Uruguay Structural Adjustment Loan (PREM)

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The Structural Adjustment Loan (SAL) and Special Structural Adjustment Loan (SSAL) Projects are intended to help Ururguay withstand the large external shocks that have been affecting its economy over the past three years and to advance the Government's structural adjustment program. Policy conditionality covers fiscal and debt sustainability issues, including reduction in public expenditures, particularly the wage bill; increasing the tax on wages and pensions; and curtailing wage benefits in the public enterprises. It also covers reform of the public mortgage bank (BHU), including changing its organic chart to limit its lending activity to housing finance to individuals and only insofar as it can sell these mortgages to the private sector; allowing only deposits for "ahorro previo"; and prohibiting BHU to build; a thorough internal restructuring of the institution to fit its new functions; improving supervision of the public banks; and developing the market for mortgage-backed securities. policy conditionality also covers social protection measures, including developing a mechanism for cross-checking eligibility of beneficiaries of various social protection programs to enhance their efficiency and effectiveness; protection of social programs that attend poor children; and reform of the unemployment insurance system to improve its operation and expand its coverage. The loans will be carried out in close coordination with the IMF and the InterAmerican Development Bank.