Reduced revenue collection due to lower inflation and economic activity, creates a fiscal gap that current government is filling through borrowing 1. Uruguay’s fiscal framework, with limited revenue sources and high fixed expenditures, creates a reliance on borrowing to cover budgetary needs. The absence of strong accountability mechanisms and the prioritization of maintaining stability over structural reforms suggest that borrowing will remain a preferred policy tool. As economic recovery remains uneven globally, Uruguay’s ability to generate growth-driven revenue improvements may be constrained, further necessitating debt financing.

Media outlets play a crucial role in broadcasting Uruguay’s favorable rankings on indices like The Economist’s Democracy Index and celebrating its reputation as a fiscally responsible and politically stable nation. The underlying message to investors is clear: Uruguay is a safe, predictable, and reliable debtor. This reassures bondholders and encourages further investment. Therefore, Uruguay’s “good payer” status is not just an economic reality but a politically constructed and media-reinforced narrative. This myth about democracy and stability serves to align the country’s policies with the interests of bondholders and investors while limiting the scope for alternative socio-economic priorities. In this context, political elites might continue to prioritize policies that maintain or enhance these favorable rankings, potentially at the expense of broader citizen engagement in decision-making processes related to housing, cost of living, or security. Over time, citizens have internalized the belief that stability is inherently beneficial, even if it restricts their material or participatory freedoms. The discourse becomes part of the national identity, making alternative paths seem risky or undesirable.

Breaking this cycle would require challenging the dominant narrative and fostering a broader public debate about the costs and benefits of maintaining such artificially based reputation. If investor interests are indeed shaping political priorities and citizen subjectivities, it highlights a democratic deficit where formal stability is achieved at the expense of substantive freedoms, equity, and public participation. Addressing this issue would require rethinking the relationship between global financial markets, domestic policy-making, and civic engagement.

Referencia

  1. Ampliación de tope de endeudamiento del gobierno afectará negativamente a la próxima administración e implicará un punto de partida fiscal peor de lo previsto https://radiocarve.uy/ampliacion-de-tope-de-endeudamiento-neto-del-gobierno-afectara-negativamente-a-la-proxima-administracion-e-implicara-un-punto-de-partida-fiscal-peor-de-lo-previsto/ ↩