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Last Updated:  Wednesday, 12 March, 2003, 21:28 GMT
Uruguay seeks debt restructuring
Uruguay parliament building
Uruguay has run up huge debts
Officials from Uruguay are to travel to the US in an attempt to woo investors about a voluntary restructuring of its debt.

The restructuring of a quarter of Uruguay's gargantuan debt is necessary to prevent the country from financial collapse.

Wall Street had previously criticised Argentina for being too slow to open a dialogue with bond holders when it collapsed more than a year ago.

Central Bank President Julio de Brun said the restructuring would consist mainly of bonds coming due over the next five years.

"It is aimed at clearing financing over the next five years," De Brun told local radio in Uruguay.

"This will work if there is a high level of participation."

Argentina

Late on Tuesday, Uruguay's government proposed a voluntary debt exchange to its creditors.

The announcement was long expected by the financial world.

Uruguay's economic crisis deteriorated after last year's economic meltdown in Argentina.

Uruguay was once known as the "Switzerland of South America" as investors praised the country's economic stability.

It also had thriving banks whose secrecy attracted international fortunes to Uruguay in the 1980s and 1990s.

But it was hit hard by the economic turmoil rocking Latin America in 2002.

The economic crisis in Argentina led to runs on Uruguayan banks by depositors and deteriorated its debt problem.

Uruguay's mammoth $11.4bn public debt is now almost 90% of its gross domestic product.

This year alone, Uruguay has debt obligations of $1.6bn.


SEE ALSO:
Country profile: Uruguay
03 Jan 03 |  Country profiles
IMF breakthrough for Uruguay
21 Feb 03 |  Business


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