The guidelines of the financing policy for the next four years were published alongside Budget 2010-2014 on August, 31.
The achievement of a more dynamic domestic market is one of the main guidelines of the debt management strategy for the year. In this regard, the financing program of the government will be shifted mainly towards the issuance of local currency denominated papers in the internal market. In consequence, during the second half of May the government restarted the domestic auctions of Treasury Notes to continue its pre-funding policy. However, the Debt Management Unit will continue monitoring and evaluating the possibility of tapping the international markets opportunistically and executing liability management operations to further enhance the efficiency of its Global and Domestic Debt Curve.
The main role of the Debt Management Unit (DMU) is to ensure the Central Government´s medium term financing at the lowest cost consistent with a prudent risk level. To comply with that objective, the main strategic guideline will continue to be the reduction of the roll-over risk. To dispel it, is the main challenge for any emerging country debtor. This aim will be achieved through further actions directed to the smoothening of the debt maturity profile and the extension of the average life of the debt. At the same time, the DMU will carry on the same pre-funding policy as today. This stance will assure that at in any point of time the government will have liquid assets to cover total debt service due for the next twelve months, plus an additional cushion for unexpected events that might have a transitory impact in the fiscal balance, as was the case of the 2008-2009 draught.
At the beginning of 2009, Uruguay had a solid financial position, a web of contingent credit lines with multilateral organizations and had reduced its debt amortizations due in the short term through liability management operations and private buybacks.
