Independent watchdog openly questions government's growth forecasts amid stagnation fears.

The Autonomous Fiscal Council appeared before Parliament this week with a message rarely heard so openly from an independent technical body: the growth projections included in the Ministry of Economy and Finance's Rendición de Cuentas are overstated. The warning is no small matter. In a country where the Frente Amplio government has bet on private investment as the engine of recovery, and where Minister Gabriel Oddone has been forced to admit there is "a fairly high probability" that 2026 growth figures will have to be revised downward, the signal from the fiscal watchdog introduces an institutional tension that deserves attention.

The friction between official optimism and the reality of the data is the day's connecting thread. Oddone himself, in defending the correction of growth figures before Parliament, argued that "projection errors or deviations are commonplace" — a formulation that, while technically valid, becomes politically awkward when it emerges in the context of a Rendición de Cuentas that the opposition coalition is already refusing to endorse. The Coalición Republicana's refusal to back the supplementary budget has led the minister to declare that he is not giving up on negotiating, but the parliamentary arithmetic complicates any quick resolution.

The activity picture reinforces the skepticism. The Uruguayan economy grew a mere 1.8% in 2025, below both official and IMF forecasts, and closed the year with a virtually stagnant fourth quarter. The first quarter of 2026 showed a rebound of between 0.8% and 0.9% depending on the estimate, driven by consumption and exports, but the slowdown in agriculture — hit by falling soy and rice prices — and the contraction in construction temper any enthusiasm. The World Bank has cut its Uruguay growth projections to 1.6% for 2026 and 1.7% for 2027, while the Central Bank itself projects a pace below what the MEF estimates. Private analysts have trimmed their forecasts in successive revisions, and several agree that 2026 begins effectively "flat," with no positive statistical carryover.

Faced with this picture, the government has pinned its hopes for reactivation on a set of large private projects: green hydrogen, data centers and a new pulp mill. These are capital-intensive investment projects that, in theory, should move GDP forcefully, but whose materialization depends on execution timelines that do not always align with political urgencies. The government is also betting on the "knowledge economy," whose service exports posted record growth, and on the momentum of the technology sector, which already accounts for a significant fraction of GDP. The Central Bank, for its part, has advanced a draft open finance bill, while the Financial Stability Committee has certified that the banking system is "well prepared to absorb hypothetical adverse scenarios" — a reassuring statement given the external context.

That external context is, on its own, cause for concern. Oddone has publicly warned about the effects of the Middle East war on energy prices, calling the phenomenon a potential "negative shock." Along the same lines, the dollar in Uruguay recorded its largest weekly gain in six years in recent weeks, precisely as a reflection of geopolitical tension. The currency effect is a double-edged sword: it eases the exchange-rate lag that has weighed so heavily on exporters, particularly the agricultural sector — whose trade association, the ARU, had warned it was "at breaking point" — but generates uncertainty about inflation and the purchasing power of wages.

On the social front, the government agreed with the Ministry of Economy on a 2.5% increase in minimum pensions from BPS, the Caja Policial and the Caja Militar, a measure that came after weeks of tension with the unions. The PIT-CNT, which met with Oddone to discuss changes in social security, received a warning from opposition figure Pablo Abdala that "agreements are made to be honored" — a signal that any modification to the pension system, including the changes to the AFAP regime that the government has confirmed it will push, will draw resistance from both the political right and workers. Oddone has ruled out any "nationalization" and has assured there will be "no confiscation," but the political debate is far from settled.

Three variables will demand close monitoring in the coming weeks: the parliamentary negotiation around the Rendición de Cuentas, in which Oddone has bet on dialogue despite the opposition's initial rejection; the evolution of the exchange rate and its effects on sectoral competitiveness, especially along the border with Argentina, where the MEF has already introduced adjustments to the Imesi fuel discount; and the confirmation — or delay — of the large private projects that the government has placed at the center of its growth strategy. Uruguay has reached the lowest country risk in Latin America, which gives it room to maneuver in debt markets, but turning that financial stability into real economic dynamism remains the unfinished task of the current government's term.

**ANCAP (state-owned company, does not trade on international markets)** — Crude from the Vaca Muerta formation in Argentina is consolidating its position as a key input for the Uruguayan state refinery, progressively displacing other sources and deepening bilateral energy dependence between the two countries. The trend reinforces the strategic role of Argentine unconventional producers, with indirect exposure for companies such as YPF (NYSE: YPF), the leading operator in Vaca Muerta.

**Ministerio de Economía y Finanzas — Tesoro Nacional** — The MEF doubled its issuance of peso-denominated Treasury Notes after receiving bids for nearly 9.7 billion pesos, awarding 4.406 billion at a rate below 7% — a sign of robust demand for local-currency instruments in the context of the Uruguayan economy's gradual pesification. The operation took place alongside a joint placement with the Central Bank of more than 33 million dollars equivalent.