FROM THE OFFICE OF PUBLIC AFFAIRS

The United States Government strongly supports the recommendation to advance $1.5bn and to increase to a total of $3.8bn financing for Uruguay from the IMF, World Bank, and Inter-American Development Bank. We are confident that this enhanced program will help Uruguay address the intense external pressures it has faced in recent months. This confidence stems from the extraordinary actions and commitments by the Uruguayan authorities to address these pressures.

In order to provide rapid financing to the Uruguayan government in support of the banking system, the United States government has agreed to provide up to $1.5 billion in short-term bridge financing from the Exchange Stabilization Fund (ESF) to Uruguay’s central bank during the brief period until international financial institution loans are disbursed. This is consistent with past use of the ESF.

100% of all dollar-denominated sight and savings deposits in both public and private domestic banks will be fully backed with the help of these new funds. It is essential for the Uruguayan people and business community to have access to these deposits to preserve the payments system in the economy.

For some time, Uruguay has effectively implemented sound economic policies and embraced free markets, liberalizing trade and maintaining low inflation. President Batlle’s administration has made courageous commitments to ensure that Uruguay remains a strong financial center.

These commitments include the difficult but necessary steps of closing unsustainable banks and strengthening the supervisory and regulatory framework and bank management in the remaining financial institutions. Uruguay’s approach to bank reform should encourage confidence of depositors in the financial system. Foreign banks have played an important role in the banking system, and we expect that role to continue.

A government that puts in place and follows through on such strong economic policies merits the consistent support of the international financial institutions and the United States.

I look forward to meeting with President Batlle and his economic team next week in Montevideo.