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Uruguay

Yearbook 2002

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.

2002 Uruguay

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 system.

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