The current standby arrangement was initially approved on 25 March 2002 in an amount of US$823m for a 24-month period. It was increased by US$1.6bn on 25 June, and then by US$521m on 8 August.
In commenting on the executive board decision, First Deputy Managing Director Anne Krueger said, 'Uruguay's performance under the standby arrangement has been favourable, and commendable progress has been achieved in containing the crisis and stabilising the economy. The authorities' firm implementation of sound macroeconomic policies and the successful recent debt exchange have contributed to a notable improvement in economic and financial indicators. There are encouraging signs that the economy has bottomed out, bank deposits have continued to increase in recent months, and risk spreads have declined markedly.'
She warned, though, 'While the debt exchange has addressed the near-term financing needs and improved the medium-term debt profile, important tasks nevertheless still lie ahead. The authorities remain firmly committed to make further strong progress on the implementation of policies in the fiscal, banking, and structural areas, that will be critical to ensuring a return to growth and sustainable debt dynamics.
'Fully restoring stability and confidence in the banking system is a key element of the programme.
'For 2003, the authorities are committed to attaining a primary surplus of 3 percent of GDP. To this end, they are exercising continued expenditure restraint, while taking steps to improve the social safety net and to strengthen tax collections. The continued commitment to a floating exchange rate régime is welcome.'
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