UY - COVID-19 Response & Economic Recovery

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The development objective of the Coronavirus 2019 (COVID-19) and Economic Recovery Emergency Development Policy Financing for Uruguay is to support the Government of Uruguay in: (i) mitigating the economic and social impact of the COVID-19 outbreak, and (ii) laying the foundations for a strong and resilient economic recovery. It will also support vulnerable firms, notably micro, small and medium-sized enterprises (MSMEs), with temporary measures aimed at improving access to credit. To set up the foundations for a strong economic recovery, the operation will address some key policy and institutional bottlenecks by supporting: (i) early actions under the fiscal consolidation program put forward by the government; (ii) the facilitation of new firm registration; (iii) the strengthening of the institutional capacity to prepare for, and respond to, future climate-related shocks through an enhanced emergency system; and (iv) the transformation of the agriculture model that increases resilience to climate variability and enhances productivity. The main risk to the operation relates to Uruguay undergoing a deeper and more drawn-out economic downturn due to the COVID-19 pandemic than envisaged. The measures supported by the operation help mitigate this risk as follows: the temporary COVID-19 response measures under the first pillar will help the economy withstand the shock, while the institutional and policy reforms under the second pillar will be important for embarking swiftly on a sustained recovery trajectory.