Second Programmatic Reform Implementation Development Policy Loan

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The Second Programmatic Reform Implementation Development Policy Loan Program (PRIDPL II) operation is consistent with the three main objective of the Country Assistance Strategy (CAS), namely: (i) reduce vulnerability of Uruguay's economy; (ii) sustain economic growth; and (iii) improve living standards. As the centerpiece of the CAS lending program, the PRIDPL program targets all three objectives. In terms of specific actions, the PRIDPL II focuses on three areas: (a) implementation of the tax reform; (b) a first set of measures to improve the business climate and initiate the design of a program to promote capital markets development; and (c) implementation of ongoing measures to improve the social security system. These three areas are consistent with the broader reform agenda set out in the CAS. The tax reform supported by PRIDPL II is the cornerstone of the government's tax administration and tax policy reforms. The measures identified to improve the business climate and promote capital markets are aligned with the financial sector and capital market reform goals set out in the CAS. Finally, the social protection component builds on the Social Program Development Policy Loan (SPDPL) presented to the Board with the CAS. The overall risk associated with the PRIDPL II is considered moderate. The risks can be classified as those related to country context, which consists of economic, political and social risks, and as those related to the PRIDPL II program, which correspond to managerial, sustainability, and outcome risks with regard to program implementation.