Fiscal watchdog challenges budget growth projections as Uruguay's economy stalls.

The tension between official optimism and institutional skepticism rarely condenses into a single day with such clarity: while Minister Gabriel Oddone presented the 2025 Rendición de Cuentas before Parliament on Wednesday, defending a spending increase compatible with fiscal targets, the Consejo Fiscal Autónomo warned legislators that the Ministry of Economy and Finance's growth projections are overstated, casting doubt on the soundness of the numbers underpinning the entire budget document.

The Rendición de Cuentas, which contemplates additional spending of approximately one billion dollars according to parliamentary sources, arrives at a moment of uncomfortable visibility. The economy grew just 0.8% in the first quarter of 2026 relative to the previous quarter, a pace that private analysts describe as modest and one that the Central Bank itself projects below official estimates for the full year. Ceres's leading activity index, whose latest readings had sent contradictory signals — first reinforcing signs of recovery, then of weakening — reflects the same ambiguity that dominates the country's economic diagnosis. That the government is projecting a rebound against a global backdrop Oddone himself described as "challenging and uncertain," with an additional negative shock from the war in the Middle East pressuring energy prices, lends the budget discussion a more political than technical character.

Oddone's response to the criticism was characteristic of his style: he acknowledged that projection errors are "commonplace" and defended the revision of growth figures as part of an ordinary management process. Before the Senate, where he was interpellated by the opposition on both the macroeconomic situation and the changes planned for the AFAP system, he dismissed any risk of stagnation in Uruguay and reaffirmed the fiscal course. The Frente Amplio, in turn, backed the economic team's management with its votes, suggesting the Rendición de Cuentas has the minimum support needed to advance — though the government made clear that, should the text fail to pass, it will seek to introduce the changes in social allocations through an "alternative law."

Fiscal pressure remains the structural knot that no political consensus has managed to untie. The Unión Industrial Argentina — whose local counterpart, the Uruguayan UIA — warned about what it calls the world's heaviest fiscal burden on the formal economy, a complaint that resonates with the competitiveness bill the government presented in Parliament, aimed at strengthening oversight of markets and economic concentrations. Competitiveness, cited by most surveyed firms as their chief concern for 2026, is not a new problem, but what has changed is the urgency: with the World Bank warning that Uruguay was a "superstar" that has lost ground, and with the Central Bank pointing to persistent rigidities in service prices even as headline inflation remains under control — indeed at seventy-year lows — the room for complacency is narrowing.

Against this backdrop of concern about growth, two developments offer relevant counterexamples. Services exports from the Knowledge Economy posted record growth, confirming that the most sophisticated sectors of the Uruguayan economy continue to gain international ground. And the wheat harvest, with historic production, could contribute close to 3.9 billion dollars to the economy — a foreign currency injection arriving at an opportune moment given the debate over exchange rate competitiveness. The Central Bank, meanwhile, is advancing on two far-reaching regulatory fronts: the introduction of a draft bill to create an open finance system — aligned with global open banking trends — and an initiative to protect the credit history of minors. On the pensions front, minimum benefits from BPS, the Caja Policial and the Caja Militar will receive a 2.5% increase following an agreement with the MEF, an adjustment that eases social pressures at the margin but does not resolve the structural problem of the social security systems.

What to watch closely in the coming weeks is the parliamentary debate over the Rendición de Cuentas and the possibility that Senator Abdala insists on applying a 1% tax within the framework of the Estrategia Nacional de Desarrollo, a proposal Oddone rejected forcefully but which does not appear definitively off the table. Equally relevant will be whether the Ceres index confirms or reverses the signs of weakening, and whether external pressure — rising oil, global uncertainty, trade relations with China under Washington's gaze — ultimately forces the MEF to revise its 2026 growth projections downward before the second half concludes.

**BTG Pactual (NYSE: BTG)** — The Brazilian investment bank completed the acquisition of HSBC's local operations in Uruguay for 211 million dollars and formally began its activities in the country, consolidating its expansion in private banking and wealth management across the Southern Cone. The deal positions BTG Pactual as a relevant player in a Uruguayan market where demand for sophisticated financial services is growing in parallel with the development of the Knowledge Economy.