Uruguay. According to
Countryaah website, the economic recession of the last three years
was further deepened during the year under the strong
influence of the crisis in neighboring Argentina.
Particularly hard hit was the tourism industry, which
largely lives on Argentine visitors, but even large
withdrawals of Argentine account holders in Uruguayan banks
led to the central bank closing a large commercial bank as
early as February.
Between January and May, foreign exchange reserves fell
by 59%, and by August almost $ 2 billion had disappeared
from the country, while the value of the currency had
halved. On June 20, the currency was released, resulting in
a real devaluation of 16%.
The government's countermeasures in the form of VAT
increases and savings packages proved fruitless and
triggered protests and strikes instead. During the year,
both prices rose, with eroded wages as a result, and
unemployment, and the central trade union organization
PIT-CNT conducted three general strikes.
The government's inability to stop the outflow of capital
necessitated a $ 1.5 billion rescue package from the
International Monetary Fund (IMF), which, however, proved
insufficient. By July 29, confidence in the country's
banking system and currency had reached its bottom level and
a veritable rush after the dollar erupted. The bank
withdrawals reached such an extent that the government was
forced to close the banks the following day; Uruguay's
tradition of monetary stability had collapsed.
For a few days, unrest and supermarket looting erupted,
but fears of a development similar to that in Argentina soon
subsided. Thanks to an expedited US emergency loan, the
banks were able to open again after a week.
The economic crisis also had political repercussions. On
July 22, Finance Minister Alberto Bensión resigned and was
replaced by Alejandro Atchugarry. At the same time,
sympathies for the opposition left coalition Frente Amplio
(FA) increased. According to a survey in October, the FA was
supported by 52% of the electorate against 15% each for the
traditional parties Colorados and Blancos, which means that
a historic trend breach has taken place in Uruguay, where
the latter two have traditionally been a full-cast two-party