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LatinNews Daily - 26 May 2021

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In brief: IMF fully backs Uruguayan gov’t

*The International Monetary Fund (IMF) has released a concluding statement following a virtual staff mission to Uruguay. The statement praises the fiscal and monetary policy response adopted by the government led by President Luis Alberto Lacalle Pou to mitigate the negative effects of the coronavirus (Covid-19) pandemic. The statement notes Uruguay’s “Fiscal policy appropriately focused on sustaining the economy and protecting the most vulnerable while taking steps to ensure medium-term fiscal sustainability in the context of limited fiscal space”. It highlights the expansion of credit lines to businesses affected by the pandemic and financial relief for households. It also highlights the recently announced reforms to the monetary policy framework that “signalled a renewed commitment to the objective of bringing down inflation as the recovery takes hold”. The statement concludes that Uruguay is in a better position than most of its neighbours to experience an economic recovery although it advises that “as the economy reopens and continues to recover, fiscal support should shift from policies to preserve jobs and keep firms afloat to policies that stimulate job creation”.