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Uruguay targets infrastructure, oil sectors in reform blitz

Bnamericas Published: Friday, April 24, 2020
Uruguay targets infrastructure, oil sectors in reform blitz

Uruguay’s government has submitted a bill for urgent discussion that includes various areas including infrastructure and oil. 

Officials had been drafting the text over the past several months.

The draft legislation - which parliament has 90 days to debate - introduces changes to existing rules governing the use of post-tax profits earned by state lender Banco República.

Under current legislation the government can channel up to 50% of the bank’s annual post-tax income into state coffers and can also take a further 30% for financing “feasible and sustainable productive projects.” 

The bill adds into the text that the 30% can also be used for the financing of infrastructure projects.

It also calls for the creation of an infrastructure development plan to “improve the institutional framework of the system of concessions and public-private participation contracts.” The plan would encompass areas such as project risk, financing, tender document preparation and red-tape reduction. The executive would be authorized to request help from international bodies experienced in the area.

Under the proposed changes, a single agency or entity would manage all key phases of projects. 

OIL MONOPOLY

The government also proposes scrapping state oil company Ancap’s monopoly on the importing, exporting and refining of crude oil and derivatives. The executive, with input from energy and water regulator Ursea, would draw up rules. 

Alejandro Chafuen, managing director, international, at US think tank Acton Institute, told BNamericas recently that ending Ancap's monopoly would be politically "very hard." A similar attempt in 2003 was rejected.

The government of center-right President Luis Lacalle Pou - which has previously said it wanted to reduce the country’s fiscal deficit without raising taxes - also proposes spending efficiency measures and fiscal rules as well as the creation of a public policy-monitoring agency.

ALSO READ: Challenges facing Lacalle Pou and Uruguay (apart from coronavirus

Another focus area of Lacalle Pou (pictured) is social security. The bill establishes a special committee tasked with analyzing the current system and putting forward reform suggestions.

Lacalle Pou will need to capitalize on political tailwinds during his first year in office, said Chafuen.

Other areas encompassed in the bill include security, education, labor relations, telecommunications, anti-money-laundering, and SME support.

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