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Last Updated:  Friday, 21 February, 2003, 20:43 GMT
IMF breakthrough for Uruguay
The International Monetary Fund (IMF) has agreed to start work on a package of reforms with Uruguay, paving the way for the much-needed resumption of economic aid.

Uruguay's economy was hammered last year by the knock-on effects of an economic meltdown in neighbouring Argentina.

Any deal to restart IMF aid is expected to involve a commitment from Montevideo to restructure its debts.

But an IMF spokesman declined to comment on whether such a demand was part of the new agreement.

Return to growth

IMF western hemisphere department head, Anoop Singh, said: "We have reached agreement with the Uruguayan authorities on the basis of an economic program for 2003.

"We are confident that the envisaged economic program will be supported by the international community and build a strong foundation for Uruguay to return to sustained growth.

"We plan for board consideration of the program in mid March."

Uruguay's breakthrough with the IMF came after its central bank President Julio de Brun led a delegation to Washington to try and wrap up talks to revive the desperately-needed aid package.

Banking reforms

Mr Singh said Uruguay would finalize a letter of intent - the document laying out what precise commitments the nation will make in return for renewed aid - in the coming days.

He added: "This program defines a fiscal and financing framework to pave the way for medium-term economic sustainability and growth.

"The program will also carry forward bank reforms aimed at strengthening the domestic banking system."

The IMF offered few details on what would be included in the plan to revive Uruguay's economy.

Debt fears

The organisation extended $2.8bn in loans to Uruguay when its economy went into meltdown last year.

But the country failed to pass an IMF review in December.

And the lender remained concerned about lack of progress in dealing with insolvent banks.

Without IMF aid, some observers had feared the tiny nation would be unable to service its debts this year.

Uruguay's international reserves slid 12% in January to $683m as the government made debt payments and have since slid below the $600m mark.

The country must make a total of $1.4bn in debt payments this year - an amount it would be unlikely to be able to repay without the resumption of IMF aid.



Country profile: Uruguay
03 Jan 03 |  Country profiles
US finance chief praises Uruguay
06 Aug 02 |  Business


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