More debt, less freedom: the price of Uruguayan statism

While the government prepares the next five-year budget for 2026-2030, the fiscal debate once again takes center stage on the country's economic agenda.

On June 26, at the Council of Ministers, the Minister of Economy and Finance, Gabriel Oddone, presented the main guidelines that will guide the drafting of the bill that must be submitted to Parliament before August 31, as established by Article 214 of the Constitution.

Oddone outlined the country's macroeconomic and fiscal outlook, emphasizing that the new budget will seek to maintain a "prudent debt level," estimated at around 60% of Gross Domestic Product, and that it will serve as an anchor for the application of the fiscal rule.

However, while there is talk of "fiscal prudence" and "clear rules," the Executive Branch itself has sent the 2024 Accountability Report to Parliament, requesting an increase in the debt ceiling for the coming year, raising it to US$3.45 billion.

The State's gluttony

Justifying the increase in the debt ceiling as something necessary and responsible is exquisitely cynical. The Uruguayan State is far from having revenue problems. What exists is a blatant squandering of public resources.

This is not an emergency situation that requires more borrowing, but rather a State that spends as if it had infinite resources, while indebting future generations of our country.

In 2024, the fiscal deficit reached 4.2% of GDP, reflecting that the State continues to spend beyond its real means. The Central Government and the Social Security Bank (BPS) are not exempt from this dynamic: they accumulate a joint deficit of 3.3%, which demonstrates irresponsible management of public resources and a constant expansion of state spending.

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To finance this waste, the country increased its public debt by almost US$5.7 billion in just one year.

This increase not only means more loans, but also more interest that will have to be paid, limiting the State's ability to invest in priority areas or reduce taxes that would benefit Uruguayans.

The debt/GDP ratio rose from 64% to 68.7%, a clear sign that the Uruguayan economy is increasingly being financed with borrowed money. This upward trend is unsustainable.

Millions for identitarian progressivism

Most concerning is what the money is spent on. In the midst of a fiscal crisis, while the deficit grows and the government takes on more debt, millions of dollars continue to be allocated to finance an agenda that generates neither jobs nor economic growth.

The "Gender Equality Policies" annex for the 2024 fiscal year shows that, solely on gender policies labeled as such, spending exceeded US$23 million, distributed among campaigns, training, building adaptations, and the purchase of materials to promote "equality." This doesn't include other areas that disguise the spending.

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In 2019, under the administration of Tabaré Vázquez, 621 million Uruguayan pesos, equivalent to about US$17.7 million, were allocated to promote the gender perspective.

For 2024, under the theoretically right-wing government of Luis Lacalle Pou, the amount allocated to feminist policies rose to 906 million pesos, approximately US$23.2 million.

Privileged by Law

To make matters worse, there are quotas. In recent years, Uruguay has established by law various mandatory employment quotas for entry into the public sector.

The regulations establish, for example, 8% for people of African descent (Law No. 19,122), 4% for people with disabilities (Law No. 19,691), 1% for trans people (Law No. 19,684), and now also for victims of violent crimes, as established by Article 105 of the Urgent Consideration Law.

During 2024, 415 people of African descent (197 men and 218 women), 81 people with disabilities, 23 trans people, and out of 1,808 vacancies for victims of violent crimes, only one was actually filled. Despite the absurdity this entails and the elephantine and inefficient state bureaucracy, the quota law was not fulfilled.

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Public employment has become a system of identitarian privileges, which doesn't take professional qualifications into account. This way, the basic principle that positions should be filled by the most capable is boxed in.

While the fiscal deficit exceeds 4% of GDP, the State continues to finance inclusion projects that generate more bureaucracy than productive results: ideological agendas are prioritized over the urgent need to balance public accounts and reactivate the real economy.

There is no competitiveness, there is fiscal slavery

Recently, Minister Oddone acknowledged that Uruguay faces "severe competitiveness problems" due to bureaucratic obstacles and poorly applied regulations. In response, he announced a package of 12 microeconomic measures aimed at improving foreign trade by simplifying procedures and reducing costs.

However, these measures have a limited scope and, once again, they do not address the real problem: an oversized state apparatus that suffocates private initiative with taxes and regulations.

The announced tax reductions—about US$20 million per year—are insignificant compared to the total weight of the tax and regulatory burden faced by productive sectors.

While the State keeps runaway spending and continues to increase public debt, it claims to improve competitiveness with marginal adjustments. What the private sector needs is to be freed from the weight of the State.

How can real economic growth be expected if the need to reduce public spending and shrink the size of the State is not even mentioned?

True competitiveness is not achieved with partial measures, but with lower taxes, less bureaucracy, and more economic freedom. As long as the State continues to expand its size and spending, any improvement will be useless.

Uruguay continues to slowly spiral downward: excessive public spending and more debt. It is urgent to shrink the size of the State, free the private sector to generate jobs, and uproot the globalist agenda from our land. Only then will Uruguayan society be able to prosper.