Uruguay’s President Tabaré Vázquez this week announced the country’s four-year infrastructure investment program.
The program, worth $12 billion, will invest most of the total in the energy sector and road construction.
The country’s government believes that investments lead to sustained growth.
The infrastructure investment program planned for 2015 to 2019 aims to optimize Uruguay’s productive capacities and help advance the strategic project, set to position the country as South America’s logistics center.
Dividing up the budget
From the $4.23 billion earmarked for the energy sector, $1.4 billion will be for the National Administration of Power Plant and Electrical Transmissions, and a Power Purchase Agreement (PPA) for wind, solar, and biomass worth a reported $1.7 billion.
The transportation sector will also get a sizeable chunk of the investment program. The Ministry of Transport and Public Works (MTOP) and the Highway Corporation of Uruguay (CVU) will collectively get $1.6 billion. Road development altogether will receive $2.4 billion.
Social infrastructure worth $1.9 billion will be destined for healthcare, education, and citizen security. Water and sanitation, ports and railways, housing, and communications also received hundreds of millions for development.
Vázquez said that the investment program will be financed by 66 percent of public funds and 34 percent from the private sector.
“Ambitious but achievable”
Although the money allocated to the program is equal to 21.5 percent of Uruguay’s growth domestic product (GDP) in 2014, Vázquez assured that the government will not impose new taxes.
Uruguay’s Economy and Finance Minister Danilo Astori said that the government will not seek loans to complete what he described as an “ambitious but achievable program.”
He added that the Inter-American Development Bank (IDB) and the CAF Latin American Development Bank will “participate” in the programs.
“The fiscal impact of these programs is properly studied. It will not generate inflation,” Astori said.
Uruguay posted the second highest GDP increase in South America for the first quarter of 2015, with a 4 percent climb year-on-year.