Uruguay’s New Debt Strategy: Going Local and Growing Global

Uruguay’s finance chief has announced a major policy change: the country will begin issuing half of its government debt in its own currency, the peso. This move is part of a broader strategy to reduce dependence on the U.S. dollar and protect the economy from foreign‑currency volatility.

Why It Matters

• Historical Context
  In the early 2000s, about 90 % of Uruguay’s debt was issued in U.S. dollars because peso‑denominated bonds were scarce and dollar borrowing was cheaper.

• New Approach
  Issuing debt in pesos may cost more upfront, but it aligns borrowing with tax revenue collection, providing a steadier repayment schedule.

Investor Interest

• Emerging‑Market Appeal
  Global investors are increasingly drawn to non‑dollar debt, seeking diversification.

• Record Sales
  Last year, Uruguay sold 40 % of its international bonds in pesos, a new high. This year it plans to raise roughly $6 billion mainly through bond sales, and will issue another green bond in 2027 to reinforce its environmental commitments.

Economic Outlook

• Growth & Inflation
  The economy grew about 2.5 % last year, with inflation cooling.

• Fiscal Deficit
  The government faces a rising deficit—just over 4 % of GDP by the end of 2025. Reforms, better tax collection, and sector incentives are aimed at reducing this gap.

Strategic Partnerships

Uruguay seeks deeper ties with:

• Mercosur neighbors
• The European Union
• China and Canada

A stronger trade network is expected to boost growth and reinforce Uruguay’s position as a regional leader while expanding its global footprint.

Overall, the country is positioning itself both as a regional pioneer and an international player, using local‑currency debt to manage risk and attract foreign capital.