Legal Limit to Government Net Indebtedness

The 2020-2024 National Budget Law No. 19,924, promulgated in December 18, 2020, includes a new authorization framework for Central Government indebtedness. Article 696 of this law sets a cap to Government Net Indebtedness (GNI). GNI is defined as gross indebtedness (bond market issuance and disbursed loans) net of amortizations and the accumulation of Central Government’s liquid and other financial assets, during the fiscal year.

The new borrowing framework also includes a safeguard clause that allows for an increase in the legal cap, and is only applicable under extraordinary circumstances (unexpected events such as natural disasters, pandemic, strong change in relative prices or an economic recession). When invoked, the clause allows for up to an additional 30% increase in the baseline net indebtedness amount authorized by Congress.  

For 2021, the Central Government’s net indebtedness limit was originally set at USD 2,300 million, and was increased by 30% to USD 2,990 million after the safeguard legal clause was triggered due to the Covid-19 pandemic. In July 2021, the government communicated to Congress the need to activate the safeguard clause, in light of the additional budgetary resources required to mitigate the health, social and economic impact of Covid-19. Hence, the augmented legal limit for net indebtedness in 2021 is USD 2,990 million (see the transcript of the Ministry of Economy and Finance´s presentation in Congress, in Spanish).

The observed figure was USD 2,563 million (see page 9 of the February 2022 Debt Report).

In the 2020 Annual Budget Review approved by Congress (Law No. 19,996, article 343), the maximum amount of GNI for 2022 was set at USD 2,100 million.

On October 20, 2022, Annual Budget Review (Law No 20.075) was promulgated by Parliament. In article 500 of the refered law, the legal limit for net indebtedness of the Central Government for 2023 was set at US$ 2,200 million. 

Sovereign Debt Management Unit

Ministry of Economy and Finance of Uruguay
Colonia 1089 3rd Floor CP 11100 Montevideo -

Última Actualización: 01/06/2023