Document of The World Bank · Financing Contribution Tax) CPAR Country Procurement Assessment Report ... Accounting Norms) ... (non-Resident Income Tax)

Document of The World Bank

Report No: ICR1585

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IBRD 83927 and 74520)

ON A

LOAN

IN THE AMOUNT OF US$100 MILLION

AND A LOAN

IN THE AMOUNT OF US$400 MILLION

TO THE

ORIENTAL REPUBLIC OF URUGUAY

FOR A

SERIES OF PROGRAMMATIC REFORM IMPLEMENTATION DEVELOPMENT POLICY PROGRAMS—LOANS I AND II

September 21, 2010

Poverty Reduction and Economic Management Argentina, Paraguay and Uruguay Country Management Unit Latin American and the Caribbean Region

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CURRENCY EQUIVALENTS

Exchange Rate Effective 9/2/2010

Currency Unit = Uruguayan Peso UYP 1 = US$ 0.048426 US$1.00 = UYP 20.6500

GOVERNMENT FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AAA Analytical and Advisory Activities ACDE Asociación Cristiana de Dirigentes de Empresa (Christian Association of Business

Managers) AFAP Administradora de Fondos de Ahorro Previsional (Pension Fund Administration) AIN Auditoría Interna de la Nación (National Internal Audit Office) BCU Banco Central de Uruguay (Central Bank of Uruguay) ATyR Asesoría Tributaria y Recaudatoria (Tax Administration Section of BPS) BEVSA Bolsa Electrónica de Valores del Uruguay (Electronic Stock Exchange) BHU Banco Hipotecario del Uruguay (National Mortgage Bank) BPS Banco de Previsión Social (Social Security Fund) BROU Banco de la República Oriental del Uruguay (Bank of Uruguay) BVM Bolsa de Valores de Montevideo (Montevideo Stock Exchange) CAS Country Assistance Strategy CCEA Colegio de Contadores, Economistas y Administradores del Uruguay (Accountants,

Economists, and Business Administrators Association) CD Certificate of Deposit CFAA Country Financial Accountability Assessment CINVE Centro de Investigaciones Económicas (Center of Economic Research) COFIS Impuesto de Contribución al Financiamiento de la Seguridad Social (Social Security

Financing Contribution Tax) CPAR Country Procurement Assessment Report CPI Consumer Price Index CPIA Country Performance and Institutional Assessment CPNCA Comisión Permanente de Normas Contables Adecuadas (Permanent Commission of

Accounting Norms) CPSS Committee on Payment and Settlement Systems DINAMA Dirección Nacional de Medio Ambiente (National Environment Directorate) DGI Dirección General Impositiva (Tax Administration Department) DMV División de Mercado de Valores y Control de Administración de Fondos de Ahorro

Provisional (Uruguay’s Securities Market Regulator) DNA Dirección Nacional de Aduanas (Customs Authority) DPL Development Policy Loan ECH Encuesta Nacional de Hogares Ampliada (Household Income Survey) EGIH Encuesta de Gastos e Ingresos de los Hogares (Household Income and Expenditure

Survey) EMBI Emerging Markets Bond Index FA Family Allowance FDI Foreign Direct Investment FF Fideicomisos Financieros (Trust Funds)

i

FLAR Fondo Latinoamericano de Reservas (Latin American Reserve Fund) FSAP Financial Sector Advisory Program GDP Gross Domestic Product GEF Global Environmental Facility GOU Government of Uruguay IADB Inter-American Development Bank IAS International Accounting Standards IASB International Accounting Standards Board IASS Impuesto de Asistencia a la Seguridad Social (Social Security Tax) IBRD International Bank for Reconstruction and Development IBTAL Institution Building Technical Assistance Loan ICA Investment Climate Assessment ICR Implementation Completion Report IFRS International Financial Reporting Standards IMF International Monetary Fund IMPEQUE Impuesto a las Pequeñas Empresas (Small Enterprises Tax) IOSCO International Organization of Securities Commissions IRP Impuesto a las Retribuciones Personales (Wage Tax) IRNR Renta de No Residentes (non-Resident Income Tax) IRPF Impuesto de la Renta da la Personas Físicas (Personal Income Tax) MEF Ministero de Economía y Finanzas (Ministry of Economy and Finance) MIDES Ministerio de Desarrollo Social (Ministry of Social Development) MVOTMA Ministerio de Vivienda, Ordenamiento Territorial y Medio Ambiente (Ministry of

Housing, Planning, and the Environment) NPL Non-Performing Loan ONS Obligaciones Negociables (Private Bond Issues) OSE Obras Sanitarias del Estado (Uruguayan state-owned water utility) PAD Project Appraisal Document PANES Plan de Asistencia Nacional a la Emergencia Social (National Attention Plan for the

Social Emergency) PFM Public Financial Management PIT Personal Income Tax PRIDPL Programmatic Reform Implementation Development Policy Loan PSIA Poverty and Social Impact Assessment REC Registro de Estados Contables (Registry of Financial Statements) ROSC Report on the Observance of Standards and Codes RTGS Real Time Gross Settlement SIIF Superintendencia de Instituciones de Intermediaciones Financiera (Bank

Superintendency) SPDL Social Program, Development Policy Loan SME Small and Medium Enterprise SSAL Social Sectors Special Structural Loan TCR Tribunal de Cuentas de la República (Court of Accounts) UCA Unidad Central de Adquisiciones (Procurement Central Unit) UTE Administración de Usinas y Transmisiones Eléctricas (State-owned Electricity Company) VAT Value-added Tax

Vice President: Pamela Cox

Country Director: Penelope J. Brook

Sector Director: Marcelo Giugale

Sector Manager: Rodrigo A. Chaves

Task Team Leader: James Parks

ICR Team Leader: Paloma Anos Casero

ii

URUGUAY First and Second Programmatic Reform Implementation Development Policy

Program

CONTENTS

Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Program Performance in ISRs H. Restructuring

1. Program Context, Development Objectives and Design ............................................ 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 5 3. Assessment of Outcomes .......................................................................................... 10 4. Assessment of Risk to Development Outcome ......................................................... 27 5. Assessment of Bank and Borrower Performance ..................................................... 28 6. Lessons Learned........................................................................................................ 30 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ........... 30 Annex 1 Bank Lending and Implementation Support/Supervision Processes .............. 31 Annex 2. Beneficiary Survey Results ........................................................................... 32 Annex 3. Stakeholder Workshop Report and Results ................................................... 33 Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 34 Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 35 Annex 6. List of Supporting Documents ...................................................................... 36 MAP OF URUGUAY ................................................................................................... 37

i

A. Basic Information

Program 1

Country Uruguay Program Name First Programmatic Reform Implementation DPL

Program ID P083927 L/C/TF Number(s) IBRD-74520

ICR Date 09/23/2010 ICR Type Core ICR

Lending Instrument DPL Borrower GOVERNMENT OF URUGUAY

Original Total Commitment

USD 100.0M Disbursed Amount USD 100.0M

Implementing Agencies Ministerio de Economia y Finanzas

Cofinanciers and Other External Partners

Program 2

Country Uruguay Program Name

Second Programmatic Reform Implementation Development Policy Loan

Program ID P106724 L/C/TF Number(s) IBRD-76670

ICR Date 09/23/2010 ICR Type Core ICR

Lending Instrument DPL Borrower GOVERNMENT OF URUGUAY

Original Total Commitment

USD 400.0M Disbursed Amount USD 400.0M

Implementing Agencies Ministerio de Economia y Finanzas

Cofinanciers and Other External Partners B. Key Dates First Programmatic Reform Implementation DPL - P083927

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 01/10/2007 Effectiveness: 07/25/2007 07/25/2007

Appraisal: 03/13/2007 Restructuring(s):

Approval: 05/30/2007 Mid-term Review:

ii

Closing: 06/30/2008 01/22/2012 Second Programmatic Reform Implementation Development Policy Loan - P106724

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 04/16/2008 Effectiveness: 02/12/2009 02/12/2009

Appraisal: 06/24/2008 Restructuring(s):

Approval: 02/03/2009 Mid-term Review:

Closing: 01/22/2012 01/22/2012 C. Ratings Summary C.1 Performance Rating by ICR Overall Program Rating

Outcomes Satisfactory

Risk to Development Outcome Moderate

Bank Performance Satisfactory

Borrower Performance Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Overall Program Rating

Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Satisfactory

Quality of Supervision: Satisfactory Implementing Agency/Agencies:

Satisfactory

Overall Bank Performance

Satisfactory Overall Borrower Performance

Satisfactory

iii

C.3 Quality at Entry and Implementation Performance Indicators First Programmatic Reform Implementation DPL - P083927

Implementation Performance

Indicators QAG Assessments

(if any) Rating:

Potential Problem Program at any time (Yes/No):

No Quality at Entry (QEA)

None

Problem Program at any time (Yes/No):

No Quality of Supervision (QSA)

None

DO rating before Closing/Inactive status

Satisfactory

Second Programmatic Reform Implementation Development Policy Loan - P106724

Implementation Performance

Indicators QAG Assessments

(if any) Rating:

Potential Problem Program at any time (Yes/No):

No Quality at Entry (QEA)

None

Problem Program at any time (Yes/No):

No Quality of Supervision (QSA)

None

DO rating before Closing/Inactive status

D. Sector and Theme Codes First Programmatic Reform Implementation DPL - P083927

Original Actual

Sector Code (as % of total Bank financing)

Capital markets 20

Central government administration 40 100

Compulsory pension and unemployment insurance 20

Law and justice 20

Theme Code (as % of total Bank financing)

Analysis of economic growth

Debt management and fiscal sustainability 25

Public expenditure, financial management and procurement

15

Regulation and competition policy 14 15

Social risk mitigation 29 25

Social safety nets 14

iv

Standards and financial reporting 14

Tax policy and administration 29 20 Second Programmatic Reform Implementation Development Policy Loan - P106724

Original Actual

Sector Code (as % of total Bank financing)

Capital markets 14

Central government administration 14 100

Compulsory pension and unemployment insurance 29

General finance sector 29

Payment systems, securities clearance and settlement 14

Theme Code (as % of total Bank financing)

Debt management and fiscal sustainability 25

Public expenditure, financial management and procurement

15

Regulation and competition policy 28 15

Social risk mitigation 29 25

Standards and financial reporting 29

Tax policy and administration 14 20 E. Bank Staff First Programmatic Reform Implementation DPL - P083927

Positions At ICR At Approval Vice President: Pamela Cox Pamela Cox Country Director: Penelope J. Brook Axel van Trotsenburg Sector Manager: Rodrigo A. Chaves Mauricio Carrizosa Task Team Leader: Paloma Anos Casero James Parks ICR Team Leader: Paloma Anos Casero ICR Primary Author: Luis Alvaro Sanchez William V. Mayville

v

Second Programmatic Reform Implementation Development Policy Loan - P106724 Positions At ICR At Approval

Vice President: Pamela Cox Pamela Cox Country Director: Penelope J. Brook Pedro Alba Sector Manager: Rodrigo A. Chaves Rodrigo A. Chaves Task Team Leader: Paloma Anos Casero James Parks ICR Team Leader: Paloma Anos Casero ICR Primary Author: Luis Alvaro Sanchez William V. Mayville F. Results Framework Analysis

Program Development Objectives (from Program Document)The overall Project Development Objectives for both Development Policy Loans I and II aimed at supporting government policies in public sector management, financial sector reform, and social programs reform. They took the following form: (i) reduce vulnerability of Uruguay#s economy; (ii) sustain economic growth, and (iii) improve living standards. Revised Program Development Objectives (as approved by original approving authority) In agreement with the Government's approach to the DPL series, no intermediate project indicators were developed. (a) PDO Indicator(s)

vi

First Programmatic Reform Implementation DPL - P083927

Indicator Baseline

Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Sustained growth and fiscal sustainability as illustrated by: 1. strong real GDP growth; 2. tight fiscal stance; 3. promote investment; 4. contain inflation; 5. maintain stable current account

Value (quantitative or Qualitative)

1. Growth in 2006 at 4.6% 2. Primary surplus in 2006, 2.6% 3.Rate of growth in real investment, 3.3% 4.Previous inflatio n, 6.4% 5.Current Account Deficit, -2.3%

1. Target of 3% a year 2. primary surplus 4 % of GDP 2007-08 3. real investment to rise 7% a year over 2007-08 4. CB tar get range for CPI inflation 4.5%-6.5% year 5. Cur.acct. deficit(- imports for pulp mill projects) about 1.5% of GDP in 2007-08

1. No change 2. primary surplus is 3.2 of GDP in 2008 and 3.1% in 2009 3.No change 4. CB target range for CPI inflation is 3%-7%. 5. Current account projected to record deficit in the range of 1% of GDP in 2008 and 2009

1.'08: 8.5% '09: 2.9% 2.'08: 1.3% '09: 1.1% 3. Gross fixed cap. form.: '07: 8.9% '08: 1 8.7% '09: -4.0% 4. In Dec. '09, target to 4-6%. Rate of inflation was:2008: 9.2%; 2009: 5.9% 5. Cur. acct. bal. rpt by CB: '07:0.9%, '08:4.8%, '09: 0.8%

Date achieved 03/23/2007 12/31/2009 12/31/2009 06/30/2010 Comments (incl. % achievement)

Macroeconomic performance in 2009 was affected by the global crisis and severe drought, leading to a lower primary surplus t han expected and contraction in private investment.

vii

Indicator 2 : Create a simpler, more equitable tax structure, as illustrated by: 1. total tax/GDP ratio; 2. effective IWF tax contributions ; 3.adequate IRPF revenue collections; 4. lower cost of tax collection


1. Total tax revenue-to-GDP ratio 17.9% in 2005. 2. IRPF tax contributors 20000 in 2006. 3. IRPF in 2007 .7% of GDP. 4. Cost of total tax collection 1.12% in 2007 (not 1.5% as stated in the DPL document)

1. Equal to 2005 value of 22.5% of GDP for 2008 and 2009. 2. IRPF tax over 600,000 in 2008-09. 3. IRPF revenue greater t han or equal to 2. 1% of GDP in 2009. 4. Ratio of tax collection costs to tax revenues 1.3% in 2009

1.No change 2.Target IRPF and IASS increase from baseline of about 200,000 in 2006 3. No change 4. No change

1. 2008: 17.73% 2009: 18% 2.Contributon of IRPF and IASS: 2008: 497.282 2009: 604.422 3. IRPF Revenue: 2007: 0.7%;208: 1.9%;2009: 2.3% 4. Ratio of cost of collection to tax revenues:2007:1.12% 2008: 1.04%;2009:1.02%Source: DGI


Some baseline information revised re available government data, including: (a) total tax revenue-to-GDP ratio and (b) ratio of tax collection costs to tax revenues. All targets met.

Indicator 3 : Establishment of an institutional, legal and regulatory, and infrastructure framework that provides for a safe and efficient market infrastructure.


(i) Market capitalization at US$20 m. (ii) Stock US$4,500 m. for both stock exchanges Invest. protection index (DB): 5 Tr ansp. of transact. disclos. index: 3 Corp. gov. dir. liab. index: 4 Baseline Securities Settlement System 2007

(i) Rise in market capitalization (ii) Increase in stock exchange activity. Improve investor protection index Improve disclos. index Improve direct liability index Improved compliance IOSCO Principles on Sec. Reg. and CPSS-IOSCO

No change Dropped No Change

(i) Market capitalization: US$139 m. (ii) Stock exchange activity (private sector) for both the primary and the secondary ma rket: US$6.200 m. Met. Uruguay has adhered to IOSCO Multilateral Memorandum of Understanding (2010).

Date achieved 03/23/2007 12/31/2009 12/31/2009 06/30/2010

Comments (incl. % achievement)

(a) Info on mkt. capitalization from CB; (b) Doing Business indicator dropped; (c) adherence to the IOSCO Multilateral MoU ( 2010), i.e., Uruguay complied with IOSCO Recom. on Securities and Settlements Systems (2007)#the 2nd country in LAC, after Brazil

viii

Indicator 4 : Reform of the payments and security settlement systems to improve safety and efficiency


Baseline set in 2007 Report on the Observance of Standards and Codes (ROSC)

Improve Standards and Codes

Staff assessment of progress over baseline. Real Time Gross Settlement (RTGS) system in operation and in compliance with th e Committee onPayment and Settlement Systems (CPSS) of BIS core principles for systematically important payment systems

Partially met and on track. (New payments system will be functioning in 2010.)

Date achieved 03/23/2007 12/31/2009 12/31/2009 06/30/2010


(a) Met: Law on Payment Systems (2009) conforms to observations of 2007 Report on the Observance of Standards and Codes (ROS C); (b) Work in Progress: Technical platform for a new Real Time Gross Settlement (RTGS) system, which comes into operation in 2011

ix

Indicator 5 : Bankruptcy Law: Modernized legal framework for bankruptcy in order to provide for an efficient resolution of problem enterpri ses


Insolvency and Creditor Rights ROSC set baseline. Average of 34 per annum over 2004-06) Number of insolvency cases sat isfactorily resolved and reduction in the time required to resolve them (baseline not determined.)

Insolvency and Creditor Rights ROSC update shows progress over baseline. Increase in the number of insolvency cases prese nted. Increase in the number of insolvency cases satisfactorily resolved and reduction in the time required to resolve them.

No change

New Insolvency Law under implementation addresses ROSC analysis Partially met and on track. 34 new cases in 2009; includin g other regulations total becomes 47, compatible with baseline. Insolvency cases "satisfactorily resolved" not yet defined


New Law on Bankruptcy (2008) addressed key points of Insolvency and Creditor Rights ROSC (2006). ROSC Update on impact not d one;use of proposed indicators is questionable.

x

Indicator 6 : Information Transparency and Disclosure: Improve information transparency in the corporate and financial sector (public and p rivate)


World Bank's Doing Business database rates transparency of transactions as measured by the disclosure index in Uruguay 3 out of 10 compared to an average of 4.3 for LAC and 6.3 for the OECD. ROSC provided the baseline ROSC provided baseline

Improve transparency transact. measured by disclosure index. Recent version of IFRS implemented by all firms. Availab. of large and med. firms statements on-line. Public corp. audit and present fin. info rpts. like priv. sec.+ mgt indic.

Dropped No change No change Entes autonomos make timely public audit reports and financial statements with improv ed information quality (including management indicators) following private company standards

Met Not met,in progress Met

Date achieved 03/23/2007 12/31/2009 12/31/2009 06/30/2010


(a) All firms must adopt IFRS by 2009; (b) reg. in place to improve compliance with submis. of fin. stamnts. to AIN by 9,000 entities+internet for info; (c) Entities use priv. firms accounting norms, all audited by the Tribunal de de Cuentas.

Indicator 7 : Expand and consolidate the social protection system, reinforcing the system for the poor and vulnerable


As of 2006, 61% of the poorest quintile households were covered by PANES or Family Allowances Program.

By 2009, at least 70% of households from the poorest quintile are covered by Plan de Equidad

No change 2009: 74.7%


Information Provided by MIDES based on the 2009 Household Survey

xi

Indicator 8 : Increase efficiency, transparency and accountability of social protection institutions


As of 2006, 65% of active labor force contributed to social security.

By 2009, at least 70% of the active labor force contributed to social security.

No change

2006: 63.5% 2007: 65.3% 2008: 66.7% 2009: 74%


Calculation for 2009 based on the ratio of contributors to social security (BPSD and others) over the employed active labor force. The information has been provided by the BPS.

Second Programmatic Reform Implementation Development Policy Loan - P106724

Indicator Baseline

Value


approval documents)

Formally Revised Target Values



Indicator 1 : Sustained growth and fiscal sustainability as illustrated by: 1. strong real GDP growth; 2. tight fiscal stance; 3. promote investment; 4. contain inflation; 5. maintain stable current account


1. Growth in 2006 at 4.6% 2. Primary surplus in 2006, 2.6% 3.Rate of growth in real investment, 3.3% 4.Previous inflatio n, 6.4% 5.Current Account Deficit, -2.3%

1. Target of 3% a year 2. primary surplus 4 % of GDP 2007-08 3. real investment to rise 7% a year over 2007-08 4. CB tar get range for CPI inflation 4.5%-6.5% year 5. Cur.acct. deficit(- imports for pulp mill projects) about 1.5% of GDP in 2007-08

1. No change 2. primary surplus is 3.2 of GDP in 2008 and 3.1% in 2009 3.No change 4. CB target range for CPI inflation is 3%-7%. 5. Current account projected to record deficit in the range of 1% of GDP in 2008 and 2009

1.'08: 8.5% '09: 2.9% 2.'08: 1.3% '09: 1.1% 3. Gross fixed cap. form.: '07: 8.9% '08: 1 8.7% '09: -4.0% 4. In Dec. '09, target to 4-6%. Rate of inflation was:2008: 9.2%; 2009: 5.9% 5. Cur. acct. bal. rpt . by CB: '07:0.9%, '08:4.8%,'09: 0.8%


Macroeconomic performance in 2009 was affected by the global crisis and severe drought, leading to a lower primary surplus t han expected and contraction in private investment.

xii

Indicator 2 : Create a simpler, more equitable tax structure, as illustrated by: 1. total tax/GDP ratio; 2. effective IWF tax contributions ; 3.adequate IRPF revenue collections; 4. lower cost of tax collection


1. Total tax revenue-to-GDP ratio 17.9% in 2005. 2. IRPF tax contributors 20000 in 2006. 3. IRPF in 2007 .7% of GDP. 4. Cost of total tax collection 1.12% in 2007 (not 1.5% as stated in the DPL document)

1. Equal to 2005 value of 22.5% of GDP for 2008 and 2009. 2. IRPF tax over 600,000 in 2008-09. 3. IRPF revenue greater t han or equal to 2. 1% of GDP in 2009. 4. Ratio of tax collection costs to tax revenues 1.3% in 2009

1.No change 2.Target IRPF and IASS increase from baseline of about 200,000 in 2006 3. No change 4. No change

1. 2008: 17.73% 2009: 18% 2.Contributon of IRPF and IASS: 2008: 497.282 2009: 604.422 3. IRPF Revenue: 2007: 0.7%;#08: 1.9%;#09: 2.3% 4. Ratio of cost of collection to tax revenues:#07:1.12% #08: 1.04%;#09:1.02% Source: DGI


Some baseline information revised re available government data, including: (a) total tax revenue-to-GDP ratio and (b) ratio of tax collection costs to tax revenues. All targets met.

Indicator 3 : Establishment of an institutional, legal and regulatory, and infrastructure framework that provides for a safe and efficient market infrastructure.


(i) Market capitalization at US$20 m. (ii) Stock US$4,500 m. for both stock exchanges Invest. protection index (DB): 5 Tr ansp. of transact. disclos. index: 3 Corp. gov. dir. liab. index: 4 Baseline Securities Settlement System 2007

(i) Rise in market capitalization (ii) Increase in stock exchange activity. Improve investor protection index Improve disclos. index Improve direct liability index Improved compliance IOSCO Principles on Sec. Reg. and CPSS-IOSCO

No change Dropped No change

(i) Market capitalization: US$139 m. (ii) Stock exchange activity (private sector) for both the primary and the secondary ma rket: US$6.200 m. Met. Uruguay has adhered to IOSCO Multilateral Memorandum of Understanding (2010).

Date achieved 03/23/2007 12/31/2009 12/31/2009 06/30/2010


(a) Info on mkt. capitalization from CB; (b) Doing Business indicator dropped; (c) adherence to the IOSCO Multilateral MoU ( 2010), i.e., Uruguay complied with IOSCO Recom. on Securities and Settlements Systems (2007)#the 2nd country in LAC, after Brazil

xiii

Indicator 4 : Reform of the payments and security settlement systems to improve safety and efficiency


Baseline set in 2007 Report on the Observance of Standards and Codes (ROSC)

Improve Standards and Codes

Staff assessment of progress over baseline. Real Time Gross Settlement (RTGS) system in operation and in compliance with th e Committee onPayment and Settlement Systems (CPSS) of BIS core principles for systematically important payment systems

Partially met and on track. (New payments system will be functioning in 2010.)

Date achieved 03/23/2007 12/31/2009 12/31/2009 06/30/2010


(a) Met: Law on Payment Systems (2009) conforms to observations of 2007 Report on the Observance of Standards and Codes (ROS C); (b) Work in Progress: Technical platform for a new Real Time Gross Settlement (RTGS) system, which comes into operation in 2011

xiv

Indicator 5 : Bankruptcy Law: Modernized legal framework for bankruptcy in order to provide for an efficient resolution of problem enterpri ses


Insolvency and Creditor Rights ROSC set baseline. Average of 34 per annum over 2004-06) Number of insolvency cases satis factorily resolved and reduction in the time required to resolve them (baseline not determined.)

Insolvency and Creditor Rights ROSC update shows progress over baseline. Increase in the number of insolvency cases prese nted. Increase in the number of insolvency cases satisfactorily resolved and reduction in the time required to resolve them.

No change

New Insolvency Law under implementation addresses ROSC analysis Partially met and on track. 34 new cases in 2009; includin g other regulations total becomes 47, compatible with baseline. Insolvency cases #satisfactorily resolved# not yet defined


New Law on Bankruptcy (2008) addressed key points of Insolvency and Creditor Rights ROSC (2006). ROSC Update on impact not d one;use of proposed indicators is questionable.

xv

Indicator 6 : Information Transparency and Disclosure: Improve information transparency in the corporate and financial sector (public and p rivate)


World Bank's Doing Business database rates transparency of transactions as measured by the disclosure index in Uruguay 3 out of 10 compared to an average of 4.3 for LAC and 6.3 for the OECD. ROSC provided the baseline ROSC provided baseline

Improve transparency transact. measured by disclosure index. Recent version of IFRS implemented by all firms. Availab. of large and med. firms statements on-line. Public corp. audit and present fin. info rpts. like priv. sec.+ mgt indic.

Dropped No change No change Entes autonomos make timely public audit reports and financial statements with improv ed information quality (including management indicators) following private company standards

Met Not met, in progress Met

Date achieved 03/23/2007 12/31/2009 12/31/2009 06/30/2010


(a) All firms must adopt IFRS by 2009; (b) reg. in place to improve compliance with submis. of fin. stamnts. to AIN by 9,000 entities+internet for info; (c) Entities use priv. firms accounting norms, all audited by the Tribunal de de Cuentas.

Indicator 7 : Expand and consolidate the social protection system, reinforcing the system for the poor and vulnerable


As of 2006, 61% of the poorest quintile households were covered by PANES or Family Allowances Program.

By 2009, at least 70% of households from the poorest quintile are covered by Plan de Equidad

No change 2009: 74.7%



xvi

Indicator 8 : Increase efficiency, transparency and accountability of social protection institutions


As of 2006, 65% of active labor force contributed to social security.

By 2009, at least 70% of the active labor force contributed to social security.

No change

2006: 63.5% 2007: 65.3% 2008: 66.7% 2009: 74%



(b) Intermediate Outcome Indicator(s) First Programmatic Reform Implementation DPL - P083927

Indicator Baseline Value


approval documents)

Formally Revised

Target Values



Indicator 1 : N/A Value (quantitative or Qualitative)

N/A N/A N/A N/A


First Programmatic Reform Implementation DPL - P083927

Indicator Baseline Value


approval documents)

Formally Revised

Target Values



Indicator 1 : N/A Value (quantitative or Qualitative)

N/A N/A N/A N/A


G. Ratings of Program Performance in ISRs Second Programmatic Reform Implementation Development Policy Loan - P106724

xvii

No. Date ISR Archived

DO IP Actual

Disbursements (USD millions)

1 06/28/2007 Satisfactory Satisfactory 0.00 2 01/19/2008 Satisfactory Satisfactory 0.00

H. Restructuring (if any)

1

1. Program Context, Development Objectives and Design

1.1 Context at Appraisal

a. Macro-economic context at appraisal At the time of appraisal, Uruguay’s macroeconomic framework was satisfactory, with higher than projected growth, strong fiscal performance, and inflation low and stable. Public debt sustainability also had improved faster than anticipated in the CAS: the debt/GDP ratio had fallen about 64 percent by end 2006, compared to 72 percent estimated in the CAS. Last, structural reforms were being implemented in public sector management, the financial sector, and social programs, which provided a platform for deeper reforms. Uruguay had largely recovered from the 2002 crisis triggered by events in Argentina, which caused an 11 percent drop in GDP. Moreover, its growth and fiscal outcomes outperformed those projected in the 2002 CAS. For example, the economy grew 6.6 percent in 2005 and an estimated 6.8 percent in 2006, compared to 6 percent and 4 percent, respectively, projected in the CAS. On the other hand, the Government projected a decline in economic growth over the medium term tapering off to an equilibrium near the historical average. The public debt burden also lessened after the crisis. The improved fiscal position, strong growth, and lower interest rates coupled with the strength of the currency all contributed to a lower public sector debt-to-GDP ratio. Debt management policies also have been successful since 2003. By 2006, the Government was able to smooth repayment peaks, refinance expensive emergency financing, and gradually increase the peso share debt. In addition, the 2007-08 current account deficit was expected to be modest. Not counting the substantial imports related to the concentration of pulp mill projects, the deficit was expected to remain in the range of 1.5 percent of GDP in 2007-08. Current account risks were mitigated by reducing public debt and diversifying exports. However, the risks to growth persisted in the form of potential current account shocks caused by international interest rates and adverse regional developments. The baseline macroeconomic scenario showed the public sector debt ratio falling from 64 percent of GDP in 2006 to 50 percent in 2010. This outcome was contingent on maintaining a primary surplus. The fiscal policy of the Government at the time was targeted at achieving a 4 percent primary surplus from 2007 onward. The Government track record of maintaining prudent macroeconomic stabilization policies and subsequent strong fiscal performance lent credibility to this scenario. Economic and financial risks were considered likely because of the high level of public sector debt and guarantees, and the still high dollarization in the economy. Hence, public sector debt was considered an important fiscal risk. The Government’s debt service

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capacity remained dependent on a combination of factors including continued fiscal discipline, moderate world interest rates, low sovereign risk premiums, sustained economic growth, and active debt management. Much of the debt (over 90 percent by end June 2006) was denominated in foreign currency. This exposed the public sector debt to exchange rate fluctuations. The Government also had large contingent liabilities from explicit and implicit guarantees to state banks and non-banking financial institutions and the large public sector pension system. Other liabilities were inherent in the large public enterprises that dominated Uruguay’s public services and infrastructure. Financial sector vulnerabilities, an external shock caused by adverse movement in global interest rates, and a delay in the structural reform program of the administration also were factors at the time of the DPL. At the time of PRIDPL II, growth, performance had exceeded expectations, averaging 8 percent over 2005-08, which allowed Uruguay to consolidate economic gains made since the 2002 crisis. The country also benefitted from a generally favorable external environment until mid-2008, with high regional growth and buoyant agricultural commodity prices, though partially offset by recent years of high oil and gas prices. The economy was expected to expand by 10.6 percent in 2008, driven by foreign direct investment in pulp mill projects, expanding commerce and telecom services, and a strong construction sector. Nevertheless, baseline economic projection used in debt sustainability analysis assumed a slowdown in growth from 2008 onward.

b. Core issues prior to loan approval At the time the operation was designed, core issues centered on growth challenges. The strategy delineated in the Bank’s 2005 Uruguay Sources of Growth study rested on three pillars: policies and reforms needed for consolidation of macroeconomic stability (Pillar I); improvements in the business climate and the allocation efficiency of the factors of production (Pillar II); and private-sector-led growth driven by innovation (Pillar III). Tax reform was seen as fostering fiscal consolidation and thereby contributing to medium-term macroeconomic stability. Medium-term growth prospects were also seen as linked to an increase in the quality and quantity of investment. Moreover, within the business climate agenda, the initial focus was on upgrading the bankruptcy framework and improving information disclosure—in addition to reformatting the tax system. Capital market development was another priority identified by the Government as a contributor to macroeconomic stability. For perspective, during the 2002 crisis unemployment and poverty had increased to levels unprecedented in Uruguay. By mid-2006 moderate poverty had declined to about 28 percent and extreme poverty to 3 percent, below the record 4 percent during 2005, but more than twice the percentage five years earlier. For this reason, a key priority became strengthening the social protection system, focused on ensuring broad and sustainable coverage. One of the main concerns informing Uruguay’s social protection policies centered on including poor workers and families not participating in the formal labor market. Another concern pertained to the pension system, known as the most expensive

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in the region--due in part to its extensive coverage. A better managed and regulated system appeared needed to complement this broad coverage--supported by appropriately higher revenue collection.

c. Alignment of the DPL program with Government and Bank strategies The Bank PRIDPL I program was designed to be the first in a series of two Development Policy Loans (DPLs), the second operation (PRIDPL II) following approximately one year later. The objectives were directly linked to both the Government’s explicit objectives as well as those of the CAS. The PRIDPL program was designed as fully consistent with the reform agenda set out by the Government. In 2006, the Minister of Finance summarized the economic policy objective of the Government as sustained growth at higher than historical rates, combating poverty, poverty and exclusion, and ensuing equitable access to opportunities for human progress. Macroeconomic stabilization remained at the core of the Government’s policy program for both DPLs. The Government set as a strategic priority investment climate policies to increase firm-level productivity, by enhancing innovation and upgrading worker capacity through training The other critical path investment climate policies continued to be tax reform, investment promotion, new competition and insolvency and enterprise reorganization (bankruptcy) laws, in addition to capital markets reform. For public sector management, the three priority areas for reform, supported by the Bank and the CAS, which mirrored the Government’s strategy, included tax administration and tax policy, expenditure management, and institutional reform. In the case of taxes, improving equity of the tax system was a priority, in addition to focusing on improving the administration of tax collection required to maintain the primary surplus. On expenditure management, the reform of social transfer schemes was identified as critical, with potential for broad institutional reform. In the financial sector, emphasis was on strengthening the institutional framework for supervision, on continuing bank restructuring, and on policies to promote the deepening of capital markets. The social context focus was on health and pension reform to improve overall social welfare, while contributing to fiscal stability and expenditure switching policies. Thus, the necessary framework was in place for a policy-based loan.

1.2 Original Program Development Objectives (PDO) and Key Indicators (as approved)

The overall program development objective of the two Programmatic Reform Implementation Development Policy Loan (PRIDPL) programs supported implementation of priority economic and social sector reforms as determined by the Government. The original Program Development Objectives supported the Government’s reform program in three key areas: (i) tax reform, (ii) business climate and capital markets development, and (iii) improving the social protection system.

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The key indicators for the respective PDOs were: (i) tax--increase the efficiency and equity of the tax system, while maintaining Government revenues at the level to meet the overall balance target necessary for macroeconomic stability; (ii) business climate--increase the quality and quantity of investment and thereby contribute to growth; (iii) social protection--promote social inclusion so that all individuals in society benefit from development and Government programs.

1.3 Revised PDO and Key Indicators, and Reasons/Justification

PRIDPL I highlighted the reform of the securities and settlement payment system through a trigger. PRIDPL II added a corresponding PDO on the implementation of the payment and securities payment strategy. PDO indicators that relied for measurement on the “Doing Business” database were dropped on the advice of the World Bank team under DPL II, as it gave a misleading measure of economic expansion which was not possible to evaluate with DB indicators.

1.4 Original Policy Areas Supported by the Program: Three policy reforms areas were supported by the two DPLs: tax reform, business climate and capital markets development, and policies aimed at strengthening social protection. Under tax reform, the intention was to reduce distortions and render the tax system more equitable, while maintaining requisite Government revenues to meet the primary surplus target necessary for macroeconomic stability. Measures supported by the program were: (i) Parliamentary approval of the tax reform law by end December 2006; (ii) adaptation of Banco de Protección Social (BPS) operational systems to combine collection of IRPF and social security contributions. Under business climate and capital market development the intention was to create conditions that encouraged investment through improving the business climate and increasing overall transparency of the corporate and financial sectors. Measures supported by the program were: (i) MEF in collaboration with BCU, to produce an overall strategy and implementation plan for capital markets reform; (ii) submission to Parliament of a bill on Insolvency and Corporate Reorganization (Bankruptcy Law); and (iii) MEF, in collaboration with BCU, AIN, TCR, and CPNCA, produce an implementation plan for improving transparency of information. Under strengthening social protection the intention was to expand and consolidate the social protection system, reinforce the protection of the poor and vulnerable, and increase the efficiency, transparency and accountability of social protection institutions. Measures supported by the program were: (i) BPS continued to register beneficiaries for the non-contributory family allowances program; and (ii) BPS introduced changes to increase coverage and revenue collection of the formal social security system. A complementary Institution Building Technical Assistance Loan (IBTAL) PAD was prepared along with PRIDPL I, which provided institution-building support to the policy reforms in several areas. These included: tax reform (tax administration in BPS in human

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resources, IT systems, auditing, business intelligence, collections, risk management, outreach, and taxpayer services); business climate and capital markets development (targeted technical assistance); and strengthening social protection (data processing equipment, and costs associated with designing and implementing an inter-institutional information system on beneficiaries of social programs).

1.5 Revised Policy Areas Policy areas were not revised.

1.6 Other significant changes The amount for the second operation was increased from an initial amount of US$100 million to a final US$400 million when the second operation was approved (see table 2). The first operation was disbursed in local currency. The second operation was available in foreign currency as a Deferred Draw-Down (DDO) operation over a three-year period. The reason for this was to provide the Government with a risk-management tool in the event that market borrowing was interrupted and a public sector financing shortfall arose. The authorities decided on an immediate and full drawn-down in January 2009.

Table 2. DPL Disbursement Profile

Loan # Amount Expected Release Date

Actual Release Date

Release

PRIDPL 1 US$100 million May 2008 May 2008 Regular PRIDPL 2 US$400 million DDO (2009-11) January 2009 Regular

2. Key Factors Affecting Implementation and Outcomes

2.1 Program Performance

As shown in table 3, the Government’s program performance, as described in the policy matrix of the two DPLs under review, was consistently on track. All the action triggers were a condition of Board approval, and thus were met prior to Board presentation of the respective loans.

Table 3. Prior Actions and Status for First and Second DPL

First Programmatic Reform Implementation Development Policy Loan

I. Macroeconomic Stability Status Sustained growth and fiscal sustainability The Oriental Republic of Uruguay maintained an

adequate macroeconomic policy framework to ensure fiscal sustainability and promote sustained growth.

II. Reforming the Tax System Status Create a simpler, more efficient and equitable tax structure

DGI is leading and coordinating the personal income tax (IRPF) collection efforts of different collection retention agencies as provided in Article 8 of the Tax Reform Law. The following

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implementation targets are in place: (i) DGI and BPS inspectors have been trained in the skills required for their jobs; (ii) establishment of 210 DGI posts outside DGI and tax call center for consultations; (iii) a Single Tax Registry is in operation; (iv) IRPF tax files are being transferred monthly from BPS to DGI; and (v) DGI has consolidated taxpayer information into a single IRPF tax file combining income from different sources for each multi-employed contributor.

III.1 Market Promotion and Regulatory Framework – Prior Actions

Status

Establishment of an institutional, legal and regulatory and infrastructure framework that provides for a safe and efficient market infrastructure: The Executive has presented to Parliament for

approval a draft capital markets law.

A draft of the new Capital Markets Law was sent by the Executive to Parliament on November 19, 2008.

III.2 Reform of payments and securities settlement – Prior Actions

Status

Reform of payments and security system to improve safety and efficiency: (i) The Board of Directors of BCU (central bank)

has approved a plan for reform of payment ad securities settlements.

The payment and securities settlement system reform strategy and implementation plan have been approved and communicated to the private sector. The Payment System Law has been drafted and submitted to MEF.

III.3 Bankruptcy law Status Modernize legal framework for bankruptcy in order to provide for efficient and timely resolution of problem enterprises: The House of Representatives (Cámara de

Diputados) has approved a draft Insolvency and Enterprise Reorganization Law (Ley de Concursos y Reorganización Empresarial)

On July 1, 2008, the House of Representatives, and on October 23, 2008, the Senate approved the bankruptcy law. The law became effective November 3, 2008.

III.4 Information transparency and disclosure – Prior Actions

Status

Improve information transparency in the corporate and financial sector (public and private): The Executive has issued a decree establishing as

obligatory, effective January 1, 2009, the International Financial Reporting Standards (Normas Internacionales de Información Fianciera), which include (a) the requirement for enterprises to consolidate financial statements; and (b) the requirement that enterprises provide information about related-party transactions.

The House of Representatives (CdeD) has approved amendments to Law 16.060 of September 4, 1989, published in the Official Gazette on November 1, 1989, (Ley de Sociedades Comerciales) to eliminate inconsistencies with the international accounting standards referred to in the paragraph above.

The Executive has adopted a resolution that strengthens the composition of the CPNCA and adding representatives of BCU, DGI, private

The information transparency and disclosure of prior actions reflect the steps taken to implement the agreed trigger for PRIDPL II. To meet the objectives of strengthening information transparency and disclosure, the Government decided to establish a new entity in charge of accounting standards (Ente Emisor de Normas Contables), which would have the technical and financial capacity, as well as the independence to lead the process in ensuring the latest accounting norms are adopted. The CPNCA would serve as a formal advisory body for the new entity. In order to adopt the latest International Financial Reporting Standards, relevant enterprises would be required to provide consolidated financial statements, necessitating amendments to the Corporate Law, which were remitted to Parliament June 1, 2008.

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universities, and the Association of Private Banks of Uruguay (Asociación de Bancos Privados del Uruguay)

The Executive has presented to Parliament draft legislation establishing a system of independent accounting oversight.

IV. Strengthening social protection– Prior Actions Status Expand and consolidate the social protection system, reinforcing the protection of the poor and vulnerable: The Government is implementing the new

structural income transfer policy (Plan de Equidad Social), which includes as a core component the new family allowances system

Increase efficiency, transparency, and accountability of social protection institutions: The Government is implementing legislation

(Law 18.083 as of December 27, 2006) to eliminate exemptions to selected sectors and industries and to adopt a new unified social contribution rate of employers (7.5 % of wages)

On December 22, 2007, legislation (Law 18.227) was approved by Parliament on the core component of Plan de Equidad Social—the new family allowances system—which is to be the main instrument used to provide income transfers to poor families. The new family allowances system was introduced January 1, 2008, and immediately subsumed the benefits received under the Citizen’s Income Program (PANES income transfer component). The measure has been implemented as part of the tax reform package that became effective July 1, 2007.

Second Programmatic Reform Implementation Development Policy Loan I. Macroeconomic Stability Status Maintain an adequate macroeconomic policy framework to ensure fiscal sustainability and promote sustained growth

Achieved GDP growth of more than 2% per year. Primary surplus of the non-financial public sector was 3.2% of GDP in 2008 and 3.1% in 2009. Real investment rose over 7% a year over 2007-08 level. Inflation remained within the target ranged for CPI of 3 to 7%. Current account remained at a sustainable level in the range of 1% of GDP in 2008 and 2009.

II. Reforming the Tax System– Prior Actions Status Create a simpler, more efficient, and equitable tax structure: DGI is leading and coordinating the personal

income tax (IRPF) collection efforts of different collection retention agencies, as specified in Article 8 of the Tax Reform Law. The following implementation targets are in place: (i) DGI and BPS inspectors have been trained in the skills required for their jobs; (ii) 210 DGI posts have been established outside DGI along with a tax call center for consultations; (iii) a Single Tax Registry is now in operation; (iv) IRPF tax files are being transferred monthly from BPS to DGI; and (v) DGI has consolidated taxpayer information into a single IRPF tax file combining income from different sources for each multi-employed contributor.

The DGI is effectively leading and coordinating the IRPF tax collection.

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III.1 Market Promotion and Regulatory Framework– Prior Actions

Status

Establishment of an institutional, legal, regulatory, and infrastructure framework that provides a safe and efficient market infrastructure: The Executive has presented to Parliament for its

approval a draft capital markets law.

A draft of the new Capital Markets Law (18.627) was sent to Parliament and approved December 2009

III.2 Reform of payments and securities settlement– Prior Actions

Status

Reform of payments and securities system to improve safety and efficiency: The Board of Directors of BCU (central bank) has

approved a plan for reform of payment and securities settlements.

The payment and securities settlement system reform strategy and implementation plan were approved and communicated to the private sector. The Payment System Law (18.573) was drafted, submitted to Parliament, and approved September 30, 2009

III.3 Bankruptcy law Status Modernize legal framework for bankruptcy to provide efficient and timely resolution of problem enterprises: The House of Representatives (Cámara de

Diputados) has approved a draft Insolvency and Enterprise Reorganization Law (Ley de Concursos y Reorganización Empresarial)

The Bankruptcy Law became effective November 3, 2008 and was implemented.

III.4 Information transparency and disclosure– Prior Actions

Status

Improve information transparency in the corporate and financial sector (both public and private): The Executive has issued a decree establishing as

obligatory, as of January 1, 2009, the International Financial Reporting Standards (IFRS--Normas Internacionales de Información Financiera), which include the requirement for enterprises: (a) to consolidate financial statements; and (b) provide information about related-party transactions.

The House of Representatives (CdeD) has approved amendments to Law 16.060 (September 4, 1989), published in the Official Gazette on November 1, 1989 (Ley de Sociedades Comerciales) to eliminate inconsistencies with the new accounting standards (IFRS) referred to above.

The Executive has adopted a resolution that strengthens the composition of the CPNCA and added representatives of BCU, DGI, private universities, and the Association of Private Banks of Uruguay (Asociación de Bancos Privados del Uruguay)

The Executive has presented to Parliament draft legislation establishing a system of independent accounting oversight.

The information transparency and disclosure prior action reflect the steps taken to implement the agreed trigger for PRIDPL II. To meet the objectives of strengthening information transparency and disclosure, the Government decided to establish a new entity in charge of accounting standards (Ente Emisor de Normas Contables), which would have the technical and financial capacity, as well as the independence to lead the process in ensuring the latest accounting norms are adopted. The CPNCA would act as a formal advisory body for the new entity. Congress did not approve the law creating this entity. In order to adopt the latest International Financial Reporting Standards, enterprises will be required to provide consolidated financial statements, necessitating amendments to the Corporate Law that were sent to Parliament June 1, 2008 .

IV. Strengthening social protection– Prior Actions Status Expand and consolidate the social protection system, reinforcing the protection of the poor and vulnerable: The Government is implementing the new

structural income transfer policy (Plan de

On December 22, 2007, legislation was approved by Parliament (Law 18.227) on the core component of Plan de Equidad Social—the new family allowances system—which is to be the

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Equidad Social), which includes as a core component the new family allowances system.

Increase efficiency, transparency, and accountability of social protection institutions: The Government is implementing legislation

(Law 18.083, December 27, 2006) to eliminate exemptions to selected sectors and industries and to adopt a new unified social contribution rate for employers (7.5 % of wages).

main instrument used to make income transfers to poor families. The new family allowances program was introduced on January 1, 2008, and immediately subsumed the benefits received under the Citizen’s Income Program (PANES income transfer component). The measure has been implemented as part of the tax reform package that became effective July 1, 2007.

2.2 Major Factors Affecting Implementation: The IBTAL contributed to the successful implementation of PRIDPL I and II, as intended. The strong commitment of the Government was also a factor contributing to the overall successful implementation. An issue arose concerning the lines of accountability and leadership given the comprehensive nature of the reform and the need for inter-institutional cooperation. Offsetting this was a highly committed and competent team commensurate with the scope of the ambitions reform agenda. This meant that the program success also involved leadership and champions of the targeted development areas, such as the MEF and the Central Bank. The direct involvement of the Central Bank, the MEF (DGI), and Ministry of Social Development (MIDES) helped to clarify the lines of responsibility and leadership paths. In contrast, in the case of transparency and insolvency, ambiguous assignment of responsibilities meant that meeting outcomes became less assured. The clear allocation of responsibilities aided by a well-articulated strategic framework enabled implementation to move forward in a satisfactory way overall, especially in the case of the Plan de Equidad.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: The Government and the Bank agreed to monitor progress of the PRIDPL program regularly, in tandem with CAS monitoring. Discussions were held with the Ministry of Finance and the Economy, the main counterpart agency, which was in charge of monitoring and evaluation and collecting data from the appropriate sources needed to monitor progress. The CAS review focused on the maintenance of agreed triggers for continued policy-based lending--in particular maintenance of a satisfactory macroeconomic framework and progress on the overall structural program. Data sources included: central and non-financial public sector budget monitoring by MEF; Central Bank reports and analysis; tax information systems; investment climate surveys; reviews and analysis of laws and implementing regulations from the World Bank and other stakeholders; financial audits and follow-up on CFAA recommendations; World Bank supervision reports; and IMF Article IV consultations.

2.4 Expected Next Phase/Follow-up Operation The new DPL series (August 2010), initiated by the First (to be followed by a Second) Programmatic Public Sector, Competitiveness and Social Inclusion Development Policy Loan, builds on the results and lessons of PRIDPL I and II. The new series also benefits

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from the experience of parallel technical assistance provided IBTAL for PRIDPL I and II, which will continue to support the new DPL series. The new Uruguay Country Partnership Strategy (CPS) FY10-FY15, Report No. 55863-UY, also notes that the previous CPS strategy to implement PRIDPL I and II was the appropriate one and provided a solid foundation for subsequent core reforms to support the new Government’s evolving public sector reform agenda through the newly initiated DPL series.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation The themes covered under the DPL series remain highly relevant in the country and to the present administration, as highlighted in the new CPS. The new DPL series targets the consolidation of reforms supported by the Programmatic Reform Implementation Development Policy Loan (PRIDPL) series (approved May 2007), and bolsters Government efforts in other areas were not supported by the PRIDPL series. Specifically, the loan recognizes recent achievements in public sector management, business climate and social service delivery (prior actions for DPL-I). The indicative triggers for DPL-II reflect broad policy areas of support, anchoring the new Government’s reform agenda through 2011.

3.2 Achievement of Program Development Objectives

Table 4 below, is a summary of actual achievements under PRIDPL I and II relative to baselines and targets. Detailed Indicators provide evidence of progress toward achieving PDOs including both quantitative and qualitative values and explanatory comments on values achieved.

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Table 4. Program Development Objectives Results

First Programmatic Reform Implementation Development Policy Loan P083927 and Second Programmatic Reform Implementation Development Policy Loan P106724

Indicator Baseline value Original target Formally revised target

(target years) Actual value Achieved at

Completion of Target Years Indicator 1. Sustained growth and fiscal sustainability as illustrated by: 1. strong real GDP growth; 2. Tight fiscal stance; 3. Promote investment; 4. Contain inflation; and 5. Maintain stable current account. Value (Qualitative and Quantitative)

1. Growth in 2006 at 4.6% 2. Primary surplus in 2006, 2.6% 3. Rate of growth in real investment, 3.3% 4. Previous inflation, 6.4% 5.Current Account Deficit, -2.3%

1. Target of 3% plus per annum 2. primary surplus is 4 % of GDP in 2007 and 2008 3. Real investment to rise at 7% plus per annum over 2007-08 4. CB target range for CPI inflation 4.5%-6.5% year 5. Current account (excluding imports related to the construction of pulp mill projects) projected deficit about of 1.5% of GDP in 2007 and 2008.

1. No change 2. Primary surplus is 3.2 of GDP in 2008 and 3.1% in 2009 3. No change 4. CB target range for CPI inflation is 3%-7%. 5. Current account projected to record deficit in the range of 1% of GDP in 2008 and 2009.

1. 2008: 8.5% 2009: 2.9% 2. 2008: 1.3% 2009: 1.1% 3. Gross fixed capital formation: 2007: 8.9% 2008: 18.7% 2009: -4.0% 4. In December 2009, the target changed to 4%-6%. The rate of inflation was: 2008: 9.2% 2009: 5.9% 5. The current account balance as reported by the Central Bank was the following: 2007: 0.9% 2008: - 4.8% 2009: 0.8%

Comments: Macroeconomic performance in 2009 was affected by the impact of the global crisis and severe drought, which led to lower primary surplus than expected as well as a contraction in private investment. Indicator 2. Create a simpler, more equitable tax structure, as illustrated by: 1. Total tax/GDP ratio; 2. Effective IWF tax contributions; 3. Adequate IRPF revenue collections; 4. Lower cost of tax collection Values (qualitative and quantitative)

1. Total tax revenue-to-GDP ratio 17.9% in 2005. 2. IRPF tax contributors 20,000 in 2006.

1. Equal to 2005 value of 22.5% of GDP for 2008 and 2009. 2. IRPF tax over 600,000 in 2008-09. 3. IRPF revenue greater

1. No change 2. Target IRPF and IASS increase from baseline of about 200,000 in 2006 3. No change 4. No change

1. 2008: 17.73% 2009: 18% 2. Contribution of IRPF and IASS: 2008 : 497.282 2009: 604.422 3. IRPF Revenue:

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3. IRPF in 2007, 7% of GDP. 4. Cost of total tax collection 1.12% in 2007 (not 1.5% as stated in the DPL document.)

than or equal to 2.1% of GDP in 2009. 4. Ratio of tax collection costs to tax revenues 1.3% in 2009.

2007: 0.7% 2008: 1.9% 2009: 2.3% 4. Ratio of tax collection costs to tax revenues 2007: 1.12% 2008: 1.04% 2009:1.02% Source: Data provided directly by DGI

Comments: Some of the baseline information presented in the DPL documentation has been revised in line with available government information. The revisions cover (a) the total tax revenue-to-GDP ratio and (b) the ratio of tax collection costs to tax revenues. All of the targets have been met. Indicator 3. Establishment of an institutional, legal and regulatory, and infrastructure framework that provides for a safe an efficient market infrastructure. Values (Qualitative and Quantitative)

(i) Market Capitalization at US$20 million (ii) Stock US$4,500 million for both stock exchanges about million

(i) Rise in market capitalization (ii) Increase in stock exchange activity.

No change (i) Market capitalization: US$139 million (ii) Stock exchange activity (private sector) for both the primary and the secondary market: US$ 6,200 million.

Investor protection index (World Bank’s Doing Business database) rating Uruguay 5 out o f 10 compared to an average o f 5.1 for LAC and 6 for OECD Countries. Transparency of transactions measured by disclosure index rating Uruguay as 3 out o f 10 compared to an average of 4.3 for LAC and 6.3 for the OECD. Corporate governance measured by the extent

Improve investor Protection Index Improve disclosure index Improve director liability index

Dropped

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o f director liability index rating Uruguay 4 out of 10 compared to an average o f 5.1 for LAC and 5 for the OECD.

Baseline set by Recommendations on Securities Settlement Systems (2007).

Improvement in compliance with IOSCO Principles on Securities Regulation and CPSS-IOSCO (Staff assessment on progress from baseline as set out in the 2007 assessment).

No change Met. Uruguay has adhered to the IOSCO Multilateral Memorandum of Understanding (2010).

Comments: (a) Information on market capitalization provided by the Central Bank; (b) Doing Business outcome indicator dropped per suggestion of the Bank staff; (c) Adherence to the IOSCO Multilateral Memorandum of Understanding (2010) means that Uruguay complied with the IOSCO recommendations on securities and settlements systems (2007)—the second country in LAC after Brazil to do so. Indicator 4. Reform of the payments and security settlement systems to improve safety and efficiency Values (Qualitative and Quantitative)

Baseline set by 2007 Report on the Observance of Standards and Codes (ROSC).

Staff assessment on progress over baseline. Real Time Gross Settlement (RTGS) system in operation and in compliance with the Committee on Payment and Settlement Systems (CPSS) of the Bank for International Settlements (BIS) core principles for systematically important payment systems (New Payments system will be functioning in 2010).

Partially met and on track.

Comments: (a) Met: Law on Payment Systems (2009) that meets the observations under the 2007 Report on the Observance o f Standards and Codes (ROSC); (b) Work in Progress: Technical platform for a new Real Time Gross Settlement (RTGS) system, which will come into operation in 2011. Indicator 5. Bankruptcy Law: Modernized legal framework for bankruptcy in order to provide for an efficient resolution of problem enterprises Insolvency and

Creditor Rights ROSC set baseline. Average of 34 per

Insolvency and Creditor Rights ROSC update shows progress over baseline. Increase in the number of

No change New Insolvency Law under implementation addresses ROSC analysis Partially met and on track. 34 new insolvency

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annum over (2004-06) Number of insolvency cases satisfactorily resolved and reduction in the time required to do so (baseline not determined.)

insolvency cases presented. Increase in the number of insolvency cases satisfactorily resolved and reduction in the time required to do so.

cases in 2009; including other regulations the total comes 47, which is compatible with baseline. Insolvency cases satisfactorily resolved not yet defined.

Comments: New Law on Bankruptcy (2008) addresses key observations of Insolvency and Creditor Rights ROSC (2006), but a ROSC update that would take stock of impact has not taken place. The relevance of proposed indicators is questionable. Indicator 6. Information Transparency and Disclosure : Improve information transparency in the corporate and financial sector (public and private) World Bank’s Doing

Business database rates transparency of transactions as measured by the disclosure index in Uruguay 3 out of 10 compared to an average of 4.3 for LAC and 6.3 for the OECD.

Improve transparency of transactions as measured by the disclosure index of the World Bank’s Doing Business database.

Dropped

Most recent version of IFRS implemented by all corporate companies.

No change Met

ROSC provided the baseline

Availability of large and medium enterprises financial statements in the companies’ registry on-line.

No change Not met—in progress

ROSC provided baseline

Public enterprises (UTE, OSE, ANCAP and ANTEL) make public timely their audit reports and financial statements with improved quality of

Entes autónomos (UTE, OSE, ANCAP and ANTEL) make public timely their audit reports and financial statements with improved quality o f information (including management indicators) following the same standards as private

Met

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information (including management indicators) following the same standards as private companies.

companies.

Comments: (a) Decree (2008) mandating adoption of IFRS by all listed companies, which must comply beginning in 2009; (b) regulations in place to improve compliance with submission of financial statements to the AIN by around 9,000 enterprises and work on internet platform to present information commencing; (c) All Entes Autónomos follow same accounting standard norms same as private companies, all are audited by the Tribunal de Cuentas and all, but one use an additional external auditors, with all information available to the public. Indicator 7. Expand and consolidate the social protection system, reinforcing of the poor and vulnerable As o f 2006, 61% of

the poorest quintile households were covered by PANES or Family Allowances Program.

By 2009, at least 70% of the poorest quintile households are covered by Plan de Equidad.

No change 2009: 74.7%

Comments: Information Provided by MIDES based on the 2009 Household Survey Indicator 8. Increase efficiency, transparency and accountability of social protection institutions As of 2006, 65% of

occupied labor force contributed to social security.

By 2009, at least 70% of the occupied labor force contributes to social security.

No change 2006: 63.5% 2007: 65.3% 2008: 66.7% 2009: 74%

Comments: Calculation for 2009 as the ratio of contributors to social security (BPSD and others) over the employed active labor force. The information has been provided by the BPS.

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3.2.1 Macroeconomic Stability: Satisfactory After recovering from the 2002 crisis, Uruguay’s economic growth accelerated, supported by sound macroeconomic fundamentals. Before the 2008 global crisis, Uruguay was posting real GDP growth that averaged 7 percent during the 2005-08 period and peaked at close to 9 percent in 2008. Private investment also reached record levels and unemployment set a historic low. Improvements in macroeconomic fundamentals included a reduction in the Government’s public debt as well as the external debt of the country. Gross public debt decreased from 105 percent of GDP in 2003 to 60 percent in 2008. The share of public debt denominated in local currency declined from 90 percent in 2006 to 61.5 percent in 2009; but still was a matter of concern. In turn, the net public debt fell from 68.3 percent of GDP in 2003 to 35.2 percent in 2009, with the refinancing risk reduced by smoothing the amortization schedule. Inflation has shown a secular decline (5.9 percent in 2009), but with levels fluctuating, and remains a concern. By skillful management of the impact of the global crisis, economic growth remained positive, based on sound the macroeconomic fundamentals that remain in place. The economy contracted only in the first quarter of 2009; growth returned to reach 2.9 percent in 2009, representing one of the best performances in the region. The Government did not design and implement specific expenditure measures to counter the impact of the crisis; rather they let automatic stabilizers operate and continued to implement their investment program, which was nearing full implementation towards the end of the administration. The financial authorities took measures to protect foreign exchange reserves with the support of international organizations. The main item not in keeping with expectations was the primary public surplus, which, at 1.3 percent and 1.2 percent of GDP in 2008 and 2009, respectively, was below the expected 4 percent Government target because of weak public enterprise sector performance, as, for example, seasonal factors (low rainfall) severely affected energy company accounts. Inflation that ebbed up in 2008 to nearly 10 percent has declined to 6 percent in 2009, responding to tight monetary policy. Gross investment over GDP increased from 15.2 percent in 2003 to 23 percent in 2008. The recent crisis caused the investment ratio to drop to 21.8 percent, but it is expected to recover with economic growth, which is likely to reach 8 percent in 2010. International ratings of Uruguayan sovereign debt have improved since the 2002 crisis. Since declining in January 9, 2003 to CCC/negative, the S&P foreign currency rating gradually has increased to reach B/positive by January 2006, which coincided with the beginning of the previous administration. The latest update in July 2008 recorded a BB- and stable rating. 1 However, the country has yet to regain the investment grade it lost during the previous crisis. Further improvements in international ratings would require greater reduction in the gross public-debt-to-GDP ratio, as well as the share of that debt denominated in foreign currency. In addition, the country needs a strategy for

1 The current ratings are by agency (a) Moody’s—Ba3 and stable outlook; (b) Fitch—BB-and positive outlook; and (c) S&P---BB-and stable outlook. The Canadian bond rating agency, DBRS, upgraded Uruguay’s local and foreign currency rating to BB and assigned a positive trend (September 2009).

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building required infrastructure without increasing fiscal risks, and to align real wage increases with productivity gains both to maintain and improve competitiveness. This ICR rates achievements of results under this pillar as satisfactory. The authorities sustained their commitment to solid macro-policy and the profile of the country continues to improve despite the global crisis (see table 5 below). The contribution of the Bank was limited to the financial characteristics of the operations. PRIDPL I was disbursed in local currency consistent with the policy of the Government to increase the share of the debt in public currency. The second operation, coming just before the crisis, was provided as a DDO (deferred draw-down option) in support of the Government strategy to shield the reserves of the country in the wake of the coming crisis. The amount of the second operation was increased from an original of US$100 million to US$300 million and then to a final US$400 million. The authorities drew the full amount upon effectiveness of the operation. Lastly, the Bank team maintained a dialogue with the authorities on macroeconomic policy in parallel with the IMF discussions on Article IV. 3.2.2 Reforming the Tax System: Highly Satisfactory The authorities revised the policy framework to address several shortcomings of the system in place. Uruguay was a worldwide leader in the introduction of VAT, with income taxation for capital and labor not well developed. Uruguay’s tax system came to rely on a high level of indirect taxation, with income taxation scattered among various taxes and lacking a comprehensive well-designed structure. In addition, several low-yielding nuisance taxes were in place that increased compliance costs. The tax system lacked progressivity. To address this situation the Government launched a tax reform that included the following initiatives: (a) introduction of a Personal Income Tax (IRPF) with a progressive five-scale schedule to replace a wage tax; (b) rationalization of the Corporate Income Tax, with a new tax replacing four corporate income taxes in place; (c) reduction in the value added tax (23 to 22 the top rate and 14 to 10 the reduced rate.); (d) unification of the employer’s social security contribution and elimination of sector exemptions; and (e) elimination of several small taxes.

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Table 5. Uruguay: Macroeconomic Framework Key economic indicators in percent, unless otherwise indicated

The great challenge for the authorities was the implementation of the tax reform. The previous administration had already focused on the modernization of the tax administration, which had taken tax revenue collection from 15 percent in 2003 to 17 percent by 2006. The tax reform did not seek to further increase revenues but instead to rationalize the system and increase contribution of direct personal taxation. This represented a major challenge, as introduction of the IRPF was expected to triple contributors, from 200,000 to 600,000. The Government saw the introduction and expansion of the personal income tax as an important tool for the reduction of informality in the country, representing a flagship program of the authorities. The authorities achieved all objectives set for the tax reform. First, the personal income tax was successfully implemented, with the new administration that came into office 2010, plans to build on these achievements to improve the design by broadening the definition of the tax base to include investments abroad. Second, the net of personal

Uruguay: Macroeconomic Indicators(in percent, unless otherwise indicated)

2004 2005 2006 2007 2008 2009 2010p 2011p 2012p 2013p 2014p 2015p

National accountsReal GDP growth (%) 5.0 7.5 4.3 7.5 8.5 2.9 5.5 5.0 4.0 4.0 4.0 4.0GDP (US$ billion) 13.7 17.4 19.8 24.0 31.2 31.5 41.0 44.2 47.4 50.9 54.6 58.4

External sectorCurrent account balance (% of GDP) 0.0 0.2 -2.0 -0.9 -4.8 0.7 -1.8 -1.5 -1.1 -0.6 -0.4 -0.2

excluding pulp mill projects 1/ 0.0 0.2 -2.0 0.4 -4.8 0.7 -1.8 -1.5 -1.1 -0.6 -0.4 -0.2Trade balance (% of GDP, incl. services) 3.5 2.3 -0.5 0.7 -2.9 2.4 -0.7 -0.4 -0.1 0.5 0.7 0.6Exports of goods and services (% of GDP) 31.1 29.3 29.2 28.9 30.1 27.2 24.1 24.5 24.9 25.6 25.4 25.2Imports of goods and services (% of GDP) 27.6 27.0 29.7 28.3 32.9 24.7 24.8 24.9 25.0 25.0 24.7 24.5FDI (US$ billion) 0.31 0.81 1.49 1.24 1.79 1.23 1.26 1.30 1.33 1.37 1.40 1.44

PricesCPI (% change, end of period) 7.6 4.9 6.4 8.5 9.2 5.9 7.3 6.7 6.2 6.0 6.0 6.0CPI (% change, period average) 9.2 4.7 6.4 8.1 7.9 7.1 7.5 7.0 6.4 6.0 6.0 6.0Exchange rate (local currency/US$, end of period) 26.4 24.2 24.5 21.6 24.4 19.6 20.1 20.8 21.4 22.0 22.7 23.7Real effective exchange rate (2005=100, + = appreciation) 89.1 100.0 101.9 103.9 116.1 121.5 — — — — — —Merchandise terms of trade (2000=100) 99.9 90.7 88.6 88.7 92.3 — — — — — — —

Labor market (% )Unemployment rate 2/ 13.1 12.2 11.4 9.6 7.9 7.3 — — — — — —

Fiscal (% of GDP)Revenues 3/ 28.0 28.0 28.0 28.0 26.2 27.7 29.1 28.8 28.9 29.0 29.1 29.2

Current surplus of Public Sector Enterprises 2.7 2.1 1.4 2.4 0.8 1.3 2.5 2.1 2.1 2.1 2.1 2.1Current expenditures 3/ 21.5 21.9 22.0 21.9 21.8 23.7 23.8 23.5 23.3 23.0 22.8 22.6Public investment 2.5 2.3 2.6 2.9 3.2 3.4 3.4 3.5 3.7 3.9 4.0 4.0Primary balance (deficit (-)/surplus (+)) 3.8 4.0 3.6 3.5 1.3 1.1 2.1 2.1 2.2 2.4 2.6 2.9

Central Government & Public Sector Enterprises 3.9 3.7 3.5 3.2 1.1 0.7 1.8 1.8 1.9 2.1 2.3 2.6BSE 4/ 0.0 0.2 0.0 0.2 0.2 0.1 0.3 0.3 0.3 0.3 0.3 0.3Central Bank -0.2 0.0 -0.2 -0.1 -0.1 -0.1 0.1 0.1 0.1 0.1 0.1 0.1Local Governments 0.1 0.2 0.4 0.2 0.1 0.3 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1

Interest payments 5.6 4.4 4.2 3.5 2.9 2.8 3.1 3.2 2.8 2.7 2.4 2.0Overall fiscal balance (deficit (-)/surplus (+)) -1.8 -0.4 -0.5 0.0 -1.5 -1.7 -1.0 -1.1 -0.6 -0.3 0.2 0.9

Savings and investment (% of GDP)Gross domestic investment 17.5 17.7 19.4 19.4 22.7 17.9 20.7 19.9 19.4 18.9 18.4 18.3Gross national savings 17.5 17.9 17.4 18.4 17.9 18.6 18.9 18.5 18.3 18.2 18.0 18.1Foreign savings 0.0 -0.2 2.0 0.9 4.8 -0.7 1.8 1.5 1.1 0.6 0.4 0.2

Indebtedness (% of GDP)Public sector gross debt 3/ 89.6 79.3 70.4 62.6 61.7 60.0 53.2 49.2 45.9 43.2 40.8 38.8

of which FX-denominated 68.7 57.9 47.8 42.4 40.0 34.0 33.8 35.0 34.3 33.9 33.2 32.3

Actual Projected

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income taxpayers increased from around 200,000 in 2006 to over 600,000 in 2009.2 Third, PIT revenue targets were met: the combined collection of IRPF plus IASS revenues reached 2.3 percent of GDP, above the Government target under the DPL of 2.1 percent.3 Third, VAT and CIT rates were reduced. Fourth, overall revenue targets have been met: the ratio of taxes to GDP in 2009 was 18 percent roughly the same as in 2005 or 18.5 percent. 4 Fifth, the ratio of direct to indirect taxation increased as the Government intended. Lastly, the cost of collection decreased as intended in line with Government policy to undertake new programs without increasing the size of the implementing agencies. This ICR rates the achievement of results as highly satisfactory, as not only the objectives were met but they were met in an exemplary way. The success in the introduction of the PIT was due in great part to the skillful use of the social security infrastructure at the Banco de Previsión Social (BPS), which is collecting 80 percent of the tax on behalf of the Ministry of Finance (Dirección General de Impuestos--DGI), while DGI audits and enforces. The coordination between BPS and MEF is exemplary in the world. The Bank concentrated its support on the implementation of the PIT while the IBD focused on VAT work. The technical support for the implementation of the personal income tax came through the Institution-Building Technical Assistance Loan (IBTAL), and was provided to the tax administration area of the BPS in adapting the operational systems. 3.2.3 Business Climate and Capital Markets Development: Moderately Satisfactory The DPL design under this pillar supported a two-pronged strategy to increase productive investment. On the one hand, the intent was to improve investor access to financing sources and on the other, to improve the investment climate to attract foreign investors. In this context the development of the capital markets was seen as a way of facilitating the transfer of resources from savers (such as pension funds) to investors, especially small and medium enterprises. In line with these objectives, the DPL covered (a) increased transparency in the availability of financial sector information, (b) the modernization of the capital markets, and (c) increased security of property rights by overhauling bankruptcy legislation and procedures. The second DPL highlighted the work on securities and payment system. The program under this pillar had ample analytical work that included: (a) Financial Sector Stability Assessment (FSAP) of May 1, 2006; (b) Report on the Observance of Standards and Codes (ROSC) on Insolvency and Creditor’s Rights (January 2006); (c) Corporate Governance ROSC Assessment (April 19, 2006); and (d) ROSC on Accounting and Auditing (January 2006). During DPL implementation an investment climate assessment was prepared (2008).

2 Note: To bring greater realism, PRIDPL-II removed the 600,000 contributors target that RIDPL-I had set. Thus, in this specific regard, it can truly be said that the program delivered far above expectations. 3 The elimination of the PIT on pensions led to the introduction of a pension surcharge in its place (IASS). The total for the PIT includes both. 4 The DPL quotes the ratio of taxes to GDP at 22.5 percent, for 2005, but this does not correspond to the information available now, which is 17.8 percent.

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3.2.3.1 Capital Markets Reform The DPL supported Government’s efforts to improve compliance of the security regulation, supervision, and the payments system with international standards. To gauge progress, the Government set the goal of complying with the principles issued by the International Organization of Securities Commissions (IOSCO) Principles on Securities Regulation and (Committee on Payments and Settlement Systems) CPSS-IOSCO Recommendations on Securities Settlement Systems. The Capital Markets Law (2009), supported by the DPL, addressed the key shortcomings that previous IOSCO reviews had identified. These included strengthening the regulatory powers of the Central Bank over capital markets, reducing the powers of the self-regulating capacity of the two stock exchanges, and fostering the professionalization of the key players (traders, dealers, issuers, asset managers and regulators). In addition, the Capital Markets Law mandates the creation of a committee to promote the development of the capital markets. Implementation of the law has just begun. After addressing the main shortcomings, Uruguay has become a signatory member of IOSCO, the only Latin American country to do so. The advances introduced by the Central Bank Law, the Capital Markets Law, the Payments System Law and complementary regulations enabled the Central Bank of Uruguay to sign IOSCO’s Multilateral Memorandum of Understanding (MMMoU) 5 and become a signatory member of IOSCO--the second country in Latin America, after Brazil, to do so. Previously Uruguay was only an ordinary member. Signatory membership means that Uruguay has complied with the IOSCO principles on securities regulation and security settlement systems. The Central Bank of Uruguay is now undertaking a thorough stocktaking of the progress the country has made. Envisaged increases in capital market activity have taken place. The DPL foresaw an impact of the program on the growth in the stock market and the activity in the primary and secondary markets. The value of the stock market grew from US$20 million (the baseline set under the DPL) to US$139 million today. Still, only three companies are actively traded in the stock market. Activity in the primary and secondary markets similarly increased from 4,500 million (DPL benchmark) to 6,200 million today. Nevertheless, this growth cannot be attributed solely to the approved Capital Markets Law. Other factors included the rapid pace of economic growth and the relatively small impact of the crisis on the country. 3.2.3.2 Bankruptcy Law The Government has initiated an institutional overhaul of the insolvency regime in the country. The Bankruptcy Law, supported under the DPL, was approved in 2008 and became effective in 2009. The Law addressed the concerns identified by the Insolvency and Creditor Rights ROSC (2006). Previous legislation was fragmented, complex, and

5 IOSCO MMoU is the international benchmark for enforcement cooperation and exchange of information among regulators.

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obsolete—the applicable regime for corporation was the Concordato Preventivo Law of 1900. Processes took forever, which created a disincentive to use the regulations; reportedly, during the 2001 crisis, enterprises (especially small and medium) closed rather than avail themselves of the systems in place. In contrast, the new legislation provides incentives for enterprises (manager) to initiate processes early and penalizes delays. The law became effective immediately after approval in November 2008, because the authorities wanted it implemented quickly to prepare for the potential effects of the global crisis. The process of training and information dissemination is ongoing, with the support of the Bank’s Institution-building Technical Assistance Loan (IBTAL). Fortunately, attempts to reform the bankruptcy institutions a decade ago had left in place two specialized courts in Montevideo, which are now being equipped to implement the new legislation. The DPL results framework does not allow a fair assessment of the impact on the ground of the new institutional insolvency rules. The number of insolvency cases coming to court averaged 34 per year over 2004-06. They dropped to 20 in 2008. In 2009 the number of cases under the new law was 34 and total number of cases close to 50. This signified a substantial increase in the number of cases with respect to 2008 and a lesser increase with respect to the baseline set in the DPL. In retrospect, it is unclear whether this was due to the new law or to the economic downturn that occurred in 2009. In addition, the DPL expected an increase in the number of cases addressed satisfactorily, and a reduction in length of time to do this. Experts have yet to agree on the definition of “satisfactorily-resolved” cases; hence, both baselines and current measurements are lacking. Anecdotal evidence, however, suggests that several cases that began in 2009 that were covered under the new law have been completed, implying that the new law induces faster settlements. Given the inadequacy of the indicators developed to assess programs, a deeper analysis of the impact of the law will be needed. A ROSC update, as foreseen under the DPL design, is needed. This update would take thorough stock of the adequacy of the new insolvency legislation as well as the implementation challenges, including the design of improved indicators to gauge progress. In addition, the Update could identify needs for fine-tuning and identifying problem areas that need attention. For instance, reportedly one of the major problems for the two courts in Montevideo is the backlog of old cases that remained unresolved and to which the new legislation does not apply. 3.2.3.3 Information Transparency and Disclosure The DPL supported ongoing Government efforts to foster investor and creditor confidence through improved corporate accounting and auditing practices and enhanced transparency. Uruguay began implementing international accounting standards in 1991(IAS), and in 2004 the application of IAS/IFRS (International Financial Reporting Standards) became mandatory. A ROSC on Accounting and Auditing (2006) acknowledged the progress that Uruguay had made up to then and identified areas that needed attention to improve the quality of accounting practices and further encourage a culture of transparency and disclosure.

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Large and medium enterprises are using updated IFRS accounting norms. In July 2007, Executive Decree 266/07 established IFRS norms as mandatory, beginning January 1, 2009. These norms include: (a) the requirement for enterprises to consolidate financial statements; and (b) the requirement that enterprises provide information about third-party transactions. Today all listed companies follow IFRS norms, as do public enterprises (Entes Autónomos) Moreover, the Central Bank mandates that financial institutions require from clients (enterprises) balances that follow adequate norms (IFRS), which helps monitor compliance with them. Simplified accounting norms for small and medium enterprises have been issued to facilitate compliance. Thus, the use of IRRS is widespread. The objective of enhancing transparency by making available on-line the financial statements of large and medium enterprises has been partially met but not fully achieved. In Uruguay, enterprises of specified size are to send their yearly balances to the Auditoría Interna de la Nación (AIN) at the Ministry of Economy and Finance; however, compliance with this mandate is low, because AIN does not have enforcement tools. Although compliance has improved, it remains below 30 percent (The total number of enterprises expected to report is about 9,000). The Government has taken steps to improve compliance by lifting restrictions that impeded the Dirección General de Impuestos (DGI) from providing to AIN the list of the enterprises that meet the criteria for reporting. In addition, AIN needs the support of the Central Bank to upgrade its capacity to build and manage the electronic registry. No time estimate is available as when such a registry would be available on-line. Other related registries are available on-line. For instance, the Central Bank has just setup an on-line a credit registry that provides information on the credit status of firms and individuals. Legislation to create a public entity responsible for issuing accounting norms and monitoring enforcement (Ente Emisor de Normas Contables) was not approved in Congress. PRIDPL II supported presentation to Congress for consideration draft legislation (July 2008) establishing a new public entity that would have the technical and financial capacity to assure a continuous updating and upgrading of accounting norms, as well as be able to enforce compliance, including oversight over the accounting profession. The proposed law did not make it through Congress during the last administration because of opposition of the accounting profession. Given the difficulties in obtaining approval for the law, and that intended work on the reform of the auditing practices did not advance, it seems advisable to rethink how to advance the transparency and disclosure agenda in the future. It is especially important to consolidate the leadership agenda that to date has been divided among numerous agencies. 3.2.3.4 Reforming the Payments System PRIDPL II highlighted the reform of the payments system as a key underpinning of the reform of the capital markets. The IMF and the World Bank had undertaken in 2006, as part of the FSSAP, a review of the payment systems (CPSS Core Principles for Systematically Important Payments Systems). It concluded that the legal framework in Uruguay was incomplete, since essential elements for the development of modern

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payments and securities settlement systems were lacking. To address these shortcomings, the Central Bank drafted a new Payments System Law, which the executive presented for consideration by Congress, which was approved in 2009. A DPL I trigger supported presentation for the plan to reform the Settlement and Security System. The new Payment System Law enhanced the oversight powers of the Central Bank on all matters relating to payments and addressed the shortcomings identified under the 2006 FSAP. These included: the finality of settlement, protection of the systems against bankruptcy procedures, the legal basis for netting arrangements, legal basis for public securities, legal definition of repossession, improvement in the legal basis for custody arrangements, and legal basis for electronic documents and documents. With the new legislation in place, the process of establishing a modern payment system is underway. The Central Bank has engaged 6 a vendor to design, develop and set-up the platform for the new and modern RTGS system, which is expected to be in place and operating by 2011. Thus, the institutional bases are in place for new payment systems; however, the expectation under the DPL that a system would be in operation by 2010 will not be met. Parallel efforts are underway to encourage the use of the banking system—as opposed to checks and cash, etc. With hindsight, the expectations were ambitious, and focus on the legal overhaul alone would have sufficed. The Central Bank plans to request a ROSC update once the new payment system is in operation, in line with the expectations under the DPL. Summary Assessment of 3.2.3: Business Climate and Capital Markets Development This ICR rates the achievement of development outcomes as moderately satisfactory. The DPL program was highly relevant and contributed to a significant overhauling of the financial sector and the insolvency regime. However, in the area of transparency, the reform has proceeded more slowly than expected and intended ROSC updates in various areas have yet to take place. The overall agenda remains highly relevant to the country and is important to ensure its sustainability. The DPL focus on the financial sector and the investment climate was highly relevant. By the time of the DPL design (2006-07) the banking sector had recuperated from the 2001 crisis, but the financial sector remained small, especially the capital markets, and the investment level relative to GDP was low. Therefore the focus on the financial sector was relevant to the development challenges of the country as well as the priorities of the authorities who--led by the Central Bank and the Ministry of Finance--had launched a broad range of initiatives to overhaul the financial sector institutional set-up. The authorities, however, did not outline a comprehensive strategy7 but presented the diagnosis and initiatives as part of corresponding legal initiatives, which were taken to Congress and various for a, as noted in the PADs for PRIDPL I and II.

6 The Central Bank hired the Bank to help in the preparation of a TOR for the selection of a vendor. 7 The Plan de Equidad, the main strategic document of the Government, does not outline such reform.

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The authorities achieved the objective of overhauling the financial sector, beginning with the revision of the Charter of the Central Bank to reiterate its autonomy and sharpen its regulatory mandate through the creation of the Financial Sector Superintendency within the Bank. The new Law on Payments Systems and the new Capital Markets Law responded to the concerns that had been identified in the FSAP, the complementary ROSCs, and other assessments. They have allowed Uruguay to become a signatory member of IOSCO. Enterprises are using updated international accounting standards, although the institutional gains in transparency fell short of expectations and the agenda ahead in this area needs some rethinking. The Law on Bankruptcy addressed the ROSC concerns and brought together a set of norms that replaced an obsolete and complex framework and provided adequate incentives to stakeholders to address insolvency problems early. In contrast, the transparency agenda needs to be rethought following the failure of the law creating a specialized accounting body to pass through congress. The Bank team suggested correctly that the proposed Doing Business indicators be dropped, as they did not capture or reflect the DPL agenda. However, certain design shortcomings do not allow for a summary evaluation, as originally intended at this point. First, while various development outcomes intended to be influenced by the program were met, it is difficult to assign a causal link to the program. Examples are the increased level of activity in the capital markets and the high levels of FDI inflows that have increased several-fold since 2004 to reach around 6 percent of GDP in 2008. These increases took place before the institutional changes came about. Second, the DPL proposed the use of FSAP/ROSC updates to access institutional progress with respect to payment systems and insolvency reform. These updates have not taken place. Perhaps, it would have been premature to undertake them previous to the approval of the new legislation and the commencing of its implementation. It remains advisable to carry out these updates to assess outcomes on the ground as a prelude to a next stage of financial sector and investment climate upgrading. In retrospect, an alternative results framework could have better captured what was possible to achieve during the program period. The implementation of the agenda under this pillar is in mid-course and remains highly relevant to the competitive challenges of Uruguay, hence the need to assure its sustainability and extend it to cover more fully investment climate issues. With hindsight, the design under this pillar was ambitious even if--despite the dual focus on (a) facilitating financial sector intermediation and (b) improving the investment climate and property rights--the DPL program centered fundamentally on a financial sector agenda. In addition to consolidation of the financial sector agenda, a focus on competitiveness now requires greater attention, as real wages have increased in response to a tight labor market, skills are becoming scarce, pressure mounts on the exchange rate, and infrastructure and logistics become constraints to the growing economy. An enhanced strategic articulation of these issues should facilitate implementation of such an agenda and the channeling of support by development partners.

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3.2.4 Strengthening Social Protection: Highly Satisfactory The DPL supported the Government efforts to put in place a permanent system of social assistance under the Plan de Equidad. The 2002 crisis increased the level of poverty, which reached a peak of 31.9 percent in 2004, with a high of extreme poverty incidence of 3.9 percent. The level of informality in the economy had similarly increased to reach a high of 43.6 in 2003. To address these concerns, the authorities in 2005 introduced temporary program of social assistance (PANES). Before PANES, the country had only a partial system of social assistance with limited coverage. The idea behind PANES was that the new system would cover the majority of the lower quintiles and provide significant assistance. A second objective was to increase the coverage (contributions) of the social security system. The Government met all main the objectives, including those that the DPL highlighted. 8 The new system of family assistance is in place and fully operating. Legislation has been passed and its design is aligned to the realities of a country with universal access to health and education. Thus, the design eschews a conditional cash transfer approach; rather, it emphasizes a seamless coverage of both employed and unemployed, and is noteworthy in that it is one of the few systems to provide a clear and effective exit strategy. The design of the program prioritizes avoiding stigmatization. The program one of the best targeted on the continent: 74 percent of the families in the lowest income quintile of the population benefited from the household subsidy. The Government expanded the coverage of the contributory system of social security managed by the BPS. The DPL also supported the aim of a broader strategy to reduce informality and incorporating into the formal systems the sectors and occupations that traditionally had been informal (such as construction, agriculture, and domestic service). The strategy of expanding the coverage of the social security system has worked and today around 74 percent of the employed active labor force are contributing to the system, slightly above the expectations set under the DPL of 70 percent. Poverty incidence has been coming down rapidly: from 29.2 percent of the population in 2005 to 20.5 percent in 2008. Similarly, absolute poverty dropped from 3.4 percent in 2005 to 1.5 in 2008. In addition, the strategy to reduce informality is working, as the estimate is that by 2008 the share of the labor force in the informal sector dropped by one-third compared to 2003. The drop in the rate of unemployment to a historic low of 7.6 of the labor force in 2008, rising real wages throughout the period, and well-targeted social assistance explain the substantial drop in poverty and attest to the effectiveness of the strategy. This ICR rates achievements of development outcomes under this pillar as highly satisfactory based on: (a) a sustainable social assistance program in place that targets a high percentage of the poor, avoids stigma, and provides exit options, and (b) a

8 The Government has reviewed the performance of social plans in “De la Emergencia a la Equidad”, which provides additional information on the achievements.

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successful program of expanding coverage of social security coverage to hard-to-reach sectors, and has contributed to reducing informality in the country. The contribution of the Bank included analytical work, such as a Poverty and Social Impact Assessment (PSIA), whose aim was to assess the impact of the tax reform and strengthen the capacity of MIDES to analyze, coordinate, monitor, and evaluate social policy in Uruguay. In addition, the Bank produced “Income Transfer Policies in Uruguay” in October 2007.

Table 6. Uruguay: Selected Social Indicators, 2001-08

Source: Central Bank of Uruguay; National Bureau of Statistics (INE) and World Bank staff calculations. Notes: 1/ Data for 2001-2005 refer to urban population (cities and towns of more than 5000 inhabitants); data for 2006-2008 refer to total population. 2/ Measured as the percentage of total employed population that does not make any social security contribution. Data for 2001-2006 refer to urban population; data for 2007-2008 refer to total population. 3/National level Gini index.

3.3 Justification of Overall Outcome Rating Ratings: Satisfactory The social assistance, tax reform, and the overhaul of the financial sector’s institutional framework fully justify an overall rating of satisfactory. In addition, the cooperation between the DGI and the BPS seems exemplary, as few countries in the world have managed to achieve this level of cooperation. Moreover, the coverage of the lowest quintile of the population is high and the country has successfully reduced informality and enhanced inclusiveness. It should be noted that the broad and ambitious reform of the investment climate and financial sector was not fully realized and in some cases, such as transparency, advanced at a pace much slower that estimated. This does not outweigh the significant accomplishments in institution building and capacity development under PRIDPL I and II and meeting the PDOs at the nexus of the agreed reform program

3.4 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development High and Sustainable Impact The work undertaken by Government under the themes covered by DPL is having high impact on social outcomes including the reduction of poverty. The main direct contribution has been the consolidation of a broad and effective family assistance program that, jointly with the growing economy, even through the crisis, has led to further reduction of poverty as noted above. The Government continues to work on consolidating the various social assistance programs around a common infrastructure

2001 2002 2003 2004 2005 2006 2007 2008Poverty Incidence % 1/ 18.8 23.6 31.3 31.9 29.2 27.5 26.0 20.5Extreme Poverty Incidence % 1/ 1.3 1.9 3.0 3.9 3.4 2.1 2.0 1.5Unemployment Rate (INE)% 15.3 17.0 16.9 13.1 12.2 11.4 9.6 7.6Share of Labor Force in Informal Sector % 2/ 41.7 42.8 43.6 42.4 38.8 34.9 34.7 33.3Income Distribution (Gini) 3/ 0.45 0.45 0.43 0.44 0.42 0.44 0.44 0.42Real GDP Growth % -4.1 -8.3 0.8 5.2 7.6 4.6 7.6 8.9

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with the support of the Bank. In addition, gender and youth are explicitly targeted to ensure full and equitable coverage as noted in the Plan de Equidad and Government stocktaking. The effect on poverty is highly sustainable. (b) Institutional Change/Strengthening

Institutional impact is high in all areas of engagement. The introduction of a personal income tax and the introduction of a permanent

family benefit are major institutional achievements that have already delivered on the expected institutional outcomes. In both of these areas Uruguay has put in place institutions that meet high quality standards and that are innovative. The cooperation between the Ministry of Finance and the social security agency (BPS) is as exemplary as it is effective. The family assistance benefit is both well targeted and the coverage of the population with low incomes is high. The design of the assistance is innovative in avoiding stigma and preparing beneficiaries for exiting the program.

The program also delivered a significant institutional transformation in the financial sector with the reform of the Charter of the Central Bank that enhanced and clarified its regulatory powers. The Capital Markets and the Payment System Law further enhanced these powers. Both of these laws addressed the weaknesses that previous stocktaking exercises (ROSC) had identified, as did the law on bankruptcy. The new law on Bankruptcy has addressed institutional shortcomings and the new framework in place tie/freeze productive assets.

Sustainability: High (c) Other Unintended Outcomes and Impacts N/A

3.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops N/A

4. Assessment of Risk to Development Outcome Ratings: Moderate The overall risk to development outcome was mitigated by a number of measures associated with the PRIDPL II. Risks were economic, political, and social risks, as well as managerial, sustainability and outcome relative to program implementation. Economic risks were mitigated by the Government acting to reduce public sector debt vulnerability, specifically by focusing on macroeconomic stability and reforms to strengthen the financial system. Political risks were attenuated by the PRIDPL program being country-driven and supporting key reforms identified by government as priority and through Uruguay’s tradition of consensus building. The main social risk was the potential for

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labor relations to worsen, particularly if growth rates slow. The government’s expansion of social protection programs and its augmentation of social spending, particularly in the areas of health and education, offset the risks of labor unrest as does the government’s commitment to collective bargaining and to raising real wages to pre-crisis levels. Managerial risks for the PRIDPL I operation related to implementing new programs, particularly the tax reform, and operating information systems because of possible shortages of trained human resources. It was mitigated by Government efforts to strengthen capacity in implementing agencies and in the executive branch overall. The IBTAL operation that accompanied the PRIDPL I to the Board in May 2007, together with related technical assistance from other donors, strengthened the implementation of information systems and processes related to the implementation of PRIDPL policies.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Ratings: Satisfactory The Bank responded to the Government request with innovative design. The first loan was in pesos---since then the percentage of debt in pesos has gone up reducing the exposure in foreign currency. The shift to local currency is noted by rating agencies as a factor contributing to a better bond rating. The second loan was provided to be available for draw-down over a three year period and the amount of the loan was increased first to three hundred and then to four hundred as the global crisis mounted. With fresh memories of the 2002 crisis Uruguay took action to shield itself by advancing resources that would allow the authorities to maintain an adequate level of reserves while avoiding any liquidity problem in the payment of budget obligations. The contributed analytical work was high quality and aided the design of several Government initiatives supported under the DPL series. However, the results framework was uneven. It was strong in areas where the Government had identified clear and quantifiable program and weak in areas of financial sector and investment climate, where the emphasis was on institution building, which is far more difficult in tracking progress, and also takes longer to achieve results. The intention to measure results from the ROSC framework was risky because of asymmetry between results on the ground and the timing of the proposed ROSC update, which presumes implementation of prescribed outcomes. (b) Quality of Supervision Ratings: Satisfactory The Bank closely monitored progress of the PRIDPL. The PRIDPL missions coincided with the IBTAL supervision missions, as the TA related directly to achieving program outcome indicators. This led to satisfactory supervision based on the close

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linkage between the two operations Moreover, the Bank assigned staff to the local office in Montevideo specifically to ensure close monitoring and evaluation of PRIDPL program progress. (c) Justification of Rating for Overall Bank Performance Ratings: Satisfactory The Bank’s performance is rated satisfactory. The program was anchored in solid analytical work and the triggers served to guide program implementation. It was also assisted by well coordinated dialog with the Borrowers. In addition, the Bank supported the program through technical assistance and periodic visits by technical experts, upon the request of the Government.

5.2 Borrower Performance The Borrower’s performance is satisfactory. (a) Government Performance Ratings: Satisfactory The Government had a clear strategy, which it presented in the Plan de Equidad. The commitment to this strategy was high and the Government assigned the technical resources and sought support as needed to implement the strategy on time. The Government fully owned and was committed to implementing the agenda. Although the financial sector and investment climate agenda lacked a similarly well-articulated public strategy, the institutional legal reform initiatives, most of which became reality, revealed that the design of the DPL was well aligned with the priorities of Government. There also was a highly committed and competent team commensurate with the scope of the ambitions reform agenda, However, this meant that program success was also dependent on leadership and champions of the targeted development areas (such as the MEF and the Central Bank) and less progress might be expected where the leadership was dispersed, in the transparency agenda, for example, and the insolvency reform efforts. Justification of Rating for Overall Borrower Performance Ratings: Satisfactory The leadership and clarity of vision at the core of the strategy, reflected in the Plan de Equidad, enabled the Borrower to sustain the requisite support for PPRIDPL I and II.

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6. Lessons Learned Clear allocation of responsibilities is crucial to timely implementation of

programs and effective realization of PDOs and related indicators. The involvement of the Central Bank, the MEF (DGI), and MIDES meant that the lines of responsibility were clear and leadership paths well defined. In contrast, in the case of transparency and insolvency, ambiguous assignment of responsibilities meant that meeting outcomes became less assured. In practice, a clear allocation of responsibilities is aided by well-articulated strategic framework, such as the Plan de Equidad.

The results framework needs to be realistic to provide a fair measure of progress and achievement without compromising the credibility of the program. In the case of taxation and social assistance, indicators were well articulated and could be measured, and the authorities expressed confidence that the Bank was supporting their main program vision, as embodied in the Plan de Equidad. In the absence of an equally well-articulated strategy, such as in the case of the financial and capital markets and insolvency component, tracking success through the results framework was not straightforward because the proposed instrument could not be implemented and/or because the intended results were not well linked to the overall program outcomes.

A DPL can be an important and effective instrument to build and deepen the relationship between the Bank and the Borrower. By aligning the priorities of the DPL with the Government agenda and tailoring the program to suit local conditions, this PRIDPL moved the dialog forward and eased any apprehension that might have existed during the initial stages of DPL development. This was achieved in Uruguay because the Bank worked closely with the Government to ensure that it was satisfied that its reform objectives, articulated in its Plan de Equidad and related documents, would be realized, with the Bank as an active partner.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing agencies N/A (b) Cofinanciers N/A (c) Other partners and stakeholders N/A

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Annex 1. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members P083927 - First Programmatic Reform Implementation DPL

Names Title Unit Responsibility/

Specialty Lending Supervision Enrique Fanta Ivanovic Senior Public Sector Specialist LCSPS Pilar Elisa Gonzalez Rodriguez

Senior Counsel LEGLA

Mario Guadamillas Program Manager FPDFP Rafael P. Rofman Lead Social Protection Special LCSHS-DPT Emily Sinnott Senior Economist ECSH4 Morag N. Van Praag Senior Finance Officer CTRDM David E. Yuravlivker Consultant LCSPE

(b) Staff Time and Cost P083927 - First Programmatic Reform Implementation DPL

Stage Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel and consultant costs)

Lending FY06 6 31.61 FY07 31 300.37 FY08 3.56

Total: 37 335.54 Supervision FY06 0.00 FY07 0.00 FY08 16 98.58

Total: 16 98.58 P106724 - Second Programmatic Reform Implementation Development Policy Loan

Stage Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel and consultant costs)

Lending FY08 70.11

Total: 70.11 Supervision

Total: 0.00

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Annex 2. Beneficiary Survey Results N/A

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Annex 3. Stakeholder Workshop Report and Results N/A

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Annex 4. Summary of Borrower's ICR and/or Comments on Draft ICR The Government of Uruguay agreed with the assessment of the ICR and sent editorial comments that were incorporated in this version.

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Annex 5. Comments of Cofinanciers and Other Partners/Stakeholders N/A

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Annex 6. List of Supporting Documents

Ayuda Memoria, Proyecto Fortalecimiento Institucional (IBTAL), February 25-29, 2008, World Bank Supervision Mission.

Ayuda Memoria, Proyecto Fortalecimiento Institucional (IBTAL), May 17-21, 2010.

World Bank Supervision Mission. Country Partnership Strategy for the Oriental Republic of Uruguay for the period 2010-

2015, IBRD, Country Management Unit, Argentina, Paraguay, and Uruguay, Latin American and the Caribbean Region, August 18, 2010.

CPSS Core Principles for Systematically Important Payment Systems 2006. WB and IMF

(part of FSAP). Doing Business, database. First Programmatic Public Sector, Competitiveness and Social Inclusion Development

Policy Loan (PSCSIDPL I). Program Document, August 18, 2010. First Programmatic Reform Implementation Development Policy Loan (PRIDPL I),

Project Appraisal Document, April 19, 2007. Institutions-Building Technical Assistance Project, Project Appraisal Document, April 12,

2007. Implementation Status and Results Report, (ISR), Uruguay IBTAL, June 19, 2007. Implementation Status and Results Report, (ISR), Uruguay IBTAL, September 25, 2007. Implementation Status and Results Report (ISR), Uruguay, IBTAL, April 10, 2008. Plan de Equidad Social PANES (part of GoU’s 2005-2010 Reform Plan). Report on the Observance of Standards and Codes (ROSC), Accounting and Auditing,

January 2006. Report on the Observance of Standards and Codes (ROSC), Insolvency and Creditor’s

Rights, Uruguay, January 2006. ROSC, Corporate Governance, September 2005. Investment Climate Assessment, 2008. Second Programmatic Reform Implementation Development Policy Loan (PRIDPL),

Project Appraisal Document, December 22, 2008.

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MAP OF URUGUAY