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Capital Markets

Uruguay: Market gives new leftist coalition seal of approval

Finance minister says the government is will keep the purse strings tight as it reforms taxation, banking regulation and bankruptcy law

Vázquez: proving his critics
wrong

Sometimes the left can be so unpredictable. When Tabaré Vázquez was overwhelmingly elected president of Uruguay in November, many analysts feared the worst. He had broken decades of comfortable two-party rule in the country, and had done so by leading an avowedly socialist coalition including communists and former Tupamaros guerrillas. What's more, he had a strong mandate, after garnering more than 50% of the vote in the first round of a three-way race.

But since taking power in March, Vázquez and finance minister Danilo Astori have turned out to be the leaders of one of the world's most fiscally conservative administrations. Astori has kept all of the economic policies of the previous administration, which turned a primary deficit of 1.2% of GDP in 2001 into a primary surplus of 3.8% in 2004. The target is now 4%.

If anything, Astori has gone even further than his predecessors. "The main difference between the past and present policies is that this government is willing to implement structural reform while maintaining the fiscal stance of the previous three years," he says.

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