wholesale price index for 1969 and by the 1970 change in the U.S. wholesale price index for 1970 and subsequent years. As a corollary exports and imports were projected forward from 1970 as a base in constant, 1970, U.S. dollarS. LI See Table 5.8 , Statistical Appendix,Projected public sector investments exclude those of the Plan Agropecuario and the National Housing Plan. 3/ Projected changes in stocks represent beef herd build-up resulting from the pasture improvenent program. Source: Staff estimates. Table 2.?: AVAILABILITY AND USE OF RMOURCES (Composition and Percent Change)

'-;3E A20A. P_ZE;T C:'NS) C O M P 0 S i T I 0 N 1965/1961 1969/1965 1973/1969 1976/1 '73 1961-6&l/ 1965 -6W 1968 1969 1970 1971-73_/ 1974-76" 3.9 4.0 100.0 100.0 100.0 100.0 100.0 0.3 0.7 G.r c-^ ?r'>thct 100.0 100.0 -2s.1 -15.1 -7.3 I|.3 -0.7 -1.3 -1.5 -1.7 -1.3 -1.1 -1.0 1. 'Ne: Fctor Pae-.ets 99.0 0.2 0.5 4.1 4.0 99.3 98.7 98.5 98.3 98.7 98.9 2. ,.c:: 'attor.a1 .>rc4.9ct 0.8 -3.1 -2.5 -1.0 -0.3 0.3 -0.1 es;-:rces ~tr, -e L-. ~1z) 6.6 8.1 5.1 11.6 12.0 13.3 14.5 15.4 16.1 -5.8 1. n-c's (Lc'-':~Lig r.o.n-factor services) L4.9 3.0 -1.9 5.7 6.3 -14.1 -lh.7 -1h.5 -_1.3 -14.8 -15.1 -16.2 2, " -r rC~s 1'r.cl g non-factor services) 1.8 4.2 3.8 96.9 97.5 99.0 99.7 100.3 99.9 -1.0 ' ':--:e :-essr r^es *' I l*r:o.8c 0.5 0.6 3.8 3.8 86.! 86.0 86.2 88.5 84.4 86.2 83.9 .~'~~~~'1 - 0.6 n.a. n.a. 73.6 73.5 72.1 n.a. n.a. n.a. 0.1 1. ?-vate Sector 75.2 0.6 n.a. n.a. 12.4 12.7 12.4 n.a. n.a. n.a. 3.7 2. 7-:1it _ector 11.2 10.5 6.5 4.0 10.8 11.3 14s.5 i5.3 16.1 16.0 -8.1 -e-t=e-- la 4.0 15.3 16.1 16.0 -7.0 9.2 6.3 lL.11:t-er•t l.0 11.6 14.6 4.8 8.2 1. 7LXe: (11.0) (11.4) (11.8) (12.3) _8.2 9.8 (11.3) (8.0) (8.4) -6.9 .2r'va.s ~e¢::r (3.6) (3.9) ( .3) (3.7) -1.8 7.6 10.4 r (2.8) (3.0) (3.2) 4 -0.2 -0.3 -0.1 - - - 2. :are 'r.Sctks 0.3 0.9 4.4 5.1 13.9 13.8 15.5 15.6 15.8 16.1 -0.7 7:. 7rLn;Qs-Z (7 - 7) 13.6 -..3 5.7 5.2 12.6 12.3 13.8 14.3 I.7 15.1 -1.6 '.a Ao-al 3-riros ( - 1-1) 12.9 i/ Ave4-ae a values. I/ * er -riods shoqwn.

Soc_rce: Tables 2.5 ans 2.6 , Statistical Appendix.

Table 3.1 i BALANCE CF PAYX.NTS (in imlhlionis of U.S. Dollara)

T FD A C T U A 1. tT1'AT E P RO 1 '. 1975 i9,5 1 Y76 1965 1966 1967 1Q68 1969 1Q70 1971 1972 1973

257.8 288.0 300.e 318.0 336.5 2.0 3).< L3 A. Exports of Goods anid Non-Factor Services 252.5 258.0 218.0 237.1 295.0 327.0 3 196.3 190.3 159.8 I 79.3 200.3 230,0 252.0 260.0 277.0 Merchandise (FOB) °.0 58.0 50., 5 45.0 45 .0 i5.0 5.0 45.0 l5.0 455. 5 46.5 Tourism 13.0 13.0 13.0 13.0 13.0 13.0 i 3.1 Non-Factor Services 11.2 12.7 13.2 12.8 12.5 -250.5s -282.0 -306.0 -322.5 -352.' -362.5 -38'M -i - B. Imports of Goods and Non-Factor Services -163.3 -179.2 -209.6 -2Y6.6 -285.0 - D -132.2 -147.6 -135.9 -167.8 -200.0 -220.0 -235.0 -250.0 -265.0 Merchandise (FOB) -123.1 -21.0 -24.5 -19.0 -18.0 -18.0 -18.0 -20.0 -2'.0 -22.0 -22.5 -23.5 Tourism -60.0 -64,0 -65.0 -69.0 -73.5 -7s .0 -7J_. Non-Factor Services -26.2 -29.0 -44.0 -42.7 -52.6 17.4 6.0 -6.0 -1, 5 -6.0 -6.5 j 0 6.) C. Resources Gap (- inflow) 81.2 68.8 8.4 40.5 30.0 Trade 73.2 58.1 12.2 43.4 32.5 Merchandise -21i.0 Non-Factor Services 11.0 10.7 -3.8 -2.9 -15.1 25.2 -29.9 26.0 -25.5 -23.3 -21.0 -22.1 -23.5 -23.8 D. Net Factor Incone Payments -15.5 -19.2 -25.8 -11.4 -12.0 -12.0 -12.0 -12.0 -12.0 -12.0 RemittanceL/ -10.2 -10.6 -15.9 -15.1 -25.6 Profit -14.6 -13.5 -11.3 -9.0 -10.1 -11.5 -1. 3 Interest Payrrcnts on Loans -5.2 -8.6 -9.9 -10.1 -14.3 t-14.3) (-15.6) (-12.1) (-9.4) (-6.5) (-5.7) (-14.1) (-3.5) Debt Authorized before 1970 (-5.2) (-8.6) (-9.9) (-10.1) (-) (-) (-1.4) (-1.9) (-2.5) (-5.4) (-7.5) (.5,2) Debt Authorized in 1970,76 (-) (-) (-) (-) -O 5 0.5 0.. 0.5 0 .5 £.; 0°.5 E. Private Donations -0.6 - 0.7 -0.4 7.5 11.45 12,5 12,5 13.,5 h.0 15.5 15.0 F. Government Cturrent Transfers (net) 3,2 6.8 9.2 -1.6 -7.0 -18.5 -14.8 -13.0 -14.1 5 -2.3 G. Current Account Balance 7f1-4 56.4 -7.6 23 1.0 1.0 1.0 1.0 1.0 1.0 H. Direct Tnvestrients _ - 1.1 215 2.2 2.2 2.2 22 2 2.5 I. Official Donations 0.6 - 2.2 0.8 -6.8 _ _ - - - - _ _ J. Su=pliers' Credits (net) -13.6 1.0 10.8 35.6 37.0 55.4 68.6 66.6 62.2 43.1 K. Loan Disbursements 36.2 36.4 47.2 40.9 57.2 27.0 12.9 4.5 1.4 1.4 1.4 1.4 and Prior Years' Loans 36.2 36.5 47.2 50.9 57.2 1. 1969 - 8.6 24.1 50.9 67.2 65.2 60.8 51i.7 2. 1970-76 Loans - - - - (6.6) (19.1) (43.9) (53.2) (61.2) (59.8) (L1.7) (a) International Agencies - - - - - _ (2.0) (5.0) (7.0) (14.0) (5.0 (1.0) (-) (b) Suppliers - _ _ _ -35.5 -37.7 -51-9 49.5 -50.2 -36.9 -20.7 -17.3 -19.'2 L. Loan Amortization -11.8 -21.9 -38.8 -49.5 -48.2 -34.3 -16.8 -10.5 -10.5 Loans 11.8 21.9 34.4 -38.8 -37.7 -51.9 1. 1969 and Prior Years' - - -2.0 -2.6 -3.9 -6.8 -8.5 2. 1970-76 Loans - - - - - _ - (_) (-) (-1.3) (-L.2) (-5.9) (a) International Agencies - - - _ _ _ _ - (2.0) (-2.6) (-2.6) (-2.6) (-2.S) (b) Suppliers _ _ _ _ 1.6 3.3 7.8 - _ _ _ _ _ M. Short-Tern C(pl'tal (net) f.4 -2.5 -0.7 9.2 R. 3If: Pr;.wlnrDp',^io2 El ;'ht.n 27.S 27'.1 - 2.2 2.±2 8.5 2k2 59.1 1,8.h 0. Cpr, t.nl Aecouw,. Tnlance 11.8 16.0 -38. -2.7 -2 _ - - _ - - P. Errors nnl (Bclcsinns -90.1 -';0.7 -41.0 13.8 -19.6 60.0 27.8 6.4 -21.2 -35.0 -35Q -7. Q. Chanrle in lie Fore.1 sn fle.rvr -_ incrrtasn) 6.9 -21.7 23.5

K. j/ Includes intere3t on those suppliers' creditt vi-ich are not included in item

SO'2rce: Central Elar,k of Uruguay, and IBRD staff estimates. [ni,I e 3. 2 : EXPORTS (FOB) (Values in Lhovsa,Ws ot US d.ll..rs; -,,lu e in metrIc tons)

1960o 1961 19462 196 3 1964 196 5 1966 19b 7 194)1 1969

Woo I Greasy Value 33,493 73,518 49,75 5 49,9917 28,315 61,6211, 4f, 007 46 2')8 46,.9f,2 31496 Volume 26,9 77' 63,685 39,d6 1 35, 39 1 Li,236 50,94.1: 35,681 4t3,108 47,3)5 32,1498 Pr ice (US$/kg.) 1,242 1,155 1,248i 1,393 1,.553 1,210 1,28 7 1,154 99 1 1,0-15 Scoured Value 11,591 11,973 8,5 74 8,386 6,997 7,783 8,966 6,776 5,49 7 7,755 volume 7,932 8,620 6,0111 5,4.33 3,837 5,366 5,479 5,0281 4,40I'9 5,771 Price (U1S$/kg.) 1,452 1,390 1,425 1,54~4 1,824 1,450 1,636 1,348 1,247 1,3143 Tops Value 21,740 24,27u 23,2,44 26,607 32,16 5 20,9211 29,399 25,829 2 5,524 214,68i Volume 9,645 11,576 10,491 12,033 L3,',17 10,073 13,390 13,33U 15,5914 13.9148 Pr ice (UJSS/kg.) 2,254 2 3097l29 _221_J[ 9,31 _ L_ J6 197 fi t, 3r1 1,76) Total 66b.824 10,) ;.4,32 81 .o13 14 ,9'0 u7 .-.7/ 8033812 43 7?2 7,1.903 77.9t;3 2c Beef Chilled Value 8,2.74 5,668 3 ,711L 10,939 L3,287 6,969 5,768 3,820 9,042 5,609 Volume 20,324 14,112 9,6 57 J1,339) 30,069 10,3=1 9,332 6,860 16,246 ii,661 PriCe (US5$/toLI 407 402 384 351 442 674 618 558 496 1481. Frozen Value 13,159 11,051 15,977 10,331 4 3 ,557 32,020 25,165 2 7,505 37,i53 146,212 Volume n/a 28,530 44,890 33,04~5 91,658 54,4 16 46,003 53,498 76,006 914,695 Pr ice (US$Yton) - 387 356 313 4 75 538 54 7 514 496 1488 Corned Value 6,418 7,264 8,228 7,56 7 6,578 5,211 2,835 2,348 4,951 2,101 VoLume 8,455 3,1)77 n/a 11,396 lU,116 11,168 4,115 2,884 5,401 2,388 Price (US$/ton) 759 81IS - 653 646 467 6,:9 814 917 879 Other Meat 2,4 3,,0 3,506 4 , 531 10,1'i5 1662 L 3;L 6.7 53 1,9 8 162 Total 30.793 27.31.3 31 ,24 3 3 .~j 74,30J7 60,,52 '5,1L32 I.u,/.26 O, Hides Cattle , Value 833 1,432 845 1,3214 776 911 976 680 916 920 Volume 1,217 2,833 1 .7 73 3,07 3 1,977 2,274 1,846 1,26 7 2,2 31 2,16i Price (US$Iton) 684 497 497 431 393 404 529 537 411 1425 Cattle (Salted) Value 5,221 4,895 6,587 5,174 5,t845 3,6891 1,264- 66 ill 2414 Volume 13,248 13,491 19,319 18,013 21,359 12,416 3 U.65 121 240 773 Price (U5$/ton) 39. 363 341 2o7 2 74 314 412 545 4.63 31 CaLttLe (Scmi-Processed) Value 1,898 2,111 2,393 1,778 2,864 3,920 6,61,5 5,078 7,048 2i2,807 VolIuWe n/a I,3.35 1,647 1,521 3,563 6.175 6,357 4,759 5,239 7,W79 Price (USS/ton) n/a 1,524 1,453 1,169 79 7 635 1,082 1,067 1,333 1,6142 Shieep (Dry) VaLue 6,842 7,239 6,684 8,066 5,806 5,302 5,122 8, 329 4 5d0 5,521 Vol ume 9,019 10,655 9,12 7 9,bo7 5,980 7,23i7 6,50 3 6,99 5 7,314 8,370 Price (US$/ton) 759 684 730 834 9 71 723 777 690 536 660 Sheep (Semi-processed) Value 370 389 22 172 934 855 1,674 1,245 1 ,257 2,980 Volume 2 79 255 11 39 60 44,5 ,391 661 765 2,262 P'rice (US$/ton) 1,326 1,510 2,000 1,933 2,1)30 1,921 1,479q 1 ,34 l,61u3 1,317 Or),,,r 6 77 7302 751, I .Y3 99 9ooI 2,Sl 2,50 1 1 lutal 15,.4.0 lull',,', - 57,2.77 ,!-~7 17:771 7 1/,-S 19:0.11 ,.; 174,1717 ,I 1".'..lo ~~~~~~~~T16,1,2 A4riCulLural Products 433 Whbeat - 9 3,115 - 4,579 7,393 1,216 -,~ Lins.ed OiL 4 ,714 6,4 97 4,103 6,056 2,134 3,2.1U 2,605 1,8111~ 1,417 14,171 1,23 7 il71 1,874 3,34~6 9,38 1,651 2 ,1;5 1,357 411 3,3314 Linseed Expellers 7 2 Othner 1,920 6ffi,5?d 3.14 5 j' 4L1 ffi6,9 5,842 5 Lv ) 114 903 Total 1.l. 1,7 2.uY '4, 2.7 r[q3~ Oth,r Frod,ucts worsted Clothi 1, 25,; 1,290 1,014 804 1,182 1 ,93(1 2,076 1 ,82;i 2,20)1 PL'rtiand Cem,ent 10 141 50 76 52 3 6 74 350 9 52 3, 580 2,160 Other Ranufactures 6,090 ',,914 4,910 4 ,7 71 5,951 '.3)p7 .1,164 5,979 7,737 1,963 Other lloa-Agricultural Products 714 1,141 2,2 2 21, 36 LL I 3,j156 2,:/6 ,•'ŽLb 16,3814 Total d,072 /,s .. 391 :.12 P,412 i D(2 14 2Lt, 1155 17,2211 20,507

Total Exports 129,400 174,716 153,431 165,205 17,3,940 191,165 135,835 1 58,6 73 179,15:1 200,336

Source: Central Bank, Uruguay Table 3.3: U1JGUAY - IMPORTS (C.I.F.), 1960 - 1969 (US$ in Millions)

196o 1961 1962 1262 19 6 4 1965 1966 1967 1968 1969

Consumer Goods 24.1 4 32.9 18 31.4 14.9 12.6 I..6 19.3 18.7 Foodstuffs 11.1 10.9 12.3 8.9 I0.4 5. T7 7.2 0.7 9.4 Automobiles 3.2 7.2 2.9 0.9 0.5 0.3 - 0.3 0.8 1.1 Books, Printed Matter 1.5 3.6 3.h 2.9 2.9 4.0 0.8 2.0 1.5 2.0 Other 8.3 12.6 114.3 5.8 7.6 5.1 2.9 4.1 8.3 6.2

Intermediate Goods 123.3 92.4 94.7 78.0 112.2 6.8 3.7 87.7 92.1 98e8 Raw Materials 9 .6 71.0 6b.o 82.6 7.8 Construction Materials 11.4 11.0 9.9 6.2 8.h 5.4 6.3 6.1 4.3 5.8 Seeds, Forage, Plants 9.6 2.3 3.4 3.7 8.6 3.1 3.0 3.9 9.6 2.1 Pharmaceuticals,Drugs 4.0 3.9 4.9 4.5 6.2 5.6 7.14 6.5 5.0 7.5 Eliectrical Supplies 3.0 6.2 6.2 3.6 3.8 2.2 1.2 3.1 2.4 3.4 Other 1.7 5.0 4.3 2.4 2.6 2.2 1.1 2.7 1.6 2.2

Fuels and Lubricants 34o7 28.7 30.3 24.8 25.7 24.9 350 29.5 29.0 24.9

Capital Goods 35-4 48.5 72.6 j)d6 38o6 34.1 22.6 40.6 18.9 5 Machinery and Equipment 16.9 21.8 34.1 25.7 17.3 16.7 13.3 21.5 13.1 31.8 Vehicles (excl. Auto.) 18.2 26.2 38.2 29.7 210 17.0 8.9 18.9 5.7 22.9 Other 0.3 0.5 0.3 0.2 0.3 0.4 o.L 0.2 0.1 0.2

Total Imports 210.9 176.9 150.7 164.2 19.3 1973

Source: Central Bank of Uruguay Table 3.4: EXPORT PRICES, 1960-1969

1960 1961 1962 1963 1964 1965 1966 1967 1968 1969

.WQol (.JUS$/kg_) 0.99 1.08 Greasy 1.24 1.16 1.25 1.39 1.55 1.21 1.29 1.15 1.34 Scoured 1.45 1.39 1.42 1.54 1.82 1.45 1.64 1.35 1.25 1.64 1.77 Tops 2.25 2.10 2.22 2.21 2.40 2.09 2.20 1.94

Beef (US$/ton) 496 481 Chilled 407 402 384 351 442 674 618 558 547 514 496 488 Frozen -- 387 356 313 475 588 814 917 879 Canned 759 818 -- 653 646 467 689

Hides (US$/ton)

Cattle 463 312 Salted 394 363 341 287 274 314 412 545 425 Dry 684 497 497 431 393 404 529 537 411 1133 1642 Semi-PrOcessed N.A. 1524 1453 1169 797 635 1052 1067

Sheep

Dry 759 684 730 834 971 728 777 690 586 660 1643 1317 Semi-Processed 1326 1510 2000 1933 2030 1921 1879 1884

1/ Unit price (FOB).

SOURCE: Central Bank, Uru9uay Table 3i5: NET FOREIGN RR.3E;WFV (in millions of U.S. dollars)

END OF PERIOD 1964 1965 1906 1967 196B 1969 1970 (Junej

I. Net Reserves of Mfonetar- Authorities 15. 154. 1710 149.1 t(laRD Definition)l

1. Assets 1S7.6 197.6 204.8 182.6 207.7 210.4 215.3

a. Oold 171.4 15s.9 146.5 139.5 133.3 168.3 168.4 (i) Unpledged Gold 171.4 106.1 94.9 69.8 78.4 81.6 88.L4 (held abroad) (138.9) (39.8) (28.6) (3.5) (11.8) (5.6) (12.14) (treasury) (32.5) (66.3) (66.3) (66.3) (66.6) (76.0) (76.o) (ii) Pledged Gold and Currency - 48.8 51.6 69.7 54.9 86.7 80.0 b. Convertible Currencies 114.7 23.7 30.0 19.8 34.9 19.2 25.4 c. AID Special Letters of Credit - - - - 9.9 5.3 1.4 d. Bilateral Agreements 4.0 11.5 20.8 15.8 15.9 3.9 2.3 e. IMF Gold Quota 7.5 7.5 7.5 7.5 13.7 13.7 13.7 I.IMF Special Drawing Fighta - - - - - 14.1

2. Liabilities -141.9 -43.1 -33.8 -33.5 59.8 -40.1 -25.9

a. Financial Institutions -24.0 -23.6 -13.0 -8.8 -12.6 -3.9 -3.1 b. Bilateral Agreements -0.9 -0.9 -O.h -0.3 -0.4 - -3.2 c. Exchange Risk, Incl. Arrears - - - -12.6 -1.5 -0.8 -0.7 d. Swaps -2.0 -3.6 -6.14 -6.8 -.10.8 -12.1 -10.0a f. IMF Position -15.0 -15.0 -14.0 -5.C, -34.5 -23.3 -8.9

nI. Net Reserves of Commercial Banks _48.4 -54.1 -48.9 -50.5 -63.1 -65.9 _eo.6

3. Assets 20.3 17.6 15.8 14.4 14.9 31.7 10.9 4. Liabilities -68.7 -71.7 -64.7 -64.9 -78.0 -97.6 -91.5 108.8 III. Net Foreign Reserves (IBRO Definition) 107.3 100.4 122.1 98.6 84.8 104.4

IV. Other Assets and Liabilities js -79. -179.2 .143.8 -107.3 -117.7 -102.8

5. Assets - 4.8 5.2 5.7 5.9

a. IBRD Quota a/ 1.2 1.4 1.9 2.1 b. IDB Quota iala 3.6 3.6 3.6 3.6 C. CFI Quota - - - - 0.2 0.2 0.2 -108.7 6. Liabilities rlS5.8 -179.8 -179.2 -148.6 -112.5 -12L.4

a. Rescheduled Debt to U.S. Banks -61.7 -43.7 -47.7 -59.9 -51.0 -51.o -[I1.6 b. Bank of London - -5.6 -3.6 -14.6 -4.0 -14.o -1.o e. Swiss Banks - - -2.14 -1.7 -1.4 -27.9 -26.9 d. Deutsch-Suedam. Bank ------2.7 - e. Argentine Rescheduling -11.2 -10.3 -10.3 -7.6 -6.5 -5.6 -h4.6 f. Brazilian Reschedu4ing -38.9 -38.9 -38.9 -35.8 -31.4 -20.1 -17.8 g. Commercial Arrears-/ -19.0 -75.3 -70.3 -32.1 -10.9 -0.3 -a0.2 h. Eximbank Loans - - - -0.8 -0.7 -0.6 -0.5 i. AID Loans -6.0 -6.o -6.o -6.o -6.4 -10.2 -10.7 j. IDB Loans - - - -0.1 -0.2 -1.0 -2.0 k. Other -19.0 ------0.4

V. Net rei Reserves -0.1 -25.3 -8.2 5.3 40.6 52.6 86.6 (vdernmetlI lInitions V-T+TV)

VI. Litbilities of -onetary Authorities to Residents -121.9 -1144.0 _133.8 -115.1 -80.8 -60.5 -63.5

a. Swa>ps -75.o -58.2 -49.8 -43.0 -29.0 -23.8 -22.1 b. Cornmercial Arrears in Banks -12.8 -56.1 -56.1 -54.7 -314.9 -28.1 -27.9 o. Otho re -314.1 -29.7 -27.9 -17.4 -16.9 -8.6 -13.5

VII. Net Reserves of Mlonetary Authoritles -122.0 -160.3 -11,2.0 -109.8 -110.2 -7.9 23.1 (Government Definition: VII-V+VI1)

VIII. Net Reserves or Mornetary Authorities 12.1 -75.4 -58.3 _-48.1 7.1 30.0 65.9 (KA Definition: VIII-I - (6e-h)-VYb) … … … … … … … - 911.3 TX. Net Foretrn leserves 24.9 -19.3 -2.2 7.4 h 2.7 58.7 (fLF Definition: IJl-I(6a-g)

A" Before the Central Bank of Uruguay waa created, items Sn aid b worA not Included In liabilities of Monetaxy Auithorities. 6 IIn 19614 uld 1965 cormercial arrears witk Prlvate Sector wore not inchdod in item g "Commercial Arrears" by Monetary Author-itifs. Cheir rusurves statemenits, tlherefore, dLffcr by US.129.0 million (1964) and US$75.3 million (1965) from abovo numbers.

Source: Central Bnik of Uruguny. Table 3.6s NET FOREIGN RESERVES, 196h-76 -IBRD and IMF Definition- (in U.S. dollars millions)

Net Foreign Reserves Year Net Foreign Reserves Net Foreign Reserves of Monetary Authorities Compensatory Net Foreign Reserves -IBRD Definition- of Commercial Banks -IERD Definition- Loans -IMF Definition- (1) (2) (3) = (1)-(2) (4) (5) = (3)+(4)

POSITION END OF PERIOD

196L 107.3 -L8.4 155.7 -130.8 24.9 1965 100.4 -54.1 )54.5 -173.8 -19.3 1966 122.1 -8.9 171.0 -173.2 -2.2 1967 98.6 -50.5 149.1 -141.7 7. 1968 84.8 -63.1 147.9 -105.2 L2.7 1969 104.L -65.9 170.3 -111.6 58.7 1970 (Est.) 44h- -65.9 110.3 -80.1 30.2

Projection

1971 16.6 -65.9 82.5 -48.6 33.e 1972 10.2 -65.9 76.1 -21.4 97.5 1973 32.1 -65.9 98.0 -3.2 c4.8 1974 67.1 -65.9 133.0 - 133.0 1975 112.0 -65.9 177.9 177.9 1976 137.3 -65.9 203.2 203.2

YEAR-TO-YEAR CHANGE = decrease)

1965 -6.9 -5.7 -1.2 -43.0 -JL.2 1966 21.7 5.2 16.5 o.6 17.1 1967 -23.5 -1.6 -21.9 31.5 9.6 1968 -13.8 -12.6 -1.2 36.5 35.3 1969 19.6 -2.8 22.4 -6.4 16.0 1970 (Est.) -60.0 -60.0 31.5 -28.5

Projection

1971 -27.8 - -27.8 31.5 3.7 1972 -6.4 - -6.4 27.2 20.s 1973 21.9 - 21.9 18.2 Lo.l 1974 35.o - 35.0 3.2 38.2 1975 44.9 - 4L.9 - L..9 1976 25.3 25.3 - 25.3

Sources Central Bank of Uruguay and IBRD Staff estimates. Table 4.1:URUGUAY - EXTERNAL PUBLIC DEBT OUTSTANDING AS OF DECEMBER 31, 1969 /l

Debt Repayable in Foreign Currency

(In thousands of U.S. dollars)

Debt Outstanding Source December 31, 196 9 Disbursed Including only undisbursed

TOTAL EXTERNAL PUBLIC DEBT 264,884 320,093

Privately held debt 125,192 125,192 Publicly issued bonds 19 603 19,603 Suopliers 25,169 25 169 France 1,606 Japan 371 371 United Kingdom 7,307 7,307 United States 229 229 Multiple lenders 11,050 11,050 Unknown 1,587 1,587 Others 2,819 2,819 Financial institutions 80 420 80 L20 Switzerland 7,3 United Kingdom 2,000 2,000 United States 51,059 51,059

Loans from international organizations 62 107 81 235 IBRD 57:151 IDB 8,583 27,05O

Loans from governments 77 585 110 665 Argentina Brazil 20,093 20,093 Netherlands 1,h91 3,20h United States h7,440 78,807

7/7TDebbt with an original or extended maturity of over one year.

Statistical Services Division Economics Department July 8, 1970

Table 4.2: URUGUAY - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF DECEMBER 31, 1969

Debt Repayable in Foreign Currency

(In thousands of U.S. dollars)

Page 1 DEBT OUTST (BEGIN 0F PERIO0) PAYt4ENTS DURING PERIOD INCLUDING AMORTI' YEAR UNDISSURSED ZATION INTEREST TOTAL

TOTAL EXTERNAL PUBLIC DEBT 1970 31i7915 519918 14j549 66,466 1971 265,170 49*480 12J 102 61.582 1972 214.S91 4#8187 9,438 57.625 1973 165,933 340308 6,478 40#785 1974 130,881 16.755 4,728 21P483 1975 113o410 10,453 4P072 14,525 1976 1020266 10A484 3,576 14,060 1977 91,117 10.957 3,119 14,O76 1978 79,520 8#455 2.671 11127 19T9 71#065 7.630 2P330 9,960 1980 63J435 5,390 2,O37 7.427 1981 58.044 5F833 1.817 70650 1982 52*211 3s850 1,583 SP434 1983 48.361 3.J660 1.424 5,083 1984 44.701 3P221 1.287 4#50S

Note: Includes service on all debt listed in Table 1 prepared July 8, 1970 with the exception of the following, for which re- payment terms are not available.

Suppliers $2,178,000 Talole 1[.2:U3iJ;jGUAY - SSTIYKAPfl'ziD FUTU:.E K!JFJRVICE PAYMENTS ON EXTERNAI, PU-B3LIC DSEBT OIJT.;TAiDINCI INCLUDING UNLiSUH;E;D AS OF DECIOZlBai 31, 1969 (CONT.)

Debt Repxayable in Fore-eiFn C-urrency

(In thousands of U.S. dollars)

______~ ~ ~~~~~~Pa-g e . DEBT OUTST (IEGIN OF PERIOU) PAYM4ENTS DURING PERIOD INCLUDING AHORTI' YEAR UJNDISBURSEO ZATION INTEREST TOTAL

PRIVATELY4HELD DEBT

1970 123po15 34,309 8*898 43,20r 1971 87P877 31*458 6*114 37*571 1972 55*620 29,877 3,712 330589 1973 240972 16,563 1'325 178088 1974 s7666 1,677 256 1i933 1975 5P272 1,058 172 1*229 1976 3*524 1,006 109 10115 l977 1,852 992 51 1*043 1978 220 220 4 224

PUBLICLY.ISSUED BONDS

1970 19*603 4.154 666 4*819 19r1 14*621 3.274 478 3,r52 1972 10.549 1*027 353 1,381 1973 8p?51 1*063 290 1*354 1974 6*944 1,097 22r ,3124 1975 5.130 964 165 1,#128 1976 3*476 958 10? l*066 1977 1*852 992 51 I.043 1978 220 220 4 224 Tableh42 : URTUGUAY - ESTaEATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF DECEMBER 31, 1969 (CONT.)

Debt Repayable in Foreign Currency

(In housands of U.S. dollars)

Page 3 DEBT OUTST (BEGIN OF PERIOD) PAYMENTS DURING PERIOD INCLUDING AMORT!' YEAR UNDISBURSED ZATION INTEREST TOTAL

PRIVATELY-HELD DEBT

SUPPLIERS

1970 22,992 5,751 1,785 7,536 1971 17e*241 6,551 1*146 7,699 1972 10p689 7,217 684 ,0901 1973 3,472 20750 174 20924 i974 722 580 29 609 1975 142 94 7 101 1976 4f8 48 1 49

FINANCIAL INSTITUTIONS

19?O 80#420 24&404 6,447 30#851 1971 56,015 21*633 4,488 26,121 1972 34,383 21#633 2P6T4 240307 1973 12,750 120750 861 13s611 PiJPTT,UF ( DESBT Table )-1-2: URUGUAY - ,STEIMATIC) jfUpUEL;-Si'?VlI(CE PAYMENTS ON EXTER2NAL IJ'I,TANDINGT INCLJ'IN. uNl)ISbilRTh A:S OF 1DE,CiMBEa :3, 1969 (eL,(U)NT. )

Debt ftep,ayable in For-eign Currency

(i1n thousand:s of U. S. dollars)

Page 4 DEBT OtUTST (BEGIN OF PERIOD) PAY4ENTS DURING PERIOD :INCLUDING AMORTIT YEAR UNDISBURSEO ZATION INTEREST TOTAL

LOANS FROM INTERNATIONAL ORGANIZAT IONS

191O 8'4235 8.226 30514 ll'740 12.110 1971 76,009 a.455 3,655 1972 67P554 8,309 3.561 11,870 11.508 1973 59.245 8,2o5 3.303 1974 51.040 8P429 2P882 11#310 1975 42.612 6.668 2.441 9,0109 1976 35.943 6,127 2*064 8,791 8.702 1977 29,216 7.024 1.678 1918 22. 193 5P241 1.294 6.534 1979 16.952 4.800 1,008 5,808 1980 12.152 3.111 755 3,866 1981 9,040 3,116 575 3,691 1982 5.924 1*,66 419 1.605 1983 4,#739 986 335 1.#321 1984 3.753 786 271 1,056

UaRD

1970 57018l 6,411 2f862 9.273 i971 50P770 6,615 2.531 9J146 8,245 1972 44. 155 6b042 2,o203 1973 380113 6,274 1.898 8.172 1974 31.839 6.520 1.581 8. 101 1975 25P319 4#903 1.265 6 166 1976 200416 4.928 1.006 5,934 1977 150488 5o189 740 5.929 1978 10P299 3.184 489 30673 3.668 1979 7.j15 3.346 320 1980 3.767 1.837 165 2.002 1981 1*930 1.93Q 72 2.002 Table 4.2:URUGUAY - STDATED FUTURE SERVICE PAYNENTS ON EXTERNAL PUBLIC DBT OUTSTAnING INCLUDING UNDISBURSED AS OF DECZBER 31, 1969 (CONT.)

Debt Repayable in Foreign Currency

(In thousands of U.S. dollars)

Page 5 OE8T OUTST (BEGIN OF PERIOD) PAYMENTS DURING PERlOU INCLUDING AMORTI YEAR UNOISBURSED ZATION INTEREST TOTAL

LOANS FOM INTERNTIONAL ORIANTZATION

too

197i 27'054 1,815 652 2,467 1971 250239 1,840 1.124 2,964 1972 23'399 2.267 1,350 3.625 1973 21*132 1J931 1'405 3.336 1974 19.201 1'909 1.301 3'209 1975 17'293 10765 1,176 2c941 1976 15#527 1J799 1,058 2.857 1977 13*728 18635 938 2,773 1978 110894 2.057 805 2,861 1979 9#837 1J452 688 2J140 1980 8.385 1J274 590 1.864 1981 7.110 1*186 503 1,669 1982 5*924 1J186 419 1.605 1983 4#739 986 335 1.321 1984 3J753 786 271 1,056

LOANS FROM GOVERNMENTS

1970 110.665 9.383 2.137 11.519 1971 101P283 9,567 2,334 11.901 1972 91.716 10.001 2,165 12m166 1973 61.715 9.539 1,049 11.389 1974 72175 6.*650 1.590 8,240 1975 65,526 2.727 1.459 4#186 1976 62,799 2,751 1.404 4.154 1977 60,048 2,941 1.391 4.331 1976 57.j07 2,994 1*374 4*368 19T9 54113 2,830 1J,322 4'152 1980 51.283 2,279 1,282 3,561 1981 49.004 2,717 1#241 3.959 1982 46.287 2#665 1,J164 3#829 1983 43.622 2.674 1,089 3.763 1984 40.948 2#435 1,017 3,452 Table )-4.2:URJGUJAY - E:3T7TED FUtTURE SERVICE PAYMENT3 ON EXTERNAL PUBLIC I)!BT OUT.STANDING JNCLUDING UNDI-3BUSSED AS OF DECEMBER 31, 1969

Debt. Repayable in Foreign Currency

(In thousands of U.S. dollars)

Page 6 OEST OUTST (aEGIN OF PERIOD) PAYMENTS DURING PERIOD INCLUDING AMORTI; YEAR UNDISOURSED ZATION IOTEREST TOTAL

LOANS FROM GOVERNMENTS

NETHERLAiN S

1970 3,204 * 111 1I 1971 3,204 11 170 181 1972 3J 193 271 203 474 1973 2J923 271 186 456 1974 2* 652 271 168 439 1975 2*381 271 150 421 1976 2*110 271 133 404 1977 1*840 271 115 366 1978 1,569 271 98 368 1979 10298 271 80 351 1980 1t028 271 62 333 1981 757 260 45 304 1982 497 249 28 2T7 1983 249 249 12 261

UNITEU STATES

1970 78.807 3*205 1.208 40413 1971 75*602 3.379 1 .532 4Q910 1972 72*223 3.553 1.514 50O67 1973 68.670 3PO91 1.402 40493 1974 65,579 2J434 1*346 3,780 1975 63.I45 2.457 1J309 30765 1976 60,688 2.480 1J271 3'751 j977 58,208 2*670 1#275 3*945 1978 55,538 2*724 1*276 40.00 1979 52.814 2.559 1.242 3,801 1980 50J255 2*008 1.220 3,228 1981 48*247 2P458 1J197 3*654 1982 45,789 2,416 1J136 3.552 1983 43.373 2,425 1,076 3*502 1984 40,948 2P435 1.017 3*452 Table 4.2:URUGUAY- &STIMATaD FUTURE SE;IVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING ENCLUDING UNDISBURSED AS OF DECEMBER 31, 1969 (CONT.)

Debt Repayable in Foreign Currency

(In thousands of U.S. dollars)

Page _7_ DEBT OUTST (BEGIN OF PERIOD) PAYMENTS DURING PERIOD INCLUDING AMORTI YEAR UNOISBURSED ZATION INTEREST TOTAL

LOANS FROM GOVERNMENTS

OTH4ERS

1970 28*654 6,177 1a8 6,995 1971. 22m47? 61Srr 632 6,J81O 1972 16P299 6#177 447 60624 1973 10.122 6.1?? 262 6P439 1974 3#945 3#945 76 4.021

Statistical Services Division Economics Department July 8, 1970

Table h.3: URUMUAY - PAST TRANSACTIONS ON EXTERNAL PUBLIC DEB 1965 - 1969/1

Debt Repayable in Foreign Currency

(In thousands of U.S. dollars)

Page 1 of 5 Debt outstanding Transactions during period begianing_of_period ______Including Disbursed Undis- Author- Disburse- Payments Year uxdis. only bursed ization ment Amort. Interest Total

GA:TD TOTAL 1965 237589 198915 38671 53772 36216 11824 5168 16992 1966 278756 222526 56230 26383 36382 21928 8590 30517 1967 282050 236120 45930 35739 47216 34390 9901 44291 19ob 279534 245080 34454 64979 40893 38821 010079 046900 1969 304905 246365 5d54C, 53322 57156 37728 14336 52064 1970 320093/2 264880,/2 5?208

TUTAL PRIVATELY HELD OEBT

1965 91060 90962 98 23848 16946 6696 2049 8745 1966 107429 102'49 5000 21083 24779 9083 2605 11686 19rb 11b571 111267 1304 37131 37520 24379 5992 30371 1968 128257 1265a2 i715 15190 14395 26054 005071 031125 1969 116907 114G06 281t 33648 36459 24452 8907 33359 1970 125192/2 125192/2

PiJiLTCLY-ISULEO goNns

j955 44453 44453 - - 3492 1458 4950 1966 40174 40114 - 3498 1261 4760 9t/ 3b5%? 35d77 - a 3803 jIr)2 4905 19b8 26140 2F140 - j552 869 4/421 19b9 23798 23798 - 3499 920 4419 19/0 19 6,03 196C3q 6

rea e - notes at t,.e e- .: . t able. Table 4.3: UBUC1UAY - PAST TRANSACTIONS ON EXTERNAL PUBLIC DEBT, 1965 - 1969/1 Debt Repayable in Foreign Currency

(In thousands of U.S. dollars) Page 2 of 5 Debt outstanding Vransactions during period .beinning.-of .-pe-r-iod Including Disbursed Undis- Author- Disburse- Payments Year undis. only bursed ization ment Amort. -Interest Total PRI ATELY HELU DEBT

SlJPPLIERS

1965 6562 8464 98 5239 337 2465 388 2853 1966 11337 6337 5000 19501 23197 3109 521 3630 1967 27731 26427 1304 16731 16320 12136 1558 13694 i908 32327 30612 1715 4811 3716 10482 001890 012372 1969 26660 23849 2811 7000 9811 8276 1325 9601 19f0 25169/2 2510 -

FINA-CIAL INSTITUTIONS

1965 38046 38046 - 18609 18609 739 2o3 941 1966 55918 55918 - 15d2 1582 2474 822 3296 19b7 55033 55033 21200 21200 8440 3332 11772 19b8 67789 67789 . 10679 10679 12020 2312 14332 1969 66449 66449 - 26648 26648 12677 6662 19339 1970 80420 804k'o

T;8 PAL LOA"S "RO1M IDTERPATIO1TAL ORiAMIZATIONS

1965 84(15 5a9O 29815 15300 2528 4194 2886 7080 1906 95521 53234 42587 - 10803 4550 2967 7517 1967 91270 59467 31783 - 2000 9421 6168 32n2 9450 1968 8 31t)3 62741 2U362 13950 6840 6191 3422 "613 1969 90861 63390 27471 - 31 5314 6598 3637 10235 1970 84235 621u,7 22128

S-ee -'oet- m'es t the end o ' table. Table 4.3: - PAST TRANSACTIOi'S Oii EXTERNAL PUBLIC DEBT, 1965 - 1969/1

Debt Rep;yable in Foreign Currency

(In thousands of U.S. dollars)

Page 3 of 5 Debt outstanding f'ransactions during period beginning of period Including Disbursed Undis- Author- Disturse- Payments Year undis. only bursed ization ment Armort. Interest Total

TQTAI, L.in --- rCM4I ET:` -ATTi -AL. ORGA"IZATIO?TS

1965 68d22 49691 18331 12700 1946 3663 2493 6156 1966 71J59 47914 29085 8749 3872 2575 6447 1967 73186 t2651 2,335 - 8600 5197 2783 1980 1968 61989 56254 11735 - 5e65 5333 2960 8293 1969 62656 567b6 5870 2213 5475 3121 8596 1970 57181 53524 i657

I [) 4

19o5 16693 52Q,9 11484 2600 582 531 3q3 924 19b6 1W762 52bO 13502 a 2054 678 3Q2 1070 1961 18 )54 6636 114? - 2000 821 971 499 1470 19bb 15114 64o7 d627 13951 Y75 858 462 1320 19h,9 26205 66o4 21601 - 31 3101 1123 516 1639 1910 27'I54 45o3 10471

TT T -jAi A;NS F R);i (G0vFt ENTS i965 61'414 53;53 o761 14624 14742 934 233 1167 19h6 755 ,6 66653 O643 5000 800 829 6 301 8 I 1 314 J 9 k)7 !9 7 2~ 59 3t6 1 2!43 - I'92 275 3843 6b7 4470 196! 65174 557T7 ie317 35539 19653 6576 15;e6 8162 19-,9 97h,37 6RRt9 -2258 20?04 15383 6678 1792 8470 1.9 ' 6 17'j 75 b5 3 3 O8, Table 4-3: URUGVAY - PAST TRANSACTIOjIS ON1EXTERNAL PUBLIC DEB; 1965 - 1969/1

Debt Repayable in Foreign Currency

(In thousands of U.S. dollars)

Page 4 of 5 Debt outstanding Transactions during period beginning of period Including Disbursed Undis- Author- Distui'se- Payrents Year undis. only bursed ization ment Amort. LIterest Total

-LUA S FRO;-i GOVERNMENTS

NETHFRLANOS

1965 * .a . . . 1966 - - - - * 0 * 1961 - 1968

1969 ' ' 3704 1491 * 5 5 1970 3204 1491 1713

u4IT'L STArES

196t) 24193 15432 d761 - 118 721 233 954 19b6 2,3474 14831 d643 5900 goo 467 149 616 19ol 28306 151)3 12843 - 192 ?75 14q 167 315 1968 27A66 152 9 i2377 35539 19658 648 4J7 1065 1969 62556 34298 2d258 17tO0 13592 751 798 1548 1970 788V7 47440 31367

-ee -ut rIote= 9t the e:r-d of table. Table 4.3: _JU?UAY - PAST TRANSACTIOPIS OiN EXTERNAL PUBLIC DEBT, 15c5 - 1969/1

Debt Repayable in Foreign Currency

(In thou-ands of U.S. dollars)

Page Cq of Debt outstanding iransactions during period beginning of period ___ Including Disbursed Undis- Author- Distrrse- Payments Year undis. only bursed ization ment Armort. Interest Total

07T E4 S

1965 31621 37621 14624 14624 213 ' 213 19b6 52J32 '2e'32 ' ' ' 7829 2869 10698 1967 44203 44203 ' ' 3695 460 4155 1968 40508 40508 - . 5928 1169 7097 1969 34531 3a561 ' 5928 989 6917 1970 28654 2?654 -

Dl7ebt with an ori-nal or exterded ,.atrity o) over one year. 75 Trn,bal-.n.re c3e to th-le devalu-tion o trte F`nch Franc.

Statistical .,ervices Division Economnics_Department July 13, 1970

Table 1.1.: EXTERNALPUBLIC SECTOR DEBT7, 1961.-A?- (molln f U.S. Doll1ro)

O.tatd.Vn2 1964 Oototand.V 1965 Oototaod.! 1966 Ootot-ad.Z/ 196? Outstand.?" 1968 Ototond.Z/ 1969 2tt-./ nBebl.=ed

Den. 1963 Utili,o. -Rot.DC.- 1966 Stili. Anort. De.. 1965 utiilo. or. D-n. 1966 Utilio. Snort. Dec. 1967 Utills. Snot. De.- 1968 Stilb. Snoot. leo. 1969 De.- 1969

1. mii olfPFiann - 5Z-8.1. 18.1. 7.1 - 25.5 23.7

a. AID PL-1.60 ------18.1. 18.1. - 18.1. 0.1 A. AID Seotoro1 528-L-021------7.1 - 7.1 7.9 AID 525-L-020 ------0.7 d. AID 528-4-022------15.0

2. Kinistry of Pobllo Works 0.1 0.9 - 1.0 1.2 - 2.2 5.2 0.1 7.3 1..1 1.4. 10.3 3.0 1.6 11.? 3.2 1.7 13.2 1..6

a. LARD U6-321. CR05) 0.1 0.8 - 0.9 1.2 - 2.1 1..1 - 6.2 3.9 1.2 8.9 2.7 1.1. 10.2 2.1 1.4. 10.9 3.6 6. IDA 57-OC (8.26) - 0.1 - 0.1- - 0.1 1.1 0.1 1.1 0.5 0.2 1.1. 0.3 0.2 1.5 1.1 0.3 2.3 1.0

3. Moolotry of Agri-olture 5.1. - 0.1. 5.0 - - 5.0 - 0.5 1..5 - 0.5 4..o0 0.5 j.5 0.5 a±s

. CorlBank of Agentina 5.4. - 0.1. 5.0 - - 5.0 - 0.5 1..5 - 0.5 1..0 - .5 3.5 - 0.5 3.0-

h.. cory Cozomsoolo of tbs Plan Awropouaio 3.0 1.4. 0.1. 4.0 2.1. 0.8 5.6 1.7? 1.0 9.3 4..8 1.0 5-3.1 3.0 1.0 15.1 0.1 1.0 11..2 0.1

a. 15BRI 6U-21.5 (Firot PIn) 3.0 1.1 0.1. 1.0 2.1 0.8 5.6 - 1.0 h.6 - 1.0 3.6 . 1.0 2.6 - 1.0 1.6 - A. IBRD DR-6I? (lecood Plan) ------1..? - 1.7? 4.8 - 9.5 3.0 - 12.5 0.1 - 12.6 0.1

5. lTD 51..6 0.7 3.7 51.6 5.1. 1.2 52.8 - 4..5 4.8.3 0.1. 5.1 4.3.8 0.2 4..3 39. 7.0 1s.5 42.2 -

a. lIERDwU-1 -30 18.1 - 1.6 16.5 - 1.7 11..8 - 1.6 13.2 - i.6 uI.6 - 1.7 9.9 - 1.7 8.2- I.. IERD UR-1B8-132 4..1 - 0.3 3.8 - 0.3 3.5 - 0.3 3.2 - o.1. 2.8 - 0.2 2.6 - 0.3 2.3- c. SBAD U05-18152 23.5 0.1 0.8 22.8 - 0.9 21.9 - 0.9 21.0 - 1.0 20.0 . 1.0 19.0 - 1.1 17.9- d. AID DLP-72 7.3 0.6 0.2 7.7 0.1. 0.1. 7.7 - 0.5 7.2 0.1. 0.1. 7.1. 0.2 0.5 7.1 - 0.5 6.6- e. aEi. Bank 1.6 - 0.8 o.8 - 0.8 ------f. 8111cR Petrl.cue Co. (1965)- - - - 5.0 0.1 4..9- 1.2 3.7- 1.7 2.0- 0.9 1.1- 0.9 0.2- g. Aritioh Petrol-a Co. (1969)------7.0 - 7.0

6. O8CAP 1.9 0.9 - 2.8 o.-5 0.5 2.8 0.7 0.1. 3.1 0.1 0.5 2.7 0.1 0.3 2.5 0.7 0.5 2.7 5.7

A. IDB 1.7-OC 1.9 . 2.8 0.5 0.5 2.8 0.? 0.1. 3.1 0.1 0.5 2.7 0.1 0.3 2.5 0.1. 0.5 2.1. - A. IDB 155-OC------0.3 - 0.3 1.7? o.CIDB 1 57-DF ------1.0

7. 0SE 3.3 1.6 - 1.9 1.0 0.1 5.7 0. 0.1. 5.1. 0. 0.1. 5.3 0.7 0.8 5.2 1.0 0.8 5.1. 7.

a. IDB 15-IC 2.0 1.3 - 3.3 0.9 0.1 1..1 0.1 0.3 3.9 0.2 0.1. 1.0 0.6 0.8 3.8 0.6 0.7 3.7 - 6.118B57-SP ------0.1 - 0.1 0.1 - 0.2 0.8 DalEx Hank 1.3 0.3 - 1.6 0.1 - 1.6 - 0.1 1.5 - - 1.3 - - 1.) - 0.1 1.2 - d. ID" 11 7-OC ------2.6 a. SB 156-SF- . ------0.3 - 0.3 4..1

8. Bano Hioot.oaro - - - 0.8 - 0.5 1.2 - 2.0 1.0 0.1 2.9 0.9 - 3.8 2.8 01 6.5 1.2 a- ~ IDB 43-TF~ ~ ~ ~ ~ - - - 0.8 - 0.8 1.2 - 2.0 1.0 0.1 2.9 0.9 - 3.8 2.8 0.1 6.5 1.2

a.A DP 1.3-U ------0. - . 1

a. IDB 170-IC- . ------9.3 6.IDB199-SF - 0.1. 0. Dut.h Bank for In~eeteet in Developing Coontries------. - 0.9 - 0.9 2.3

10. Monte-ideo MNAoioap Aathority . - - - 0.2 - 0.2 0.2 - - 0.6 - 1.0 1.3 - 2.3 0.2 0.1 2.1.-

a. IDB 15-UPF - - 0.2 - 0.2 0.? - - 0.6 - 1.0 1.3 - 2.3 0.2 0.1 2.1.

11. Genral Direotorat.eof Pa -icoCredit 31.2 - 2.6 28.6 - 2.7 -- 3.0 22.9 - 1.8 18.1 - 2.9 15.2 - 2.1. 12.8

a. Externlly Bald Boode3 31.2 - 2.6 28.6 - 2.7 -- 3.0 22.9 - 1.8 18.1 - 2.9 15.2 - 2.1. 12.8

I/ InterntIonal gageolee and externlly Reid bondo, eaolades ooppller' credito, obligations of the Bank of tAa Repoblio and Central Bank. 2/ Eolodee ondiebored balace.- 3/ Cetral Bank eatiate..

Douce: Central Bank of Urogoxy.

Table 4.5: POSSIBLE COMNITMENTS AND DISBURSEMENTS OF EXTERNAL LOANS, 1970-76 (in US$ millions)

Commitment Date Loan DISBURSaIENTS Purpose Amount 1970 1971 1972 1973 1974 1975 1976

GRAND TOTAL 381.72! 8.6 214.1 50.9 67.2 65.2 60.8 41.7 1970 86.3 8.6 21.7 29.0 16.0 7.5 3.5 ?1-18o (Potatoes and Tobacco) 2.0 1.0 1.0 Rhucation (Universidad de Trabajo) 4.5 1.0 1.5 1.0 1.0 Slaughterhouse Improvement 13.0 3.0 6.5 3.5 Industrial Development 6.o 1.0 1.0 3.0 1.0 n 11 4.5 2.0 2.5 Livestock (III, IBRD) 6.3 2.6 3.7 Power (UTE, IBRD) 18.0 1.5 4.5 9.5 2.5 Floating Dock - ANCAP (Suppl.) 7.0 2.0 2.0 2.0 1.0 Railways Rolllng Stock (Suppl.) 10.0 2.0 2.0 2.0 2.0 2.0 Sea Transport - ANP (Suppl.) 6.o 3.0 3.0 Technical Assistance Grants 9.0 1.5 1.5 1.5 1.5 1.5 1.5

1971 148.14 2.4 18.4 17.6 8.0 2.0 Private Development Corporation 3; 0T 1.0 1.0 1.0 Sector Loan - Agriculture 10.0 5.0 5.0 l;oating Dock - ANCAP 8.0 2.0 2.0 2.0 2.0 Paysandu Cement Plant Expansion 4.0 1.0 2.0 1.0 livestock (IV, IBRD) 18.0 2.0 7.0 5.0 4.0 Aighwny Maintenance (IBRD) 5.0 2.4 2.6

1972 75.0 3.5 33.6 30.5 7.4 Sector Project PL-480 13.0 - T -T - Airport Modernization 4.0 1.0 2.0 1.0 Telecommunications (Microwave t? Chuy) 3.0 0.5 1.5 1.0 Projects to be Identified (IDB)~ 5.0 2.0 3.0 Power Generation (UTE, IBED) 40.0 10.6 22.0 7.4 Power Generation (UTE, Suppl.) 10.0 10.0

1973 36.0 15.2 19.5 1.3 Sector Project PI-L480 7.515.2 1 1.3 Projects to be Identified (IDB) 15.0 4.7 9.0 1.3 Tourism (1, IBRD) 8.0 4.0 4.0

1974 56.o 4.0 27.14 20.2 Sector Project PI_-480 13. 6.5 6.5 Projects to be Identified (IDB) 15.0 3.0 8.0 1.0 Livestock (V, IBRD) 18.0 1.0 7.0 5.6 Power Distribution UTE (IBRD) 10.0 5.9 4.1

1975 42.0 1.0 20.2 Sector Project PL-480 13.0 6.5 Projects to be Identified (IDB) 15.0 1.0 6.7 Development Finance Company 4.0 2.0 Tourism (II, IDRD) 10.0 5.0

1976 38.0 Sector Project PL-480 13.0 Projects to be identified (IDB) 15.0 Projects unrscheduled (IBRD) 10.0

I/ Includes 1US$63.2 million to be disbursed after 1976. 2/ Possible IIB Projects include power interconnection with Argentina, fish terminal, telecomnunication projects.

Scmrce: TIRD staff estimnates.

Tatble 5.1: CONS0LIDATF~D CASH OPERATIONS OF CENTRAL 00*V NMINT OF URUOUATAND Of SUWORDTENATE?UWDIS (MLIliona of Current Pesos)

1961 1962 1963 1964 1965 1966 1967 1968 1',69

A. CON3JLIDATEI0 CASHiOPHtATIONS CENTRAL GOVRMWENT

1. Revenues 2J&1 3,389 4,3 .8 ,99U2.3 L~~ 1~

2.Cash Expen tturesY/ 9 3,762 4.080 WO 8,293 15 009 25,663 50,071 74,1

3. Deficit (-) or Surplus 112 LB~ -135 -l -5.026 -1,7U4 -12,6'C~

4. Fin.ancing~ (not) -112 7 8 j2 DI 5,026 1.734 12,6'1

(a) Monetary Authorities 45 319 341 258 1,820 619 4,264 -1,642 8,711 (b) Treasury Bills -164 ..1 -412 -338 -466 14 762 2,402 713 (c) T'reasury Bonds ------975 3,047 (d) Other 7 55 16 2 - - - - 132

B. CASH OPER.ATIONS ORDINARY BUGPrT 5. Rerenues 2.61 2,547 3,058 ~,)9 5.097 1-1,85 I17,39 44,126 5 7L2 (a) Transfers from Retentions and Surchargea Fund 147 41 246 279 467 2,441 2,576 11,775 9,5j1 (b) Transfe-rs from EaLrmaLrkedTaxes -37 10 50 111 - 411 1,287 655 1,2,o (c) Regular Revenues 2,521 2,496 2,762 4,006 4,630 8,993 13,535 31,696 46,,~37

6. Expenditures 2.514 2.888 2,999 4,309 6,661 12.279 2.437 145,1231 65,2L3

7. Deficit (-) or Surplus n -3. 59 87 -1,56 -43 .Z5.0 -1,105 -8L 8. Financing (net) -117 2a :3 -87 1.564 434 5 039 1,105 275

(a) Monetary Authorities 40 287 337 249 2,030 420 4,277 -1,721 3,630 (b) Treasury Bills -164 -1 -412 -338 -466 14 762 2,401 77.3 (c) Treasury Bonds ------425 (d) Othw~ 7 55 16 2 - - - - 3,552

C. CASH OPEFATIONS PUBLIC WCICS FUND

9. Revenrues 103 14 15 T 5 2 1.091 1.832 LEI

(a) Transfers from Retentions and Surcharges Fund 46 106 30 95 131 131 131 131 50 (b) iaf~franf± b' t' Farzwirkbd Taxes 55 37 U-8 81 322 466 881 1,141 1,616 (c) Transfers from Ordinary B'idget ------316 - (d) Other 2 2 4- 3- 3 24 79 241a 262

10). Expendtures/ 108 17 15 188 24 820 1,078 2A61 6,.2

11. Deficit (-) or Sun-pls -5 -3 -4 - 210 -1.99 13 -629 -4,L$

(a) Monetary Authorities 5 32 4 9 -210 199 -13 79 1,1-22 (b) Treassur Bonds ------550 3,1L,74 (c) Other - - - - 91

D.CASH OPERATIONS EXP'CRT RETENTIONS ANDIMPORT SURCAGES FUND

13. Revenrues 1 442 728 961 1.075 2,LO2 3.546 11.929 9.71,7 (a) Retentions 319 244 443 381 817 2,396 2,266 9,396 5,6-7 (b) Surcharges 198 198 285 580 258 1,156 1,280 2,533 4,1'13

14. Transfers _k 2 961 1.075 LL 354 11,929 2_3i

(a) Transefers to Ordinary Budget 147 41 246 279 467 2,44a 2,576 1-1,775 9,501 (b) Transfers to Public Works Fund 46 106 30 95 131 131 131 131 c0 (c) Other Transfers 324 295 452 587 477 980 839 23 21-6

5. EARMARTED TAXES 15. Revenues hi 449 iq 812 1.231 1.807 3.477 4.468 16. TransfferaY/ 41 4 641j 812 1.231 1,12j:~ .~

(a) To Social Security Agencies 219 207 277 354i 360 363 638 922 1,193 (b) To Municipal Governmetnts 118 157 151 188 192 294 276 1i - (c) To State Railway Administration (AFE) 21 ------(d) To State Waterworks (OSE) 2 13 11 8 19 3 - - - (e) To Nat.innal Fort Administration (ANP) 5 4 4 5 12 14 15 35 39 (f) To National institute or Economy Housing (INVE) 3 1 4 5 31 .19 24 25 61 (g) To National Institute of Colonicatlon (INC) 1 - 1 2 1 1 - - - (b) National Hc,umInR hund ------22 (i) Other Direct Transafers 24 20 25 58 294 236 356 1,679 7,55

Sub-Totals Direct Transfers 393 402 473 620 909 930 1,309 2,672 2,0 70

()To Public Works Futnd 55 37 118 81 322 466 881. 1.141 1,1 (k) To OrdinaLry Budget -37 10 50 ill - 411 1,287 655 1,2.0

,/Exclude Uir$1,685 millioni In puiblic works financed by externial lentders. l/EcludJes Central OJover:anent tranafers of non-earmarked revenues to vaLrious decenutralized agekncies. Table 5.2: ESTIMATED DISTRIBUTION OF CENTRAL GOVERNNENT CASH EfPENDITURESi (in millions of current Pesos)

1961 1962 1963 1964 1965 1966 1967 19682/ 1969 1970k/ Budget

1. Revermes-/ 3,L51 3,389 4,135 5,782 6,939 1L,376 20,637 48.337 61,802 83,775 660 3 2. Current rxpenditures 3,130 3L4S 3.903 5,L06 7,861 13,922 2L2L L5,91 a. Personnel 1,278 1,777 2,141 2,995 5,124 8,306 16,629 31,69? 45,5?4 56,571 (i) Wages (1,001) (1,223) (1,582) (2,254) (4,11b6) (6.OiL) (12,967) (25,225) (30,332) (33,750) (ii) Family Bonus (71) (205) (15o) (178) (283) (537) (1,0-6) (2,112) (6,730) (12,237) (5.20e) (6,550) (iii) Social Security Contributions (115) (222) (265) (372) (385) (1,254) (1,553) (2,630) (iv) Pensions (91) (127) (144) (161) (310) (474) (1,023) (1,732) (6,332) (a,034)

b. Materials and Services 219 320 330 644 1,274 2,48S 3,256 5,o0 8,L76 12,421 9,224 c. Subsidies 1,501 1,259 1,173 1,560 1,1L7 2,453 3,459 7.594 7.105 2,500 d. Interest Payments 132 132 159 207 316 673 9co 1,577 1,934 2,73L 3. Current Account S-roluS 321 -99 332 376 -922 454 -3,607 2,427 -4,4Qo 11,00 4. Capital ExDoenditures 209 27h 377 298 432 1,087 1.419 4,161 8,2?0

a2Amortization2 101 97 121 110 186 267 341 1,700 2,377 2,600 b. Investmer.t/ 108 177 156 188 246 820 1,075 2,461 5,913 8,400 -8.216 5. Cash Deficit (-) or Surplus 112 -373 45 -78 -1,354 -633 -Z06 ,734 -12,69

Thus Bank staff ha / Prior to 1968 the Contaduria did not maintain statistics on the distribution of current expenditures by type of expenditure. used data on expenditure obligations to estizate personnel costs, materials and services purchases, and debt service for the years 1961-67. For these same years, subsidy payments have been estimated as the residual of total current expenditures minus the aforementioned expenditure obligations. 2/ Excludes redemptions of Treasury bills and bonds. Excludes investment financed by external lenders. Based on appropriations included in 1968 Rendicion de Cuentas (i.e. 1970 budget law). Source: Contaduria General de la Nacion. RErVENUE Table 5.3: CENTRAL OOVTERNT REVE2MUE BY SOURCE; EXCL0DINO EARMARKED (mllliorw of current Pesos)

1961 1962 1963 1964 1965 1966 1967 1968 1969

8 833i 258 29933 1 488 2 607 7,317 A. Excise Taxes '9 ~ t l 37 'M TobccoPr ducts 9 7 7TII 53 62 76 132 2954 440 798 2,720 998 Lubricants and Fuels 1,613 65 75 82 105 S15J 234 379 153 Alcoholic Beverages 51 123 425 8216 Beverages 9 12 11 22 28 Non-Alcoholic 3 9 12 189 378 Common Wine 2 3 4s 18 13 19 124 260 Beer 5 6 5 S 12 10 18 26 1-10 178 Chamnpagne and Fine Winea 5 6 6 fl 16 39 92 216 Perfume, Set. 5 5 7 a 16 25 32 39 19 21 34 66 166 Sumptuary Goods. 2 3 4 113 66 Other 6 3 1 3 7w 1.97I 2,159 6~1 ,4 S. Stamp Taxes 181 l7A 195 44 M. 1.5 2,860 6,733 1014 C. Sales Taxes 24 4 1 Sal1es andF Services - u 4,605 8,169 (Value added) - - - - Sales and Transactions 631. 1,403 2,250 1,288 8j35 (Turnover) 241 241 317 Is?? - 112 ?2 352 599 8t40 1.,136 Gross Receipts - - 236 3n 986 1 788 3,6 .- Txson ForelF Trade 240 239 192 D. 21 Bi-9 i' 2,721 l~IYporDuies 191 i 19- 31 26 inl 167 192 448 1914 Taxes and Other Charges on Exports 49 34 114 107 94 160 ZiB 341 365 i 063 143' 3. Taxes on Transactions '337 "- Transmission of Real Property '77 II7K - 14 31 118 155 Vehicle Transfers - - -- 81 92 132 155 409 60 Other 70 65 49 92 169 242 53 876 1,4642 1,409 P. Taxes on Banking Activity 104 113 -- o -4F -_ - - Ta-xon Banks 6 - 401 802 1,358 1, 3$5 on Banking Activity - - - - Sole Tax 162 83 74 84 19 Tax on Loans and Guarantees 65 69 48 111 80 99 140 297 1 226 1 269 3,0 ~I h7 0. Income Taxes2 1,2385 t Income Tax I 7- - 1K Z' F'Mu~calersons 33 hi 195 288 505 1,147 Persons Income Tax - 7 19 Juridical 5.4 253 3146 496 1,211 industrial and Commercial Income Tax - 62 4.4 59 and Commercial Surtax on InduBtrial - 159 22t5 - - - - - Income- 3 25 98 103 79 57 Excess Profits Tax- 1 2 14 16 16 40 36 58 39 Financia Activ-ities Tax - 5 - 66 14~6 205 459 839 Unified Tax - - - -20 35 110 l84 Tax on 2 - Commissions 1 -55 Other - - - -1 6 6 7 234 __i B. Inheritance Taxes 40 46 718 67 225 279 76 1 987 ~2 3Z$ I. ropxeroty an Walth Taxes - '- Taxon Land Cncentration - - 16 5 5 5 9 9 11 10 Real Property Surtax - 1 - 1 1 - - - Real Property Contribution 7 8 2 - 6 - 6 5 6 Real Property Contribution Surtax 946 1,327 - - - 82 161 174 215 Wealth Tax 479 ------266 Extraordinary Wealth Tax 420 807r Tax 40 45 75 128 97 134 232 Substitute for Inheritance 6 21 34 47 73 Other 4 3 5 4 29 61 117 203 370 3. ~~~~~~am b1in" 16 20 22 1W17 h Tia ;n ttary Tickets 29 55 96 176 lottery Premia 7 9 10 14 17 Tax on 1 1I - - - Others 1 1 - 7. 2_ 81 156 520 L76~ K. Other Taxes 2251 199 240 356 351 815 1.034t 2.537 2 450o L. No-TxReceipts T 5 M M9 27Li Charj. na ther Income 3 24 79 2464 262 Other Income Pub. Wks. Ministry 2 2 4 3

1.089 282 * k -58 -2.58 .424 M. AdJustment to Cash Basisa' 832 840 __6 9.01 1614 31,0 7,9 sub-total ~ 2..498 2,7=66 46009 4.633

812 1,231 1.807 3.477 4,468 MM M. Earmarked Revenues 411 4h 4 381 817 2J396 2,266 29,396 &,65 0. Export Retentions 319 244 44 __80 _5 _1,156 1.280 2,533 ,110 P. IMport Surcharges 198 198 2L85 6,939 14,376 20.63 48, 3~ Total Cash Receipts 3.451 3,389 h.135 5,782

to cash basis purports to reflect. ~/Tax revenues are recorded by the Contaduria as accrued, not paid. Thus, this adjustment delays In payment, non-payment, etc.

Source: Contaduria General de la Nacion. Table 5.4h: CENTRAL OOV tNMFNT RRVENUR2; BY SOURCE: INCIJDING KARMAUtRXD RlVEENIJFS (milliorns of current Pesoo)

1966 1967 1968 1969 1970

A. Excime Taxes 2,15 380 703 10 994 17 8'6 Tobacco Products 4 9,151,199 Lubricants and Fuels 1,008 1,825 3,076 2.721 6,475 Alcoholic Boverages 292 501 1,138 1,991 3,688 Non-Alcoholic Beverages 51 123 425 826 1,100 Coson Wine 19 22 189 378 - Beer 14 20 131 274 Champagne and Fine Wines 18 27 116 187 - Perrume, etc. 16 39 92 216 350 Sumptuary Goods 21 34 66 168 200 Other 19 20 119 74 343

B. Stamp Taxes 1.375 2.588 6,630 9.897 12,674-"

C. Sales Taxes 1,883 3,108 6 875 10 232 13,750 Sales and Services - 11 4 ', 6 i5 11,000 Sales and Transactions 1,531 2,408 1,430 925 n.a. Grosa Receipts 352 599 840 1,138 2,750 6 D. Taxes on Foreign Trade 165 1,926 3245 j7 1 6 500 Import Duties 1,701 7 , , Taxes and Other Charges on Exports 182 225 467 613 n.a.

E. Taxes on Transactions 633 502 1 234 1 562 1 012 Transmission Real Property T372 U Sf7 Vehicle Transfer 28 61 158 247 336 Other 215 206 519 660 n.a.

F. Taxes on Banking Activity 673 1.030 1.620 1.665 2,320 Tax on Banks -F - - - - Sole Tax on Banking Activity 544 956 1,536 1,646 2,300 Tax on Loans and Guarantees 83 74 84 19 20

0. Income Taxes 1 291 1 485 3 169 5 507 7 363 Physical Persons mi3- m lu tf- Juridical Persons 195 293 505 1,147 1,450 Industrial and Commercial 253 292 496 1,211 1,650 Surtax on Industry and Commerce - - 159 225 n.a. Excess Profits Tax 98 103 79 57 n.a. Financial Activities 40 36 58 39 70 Unified Tax 146 205 459 839 1,543 Tax on Commissions 20 35 110 184 300 Other 1 1 - 55 n.a. Imputed Agricultural Income Tax - - - - 200

H. Inheritance Taxes 96 176 234 364 403

I. Property and Wealth Taxes 434 1,335 2 008 2 4.250 Tax on Land Conce.ntra.ion - -n.a Real Property Surtax 21 25 22 - - Real Property Contribution 57 378 11 - - Real Property Contribution Surtax 15 8 - - - Wealth Tax 174 354 946 1,327 2,300 Extraordinary Wealth Tax - 266 479 - 850 Substitute for Inheritance Tax 141 244 420 833 1,100 Other 26 60 47 73 n.a.

J. Taxes on Gambling 61 117 203 70 3.300i Tax on Lottery Tickets 32 Y107 i9 Tax on Lottery Prermia 29 55 96 176 Others - - - -

K. Other Taxes 177 288 685 931 _ _ _ ~~~~~~~4,739 L. Non-Tax Receipts 987 1 325 3,232 3 728 Charges and Other Incomc 1,246 Other, Incl. Public Works Ministry 24 79 244 262

M. Adjustment to Cash Basis - 89 -1,432 -167 n.a.

Sub-total 10,4 17,091 36,48 52,3 7

N. Export Retentions 2,396 2,266 ,,396 5,657 4 600y/

0. Import Surcharges 1,156 1,280 2.533 6.110 5,000

Total Cash Receipts 14,376 20,637 837 61.302 83,767

1/ Includes all taxes on alcoholic beverages. Includes: "Sellado Sustitutivo", "Tricuto de Sellos", "Papel Sellado","Tinbres". 3/ Includes both uisort daties and customs' fees. Large increase projected for 1970 reflects new prohibition of prlvate gambling ac'tivities. / Includes retentlons on wool, beef and hidcs as well an tax on the export of greasy wool.

Source: Contaduria General de la Nlacion. Tobl. 5.5 CASHUPBtITIO8IS OF PRINCIPAL AU7OO?I3S EFTI71ES AN MONCIPALITI OF HONTKVIIO (in oill,ons of curent pesos)

1965Revenues 1, 990 1,342 179 631 180 IL. 55 87 13 5736 666 209 - Current33odl 6,107 tures 1. 767 1,1i54 741 676 257 42 123 277 19 29 843 308 194 6,930 Pwaronnal (6.45) Mc1) (418) (469) (139) (29) (50) (159) (10) (22) (175) (540) ('3) (3,239) Social Security (104) (102) (91) (66) (31) (-) (16) (53) (2) (4) (13) (76) (26) (584) Other (1.01) (542) (232) (1I1) (87) (13) (57) (65) (7) (3) (655) (192) (95) (3,107) Currnt Account Surplus 223 188 -562 -45 -77 -28 -68 -190 -6 -24. -107 -1,42 is -823 Capital Bapu1u as 178 534 270 9 23 - 4 30 4 27 9 138 173 1,399 Iointa.,t (123) (435) (198) (9) (23) C-) (4) (30) (4) (27) (9) (138) (173) Cash Deficit (1,173) (-) or Surplus 45 -346 -832 -54 -100 -28 -72 -220 -10 -51 U16 -280 -158 (2,222) 1966 Rev-mms 2,963 2,389 409 1,128 277 25 105 184 32 6 1. 304 616 226 - 9,664 Currentbpnd b2,533 1,8a29 1,202 966 395 62 182 473 29 40 1,445 1,054 235 10,445 Personeal (896) (759) (607) (647) (207) (41) (70) (314) (14) (28) (298) (801) (95) (4,777) social s.ewtty (144) (138) (137) (89) (Id) (-) (26) (77) (4) (7) (20) (106) (38) (831) Other (1.493) (932) (458) (230) (143) (21) (86) (82) (11) (5) (1,127) (147) (102) CurrentAccounit (4,83T) Surplu 430 560 -793 162 -118 -37 -77 -289 3 -34 441 -438 -9 -781 Capital zqmiture 338 906 103 2.3 32 2 - 8 3 37 15 1.22 308 1,897 Aatisatte (181) (421) (43) (- -) (-) (-) C-) (1) (1W- - (86) (733) IEVsataot (157) (485) (60) (23) (32) (2) C-) (8) (2) (36) (15) (2.22) (222) (1,164) CaehDatlit (-)ar Surplm 912 -346 -896 139 -150 -39 -77 -297 - -71 -156 -560 -317 -2,678 1967 Reveuesa 5,083 5,497 1,59,1 2,082 768 43 205 516 43 8 1,89,1 1,197 267 - 19,191 CurrentExediue 5,582 3.672 2.320 1,862 765 138 378 1,009 54 73 2,444h 1.740 416 20,453 FWsDAl (1,943) (1,735) (1,357) (1.303) (b4) (917) (151) (6211) (25) (55) (660) (1, 2n) (207) Socia (9,823) S.cm.ity (320) (311) (300) (1L59) (98) (-) (55) (189) (7) (12) (48) (180) (91) (1,770) Other (3,319) (1,626) (663) (400) (219) (i41) (172) (199) (22) (6) (1.736) (339) (118) curret (8,860) A t Surplus -499 1.825 -729 220 3 -95 -173 -493 -11 -65 -553 -543 -1419 -1,262 capitalzq .net 579 4,752 - 74 206 2 103 159 24 54 39 261 184 6,437 An't3iatAm (349) (500 (-) (-) (U.2) (- (13) (-) (1) (1 (- -) (5 (1,071) Inst*Mt (230) (4,252) (-) (74) (94) (2) (90) (3.59) (2) (53) (39) (261) (89) (5,366) Cash Defict (-) or WORD -1,078 -2,927 -729 146 -203 -97 -27 -652 -35 -119 -592 -804 -333 -7,699 1968 Reenue 9.084 9,774 1,651 4,127 1, W2 107 504 1,1.29 40 12 4,449 2,300 258 - 34,837 Current mgadia 1,080 6,806 3,839 2,990 1.691 215 709 2,143 116 147 5,180 3,658 600 39,174 Personnel (3,783) (3,8a40) (2,420) (1, 94j) (756) (1.39) (220) (1,441) (69) (212) (1,525) (2.884) (314) (19,446) Social SseeltTy (519) (594) (402) (437) (179) (-) (81) (388) (19) (18) (190) (392) (126) (3,345) Otb. (6,778) (2,372) (1,017) (610) (756) (76) (408) (314) (28) (17) (3,.os) (382) (160) (16,383) Current Account Surplus -1,996 2,968 -2,188 1,137 -289 -108 -205 -1,014 -76 -135 -731 -1,35 -342 -4,337 Capital mq flbo 1,515 6,042 - 440 50D 55 44 - 54 304 e1 396 255 9,716 Amotization (111) (2,061) () (-) (186) (-) (44) (-) (5) (4) ()-) (366) (3,1I1) Investmet (1,1w) (3, 981) () (4I0) (314 (55) (-) (-) (49) (300) (81) (3396) (-i11) Cash Deficit (6,605) (-) or Surpm -3,541 -3,074 -2,188 69,7 -789 -163 -249 -1,014 4130 -439 .812 -1,254 -597 -14,053

1969 afr 16,551 13.817 1,900 4,207 3,089 177 749 90 147 14 2,3D0 2,760 350 1,830 48,791 Cmvt~ tpeAdt 12,735 10.101 5,491 3,320 2,849 233 8.40 1,748 163 280 2,900 4,500 72 4? 45,927 personnel (4,120) (6,317) (3,769) (2,157) (1.092) (150) (340) (1,022) (917) (213) (900) (3, 700) (377) (30) (24.204) Social Security, (900) (932) (535) (485) (692) (-) (100) (288) (27) (40) (100) (400) (151) (5) (4,155) Other (8,Z1,5) (2,852) (1,187) (678) (1,065 (83) (400) (438) (39) (27) (1,900) (boo) (192) (12) (17,468) C-rent Acomm Surplu 3,816 3,716 -3,5911 887 240 -6 -91 -84 -16 -266 -600 -1,740 -370 1,783 2,864 Capital MqmdJ t 4,250 5,290 45 1912 955 10 488 - 622 1,157 - 310 - -302 12,577 Aortiaatico (350) (1,290) (45) (-) (345) (-) (4s) (- 9) ()()C)() (-) (2,175) Invtagt (3,900) (4,00)OD ) (192) (610) (10) (-) (-:) (5392) (1,150) () (310) (- (-302) (10,402) Com Deflcat (-) or Sm-pln -434 -1,574 -3,636 695 -705 -66 -139 -.4 -638 '.4,423 -600 -.2,050 .*370 2,085 ..9,713

/ARCAP (NatianaLl Patrolana, Csumt end AloobolAdministration), 1965-68 camh data mada amillabla by LASP axcept thA coLlsotiona of petroleum products tax ravansen and repasaom thereof to th Centr-al Ovro,ort we smo1Se from revenue and expenditure, totals. Note that a0 the revenue side the fIgures utUisted for petrolomm prod uct tax UoUectlons w thee. reported by the Coutachajas Omarml. few 1969, the current raensm. and aspnditura data ahen wea thmse reprted by LWAP in its ann-al bu.lletin. Fer 1969 1nvasttmt outlayo wwa etimated by Benk sftaff. amO (State 1 an laiapbona corporation), 1 965 thousuh 1969 cash data vae coa" available by UNI with the zceptisoof 1969 investeet data wbich wwea estimated by Bank staff. AM(State Bailq Administration), 1965 and 1966 data rwa made availabla by AS! from ita cash accouants. 1967 end 1968 cash d&ta wwa .atimted by AS! on the basis of respactive al3 budgeta. 1969 cvit data awtaken by Bank staff from API's 1969 -,nua boflatin. AN (National Pert £-Metz.israio) 1965-1968 easb data vwr satd. available by ASP. For 1969 the data used are those reportod by the DIP in i ta 1970 Article II ConsultatIons Raort. os(sutat Sanitary i.ka kdminLatrmtto): 1965-66 cash data taken frma 1970 Articie 219 Consultationa Raport of the DI? except that breakdown, of car~rent xpeoitu:re wsa estimated by Bank ataff on the basis of civil service -sgesadjutentast.1967-68 cash data =od available by OS!. 1969 cash data estimated by Bank staff on the baitsof the rese.otiva033 -aml budget. 6/ 3DII (Stat. Ocemngraph1c and Fishing Service) : 1965-68 cash data sad.I available by S0rP. 1969 data estimated by Bank staff. / IM (Uruguaysn Rational Airlina)t 1965-68 cash data code available by PLUNA. 1969 da4 eatstlotd by BanLkstaff. 8/ AXM (Bantavidc knsicipal Transprt Auth~rity): 1965-68 cash date sad. available, by AJW. 1969 data estimated by Blank staff. CM/ (Nationa C.olnization Institute) : 1965-68 cash data &ode available by INC. 1969 data estimated by Bank staff. DMV (National gco,ic Rousing institute), 1965-68 cash data made. available by S!M. 1969 data, astiLted by Bank staff. PyRIG01&L (National Sleoghterhous.) : 196,5-68 cash data made available by FB.IOOxAI. 1969 data estimated by Bank staff. MuNniicipality of %ontomideoo 1965-68 cash data made available by Mnwicipality. 1969 data estimatedby Bask staff. BUP (National 1ortpag Bank): 1965-68 dais made available by, BOlU. Note that loan ;nv-satomot are not of repayeant.. 1969 dais a,re estimated by Bank staff. OTNAYT(Nationa Housing PlAn Direcotrate). This agency "ac created in 1969 t0 prov'Ide over .11 super,isio for the a11ocation of Ntat~onl Hessi-g F-d reorr-s. Thsae resour-ces a;re provided cainly by, a 2 percent lax on payroll. by the sale of indexedbonds, and by indiexe.d .,av.gs depo.-ta. For 1969 the figur-ah.ut for DCXLVI reeusrepresento retoro. Iro the 2 percent payrol, tax ,dtila toe investamot figur ropresenis the net of directand r4mono:. investments atone bond sales, etc. Table 5.6: CASH OPERIATION OF 3OCIAL 3IVrI1RfTTr DANtt OF URUGUAY (mllliorn of current Pesoo)

Industrial Rural TotalV ard and Social Commotrc Lal Civil Domeatic Security Workers Servante Workers Hank

1964 Revenueo 1,688 1.795 309 3,792 Social Security Contributions (1,438) (1,795) (127) (3,360) Other (250) (-) (182) (432) Expenditurea 1,688 980 387 3,055 Social Security Benefit Payments (1,589) (925) (338) (2,652) Personnel and Other Administrative (99) (55) (49) (203) O ther M Deficit (-) or Surplus - 815 -78 737

1965 Revenues 2,519 1,271 519 4,309 Social Security Contributions (2,462) (1,138) (231) (3,830) Other (57) (133) (288) (478) Expenditurea 2,198 1,271 601 4,070 Social Security Benefit Payments (1,996) (1,194) (516) (3,706) Personnel and Other Administrative (202) (77) (85) (364) Other (-) (-) (4 (- Deficit (-) or Surplus 321 - -82 239

1966 Revexeas 3,956 2,228 1,044 7,228 Social Security Contributions (3,670) (2,171) (311) (6,152) Other (286) (57) (733) (1,076) Expenditurex 3,839 1,971 l,o62 6,872 Social Security Benefit Payments (3,376) (1,720) (897) (5,993) Peraonnel and Other Administrative (4418) (150) (165) (763) Other (15) (101) (-) (116) Deficit (-) or Surplus 117 257 -18 356

1967 Revenues 7,148 3,299 1,712 12,159 Social Security Contributions (6,614) (3,241) (567) (10,422) Other (534) (58) (1,145) (1,737) Zpverditures 6,444 3,172 1,788 11,404 Social Security Banefit Paymenta (5,282) (2,801) (1,449) (9,532) Personnel and Other Adminiatrative (1,116) (240) (339) (1,695) Other (46) (131) (-) (177) Deficit (-) or Surplua 704 127 -76 755

1968 Revenues 14,464 7,348 2,658 24,470 Social Security Contributions (14,006) (7,292) (754) (22,052) Other (458) (56) (1,904) (2,418) Expenditures 11,605 6,443 3,107 21,155 Social Security Benefit Payments (9,680) (5,672) (2,479) (17,831) Personnel and Other Administrative (1,925) (454) (628) (3,007) Other (-) (317) (-) (317) Deficit (-) or Surplus 2,859 905 -449 3,315

1969 Reverues 22,176 10,351 4,622 37,149 Social Security Contributiona (21,871) (na) (1,474) n.a. Other (305) (na) (3,148) n.a. Experditure. 20,323 11,530 5,575 37,428 Social Security Contributione (17,949) (10,418) (4,Y97) (33,364) Personnel and Other Administrative (2,374) (531) (578) (3,483) Other (-) (581) (-) (581) Deficit (-) or Surplus 1,853 -1,179 -953 -279

3] The Social Security Bank of Uruguay incorporates the country's three major social security funds--those for industrlal and commercial workers civil servants, and rural ead domestic workers--and is an autonomous government agenlcy. In addition to the Social Serurity Bank and its constituent funds there are four independent social security funds: tke military fund, the university graduate fund, the bank-workers fund, and the notaries frud.

S rceat For 1966-69 ceash data; Social Security Bank. ftr 1964-65 cash data; Economic Department of Central Bank of Uruguay. COSDTION OF,CASH OPERATIONS OF'C?"RL0W(N Table L.s ZTATEDDEvENTRAL.tED AG&NCZES AND MUNICIPAeTYS O (In millions of curren Pesos

1965 1966 1967 1968 1969

A1 Central Governmwent 14,229 20,499 47,775 61,332 1. Rev=uet 6,843 2. Cz.ent Excpenditures -38,316 -59,004 (irclueing transfare to Social Security Bank) -6,714 -11,469 -20,785 3. C-r-ant Aceount Defieit (-) or Surplus -2M6 9,459 2,323 (before transfers to autonomoua entities) 129 2,760 -i86 -267 -341 -1,700 -2,377 4, 4mortization -1,043 -2,106 -5,6h7 -7,61C 5. Direct Investrnents -397 -2,306 -3,321 -7,032 -6,72' 7.Af to autonomous entities -1,05 6. -856 -6,054 -4,920 -14,537 7. TctaJ ';,ash Defi'cit -) or Surplus -1,505

B. Lutonomous Entities and Municipality of Montevideo 9,664 19,191 34,837 48,791 1. Reverimps 6,107 2. Current Expeditures -201453 -39,174 -4i5,27 to SociAl SecYrity Bank) -6.930 -10,145 (izeluding transfers -1,262 -3,1337 2.174 3. C:rrert Account Deficit (-) or Surplus -823 -,31 -226 3 o,i2 . i7 -1,173 -1,164 -5,366i -J.60 -10,0, 5. 5i'eet Investmsnta 6.72B Received from Central 0overtY 1,051 2,306 3,321 ?,C32 6. r -9,eC95 5. '1 Cash Deficit ( ar S-arplus -1,11 -372 -Ii4m 3 -7p,0l C. ,ca a.5curity Bank ,34° 5, 13 a!,836 19,4'5 2 ,7?sh 4.. Revenues 3,323 5,975 5,355 2 TrAxfers from Qoovernzunt Entitei, 969 2,085 -5,872 -11,404 -21,155 -37,1?b R, t.il SC5'c-ity Fa"rrnts snd Other Currant Expenditures -4,070 356 -5 3,315 -279 4. (urent Account Surplus or Deficit 239 5. DXret Invtmant- 7i5 3,315 -275 6. ottal 0"h Surpluj g- Dvrfielt 23 356 D. >'tel A¢flrevrs.nae 2.6,290 29,036 48,5?6 101,107 137,915 .. 8Rvinues (A1+B1lC1) -49,319 -92,670 -133,"004 2. Cur-ert Expenditures (A2+B2+C3.C2)5/ -16,7745 -26,701 2,335 _793 8,hk37 4,913 Current Account Deficit (-) or Surplus (A3+B3+34) -455 3. .1,412 -4, BU -4,552 h. Ams'rtizatlon (A4IB4) -412 -1,000 -7,h472 -12 252 -11,012 5. ZD.-rct Investment (A5+B5+c5) -1,570 -2,207 -9.72 -9,677 -8,626 -17,651 6. Total Cash Deficit (-) or Surplun (ATh97+C6) -2,437 872 ag9,677 8.626 17. 5I B. t banei 924 4,183 6,977 4.375 1. Utilization of Foreign Loans (gros) 813 14, 762 3,376 4,247 2. roasury BiUs and Bonds (net) -4M6 -;66 4,732 -1,727 9,029 3. MOnAtAr7 Authorittes and Otber Irternal Sourc¢a 2,090

X clud.,iia identified subsidization of mzicipalitien other than Montevid0. I.cludea aLU investmnts by the Ministry of Public Works and the Plen A4Mopocuario. dimt.ribution Pt Central OovArnment Slqua.1m reaidual estimate of such subsidization included in table on estimated rash expenditures mlnus known stbsidy paymenta to municipalities othwr than Monti-video. 0a or. transfers from government entities to the Social SeCu?ity BAnk conosiAta V txcept for 1963-69, this series by dec-etralized sgenci". obligations reported by Central Government plus actual transfers reported trAn*fer tranesfra to Social S lncludes total of current expenditures shown in A-2, B-2 and 0-3 minuo gov_rnment egency Security pFnk. ocnoe chwnges in credit to the 6J Culo*lt.d as a resi4ual. Thia figura cannot be eooared in any exact with copecially (a) to the 'act thAt pnblic rector shown in the monetary accounto owing to various factors, but of average exchange rat-is, anrd tba peso counterpart of foreign credit utilization in calculated on the basis tEiZn hontevideo. Nevertheless, (h) to the tact that this table excludes the operations of munioipalities other to the public sector. va1uas shown in thia series are closely related to total changeS ireinternal credit rRn staLff estimates. Amw"cot Contsteria General de la Nacion, decentralizeA agencies and

Table 5.8: ESTIMATED fIVESTMENT AND INESTMENT FINANCING OF URUJGUAY'S PUBLIC SECTOR (in millions of 1968 Pesos)t/

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976

I. Total Public Sector Investment 12,785 9,1481 17,485 12,648 16,090 18,158 24,204 26,367 27,338 26,563 21 23,033

A. Central Government 2,972 4,246 4,762 5,647 6,683 7,750 7,349 8,359 8,316 8,569 7,926 7,550

1. Ministry of Public Works3/ 2,557 3,684 4,072 5,243 4,905 4,824 5,049 5,809 5,766 6,019 5,376 5,000 a. Roads (2,107) (2,894) (3,389) (4,707) (4,422) (4,247) (3,914) (4,348) (4,286) (4,389) (3,848) (3,600) b. Buildings (344) (669) (601) (440) (439) (516) (1,031) (1,317) (1,335) (1,485) (1,384) (1,250) c. Hydrographic Works (106) (121) (82) (96) (44) (62) (103) (144) (1144) (144) (144) (150)

2. Other Central Government- - - - - 988 2,101 1,000 1,000 1,000 1,000 1,000 1,000

3. Agro-Pastoral Plan-/ 415 562 690 404 790 825 1,300 1,550 1,550 1,550 1,550 1,550 B. Autonomous Entities 7,747 4,242 11,543 6,209 8,862 9,408 16,358 17,508 18,522 17,494 17,001 14,983

1. ANC / 921 639 520 1,100 3,425 1,569 1,237 2,166 2,096 2,o96 2,095 2,000 2. UTF4 3,256 1,974 9,614 3,981 3,513 5,318 6,131 7,035 9,493 8,581 8,581 6,478 3. AFEL/ 1,482 244 _ _ - - 825 825 825 825 825 825 4. ANP9/ 67 94 167 440 167 727 965 1,482 948 666 - - 5. 0SEtO 172 130 213 314 536 620 620 620 620 620 620 620 6. SO - 8 5 55 9 - 380 380 380 380 380 380 7. PLUNA1-/ 13/ 30 - 204 - - 8. Natpinal Housing Plan (INVE, BHO, DfIAVI)- 1,497 1,050 321 189 745 1,174 6,200 5,000 14,160 4,326 4,500 4,680 9. INC_LJ 30 8 52 49 467 - - - - - 10. FRIGONAL1" 67 61 88 81 ------11. AfDET 225 33 360 ------_

C. Departmental Governments'6/ 2,066 993 1,180 792 544 1,000 500 500 500 500 500 500

II. Investment Financing 12,785 9,481 17,485 12,648 16,0 18,158 24,204 26,367 27,338 26,563 25,427 23,033

A. Public Sector Savings 997 7,722 -3,021 7,079 2,786 14,652 12.082 13.465 14,050 14,598 15,178 15,867

1. Central Governmentb7/ 967 11,235 -647 9,459 2,045 9,903 7,807 8,115 8,439 8,776 9,128 9,497 2. Social Security Banks 7,254 1,449 1,707 3,315 -245 ------3. &utoromous Entities -5,098 -1,396 -1,626 -2,979 14,043 7,673 7,311 8,506 8,893 9,235 9,600 10,o63 8 a. A2JC.iP1 / (1,669) (1,750) (-1,128) (-1,996) (3,352) (2,937) (1,937) (1,940) (1,940) (1,940) (1,940) (1,940) b. UT'1E9Z7 (1,407) (2,280) (4,127) (2,968) (3,263) (5,596) (6,418) (6,829) (7,033) (7,182) (7,350) (7,500) c. AFE-2/ (-4,207) (-3,228) (-1,648) (-2,188) (-3,154) (-3,315) (-3,890) (-3,890) (-3,890) (-3,890) (-3,890) (-3,890) d. ANP (-337) (659) (497) (1,137) (779) (580) (600) (622) (650) (673) (700) (728) ea. O61 8/ (-576) (-1480) (7) (-289) (211) (577) (220) (220) (220) (220) (220) (220) f. PLUNA/ (-509) (-313) (-391) (-205) (-80) (-86) (-159) (-160) (-160) (-160) (-160) (-160) g. Housing Plan/ (-67) (-175) (-484) (-477) (1,007) (2,557) (3,2B5) (4,045) (4,200) (4,370) (4,540) (4,825) h. otherl/ (-2,478) (-1,889) (-2,606) (-1,929) (-1,335) (-1,173) (-1,100) (-1,100) (-1,100) (-1,100) (-1,100) (-1,100)

. Departmental Governments16/ -- 2,126 -3,566 -2,1456 -2,716 -3,056 -2,924 -3,036 -3,156 -3,282 -3,1413 -3,550 -3,693

B. Foreign Loans (net) 3,002 -309 6,266 2,166 -166 -515 618 4,618 6,309 4,886 3,855 681

Inflow - - - - - 3,134 4,350 8,123 9,319 7,711 6,082 2,825 Outflow _ _ _ _ _ 3,649 3,732 3,505 3,010 2,825 2,227 2,144

C. Financial Gap 8,786 2,068 14,240 3,1403 13,470 4,021 11,504 8,284 6,979 7,079 6,394 6,485

D. GNP 391,993 404,739 378,081 382,691 402,969 417,692 433,704 450,838 468,828 487,581 507,084 527,637

Sources: See footnotes next page. Table 5.8 (Conic!)

0- the costs1 of histeraci- Io,ta 0c t,vesateeot acc financial to-rfor-aeca provided by oebi agenc y 1/ Since a.ooolida,tod polio sector acaocto are not md accdicc Ucrgec-a, hibi table Was --ct-otocl by Sankastaff leo/bog ccgoabci. Coosslidatioc: of such data rqeirod tin -insig of a somber af assuptions. (see Table 5.5), of thc lorett-mt, plans of rrac ageocies and of projects being aebee by vrosintoroationvl or the fcctcre, Wict eonly - providiog an estimate of the goeoral ardors of magittud tihns the tool, riul ct be rcc-rlied 0.0 provi-elv defining outtba. avatar invostoct and ito fiaaaang, te,lco in tie past abbot' ace_tovobod. Par 1969 the deflator se-&-l.1387--is a seighted average--5O p.rfient each--of the change 2/ For 1967 andvoctoi.. yearn tie lftators 1100 ore, tie implicit to.flators of' GDP emgin,g from tho -ctional accoanta. the dtflaiorused was auicalaad to the on nanne; tho esabange rate haing roecalned stationar.y toi the oohsgort--.It--c d thc ahasge-i tol,.icetotencL pricelevl-I 2190. For 1970 and s-bseqsent ye-m tbe stare of tie poolia sector in total national incesttcet. and too internal nriar level estiatedl ot 1.0181 tioco tie 1968 level. Th..e clflators for 1969, and scaieqoecci yor- may e-agger-t G,-r,entee and -arious decestrltoeid genokos sucb as lSE, the slate eater and sanitaiton 7/Th. Mintstry of sotic Wboris nchsb,iste-s and is c-ponsibae for lihe finding of ith aomistr,,tios prsojvace of tie Central 117$ thouoands)c agency. The Miniatry toe estimated the capital outlayn is sill -oac over the 19?0-75 period as fol1o.s (in 8,100 (i) Higtways 5 and 26 (01RD and lit fandod projeots) 22,360 (ii) Highways 9 and 26 (IDB fosalod projects) 72,200 (ill) otter highway comstructbon and ealonteanc 31,500 (iv) Boilding vo...ctruction 3,6:00 (o,) Mydrographia worho 2,250 (vJ) paysando-Colon bridge tentos-Puerto Sn-ae bridge 4,510o (vii) Fray 2,280 (Viol) Jnlversbdaiddo Trabaj project 10,000 (icc) otter invenotsnt outlays her. For 1969 and 1970 the figures shown for ouch in-etrst represent the residual L/ Far tie yearsa 1965-68 direc.t investments sods by the Central Goverocoet are ver esall is magltude and are not idenstified The ratter large san shown probably largely represent aoquisitton of eqipment ._caica.a,ad by subtracting Ministry of Publia Works and Plan Agropeouaris love,,teent frm. total Central Governmnt inv,esteet. equivalent of about US$5 ecllions annu.ally-provide a reasonable margin for esetteg tong far the natiacal police and armdsreos For 1970 and scubsequent years, the figuroes projected by Bank staff--the for neeting puoblic securIty needs. postponed and sasceslated needs for r-equipping the ed-aetin-l systeec and slicer Ceotral Govert,ec,nt agencies as well as by an Honoerry Coeissiooln and ito loan to participating ranchero ore channeed through 5/ igro-Pastoral Plan adinisat-tve costs are Landed by the Cautral Government. Hwever, lbs Plan Itself in administered and vaIous css-real banks. The figures. shown for Plan Agopceouarl in-sotccen tie Central tanwisch usees Plan Agropecuaris fcunds to rediecoant potare ip,roeccet loans made by the Bomb of lbs Republic debt serrbce paymets by participstiicg ranchers). For toe futurm these inwsetaets roughly equal p,riearli.y represent pntare Loans Landed frm mew resoarces (i.e., not from fends aeamsloted as the result of Ite Peso asot.epart ef disis.o....ents from IB8 le-an to the Plani Agropecuaro.. 6/, Per the 1970-25 period ANCAY has eseti-ated its investe-nt outlays as folloas (in US$ thausands),

(i) Petrolesn produots otrage and distribstion tereclals "in Tablada y P.1iductocl3,0 6,o00 (ii) Floating dock fsr offloading credo petrolesn 6, CXX (ill) Reccdeling of storage facilities and other tosvmnsat "L. Tejac 8,000 (iv) Pipeline free the floating desk t-o Mont-detdo (Tercolnal Eate) 12,000 (e) Expansion of refining capacity 10,000 Cemet Plant - First stage (vi ) Paysando 6,030 (nti) Paysand. Cement Plant - Second stage 2,0(00 (vill) Other investment outlays 7/ For the 1970-7b ported UfTE has projeoted its teneetmnt outlays as follows (in US$ thousands),

(i) Installation of sieth tdemnsa gone rating unit and ccderoletion 21,864. of distributlon networt in Montevideo (11) other investment in gemerotios and transeidsscs, facilities including installation of the hydroelectric station at Fl PaImar, sad inter-connection sith the A-rgentine distribution system 84s,i68 4o9,?4o. (ill) Telicoem,unications facilities

Ins the shove table 71 has tees assayd that these outlays will be delayed somehat vim-a-via the original scheduole. table to cover esdnsa requirements for eplaceecens of sleepers, rails and ballast, loossetive 8/ ITTE tan so inavest-e, progra,,. APpprolately US$1 million anniually has bees allocated to thIs agency by the shove renovation and acquisitbom of rolling stock. prsjeats ove the 1971-74, period as follows (in U8$ thousands): 91 ANiP's in,vestecct plans have fallen behind schedule. Bsnk staff have projected Omplemestation of its existing ineat-set 2, 810 (i) Pert of Monte-ideo renovtion - maitlese warts. 671 (Li) port of Montevideo ren,,ation - shore saris. 4s 279 (iii) Port of Montev,ideo renovation - cranes and other, dockside equiprest. 5,936 (iv) Port of Montevideo rense,atlon - maritIme eqccpcet. 6,000) (v) Purchase of two 12,000 ton wedi freighcters. other maiaipalities. It is assared that 07E investncent oatloys for suah works wilU average the 10/ 27SE is currently proceeding with a US15 eilibon pregran to ipoqone water and sewage facilities in Montevideo, and squte-l-t of 0833 edllbon annaly. Meites,ides and aaqcairing fussing vessels. It is asseed that tots project is ieplemnted in 11/ S0fP has a U183.5 illlion project for installing a fishing termInal (storagq proesosIng, and oarketing) at toe Fort of equal anmual lootallenist over ins f lee years aosenoming in 1971. Vicakers Visasont Turboprop alir.rft as well as a few DC2-3 platen engine aircraft. It is easseued that 12/ FlUNt is presently renting a hoeing 737 Jet a-cr..aft frm Itenoa Airlines. It also has in service a number of FLiNA will sot expand its fleet daring the Projectian period. For 19170-72 investments by the Plan have been projected by Uruguay's Office of Planning and 13/ National Reu.sig Plan investment.s are defined herein as housing loians and other investment outlays net of repayrnts. anspent funds during the 1969-70 period. In 1971 and 1972 the number of houses to he tullE with, Bucdget. The large sans shown, for 1971 and 1972 reflect dolays in irplemenntloin sf ins Plan and aceseculotion of equal oxpeated acmalsi from the 2 perent payroll tan and other tax revenses eacnarked Hoaning Plan finanoing acesat to 5,170 and 3,269, respectively. After 1922 it is a.sand that net Hoasing Plan in,,est.ment for the Plan. of Oov-nmnt-e,d land and consequestly, wauld require no outlays for ex5 14/ 1110 has me definitive inest t progran. In sany -eyet, soot of its resettlemet aetivltiee wsuld probaly involve redie1triastion Proprlation. Than 111C So assmed to mobs no net inveo-tmstc during the projelison period. ..ould pronably be offset oy FRIrONAL's generation of some surplus as current soacsant as well 15./ Although, contrary to tibis projection, FRIGIONAL may andort.be some investment in plant 'uderoloation, sucb in-estenet uiiaii.ohrt-t1.t-d gte qa as by emoernal berroing sat included belo in items CT-Ajh or II-B.f1t1,Ugya1 and armret ocoscnt defct ftrgnai uilaiinohrta otvdotgte qa 16/ Perhaps, she 'ct ccigncfioant of lbs as-uccpti.ns made is for-,lating this projeation is that tha investment outlays ha., bees in Musing, and alter 1970, saab investent in included -dier that of the National the inveotment and deficits recor..ded by t-he ManicipOlity of Mosteoideo. Musch of the ioveotmnt of these ,unicipulities They are asnocd in reanaContant at tale percentage dsring the projection period. Housinp Plan. D-ring the 1965-69 proLod Manijcipality de,ficits are estimated to have averoged 0.7 peanmi- of GDP. far 1971 andcc-boqacct year a.cc,-ce that Ito tax refor mitan re-cnuee castont fmor-i-nmt. ccorot account arplusee are those nefore transfers to its deant-iratod agenaiec. The surplas projelled 17/ Central btdtabyght as a percectage af 712. pricos co-Iranaselasag adciccs fetve uig190omabse aa,yasmIgtt 18/ IThe currni oct surpluct or deficits of respective gagests ore eatracoloted by applying inace Cacocgev in oith ith inte,,cna price level in that year anid by -samngthat real current orosunt the Cents_re Gsvencrct peroto so adjont,,oni in poublic ogeccy Forces or rates, is 1971 and thai csoto .increas e P,prcpetaortelY c 0SCPc 111. AMDETC.cc FRIGIIOAL) aere reda..ed sharply in 1969an191 aigtth reuIo acc-piooeo a-io-cd c 1921 are maintainebd thinreftor. Note that the cu,rroo a-roat deficots cf "otter"' agencies (i.e.: pits tnersoanel.- c. hsatstevedfo10f is theofF.ccGONroiidtvss1icicftiP 0111of Ito-- etimisolichca..dof'thocost,..ofof t.d rurpiss tehS,,chyears.Ui im coctoecie aithan ppicasfrclonthepiaceto ccnitic fteSnhTemllmt 17' UTE .. rr-ot -ormtto cccu proje-ti-e ore tohos. from a coot fl.. pre,jectios njod by that agency for ibe IBRP1 and ciLbstb,tciio r,cot-otr'soic in, Moatov,iem.. Table 6.1: OPERATIONS OF THE MONETAR! AUTHORITIES (in millions of Current Pesos)

Dec. 1570-/7J Projected 1/.3/ 2/ LV 5/ 5/ ~~~~~~~~~~~~~~~~~~~/~~~/6/ Monetlry 196/ Dec. 1569" Juele 1970' Pidget Act;al- Dec. 1964- Dec. 1565- Dec. 1966-/ Dee. 1567- Dec. l168o June 23,351 21,751 7,6-5 -73 -1,324 65 10,h0 15,857 lh,.Sl NeNet F?relr Rse-vea 11,640 15,566 36,205 51,51 52,375 51,657 Assets 3,415 -12,564 -15,501 -35,128 -l1,134 -36,878 -37,206 Liabili_ies -3,488 117,376 37,676 52.L76 55,5C8 b,LS 10,50 12,999 22,530 30,161 30,711 II. Net DneEr-.c Credit 7,005 18,605 10,358 2 266 3,280 7,305 1,077 1,S0 13,L05 1. To F-blic Sector (net) 1,033 (15,051) (18,252) (3,313) (8,142) (3,750) (8 ,55I) (1LM,051) (12,251) C-vernment (569) (3,1 3) (-2,016) Cont.ra (-939) (-2,2Li9) (-1,387) (-2,134) (-2,516) atities (453) (-1,203) (-2,176) (-7,53L) A;tcz.^tus (-165) (609) (-3,777) (-3,532) (-1,676) (-5,21±6) Sczial Security Bank (-60) (-177) (3,5L6) (1,071) (2,021) (2,851) (3,016) (3,586) it. iz:i:aities (582) (483) -11,672 -17,872 -10,572 -11,050 2L8 -2,884 -3,078 -13,887 -11,G56 -12,591 2. ^o r.:ks (net) (-13,620) (-5,320) (18C) (-2,768) (-2,589) (-13,537) (-1,1±05) (-12,606) (-5,820) Hvre Bacnks , (-1,252) (-84) (50) (3,0) (-525) (-1,852) (-4,252) Cffi al =anks' (68) (-116) 26,681 27,581 36,200 5,554 8,313 13,628 15,568 17,532 21,681 3. To P?rvate Sector (gross) L,935 21,862 17,062 20,C00 5,651± 4,479 15,8814 19,'32 23,866 23,562 4. Mis:e'laneous Accounts -1,171 (-5,561) (-3,727) (-4,152) (-9,811) (-8,505) (-6,818) (-5,561) Swaps w,th Residents (-1,610) (-9,853) (-1657) (-1,38C) (-1,837) (-2,1L6) (-2,553) gcrj-Ters Liabilities to International Organization,/ (-97) (-359) (-) (1,532) (2,572) (3,013) (L,(85) ;..,:as*n International Organizations (-) (-) (11,211) (12,270) (29,821) (36,53S) (37,015) (1:1,211) xcr-ange Differential (2,794) (13,890) (-13,320) (-4,150) (-3,11±2) (-14,328) (-9,237) (-7,203) (-13,320) C: ers (-2,258) 16,208 61.827 61,027 71,227 63,183 L,1476 9,226 13,0614 214,011 L a I . Mcret-- Lia2zl1ties 54,622 53,122 65,622 3,038 7,057 10,277 20,0IJ1 35,0941 L1,084 cur-rc.:7 2,979 3,279 474 739 875 1,137 1,135 2,579 Sigh-.: Zeosits 301 3,593 i±,393 4,693 658 1,363 1,693 1,936 3,295 3,156 Tine Zros-ts - 533 633 332 355 1,159 1,065 833 633 Foreign Cr-rency Deposits 79

1' :zrze rates: UrZ15.20/US$ buying; Ur$18.70/US$ selling. 2' iaor.ge razes: Ur$58.9/'US&S buying; Ur$55950/uS$ selling. T'/ achan-ae ra:es: Uri75.90/'TS$ buying; Ur$76.20/USS selling. 3c-agez/ rates: Urtl1S.0C/USS buying; UrZ200.0G/USS selling. T! a rhrange ra-es UJrU2!8.0C/Us$ buying; Urr250/US$ selling. c/ Fs-,ated ''netar-yXoy Authorities. 7Z 7ear and Dosition projected by Monetaz Budget. .f Ts'Yor-tgage Barnkand the Postal Savings Bank. position. ,/ &cluding liabilities to IvF which are included in the foreign reserve

So,ur-ce: Central Bank of Uruguay. Table 6.2: OPERATIONS OF THE 0OY14MRCIAL BANYS (in millions of current pesos)!/

Dec. 1570

Ac ctdal Dec. 1"61, Lec. 1965 Dec. 1966 Dec. 1S67 Dec. 1S68 M,ay 1 6 9 Y Dec. 1569 June lF70o/ oudget 6 02 -19,186 -1,3LS -16,3s$ I. Net Foreign Reserves -L56 -2,979 -3,728 Lc -15,655 -15,212 -16,3!6

1. Assets 1,037 1,205 2,944 3,691 3,577 2. Liabilities -9,016 -L,933 -12,816 -19,3L6 19,069

II. Position with Monetary Authority-/ 288 L,L22 3,528 12,621 11,551 16,L23 15,212 3,1 lL,712 1L,2

11I. Net Domestic Credit 6,386 62c 9.101 1737,703 12,LLO L 50,LIo 55,2Lo

1. To Public Sector (net) 133 88 323 1,532 3,2'7 5,1'2 3,292 4,652 5,8S2 L,292 Central Government (133) (88) (323) (711) (2,862) (5,02-) (3,Lh3) (1,813) (5,3e3) Autonomous Entities (-) (-) (-) (1,061) (S10) (L9L) (-6) (-6) -6 Social Security Agencies C-) (-) (-) (-202) (-367) (-212) (-3L0) (-310) (-390) Municipalities (-) (-) (-) (-38) (-103) (-129) (-31) (-31) (-31) Official Banks3/ (-) (-) C-) C-) (-) (1) (226) (226) (526)

2. To Private Sector (gross) 6,855 8,033 9,190 15,798 26,252 30,62L 3L,935 oO,035 91,335 17,735

3. Miscellaneous Accounts -602 -1,692 -1,162 -262 1,895 1,905 3,213 L,213 3,213 3,213 With Non-residents C-) (372) (-115) (164) (-78) (-1,3 3) (-1,371) Capital and Reserves (-608) (-387) (-l51) (-563) (329) (s03) (1,530) Echange Differential C-) (-933) (-316) (-150) (-393) (-352) (-L2) Other (6) (-500) (-250) (287) (1,992) (3,192) (3,199)

IV. Yonetary Liabilities 6,188 7,872 9,301 19,750 30,320 38tll 10.306 17,806 98 806 53,218

Sight Deposits 1,338 2,762 3,00 8,820 13,307 15,622 16,321 13,021 19,721 Cirae Deposits 3,306 3,396 3,887 6,380 10,579 15,817 16,27L 22,779 19,379 ForeignfCurrency Deposits 1,51h 1,711 2,371 1,590 6,134 7,215 7,711 7,011 9,771

1/ See footnotes to Table 6.1 for respective exchange rates. position reported 2/ Includes cash on hand which is excluded from the Monetary Authorities statemsnt as to the net position with commercial banks. Also, this is the by the commercial banks so that its various elesants cb not necessarily agree with the accounts of the Monetary Authorities. 3 R.epresents purchases of National Housing Bonds from the National Mortgage Bank. j une 1969 position not available because of 1969 bank workers' strike. !Estinated by Monetary Authorities. 0/ Year end position projected by Monetary Budget.

Sources Central Bank of Uruguay. Table 6.3; CONSOLIDATED OPSiATIONS OF THE BANKIX5j STSTR4 (in millions of current Pesos)!(

Dec. 197ow Projected 1968 may 1969i/ Dec. 1569 June 19702- Monetary Dec. 1964 Dec. 1965 Dec. 1966 Dec. 1967 Dec. 4,205 3.671 -3,663 -882 -5,2 -133 -1.895 I. Net ForeiEn Rese-ves -559 -4,303 16,771 39,153 55,235 55,168 59,519 1. Assets 12,677 -20,434 -47,974 -60,480 -55,301 -61,414 2. Liabilities -16,980 100,579 113,579 121,022 25,037 50,596 72,452 79,093 59,979 II. Net Dcoestic Crcdit 10.847 20.429 5,083 4,796 14,845 7,L45 23,045 14,650 (net) 1,234 2,198 3,519 8,886 1. To Public Sector (8,853) (6,652) (9,410) (17,894) (17,096) (2L,394) Cei.:ra.' Go-err.-ert (1,102) (3,251) (3,636) (-2,022) (-939) (1,183) (-477) (-2,774) (-2,522) Auto.-,cr.oss Agencies (-L58) (-1,243) ) (-2,516) (-165) (-811) (-4,1Lu) (-4,h58) (-2,016) Social Security Agencies (-60) (-177) ) (-9,649) (3,515) (1,071) (1,983) (2,7L3) (2,860) (3,515) Kanicipalities (582) (483) ) (-326) (-84) (19) (309) (-262) (-1,626) Official Banks (68) (-116) 66,716 68,916 83,935 18,253 29,L26 66,120 68,233 56,616 2. To Private Sector (gross) 11,294 13,587 26,618 21,618 22,432 3,265 12,282 21,249 26,064 28,518 3. Ylscellareous Accounts -1,681 4,664 78,960 98,084 106478L 118,984 112,351 16,126 21,374 41.773 67,207 III. Yonetary Liabilities 10,288 49,073 61,573 9,286 18,013 31,390 36,602 50,573 1. Currency 3,062 6,o85 21,000 23,000 3,779 9,695 14,466 17,109 18,900 2. Sight Deposits 1,639 3,236 27,167 24,067 5,580 8,316 13,876 19,127 20,267 3. Tire Deposits 3,966 4,759 7,544 10,344 2,729 5,769 7,499 8,122 8,346 .. Foreign Cu-rency Deposits 1,623 2,046

rates. 1/ See footnotes to T'able 6.1 for respective exchange bank wrkers' strike. f/ June 1569 position not available because of 1969 7/ Bstimated by Monetary Authorities. 1I Year end position projected by Monetary Budget.

Source: Central Bank of Uruguay.

Table 7.3: HAIN AORLCULRAL CROMS

Year of Hwavest 21 3

A. Prodoctiori (000 metric tone) is- ~Crw-,s .--. a- 237 646 5S7 329 14 Ca's ba70 403 N.A. 56 86 97 72 33 73 60 H.A. SB-7ey - co=on a 16 11 10 Bza'ey 3 6 5 N.A. -ualting u 24 17 21 10 Linseed 12 36 N.A. 62 71 )A Lo 27 56 81 N.A. EBr dseed 3 4i 2 2 -- Suerr Crops 2 4 N.A. 77on 205 91 63 18 117 69 129 139 87 63 39 99 Peart:s 76 149 63 65 7 7 1 5 2 1 Flc e 3 2 77 90 107 116 iok 134 1i2 Co't'on 2 2 1 1 1 Sooghun A 1 1 -- -- 16 41 28 30 51 35 B. Sown Area (000 ha.0

V-.- 354 527 Ca- 346 380 222 535 )36 N.A. 85 S1 126 92 5b 50 75 Fa-'e-y -econ N.A. 15 15 13 14 5 6 5 N.A. ze- s2alting 32 25 19 33 25 31 .sei 34 N.A. 132 113 75 66 51 82 112 N.A. -1 5 3 3 1 3 8 N.A. 236 167 192 213 226 162 176 163 "-a -^er 114I 121 llo 122 164 169 91 97 9 6 7 5 , ce 3 3 3 3 21 21 28 32 34 31 34 37 Cot-ton 2 3 2 2 Scrghws 1 1 1 1 -- -- 72 36 32 38 141 44 C. Yield (XgJha) Wkrt. e; 2cps W..ea' 668 1,229 1,382 866 647 C_:s 876 1,199 N.A. 655 1,053 767 782 609 820 7>9 N.A. Earle-.y - co;=n 527 1,C6i 858 706 577 1,021 94L4 N.A. ;--rley - malting 329 992 889 638 42' ,iztseedi472 1,2L1A 1,058 N.A. 632 499 611 524 6)71 725 N.A. Bar is a ad 1439 690 655 602 557 Sner 2-e.cs2 685 592 N.A. Cc r-. 871 5L5 328 8146 517 $u'.flcwer 42U 733 762 618 525 352 8o16 163 146 689 669 Peanuts 753 925 193 883 Rice 675 165 795 3,776 3,669 2,293 3,271 3,366 3,403 3,397 3,917 3,7F6 G ctcc 1,C07 702 599 725 5'rghUm 673 578 839 631 -- -- 5Q3u 1,080 679 776 1,245 800

,/ W:inter crops Harvested in Decester of previous year cociined with spring crops harvested In March oC .nexm ypar. 2/ Seccnd astirta of area sow- and first est½miate tf producsion for -Aner crops. Seconr estinate of area sovm and fi-st estlmte of prodiction for awrmer cmps. Scarce: Xinistry of Aj,ricuJture aad L-iestock. Table 7.4h RLAL VALUES OF YIELDS PER lIE(TARR OF SiIECTED CROPS

196 4 1965 1966 1967 1968 1969

Current Farmgate Price (in current Pesos per 100 kg.) 156 303 542 1,100 1,400 Wheat 142 8 143 278 336 .14 2,070 1,790 Corn 2,475 2,362 Linseed 157 272 517 766 651 1,679 2,000 Sunflower seed 197 421 527

Average Yield per Hectare (in kg. per hectare) 866 647 878 Wheat 668 1,229 1,382 871 545 328 840 517 428 Corn 524 691 Ii3seed 472 632 499 611 816 463 446 Sunflower seed 618 525 352

Current Value per Hectare 711,700 1,229,200 Wheat 94,856 191,724 418,746 469,372 124,553 151,510 110,208 688,644 1,070,191 766,120 Corn 1,296,900 1,632,:142 Linseed 74,104 171,904 257,983 468,026 777,377 892,000 Sunflower seed 12,746 221,025 185,504 531,216 9.987 23.145 26.689 Wholesale Price Index (1961 - 100) 1.932 3.075 5.915 25.380 25.862 Input Price Index (1961 - 100)2/ 2.000 4.696 8.885 13.656 price index) Real Value per Hectare (thousands of 1961 Pesos - deflated by wholesale 30.7 46.2 Wheat 49.1 62.3 70.8 47.0 64.5 49.3 18.6 69.0 46.2 28.7 Coarn 56.o 61.2 Ilnseed 38.4 55.9 43.6 46.9 53.2 33.6 33.4 Sunflower seed 63.0 71.9 31.4 price index) Real Value per Hectare (thousands of 1961 Pesos - deflated by input 28.0 47.5 Wheat 47.4 40.8 47.1 34.4 50.4 42.2 29.6 Corn 62.3 32.3 12.4 34.3 51.1 63.1 Linseed 37.1 36.6 29.0 38.9 30.6 34.5 BhSlmower seed 60.9 47.1 20.9

seeds - 30.4%; pesticides 5.8%; 1/ The agricultural input price index is weighted as follows: maintenance - 28.1%. fertilizers - 12.4%; packaging - 10.6%; fuels and lubricants - 12.7%; and Livestock; SSaurces- Camara Mercantil de Productos del Pais. Ministry of Agriculture Direccion General de Estadistica y Censos. Table 7.5: COMPARISON OF CROP YIELDS IN URUGUAY AND OTHER COUNTRIES (1963-67 Average Yields in kgs. per Hectare)

G R A I N Y I E L D S OILSEED YIELDS Country Wheat Corn Paddy Rice Barley Oats Linseed Sunflower

Argentina 1,440 1,950 3,582 1,254 1,302 658 742 Brazil 750 1,310 1,546 796 730 606 -

Canada 1,572 4,930 - 1,864 1,732 704 710

Chile 1,544 3,006 2,698 1,964 1,280 - 1,250

Colombia 932 988 2,012 1,490 - - _

Mexico 2,336 1,106 2,322 858 862 814 - United States 1,744 4,462 4,748 2,094 1,672 632 952

Uruguay 962 622 3,200 684 774 548 554 North America 1,684 4,470 4,748 1,996 1,688 660 824

South America 1,420 1,270 1,690 1,066 1,174 650 738

Source: FAO, Production Yearbook, 1968. Table 7.6: URUGUAY - LAND TENURE AND USE IN 1966

Crop Land Size Class Number of Total Land Pasture Field Horti- Fruits & Lbsm ares' Farms Area Land Total Crops culture Grapes Other

Thousand Hectares

1 - 19 36,016 285 153 132 71 27 28 6

20 - 99 22,147 1,008 740 266 222 20 12 14

100 - 499 13,688 3,069 2,636 433 390 9 6 28

500 - 21499 6,130 6,456 6,126 330 271 L 5 50

2500 and more 1,212 5,402 5,245 157 104 1 1 51

TOTAL 79,193 16,220 14,900 1,320 1,058 61 52 149

Source: 1966 Census of Agriculture Table 7.7: PRODUCTION, OONSUMPTION AND EXPORTS OF BEEF, 1951-70

% of Production Consunptior Animals Slaughtered (X 1,000) Production (X 1,000 tons) Average Carcass going into per Capita Year Consumption Exports Total Consumption Exports Total Weight (Kilos) Domestic Consumption (kilo) 1951 995 492 1,487 187 112 298 200 62.5 84.0 1952 973 348 1,321 189 79 267 202 70.5 83.6 1953 923 509 1,432 184 111 295 206 62.3 80.2 1954 875 291 1,166 183 63 246 211 74.2 78.6 1955 867 167 1,034 184 35 219 211 83.9 77.9 1956 880 278 1,158 190 62 251 217 75.6 79.3 1957 951 269 1,220 188 56 244 200 77.2 77.4 1958 891 166 1,057 200 39 239 226 83.5 81.2 1959 863 220 1,083 194 52 246 227 78.8 77.6 1960 878 375 1,253 191 88 279 222 68.4 75.3 1961 941 298 1,239 209 68 277 223 75.3 81.2 1962 868 402 1,271 181 86 267 210 67.6 69.3 1963 932 429 1,361 198 98 296 217 66.8 74.9 1964 1,099 686 1,785 218 163 381 213 58.8 81.3 1965 1,147 457 1,604 213 97 310 193 68.6 78.3 1966 833 274 1,107 184 69 253 228 72.8 66.9 1967 881 270 1,151 187 66 252 219 74.2 67.5 1968 929 431 1,360 193 105 298 219 64.8 68.9 1969 854 548 1,402 187 120 307 219 60.9 65.6 1970 169 150 319 53.0 58.6

Source: Banco Central and Mission Estimates.

NOTE: Data disagree with those reported in WH-167a of October 12, 1966 as regards both total beef production and export The latter deviation is especially marked as exports reported by WH-167a average 43 percent of those shown here over the 1951-65 period. This difference seems primarily attributable to the fact that export data given by W4H-167a are in terms of deadweight while those shown here are in terms of live weight (d.w. = .52 l.w.) and also to recent attempts by Uruguayan authorities to correct older statistics for beef exported on the hoof to Brazil. Table 7.o: FWJtCTION OF Bi2F OUT?JT (1961-1969 and estimate 1970-1976)

TEAR Be5fore 73 74 75 76 1961 61 62 63 64 65 66 67 68 69 70 71 72

000 ha I. ED. PASTU0BS 250 250 250 250 250 128 16 24 32 68 91 130 3145 225 250 250 250 Per "ear 250 250 250 250 250 250 250 year 2 - 18 24 32 68 91 130 lh5 225 Stage of improved Pastures 32 68 91 130 145 225 250 250 250 250 250 250 n3 _ - 18 24 145 225 250 250 250 250 250 _ - n - 18 24 32 68 91 130 n4 491 636 861 1.111 1,361 1,611 1,861 5 cumulated 128 128 128 128 128 146 170 202 270 361

361 491 636 861 1,111 1,361 1,611 1,861 2,111 2,361 2,611 2,861 Total Improved Pasture cumulated 128 146 170 202 270 2.5 3.5 4.5 6.1 7.8 9.6 11.3 13.1 11.9 16.2 18.4 20.1 Total Ir.o.vved Pasture 14.2 m ha 1/ % .9 1.0 1.2 1.4 1.9 '000 Metric Tons 10 1 1 3 4 5 6 9 10 10 10 10 10 II. F-7-A L CiGnT) 40 kg in yr 3 2/ 1 19 1 2 2 5 7 10 11 17 19 19 19 19 F_? 'CFCH- ) 75kg in yr 4 186 13 15 17 20 27 36 49 64 86 111 136 161 X? P.k3.STU'J) 100 kg in yr 5 13 13 13 13 18 22 29 39 52 69 91 115 1420 165 190 215 Total Extra Liveweight each year 13 13 13 11 15 568 568 563 568 568 563 568 568 568 568 568 568 568 568 568 ,68 III. LT _:;IJTC'Pr without Improved Pastures 3/ 568 783 583 686 590 597 607 620 637 658 683 708 733 758 IV. LITDFM-C OUTPUT with Improved Pastures 581 581 581 582 392 292 293 295 2Q8 304 310 319 329 3h2 354 367 379 V. XT2¶A?1-EAT- C4JTRU' with Improved Pastures 4/ 291 291 291 291 310 253 252 298 - - - - . . _ - VI. AC7-J1L :~-.T OUTB¶7r with Improved Pastures - 277 267 206 281

Difference (-) be'ween Estimated ard 17 (42) (46) (6) ------Actual 'eat Output (14) (24) 5 (11) 2,750 2,770 2,800 2,836 2,886 2,921 2,956 2,991 3,027 3,063 3,100 Population 000 2,5714 2,612 2,469 2,682 2,720 Human 75 81 78 67 68 69 67 58 60 61 62 63 64 65 Consuzmption per capita per year kgs 81 69 201 218 213 184 187 193 190 169 175 180 185 19' 196 Total Consu:mption O.Otons 209 181 198 183 191 86 98 163 97 69 66 105 120 150 154 162 169 176 VII. C?C2Y Availability of Carcass Meat '000 tons 68

1/ Total area used fcr beef production. i-n years 1 and 2- 2/ io lncrease in production from breeding herd on improved pastures 7/ 1L..2 million hectares x 40 kg beef (liveweight) per hectare. fl/ 50% dressirg percentage for carcass meat. (Th in.icated below average fattenirg year.

Source: 1BRD Staff Table 8.1: GROSS VOLUME OF INDUSTRIAL OUTPUT, 1961-1969

(Index 1961 100)

1962 1963 1964 1965 1966 1967 1 9 68W 1 9 69 W/

Food Products 106.9 103.9 106.9 115.7 114.0 105.5 119.9 130.7 Beverages 120.4 124.8 89.0 100.0 11Oo. 102.2 108.8 137.4 Tobacco 109.5 120.4 127.7 119.0 105.1 109.5 94.2 110.1 Textiles 88.3 96.1 113.5 112.8 126.2 105.0 111.0 97.7 Shoes and Clothing 87.2 103.2 135.8 128.0 136.7 133.5 145.0 128.9 Wood Products 1/ 110.9 96.9 100.0 71.9 78.1 - - - Furniture 93.1 103.4 110.3 91.4 75.9 _ _ _ Paper and Paper Products 103.0 112.1 150.0 148.5 142.4 140.9 140.9 153.1 Printing and Related Industries 95.1 80.5 98.4 101.6 88.6 89.4 102.4 111.3 Leather Goods 2/ 96.1 96.1 107.8 119.6 131.4 - - - Rubber Products 78.7 59.3 72.2 67.6 82.4 68.5 58.3 62.0 88.9 100.7 94.5 110.3 121.0 103.3 112.5 Chemical Products 91.5 6 Petroleum Products 111.6 110.1 109.7 118.4 108.2 105.8 106.3 114. Non-Metallic Minerals Products 88.5 74.4 87.6 102.0 115.4 103.7 121.8 117.9 Basic Metal Products 91.5 87.2 102.1 95.7 123.4 - - - Metallurgical Products 104.2 112.6 136.1 110.9 73.9 73.9 68.1 71.7 Machinery and Equipment 3/ 120.6 111.8 108.8 88.2 94.1 - - - Electrical Equipment 86.1 70.8 84.7 82.9 69.4 62.5 55.6 62.4 Transport Equipment 104.1 109.6 107.0 106.3 108.1 - - - Other 101.8 84.7 98.2 82.9 72.1 - - - Total 100.4 99.9 10G.4 106.2 108.2 103.3 107.6 113.0

1/ Excluding furniture. 2/ Excluding shoes. 3/ Excluding electrical and transport equipment. IJ Preliminary.

Source: Bank of the Republic; Central Bank 4/ Table 8.2: INDUSTRIAL PRODUCT AT CONSTANT 1961 MARKET PRICES (million pesos)

Weight 5/ 5/ 1966 1961 1962 1963 1964 1965 1966 1967 1968

Food Products .204 824 881 856 881 953 939 870 988 Beverages .087 363 437 453 323 363 401 371 395 Tobacco .031 137 150 165 175 163 144 150 124 Textiles .154 562 496 540 638 634 709 590 624 Shoes and Clotfing .065 218 190 225 296 279 298 291 316 Wood Products- .011 64 71 62 64 46 50 - - Furniture .010 58 54 60 64 53 44 - - Paper and Paper Products .021 66 68 74 99 98 94 93 93 Printing and 5ylated Industries .024 123 117 99 121 125 109 110 126 Leather Goods- .015 51 49 49 55 61 67 - Rubber Products .019 108 85 64 78 73 89 74 63 Chemical Products .065 271 248 241 273 256 299 328 280 Petroleum Products .049 207 231 228 227 245 224 219 220 Non-Metallic Minerals Products .072 252 222 180 293 330 332 348 432 Basic Metal Products .013 47 43 41 48 45 58 - _ Metallurgical Products .019 119 124 134 162 132 88 88 81 Machinery and Equipment- .628 136 164 152 148 120 128 - - Electrical Equipment .033 216 186 153 183 179 150 135 120 Transport Equipment .063 270 281 296 289 287 292 - - Other .017 111 113 94 109 92 80 - - Total 1.000 4,203 4,210 4,166 4,526 4,534 4,595 4,428 4,643

1/ Excluding furniture. 2/ Excluding shoes. 3/ Excluding electrical and transport equipment. 4/ This series measures the valThe of gross output and not value added. No data available which break down value added in manufacturing by sub-sector. 5/ Prelimiinarv.

Source: Bank of the r-_rpublic; Central Lank Table 9.1: COST OF LIVING IN MONTEVIDEO (Indices, August 1962 - 100)

Annual General Percent Index Changes Foodstuffs Clothing Housing Other

1961 Annual Average 88.6 88.5 94.0 10.o 62.8

1962 Annual Average 98.3 11.3 98.6 100.7 100.9 72.1

1963 Annual Average 119.2 21.2 116.3 113.5 119.3 129.5

1964 Annual Average 169.7 42.4 175.1 159.9 142.8 178.5

1965 Annual Average 265.7 56.6 280.1 259.5 200.7 273.8

1966 Anmual Average 460.9 73.5 452.8 582.5 286.2 528.7

1967 Annual Average 872.4 89.3 890.2 899.3 453.5 1,082.5

1968 January 1,527.4 159.4 1,705.7 1,288.8 565.6 1,818.7 February 1,628.6 148.7 1,751.3 1,415.0 822.2 1,949.5 March 1,706.9 147.6 1,784.7 1,620.2 829.1 2,120.1 April 1,769.1 150.5 1,826.9 1,952.9 829.1 2,141.6 may 1,898.9 166.9 1,949.3 2,077.7 989.7 2,258.9 June 2,155.9 182.8 2,288.0 2,250.5 997.8 2,511.9 July 2,168.6 145.5 2,296.8 2,257.8 1,002.2 2,542.7 August 2,132.1 126.8 2,265.3 2,075.2 1,007.8 2,546.0 September 2,110.0 106.1 2,210.2 2,107.3 1,020.2 2,556.7 October 2,153.1 100.2 2,226.5 2,202.8 1,042.2 2,653.8 Irovember 2,150.0 92.4 2,170.8 2,032.9 1,045.3 2,652.8 December 2,190.4 66.3 2,204.1 2,516.4 1,054.4 2,711.0 Annual Average 1,965.9 125.3 2,056.6 2,016.5 934.1 2,372.0

1969 January 2,216.7 45.1 2,212.2 2,553.8 1,183.5 2,711.4 February 2,240.3 37.6 2,206.3 2,570.4 1,245.8 2,790.9 March 2,288.4 34.1 2,246.9 2,559.8 1,396.0 2,823.3 April 2,350.5 32.9 2,298.4 2,807.0 1,425.0 2,833.4 Hay 2,344.3 23.5 2,275.4 2,815.4 1,459.8 2,836.3 June 2,361.8 9.6 2,281.2 2,895.2 1,486.0 2,844.4 July 2,397.7 10.6 2,312.5 3,031.7 1,514.6 2,842.1 August 2,417.7 13.4 2,319.8 3,092.6 2,544.4 2,863.0 September 2,425.8 15.0 2,320.3 3,117.0 1,562.5 2,878.8 October 2,478.6 15.1 2,418.7 3,086.6 1,575.5 2,885.4 November 2,488.8 15.8 2,436.5 3,088.4 1,580.9 2,883.4 December 2,508.5 14.5 2,418.4 3,168.2 1,585.4 2,977.4 Annual Average 2,376.5 20.9 2,312.2 2,899.0 1,463.3 2,847.5

1970 January 2,577.6 16.3 2,448.4 3,196.6 1,680.7 3,152.5 February 2,609.3 16.5 2,443.5 3,235.2 1,864.4 3,176.3 March 2,652.1 15.9 2,499.3 3,329.0 1,877.4 3,177.6 April 2,68S.6 14.3 2,536.0 3,428.7 1,886.6 3,182.0 May 2,732.1 16.5 2,544.1 3,684.2 1,896.6 3,237.3 June 2,753.7 16.6 2,550.9 3,765.4 1,913.7 3,267.6

Source: Direccion General de Estadistica y Censos. Table 9.2: NATIONAL WHOLESALE PRICE DTDEX OF URUGUAY

(indices, 1961 = 100)

General Annual Percent Manufactured Livestock Agriculitu Index Changes Products Products Prodi :-ts

1961 July 100.0 100.0 100.0 200.0 127.9 1962 July 107.9 7.9 107.9 97.0 123.5 1963 July 129.2 19.7 135.3 110.6 20-2.7t 1964 July 193.2 49.5 192.7 190.0

1965 July 307.5 59.2 309.6 320.6 268.1

1966 Annual Average 591.5 92.4 587.6 662.7 49L.2

1967 Annual Average 998.7 68.8 1,023.9 952.0 906.7 1968 January 1,723.4 136.3 1,777.6 1,463.6 1,778.6 February 1,905.7 145.5 1,915.8 1,742.2 2,072-.3 March 1,931.4 137.2 1,963.8 1,725.6 2,036.1 April 2,055.9 1145.8 2,090.6 1,776.6 2,249.1 May 2,250.1 164.5 2,306.9 1,875.2 2,453.1 June 2,534.7 179.7 2,643.7 2,057.5 2,583.2 July 2,554.9 172.8 2,668.6 1,991.6 2,697.9 August 2,539.9 152.2 2,668.6 1,940.7 2,6146.9 September 2,565.1 130.7 2,680.6 2,019.8 2,672.3 October 2,579.2 120.4 2,678.6 2,107.6 2,674.3 November 2,563.7 97.7 2,682.1 2,106.6 2,529.1 December 2,569.4 65.9 2,712.3 2,090.3 2,427.7 Annual Average 2,314.5 131.8 2,399.1 1,908.1 2,402.2

1969 January 2,577.5 49.6 2,721.7 2,120.1 2,394.8 February 2,612.6 37.1 2,756.1 2,105.5 2,505.1 March 2,640.5 36.7 2,771.4 2,161.3 2,565.5 April 2,632.6 28.1 2,773.2 2,155.2 2,499.6 May 2,646.3 17.6 2,799.2 2,156.4 2,1460.4 June 2,656.1 4.8 2,799.2 2,187.0 2,497.3 July 2,663.5 4.3 2,809.2 2,180.9 2,508.7 August 2,681.0 5.6 2,811.2 2,152.3 2,680.2 September 2,695.3 5.1 2,832.1 2,149.5 2,681.0 October 2,721.1 5.5 2,838.3 2,235.7 2,733.9 November 2,743.1 7.0 2,875.8 2,245.2 2,68LI,(' 2,510 December 2,757.3 7.3 2,879.4 2,364.7 Annual Average 2,668.9 15.3 2,805.6 2,184.5

1970 January 2,875.8 11.6 3,058.3 2,372.0 2,539.3 February 2,894.3 10.8 3,085.3 2,355.1 2,559.9 March 2,929.7 11.0 3,127.0 2,361.3 2.600.2 April 3,027.7 15.0 3,160.8 2,741.2 2,668.7 May 3,037.6 14.8 3,169.0 2,767.6 2,66)4.t

Source: Central Bank of Uruguay. Table P.3 ICSteS OF NtIDL Agm RIAL PUELIC WILITr PRICES (19610? 100)

Kltearictty 11etrmelty Water Manterldso aolin Golimm Dile. OlU Diasel Oil R"iu ;r5, rU2 D_wwtic Intriul D mesticc GM Tr t Cown Subeidiad Cen R 1 01rroae Ol

1962 Aual Ava 1SD.0 92.7 10D.0 92.7 100.0 92.7 107.5 99.6 195.0 180.7 101.1 93.7 17.2 108.6 121.7 112.8 115.6 107.1 100.0 92.7 107.6 99.7 110.5 102.4 107.3 99.4

1963 A-nul Aweag 157.5 121.9 150.7 116.6 133.3 103.2 116.8 90.4 385.0 . 116.9 90.5 134.4 104.0 154.3 119.4 16.87 130.6 120.3 93.1 112.3 86.9 110.5 85.5 107.3 83.0

1964 A--I bWsMe 235.0 111.3 110.3 68.1 200.0 103.5 155.3 8o.4 ho5.o 209.6 166.3 86.1 164.1 84.9 219.6 113.7 259.4 134.3 13.1 74.1 163.6. 8.7 1.1.5 57.2 107.3 55.5

1965 Asza Aveage 346.6 133.4 233.1 75.8 238.5 77.6 222.3 72.3 500.0 162.6 448.3 145.8 346.9 112.8 417.4 135.7 5oo.o 162.6 283.7 92.3 224.7 73.1 123.9 64.3 111.2 36.2

1966 ALnnl Awagp 556.3 94.0 352.1 59.5 350.3 59.2 554.3 93.7 1,235.0 208.8 589.9 99.7 614.1 103.8 719.6 121.7 9D9.4 153.7 516.3 87.3 329.7 55.7 324.6 5S.9 299.6 50.7

1967 -I Arrage 1,316.2 131.8 785.4 78.6 953.7 95.5 1,069.5 105.1 3,230.0 323.4 1,122.5 112.4 1,179.7 118.1 1,584.8 158.7 2,031.2 203.4 918.3 91.9 839.1 84.0 874.8 87.6 263.0 76.4

1968 Lnnual kvmmge 2,185.1 94.b 1,274.9 55.1 1,736.7 75.0 2,518.7 108.8 2,030.0 303.8 2,510.1 108.5 2,537,5 109.6 2,215.2 95.7 2,834.4 122.5 1,213.7 52.4 1,613.2 69.7 2,003.6 86.6 1,711.0 73.9

1969 Amsa Averap 3,030.3 113.5 1,788.6 67.o 2,938.0 110.1 3,007.3 112.7 9,335.0 349.8 3,213,.5 120.4 3,935.9 147.5 2,391.3 89.6 2,118.8 116.9 1,319.6 49.4 2,725.0 102.1 3,188.5 19.5 2,748.3 103.0

1970 January 3,Od2.3 1,859.6 3,178.2 3,271.8 lO,eo.0 4,719.1 2,391.3 3,125.0 1,319.6 3,203.3 3,661.6 3,164.6 February 3,609.4 1,859.6 3,813.8 3, m.8 10,500.0 4.Tfsl. T 2,391.3 3,125.0 1,319.6 3,203.3 3,661.6 3,16.6 March 3 609.4 123.2 2,364.0 80.7 3, 813.8 130.2 3,27..8 111.7 10,500.0 358.6 4,n9.1 161.1 ME 2,391.3 81.6 3,125.0 106.7 1,319.6 65.o 3,203.3 109.3 3,661.6 125.0 3,164.6 108.0 April 3,609.4 2,364.0 3,813.8 4,400.2 10,500.0 4,719.1 NA 2,391.3 3,125.0 1,319.6 3,203.3 3,661.6 3,164.6 NV 3 609.4 2,364.0 3,813.8 4,400.2 10,500.0 4,79.s TED 2,391.3 3,125.0 1,319.6 3,203.3 3,661.6 3,164.6 Jun 3,60b.4 2,364.0 3, W3.8 4,co0.2 lo,5oo.o 4,719.1 2,391.3 3,125.0 1,319.6 3,203.3 3,661.6 3,164.6

Deflator ii national 1boleaa. price 1lu Izdice of railin ratae ae,b an of tbe ad of sick yewn ratw th of the a*wap raIn. praviling diwing the ym_ as In the eCs of the othbr iwie_ in this table. 8om~cez Cetrcl I1 of Dgor . Table 9.4: URUGUAY: INDICES OF NOMTNAL AND REAL WAGE LEVELS SERIES CiMPIHED BY ITNTST'RY OF FINANCE AND PCHONi04f (1968 - 100)

Nationwide Index Public Sector Nominial W4ane Real Wag2e Nominl 1.age RealWare

1968 Annual Average 100.00 100.25 100.00 100.32 January 83.15 107.03 87.62 112.78 February 87.07 105.11 87.62 105.77 March 87.86 101.19 87.62 100.91 April 90.32 100.37 88.38 98 :w May 93-49 96.76 88.38 91.50" June 94.16 85.87 88-38 80.59 July 104.56 94.79 107.49 97.44 August 104.56 96.40 107.49 99.11 September 108.08 - 100.70 107.49 100.15 October 112.96 103.14 116.51 106.33 November 112.96 103.29 116.51 106.54 December 120.84 108.45 116.51 104.57 1969 Annual Average 134.67 111.46 134.89 111.74 January 129.48 114.84 134.66 119.43 February 129.48 113.62 134.66 118.16 March 129.48 111.24 134.66 115.69 Apri.l 135.15 113.04 134.66 112.63 May 135.15 113.33 134.66 112.92 June 135.15 112.49 134.66 112.09 July 135.36 110.99 135.11 110.78 August 135.36 110.10 135.11 109.90 September 135.36 109.70 135.11 109.50 October 135.48 107.46 135.11 107.17 November 135.65 107.15 135.11 106.72 December 144.98 113.62 135.11 105.89 1970 Annual Average January 152.51 116.31 150.95 115.12 February 152.51 114.90 150.95 113.73 March 152.51 113.05 150.95 111.89 April 152.68 111.76 151.31 110.76 May 152.68 109.87 151.31 108.88 June 152.68 108.99 151.31 108.02

Source: Direccion General de Estadistica y Censos. Table 9.5: URUGUAY: INDICES OF ,NOMINAL AND REAL WAGE LEVELS SERIES COMPILED FOR NATIONAL ACCOUiNTS (1968 - 100)

Manufacturing- Construction Commerce Government Nominal Real Nominal Real Nominal Real Nominal Real Wage Wage Wage Wage Wage Wage Wage Wage

1961 Annual Average 4.9 109.6 5.5 121.5 6.1 134.4 5.2 116.6 1962 Annual Average 5.7 113.4 6.1 121.5 7.3 145.7 6.4 127.6 1963 Annual Average 6.7 111.0 7.6 125.4 8.7 144.4 7.5 124.5

1964 Annual Average 9.1 105.6 9.4 108.9 11.7 135.2 10.9 125.8

1965 Annual Average 13.6 100.3 13.3 98.7 17.1 126.6 16.7 123.3

1966 Annual Average 26.2 111.8 25.3 107.9 29.1 124.3 24.7 105.5 1967 Annual Average 46.7 105.0 53.2 119.9 57.0 128.6 53.4 120.3

1968 Annual Average 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

1969 Annual Average 128.8 106.5 128.9 106.1 124.6 103.1 n.a. n.a. January 119.7 106.1 118.5 105.1 116.2 103.1 February 119.7 105.0 118.5 104.0 116.2 102.0 March 119.7 102.9 118.5 101.8 116.2 99.9

1970 January 148.4 113.2 148.6 113.4 143.1 109.1 n.a. n.a. February 148.4 111.7 148.6 112.0 143.1 107.9 March 148.4 110.0 148.6 110.2 143.1 106.2

Source: Central Bank of Uruguay. Table 9.6: INDEXES OF ANNUAL COST AND PRICE AVERAGES

(1968 = 100)

196L 1965 1966 1967 1968 1969 1970 (may)

Wholesale Prices 8.3 13.3 25.6 43.1 100.0 115.3 131.2

Manufacturing 8.0 12.9 24.5 42.6 100.0 116.9 132.1 Agricultural 8.4 11.2 20.6 37.7 100.0 106.9 110.9 Pastoral 10.0 16.8 34.7 49.9 100.0 114.5 145.0

Cost of Living 8.6 13.5 23.4 44.4 100.0 120.9 139.0

Food 8.5 13.6 22.0 43.3 100.0 112.4 123.7 Clothing 7.4 12.0 27.0 41.6 100.0 144.0 182.7 Housing 15.3 21.5 30.6 48.5 100.0 156.6 203.0 Other 7.3 11.4 22.3 45.6 100.0 120.0 136.5

Administered Prices

Electricity: Domestic 9.8 16.0 25.5 60.2 100.0 138.7 165.2 Industrial 13.4 18.3 27.6 61.6 100.0 140.3 185.4

Water: Domestic 11.5 13.7 20.2 54.9 100.0 169.2 219.6

Gasoline: Common 6.6 17.9 23.5 44.7 100.0 128.0 188.0

Municipal Transport 5.8 7.1 17.6 45.9 100.0 132.8 149.4

Railway: Passengers 10.1 13.9 20.4 52.0 100.0 168.9 198.6 Produce 5.5 6.2 16.2 43.7 100.0 159.1 182.8 Frei ht 6.3 6.5 17.5 44.6 100.0 160.6 105.0

Import Exchange Rate 7.1 13.2 27.6 45.2 100.0 106.9 106.9

Sources: Central Bank of Uruguay. Direccion General de Estadistica y Cen os.