The Uruguayan political system consists of several political parties and the three largest parties have all led administrations over the past 15 years. Economic stability, adherence to general economic principles, transparency and respect for contracts are the traditional qualities of the Uruguayan political system and transcend the specific programs of various administrations.
These are aspects that foreign investors offer as to why Uruguay is clearly different from the majority of countries in Latin America. According to the 2008 Corruption Perceptions Index developed by Transparency International, Uruguay holds first place as the most trustworthy country in Latin America (and 23rd in the world).
In Uruguay, domestic and foreign capital is treated equally and both types can receive the same incentives. There are no limits for foreign capital in companies. Foreign investors may carry out any type of activity under the same conditions as local investors. In certain industry sectors, foreign investors can perform activities under public concession agreements.
The tax system is neutral with respect to foreign investment. No prior authorizations are required to make investments, except for environmentally-related permits.
The country has an attractive investment promotion system that grants specific guarantees to the investor, denoting a high degree of commitment by government officials. Legislation also expressly establishes tax privacy.
There are no limits on capital repatriation or profit transfer and no permits are required. The currency exchange market is free and has no limits on foreign currency trading. Investments can be made in any currency.
Uruguay respects international intellectual property standards. Copyrights, brands and patents are expressly protected by law. Studies by international organizations show the country has the best intellectual property protection in South America (source: The Global Competitiveness Report 2008-2009, World Economic Forum).
Periodic wage adjustments are established by the Salary Boards, which have been established by law and consist of representatives from workers, businesses and the government. The decisions are the board are carried out per industry sector.
State incomes come principally from taxes collected through the DGI (Dirección General Impositiva) tax bureau. However, surpluses from state-owned companies also contribute to public income. Public spending decisions are made through a budget law that is passed during the first year of each administration and adjustments are made in following years.
Whichever the political party in office, responsible fiscal policy has been the norm where primary surplus goals are sought to be in harmony with public debt sustainability. By law, there is a maximum annual limit for new net government debt.
The Central Bank of Uruguay (BCU) is a technically, administratively and financially autonomous entity. Its primary objectives are:
• Price stability to contribute to economic growth and employment objectives.
• Regulation and supervision of operations of payment and financial systems to promote solidity, solvency, efficiency and development.
Uruguay has stable internal prices with single-digit inflation. To achieve price stability, the Central Bank of Uruguay carries out an inflation goals policy. As an instrument to achieve this goal, the Monetary Policy Committee sets reference interest rates for short-term inter-bank loans.
The financial intermediation sector in Uruguay consists of 14 commercial banks, 5 lending institutions, 1 financial intermediation cooperative and 4 external financial institutions.
The commercial bank sector is the largest of the system. State-owned banks include Banco de la República Oriental del Uruguay (Oriental Republic Bank of Uruguay - BROU) and Banco Hipotecario del Uruguay (Mortgage Bank of Uruguay - BHU). The latter was recently reincorporated into the market through the concession of mortgage credits after having ceased operations in the 2002 crisis. The private commercial banking sector in Uruguay consists of 12 foreign capital banks. Deposits and loans are highly dollarized, although the share of dollar-denominated deposits and loans has declined steadily over the last few years.
Uruguay has a reliable financial system with excellent liquidity and solvency ratios and low default levels.
After the regional financial crisis of 2002, deposits have risen steadily. Currently, non-resident deposits in commercial banks account for 23% of all deposits.
2008 economic indicators:
• GDP: USD 32,200 million
• Per capita GDP: USD 9,700
• Merchandise exports: USD 6,000 million
• Average annual inflation: 7.9%
• Average annual unemployment: 7.6%
• Fiscal result / GDP: -1.4%
• Net public debt / GDP: 30%
Uruguay has a long-standing tradition of recognizing citizens' rights with regard to social security and labor relations. The literacy rate is very high and nearly all of the population has access to education, health services, potable water, telephony and electricity.
Recently, Uruguay put into practice an innovative program in IT education, known as the Plan CEIBAL (Basic Computer Technology Educational Connectivity for Online Learning). The program's objective is to promote social justice through equal access to information and communication tools for all of society. With this objective, internet-connected laptop computers are given to all school children in the public school system throughout the country in an effort to make Uruguay the country with the highest connectivity level in the world. Internationally, the project is known as the One Laptop Per Child and was designed and championed by Nicolas Negroponte of the Massachusetts Institute of Technology (MIT).
In Uruguay, people can live safely, peacefully, healthily and pleasurably. There are no ethnic or religious conflicts and public safety indices are better than the regional average. The country has the lowest victimization rate in South America (source: Latinobarómetro, 2008).
In environmental matters, Uruguay has quality standards recognized the world over. According to the Environmental Performance Index, created in 2008 by Yale and Columbia Universities, Uruguay was ranked 36th out of 149 countries.
Some indicators that reflect the quality of life of Uruguayan society are as follows:
• Uruguay has the most progressive income distribution in Latin America.
• Life expectancy: 75
• Qualified labor force: 1 in 3 workers have technical or university training.
• Literacy rate: 98%
• Doctors per 100,000 inhabitants: 365
• Infant mortality per 1,000 births: 13
• Uruguay is tobacco smoke free (6th in the world and 1st in South America).