Autonomous Fiscal Council openly questions Uruguay's budget projections, deepening institutional rift.

The tension between a government defending its fiscal projections and an autonomous body openly questioning them before Parliament defines the economic tone in Uruguay at this moment, and that institutional rift is precisely what stands out most today.

The Consejo Fiscal Autónomo (CFA) warned lawmakers that the Ministerio de Economía y Finanzas (MEF) had incurred in an "overestimation" in the projections included in the Rendición de Cuentas, a challenge that the head of the ministry, Gabriel Oddone, rejected with a defense of the technical normality of the process: "Projection errors or deviations are commonplace," he argued, contending that revising growth figures does not constitute an anomaly but rather standard practice in any macroeconomic management. The exchange reveals a deeper unease. The Frente Amplio government presented the Rendición de Cuentas with a request for additional spending equivalent to roughly one billion dollars, projecting a gradual recovery in a global environment that Oddone himself characterized as "challenging and uncertain," and it does so at a moment when the fiscal deficit closed 2025 at 4.1% of GDP — a level the MEF had projected, but which analysts place in historical perspective against the imbalance inherited from prior years.

The budget debate is further complicated by political pressure on two simultaneous fronts. On one side, Senator Pablo Abdala noted that discussion of creating a 1% tax "is not off the table" and that he will insist on incorporating it into the Estrategia Nacional de Desarrollo, a proposal that Oddone previously rejected forcefully by stating that such a tax "is not applied anywhere in the world." On the other, the government signaled that, should the Rendición de Cuentas fail to secure parliamentary approval, it will resort to an "alternative law" to implement the planned changes in social benefits — a sign that the Orsi administration is not prepared to yield programmatic ground to the legislative opposition.

Against that backdrop of political uncertainty, the real economy offers mixed signals that make a clean narrative difficult. GDP grew 0.8% in the first quarter of 2026 versus the previous quarter, an acceleration relative to the near-stagnation that characterized much of 2025, when annual growth came in at just 1.8%, below both official and IMF forecasts. Finance, agriculture, and mining accounted for most of the 2025 expansion, while industry and commerce lagged behind — a sectoral disparity that persists. The Ceres Leading Index, which functions as a forward-looking gauge of activity, rose 0.2% in April after four consecutive periods without growth, a weak but statistically meaningful signal in a cycle that has yet to confirm its direction.

Household disposable income — the money left after covering fixed expenses — halted its decline after seven consecutive months of deterioration, which could lend modest support to private consumption. Nonetheless, an international survey cited by Búsqueda shows that Uruguay registered a "sharp deterioration" in its perceived economic climate, in line with the growing pessimism among local consumers after three years of improved sentiment. Competitiveness remains the central concern of the business sector, according to in-house surveys, strained by a dollar that has lost ground and driven up relative costs for the Uruguayan exporter.

Two structural developments merit attention for their long-term implications. First, service exports from the Knowledge Economy hit a record, consolidating Uruguay as a regional platform for technology and high value-added services, a sector that leading international outlets highlight as a competitive differentiator for the country. Second, the Banco Central introduced a draft bill to create an open finance system, an initiative that, if it advances, could transform the structure of financial intermediation and broaden access to credit, at a time when the BCU is also working on modifications to the official debt-restructuring bill.

The imminent visit of the IMF's managing director, who will meet with President Orsi, Minister Oddone, and the president of the Banco Central, adds a layer of international scrutiny to the moment. The Fund cut its growth forecasts for Uruguay to 1.6% in 2026 and 1.7% in 2027, figures the World Bank also recently trimmed, and which contrast with the more optimistic expectations from the MEF. The meeting will help gauge whether the Fund endorses the government's fiscal trajectory or whether the CFA's warnings find resonance in Washington.

What to watch in the coming days is the parliamentary debate over the Rendición de Cuentas, which will determine whether the government has the fiscal room to execute its social and investment agenda, or whether it will need to fall back on the alternative legislative route. Equally important will be the release of new activity data confirming — or refuting — whether the first-quarter rebound has staying power or was a one-off. Inflation remains under control, but the BCU flagged rigidities in service prices, which could narrow the room for monetary policy maneuver if cost pressures spill over into the tradables sector.

**Banco Central del Uruguay (BCU)** — The BCU introduced a draft bill to create an open finance system that would require financial institutions to share customer data under regulated standards, with direct implications for private banks operating in Uruguay, including local subsidiaries of regionally active players such as Itaú and Santander. The initiative fits into a global open banking trend already advancing in Brazil and the European Union.

**MEF — Sovereign peso debt issuance** — The Ministerio de Economía returned to the local-currency debt market and placed more than double the amount planned, at a yield below 7%, a sign of robust demand for instruments denominated in Uruguayan pesos and consistent with the strategy of pesifying public liabilities that the government has promoted since taking office. The transaction reduces the public sector's currency exposure at a time of dollar weakness.