Uruguay taxes electric cars while recession signals mount, fiscal math questioned.

The Rendición de Cuentas (budget accountability bill) presented today by the Frente Amplio government reveals a tension that defines Uruguay's current economic moment: the Ministry of Economy and Finance is announcing an increase in public spending —roughly one billion dollars— while simultaneously proclaiming that fiscal targets will remain intact. The question circulating through markets and parliamentary corridors is whether that equation is truly sustainable, or whether the government is stretching the credibility of its fiscal anchor to a point that is beginning to raise eyebrows.

Minister Gabriel Oddone defended before Parliament that the additional spending contemplated in the Rendición de Cuentas will be financed with new revenues already approved in 2025, among them the IMESI tax that will apply to electric vehicles with an import value above 19,000 dollars. According to Oddone himself, 66% of the electric vehicles currently circulating in the Uruguayan market will not be affected by the measure, although the decision generated immediate friction within the cabinet: the Ministries of Environment and Industry voiced disagreements with the economic portfolio, a rift that rarely surfaces publicly and one that suggests revenue logic prevailed over sectoral policy considerations. The introduction of IMESI on electric vehicles also runs counter to the global trend of subsidizing the transition toward clean mobility —a contradiction that has not gone unnoticed.

At the same time that the government defends its fiscal discipline, the leading activity indicator compiled by Ceres fell again, reinforcing signals of weakening that have been accumulating since late 2025. The economy grew barely 0.8% in the first quarter of 2026 relative to the previous quarter —a modest improvement over the virtual stagnation of late 2025, when GDP actually contracted— but analysts have already trimmed their full-year projections several times. Oddone himself acknowledged before the Senate that there is "a fairly high probability" of revising 2026 growth downward, a notable admission coming from the head of the economic portfolio. The think tank Exante describes the starting point of the year as "zero to zero," with no favorable statistical carryover.

Sectoral data confirms the picture. Goods exports fell for the third consecutive month, hit primarily by weaker soy performance. Household credit has been declining for seven months and delinquency is not easing. Luxury goods purchases —planes, cars, jewelry— contracted in the first half. However, there are counter-signals worth noting: disposable household income after fixed expenses stopped falling after seven months of contraction, a nascent but relevant data point for private consumption. The knowledge economy reached a record in exports, consolidating Uruguay as a regional technology platform. And sovereign risk is touching lows not seen since 2018, with the market anticipating further declines —a signal of confidence in the country's institutional strength that contrasts sharply with the weakness of the real cycle.

The strike at the TCP port adds further pressure to the picture. The company denounced a situation of "extreme gravity" in the face of union demands it described as "unworkable," warning additionally of external interference in the negotiation. A prolonged shutdown at the country's main container terminal would have direct consequences on export chains at a moment when foreign sales are already under pressure.

On the political-economic front, Oddone's Senate interpellation —in which the Frente Amplio backed the economic team with its votes— has cleared, for now, any parliamentary turbulence. But the debate over the AFAPs remains open: Oddone rejected the term "nationalization" as an "exaggeration" and ruled out any confiscation, although the planned changes to the pension system continue to generate uncertainty among pension funds, whose reform was postponed following criticism from the private sector.

On the immediate horizon, three variables warrant close monitoring. First, the evolution of the port conflict, whose resolution or escalation will directly affect foreign trade in the coming weeks. Second, whether wheat —whose record harvest could contribute some 3.9 billion dollars to the economy according to preliminary estimates— can partially offset the soy setback in the second half of the year. And third, progress on the competitiveness bill with more than 240 measures being pushed by the government, whose parliamentary approval will largely determine whether Oddone's narrative of "gradual recovery" finds support in the data or remains an unanchored promise.

**Terminal Cuenca del Plata (TCP)** — The operator of the Port of Montevideo declared a situation of "extreme gravity" in the face of union demands it called "unworkable," with warnings of external interference in the negotiation. A prolonged shutdown would directly affect the flow of agricultural and industrial exports through one of the main ports of the Southern Cone.

**ANCAP** — The Uruguayan state refinery posted losses of 41 million dollars in the first half of the year as a consequence of the appreciation of the peso on its finances, in a context in which the government also reduced the IMESI discount for fuel purchases on the border with Argentina, hitting one of its captive markets.