Uruguay to Improve Subnational Fiscal Management with $90 Million Loan from IDB

The Inter-American Development Bank (IDB) approved a $90 million loan to support Uruguay's push to enhance the fiscal management and public investment quality of its departmental governments.

This is the second operation under a conditional credit line for investment projects (CCLIP) that aims to strengthen departmental financial management, make public service management more efficient through digitization, and facilitate access to sustainable and inclusive public infrastructure. The initiative extends an IDB commitment to strengthening subnational fiscal management in Uruguay that spans more than three decades.

The first $75 million CCLIP operation, approved in 2016, helped departmental governments systematize and digitize fiscal management and public investment processes at the departmental level. This second operation aims to build on this work, expanding departmental e-government and incorporating information and communication technologies into key public services such as lighting or waste collection.

The five-year project is expected to significantly broaden the type of investments that incorporate climate criteria. The financing will also foster public investment by departmental governments that is aligned with gender equity and diversity goals. More efficient departmental public investment is expected to make real estate appreciate more quickly in areas adjacent to public investment projects in the departments of Uruguay that benefit from the program.

In the area of financial management, the program aims to enhance transparency and efficiency by strengthening public assets and subnational debt management systems. The project will also help departmental governments develop their own green revenue streams and analyze public service delivery from a climate change lens.

The $90 million IDB loan has a 24.5-year term, with a six-year grace period and an interest rate based on the SOFR. The government of Uruguay will contribute an additional $18 million in local counterpart funds.