Uruguay 2011 Selected Issues IMF

Potential output and the output gap are unobservable economic variables, yet they are critical for macroeconomic policymaking. In the case of fiscal policy, adequate estimates over the magnitude of the output gap help assess the structural fiscal policy stance, and make timely decisions to apply neutral or contra-cyclical policies as needed to ensure sustainable growth and help limit inflation pressures. In the case of monetary policy under inflation targeting regime frameworks, output gaps often feed the central bank’s implicit Taylor rules—helping determine the size of the needed adjustment to the monetary policy rate to keep inflation and inflation expectations on track. 

This paper provides estimates of both potential output and the output gap for Uruguay based on a wide range of methods. The objective of the paper is to provide the authorities with an extensive set of estimates that can help them guide policy implementation, as well as a sense of how robust these are. The paper also presents estimates of the impact of the agricultural activity—a leading sector—on the rest of the economy. 

The main findings of this study are as follows. First, there is a high degree of consistency among the different techniques applied in terms of the size and direction of the output gap. Second, the results based on univariate filters show some sensitivity to the length of the cycle assumed. Third, following the 2002/03 domestic financial crisis, Uruguay’s economy has undergone a substantial transformation, growth has accelerated, and it seems Uruguay is at a higher level of potential output. Four, despite the caveats discussed in the paper about the estimates, the consistency of the results across the different methods could contribute to guide the policy decision making process. Fifth, it seems that the spillovers from the agriculture sector to the rest of the economy are relatively moderate in most cases. 

The rest of this paper is organized as follows: Section B discusses estimates of potential output and the output gap for Uruguay applying univariate filters. Section C introduces additional economic information and theory to estimate potential output, shedding some light into the discussion of current monetary and fiscal policies. The objective is to take advantage of economic data to disentangle the most recent economic performance by introducing multivariate techniques such as the Kalman filter, the production function, and a Structural Vector Auto-regressive Model. Section D analyses the spillover effects from agriculture to the rest of the economy. Section E concludes with some relevant inputs for policy analysis and decision making. 

International Monetary Fund. Published: December 29, 2011

Uruguay 2011 Selected Issues IMF

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Uruguay 2011 Article IV Consultation IMF

For more information about Projects in Uruguay see SOUTHERN CONE Projects

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Uruguay 2011 Article IV Consultation IMF

The strong growth has continued into 2011, but a slowdown is underway  supported by prudent macroeconomic policies. Still, the labor market is tight, wages are rising rapidly, and inflation remains above target. 

The highly uncertain international outlook presents substantial downside  risks. Uruguay’s economic and financial vulnerabilities are modest, and the government  has reduced debt vulnerabilities significantly and built important financial buffers; still the spillovers of a deteriorating global outlook could be significant.  

The immediate challenge is to support an orderly moderation in growth and inflation while reinforcing the economy’s resilience to spillovers from abroad. Staff agrees with the authorities on the key aspects of their macroeconomic framework. 

Maintaining the flexible exchange rate as a shock absorber is crucial. The broadly neutral fiscal stance in 2011 and also planned for 2012 is appropriate. Monetary policy has rightly been on pause since September until the outlook becomes clearer. If the economy takes a turn for the worse, monetary policy could be relaxed provided inflation expectations become reasonably anchored, while fiscal automatic stabilizers should be allowed to operate so long as prudent debt dynamics are maintained. While it would be important to accommodate a real exchange rate depreciation, if needed, part of the ample reserves could be used to contain overshooting. 

A long-term challenge is to sustain high growth with less volatility than in the past, which will require tackling infrastructure gaps, raising labor  skills, and increasing further the economy’s resilience to shocks. 

International Monetary Fund. Published: December 29, 2011

Uruguay 2011 Article IV Consultation IMF

For more information about Projects in Uruguay see SOUTHERN CONE Projects

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Tax: Uruguay’s tax transparency improving, says OECD’s Gurría

OECD. Newsroom.15/12/2011- Uruguay has signed 7 new agreements providing for the exchange of tax information, showing its willingness to implement the global standards. This brings to a total of 18 (1) the number of agreements Uruguay has with other countries, allowing it to move up to the OECD’s list of those that have ‘substantially implemented the standard for exchange of information’.

Uruguay’s actions follow the progress report delivered by the Global Forum on Tax Transparency and Exchange of Information to the Cannes G20 Summit, which suggested that Uruguay still had to address a number of issues for the effective exchange of information.

“The signing of these new agreements shows that Uruguay is committed to moving quickly towards full transparency and effective information exchange,” said OECD Secretary-General Angel Gurría. “I congratulate the government for swiftly acting on one of the Global Forum’s recommendations and encourage it to fully implement the global standard.”

The Global Forum will continue to monitor Uruguay’s progress and report on further developments in line with Uruguay’s commitment to full transparency and effective information exchange for tax purposes.

For more information, journalists are invited to contact Pascal Saint-Amans at + 331 45 24 97 46 or e-mailPascal.Saint-Amans@oecd.org

More information about the Global Forum on Tax Transparency and Exchange of Information:

Exchange of Information Portal: www.eoi-tax.org – Follow the latest news on exchange of information networks and peer reviews for all jurisdictions, including Uruguay.

Background Briefing on the Global Forum

The progress report

More information about the Global Forum: www.oecd.org/tax/transparency

(1) Denmark, Ecuador, Faroe Islands, Finland, France, Germany, Greenland, Hungary, Iceland, Liechtenstein, Malta, Mexico, Norway, Portugal, Republic of Korea, Spain, Sweden, and Switzerland.

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Uruguay IMF Executive Board Concludes 2011 Article IV Consultation

Public Information Notice (PIN) No. 11/154.December 9, 2011. On December 5, 2011, the Executive Board of the International Monetary Fund (IMF) concluded the 2011 Article IV consultation with Uruguay. Uruguay’s strong economic growth in recent years has produced significant welfare gains. Per capita income in purchasing power terms has doubled from its pre-2002 crisis levels, unemployment has fallen to record lows, and social indicators have improved further. The key factors behind this performance include important policy reforms, prudent macroeconomic policies, social policies and a favorable external environment.

The growth momentum has continued into 2011 but a slowdown is underway led by weaker exports and slower public investment. Real Gross Domestic Product (GDP) growth is projected at 6 percent in 2011 and 4.25 percent in 2012. Inflation at 7.9 percent in October remains above the target range (4-6 percent). The central bank tightened monetary policy in the first half of 2011 but it has left the tightening cycle in pause since late September to allow the global outlook to become clearer. The fiscal deficit has narrowed, and the gross public debt has continued to fall (to 55 percent of GDP in June).

The baseline outlook is positive but with downside risks stemming from the highly uncertain global outlook. Uruguay’s economic and financial vulnerabilities are modest, and the government has reduced debt vulnerabilities significantly and built important financial buffers; still the spillovers of a deteriorating global outlook could be significant. A long-term policy challenge is to sustain strong and balanced growth with less volatility than in the past.

Executive Board Assessment

Executive Directors commended the authorities’ skillful macroeconomic management that has underpinned Uruguay’s excellent economic performance, lowered public indebtedness, and strengthened buffers against shocks. Uruguay’s economic outlook is positive, although with downside risks stemming from the uncertain outlook for advanced economies.

Directors agreed that the main near term challenge will be to frame domestic policies to address both the cyclical requirements and the risk of negative spillovers from abroad. A flexible approach to policymaking will be crucial in the period ahead. For the longer term, Directors stressed that further fiscal and structural reforms are needed to secure a stable high growth path.

Directors welcomed the monetary tightening in the first half of 2011 to bring inflation toward the target range. They agreed that a “wait and see” approach is appropriate at present, given lack of clarity about the general direction of the global economy. A resumption of the tightening cycle will be warranted if global risks recede. Directors agreed that the central bank could explore ways to better anchor inflation expectations by communicating more clearly its inflation forecast and its responses to shocks. Directors considered that the flexible exchange rate regime has served Uruguay well, and encouraged the authorities to limit market intervention to smoothing operations.

Directors generally agreed that maintaining a broadly neutral fiscal stance is appropriate, although automatic stabilizers should be allowed to operate as developments warrant, so long as debt dynamics remain favorable. Directors commended the authorities’ public debt management, and supported their goal to further reduce the public debt ratio over the medium term. They also welcomed progress on the public private partnership framework to tackle infrastructure gaps.

Directors saw merit in ongoing initiatives to upgrade workers’ skills, but noted that other recent reforms may have reduced the flexibility of the labor market. They stressed the importance of reforms that support a dynamic economy while fostering equity. A few Directors cautioned that widespread indexation in wage agreements would complicate inflation targeting and could undermine competitiveness.

Directors welcomed the announced reforms to strengthen banks’ capital and improve dynamic provisioning. They supported closer monitoring of credit card companies, and encouraged more extensive information requirements for non banks. Directors encouraged the authorities to continue their efforts to promote de dollarization.

Public Information Notices (PINs) form part of the IMF's efforts to promote transparency of the IMF's views and analysis of economic developments and policies. With the consent of the country (or countries) concerned, PINs are issued after Executive Board discussions of Article IV consultations with member countries, of its surveillance of developments at the regional level, of post-program monitoring, and of ex post assessments of member countries with longer-term program engagements. PINs are also issued after Executive Board discussions of general policy matters, unless otherwise decided by the Executive Board in a particular case.

Uruguay IMF Executive Board Concludes 2011 Article IV Consultation

For more information about Projects in Uruguay see Southern Cone Central Projects

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Uruguay Institutions Building Technical Assistance Additional Financing

World Bank. Approval Date 06-DEC-2011.Closing Date N/A.Total Project Cost** 10. Region Latin America And Caribbean.Major Sector (Sector) (%) Public Administration, Law, and Justice (General public administration sector) (100%).Themes (%) Tax policy and administration (25%). Other public sector governance (25%).Public expenditure, financial management and procurement (25%).Environmental Category C.Bank Team Lead Ballivian, Amparo Borrower/Recipient REPUBLIC OF URUGUAY Implementing Agency MINISTRY OF ECONOMY AND FINANCE

Institutions Building Technical Assistance Additional Financing Uruguay

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Uruguay departmental governments to make strategic investments and improve their management with IDB support

News Releases.Dec 7, 2011. The Inter-American Development Bank (IDB) approved a loan of $70 million to finance a program to help modernize the Uruguayan government’s interior departments by improving their financial autonomy and ability to provide basic services.

The Subnational Program for Development and Management will include investments for development projects in 18 departments that are home to some two million people, or about 60 percent of the country’s total population.

"The program aims to strengthen the capacity of departmental governments in public policy and investments, in this way helping them to better meet the needs of the people," said Veronica Adler, IDB project team leader.

Financing will be provided to improve the institutional capacity of departmental governments in the areas of financial planning, public investment and tax revenue management, land management, and improving and expanding coverage of basic services.

Investment projects in urban areas include improvements in the urban environment, infrastructure for accessibility and connectivity, measures to mitigate and adapt to the effects of climate change, services, and urban facilities.

Measures to modernize the departmental governments include improvements in tax administration and integrating these improvements into the National Public Investment System and the Integrated Financial Information System; and capacity building in land management.

The IDB loan for $70 million has a 25-year term, a five-year grace period, and a variable interest rate based on LIBOR. Local counterpart funding totals $15 million.b

Uruguay.Profesionalization of Labor Relations Program

Esta cooperación técnica propone, a través de actividades de capacitación, mejorar las capacidades de negociación de los sindicalistas, así como aumentar la sensibilidad sobre la situación laboral de poblaciones vulnerables en Uruguay.

UR-T1078 : Profesionalization of Labor Relations Program

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Uruguay.Sustainable Management of Natural Resources and Climate Change

The objective of the Sustainable Management of Natural Resources and Climate Change Project is to support Uruguay's efforts to promote farmer adoption of improved environmentally sustainable agricultural and livestock practices that are climate smart. There are four components to the project. The first component is Establishment of an Agricultural Information and Decision Support System (IDSS) to integrate, synthesize, and generate critical and timely information in relation to natural resource management, short and medium term climate forecast, as well as potential long term changes and impacts.

The second component is on farm investments for 'climate-smart' agriculture and livestock management. This component would be implemented by Ministry of Livestock, Agriculture and Fisheries (MGAP's) Rural Development Directorate (DGDR) and would finance carrying out of demand-driven subprojects consisting of investments and technical assistance.

The third component is to capacity building and training. This component would finance activities aimed at strengthening the capacity of (a) farmers (regardless of their farm size) and technical staff of advisory service providers to adopt integrated natural resource and water management practices, and (b) MGAP, specifically of its Natural Resources Directorate (RENARE), to implement its natural resources management programs and climate change strategy in the agricultural sector. The fourth component is project management and monitoring and evaluation (M and E).

This component would provide the funds required for (a) supporting the operation of the? Project Management Unit (PMU) for the efficient coordination and management of the project; (b) supporting the operation of the project's M and E system; (c) coordinating and supervising the implementation of the training activities described in third component; and (d) supporting the design and implementation of a communication strategy to disseminate results and lessons learned within the country and the region.

Uruguay.Sustainable Management of Natural Resources and Climate Change

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Uruguay:Drainage and Environmental Sanitation

The project will finance storm drainage works, including: detention tanks or areas to contain floodwaters, sewers with adequate carrying capacity, spillways to discharge excess water into pre-established waterways, pumping stations, as needed, and complementary structures.

UR-L1069:Drainage and Environmental Sanitation

Uruguay.Support to the Strengthening of the National Social Assistance System

The goal of this operation is to strengthen the institutional capacity of the Banco de Previsión Social (BPS) as the governing and regulating entity of the National Social Assistance System, especially in its provisions of social assistance and care to the elderly.

UR-T1079:Support to the Strengthening of the National Social Assistance Systema

Uruguay.Sharing experiences of informal recyclers

The workshop aims to support Uruguayan authorities during the analysis of possible alternatives to work with informal recyclers. With this objective the TC will finance travel expenses of staff members of institutions in Argentina, Colombia and Brazil related to the topic.

UR-T1081:Workshop "Sharing experiences of informal recyclers"

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Uruguay to improve Montevideo drainage infrastructure with IDB support

IDB.News Releases.Nov 23, 2011. Loan for $20.5 million will directly benefit 4,500 people in three critical neighborhoods and in adjacent areas affected by floods. The Inter-American Development Bank (IDB) approved a loan for $20.5 million to finance the improvement of urban drainage infrastructure in Uruguay’s capital of Montevideo. The project will benefit some 4,500 people as well as protect adjacent areas from environmental degradation and urban flooding caused by wastewater and storm water.

The project aims to minimize impacts caused by the lack or inadequacy of urban drainage, mainly in the upper basin of the Arroyo Seco (Krüger Barrio), the upper basin of the Arroyo Quitacalzones (Jacinto Vera Barrio) and the Cañada Peabody basin (Barrio Lezica) in the Uruguayan capital. These neighborhoods are periodically affected by floods. In addition, water and sanitation works will be funded in the Cerro Industrial Technology Park.

"Prioritizing individual projects will make it possible to increase the capacity of existing infrastructure and extend storm sewer service to urban areas heavily impacted by the floods," said Sergio Campos, IDB project team leader.

The project will consist of constructing storm water drainage works, including flood buffer ponds, conduits to increase the capacity of spillways to drain excess water, and complementary structures.

The neighborhoods where the works will be carried out were prioritized according to frequency of flooding as well as degree of impact on residents, houses, and streets.

The operation will also finance the installation and equipping of 12 hydro-meteorological stations to strengthen the city’s rain gauge network.The stations will provide information useful in the design of future works and the detection of changes in rainfall patterns that could be associated with the effects of climate change.

The IDB loan for $20.5 million was extended for a term of 25 years with a four-year grace period and a variable interest rate based on LIBOR. Local counterpart financing totals $10 million.

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Uruguay.Transport Infrastructure Proyect

The Government of Uruguay has a long term vision to place Uruguay as a regional logistic platform; the country has been developing into a regional hub for the Southern Cone for the last two decades. Uruguay's attractiveness as a logistics hub is due to several factors, including its strategic location and an enabling free-trade-zone legislation.

Author: Gauthier,Gregoire Francois.Document Date:2011/11/23.Document Type:Project Information Document.Report Number:PIDC60

UY Transport Infrastructure - P125803

Uruguay.Sustainable Management of Natural Resources and Climate Change Project

The objective of the Sustainable Management of Natural Resources and Climate Change Project is to support Uruguay's efforts to promote farmer adoption of improved environmentally sustainable agricultural and livestock practices that are climate smart.

There are four components to the project. The first component is Establishment of an Agricultural Information and Decision Support System (IDSS) to integrate, synthesize, and generate critical and timely information in relation to natural resource management, short and medium term climate forecast, as well as potential long term changes and impacts.

The second component is on farm investments for 'climate-smart' agriculture and livestock management. This component would be implemented by Ministry of Livestock, Agriculture and Fisheries (MGAP's) Rural Development Directorate (DGDR) and would finance carrying out of demand-driven subprojects consisting of investments and technical assistance. The third component is to capacity building and training.

This component would finance activities aimed at strengthening the capacity of (a) farmers (regardless of their farm size) and technical staff of advisory service providers to adopt integrated natural resource and water management practices, and (b) MGAP, specifically of its Natural Resources Directorate (RENARE), to implement its natural resources management programs and climate change strategy in the agricultural sector. The fourth component is project management and monitoring and evaluation (M and E).

This component would provide the funds required for (a) supporting the operation of the? Project Management Unit (PMU) for the efficient coordination and management of the project; (b) supporting the operation of the project's M and E system; (c) coordinating and supervising the implementation of the training activities described in third component; and (d) supporting the design and implementation of a communication strategy to disseminate results and lessons learned within the country and the region.

World Bank. Document Date: 2011/10/17.Document Type: Project Appraisal Document.Report Number: 62277.Volume No: 1 of 1

Uruguay - Sustainable Management of Natural Resources and Climate Change Project

Potential for small wind-powered generation systems in Argentina and Uruguay

The overarching aim of this consultancy will be filling the identified gap in the available information regarding micro to small wind-powered generation systems in Latin America, with a specific focus on a country of the Cono Sur area. The proposed TC will cover two representative countries: Argentina and Uruguay.

RG-T2060: Potential for small wind-powered generation systems in Argentina and Uruguay

Uruguay: Farmers Confront the Effects of Climate Change

Press Release No:2012/158/LAC.WASHINGTON, November 17, 2011 — Today World Bank’s Board of Directors approved a loan for US$49 million to support Uruguayan farmers in adopting environmentally sustainable practices to improve the resilience of their production systems in response to the effects of climate variabilit (US$ 49 million from the World Bank) The Sustainable Management of Natural Resources and Climate Change Project will benefit 16,000 Uruguayan farmers through co-financing of land projects to improve their production systems, the creation of a National Agricultural Information System and institutional strengthening and training. “In Uruguay, the agricultural sector needs to adapt to and mitigate [the effects] of climate change, both to protect the country’s resources and to increase productivity,” said Uruguayan Finance Minister Fernando Lorenzo. “Government efforts always focus on the most vulnerable, for which reason one of the project objectives is to contribute to improving the production of smallholder farmers and to help them prepare for the effects of climate change,” he added. In recent years, Uruguayan agriculture has been severely affected by increased climatic variability. Over the past decade, the country has suffered major droughts and floods, which have negatively impacted the quality of life and agricultural production of farmers. For example, the drought of 2008-2009 caused more than US$340 million in losses in the agricultural sector. “These types of projects not only support country efforts to address a problem, but also serve to generate knowledge and experiences that can subsequently be shared at the global level. Uruguay certainly has many good experiences to share,” said Penelope Brook, World Bank director for Argentina, Paraguay and Uruguay. She added that: “16,000 farmers are expected to directly benefit from the geo-referenced system.” The loan supports three main lines of action that were identified and prioritized by the government: (i) Establishment of an Agricultural Information and Decision Support System. A geo-referenced information system will be created to integrate and generate data such as forecasts and early weather warnings and monitoring and evaluation of vegetation, soil, water and other relevant variables for agriculture. This system can serve to develop programs to simulate the impact of new technologies. (ii) Co-financing of farm investments will permit farmers to strengthen their productivity, integrate natural resource management practices, reduce vulnerability to extreme climatic events and reduce GHG emissions from the agricultural sector. (iii) Training. This component includes training of small-, medium- and large-scale farmers and of technical staff from the institutions responsible for providing technical assistance in these areas. The component also includes technical assistance and support to staff of the Natural Renewable Resources Directorate (RENARE). The Sustainable Management of Natural Resources and Climate Change Project is established in the 2010-2015 Country Partnership Strategy, whose pillars are: i) reducing macroeconomic vulnerability and strengthening public sector administration, ii) improving competitiveness and infrastructure, iii) protecting the environment, mitigating the effects of climate change and strengthening family farming, and iv) increasing social inclusion and equity. This is a 20.5 year loan with a 15-year grace period and a variable rate of interest.

See: Uruguay-OSE Response to Climate Change

IMPSA gets IDB loan to finance Latin America wind energy investment plan

IDB. News Releases. Nov 17, 2011. IMPSA, one of the world’s leading renewable energy companies, will get a $150 million loan from the Inter-American Development Bank (IDB) to help finance its plans to expand wind energy generation in Latin America.

The IDB loan will be to IMPSA’s Brazilian subsidiary Wind Power Energía S.A. to support the construction of an estimated four wind farms, three in Brazil and one in Uruguay, which will add 546 megawatts of wind energy capacity in the region by 2014. The estimated $1.4 billion investment program is expected to reduce carbon emissions by approximately 595,000 to 680,000 tons of carbon dioxide per year once the projects are fully operational.

“The long-term financing provided by the IDB will allow IMPSA to advance on its plans to build a long-term renewable energy market in Latin America and bypass the current turbulence in credit markets, which could make project financing more challenging in the coming months,’’ said John Graham, project team leader at the IDB’s Structured and Corporate Finance Department. “The IDB maintains ambitious targets for expanding its renewable energy portfolio across the region, and operations such as the IMPSA financing are meant to have a catalytic impact on this rapidly expanding sector.”

The three new Brazilian wind power plants will add an additional 481 megawatts of installed capacity in Brazil while the plant in Uruguay, known as El Libertador, will contribute with at least 13 percent of the country’s strategic goal of reaching 500 megawatts of installed wind capacity over the next five years.

The IDB will also provide IMPSA with technical assistance to conduct an energy efficiency audit in its primary hydro and wind turbine manufacturing plant. The study will help identify options for reducing the energy costs and greenhouse gas emissions at the plant, solutions that can be also implemented in other IMPSA’s plants.

IMPSA has installed hydro and wind power generation equipment across more than 110 projects in 30 countries with a cumulative capacity of approximately 23,600 megawatts. IMPSA ranks as the largest Latin American wind equipment manufacturer and direct investor in wind farms as well as the second largest manufacturer of hydro equipment in the region

Project Information

• IMPSA Wind Energy Investment Program

Press Contact

• Romina Tan Nicaretta
  rominan@iadb.org
  (202) 623-1555

Strengthening the System of Science, Technology and Innovation in Costa Rica

This TC Intra seeks to review the experiences and lessons learned by ANII and other agencies in charge of promoting innovation in Uruguay for the diffusion and adaptation to the case of Costa Rica.

CR-T1079: Strengthening the System of Science, Technology and Innovation in Costa Rica


Strengthening the System of Science, Technology and Innovation in Costa Rica

Uruguay. Institutions Building Technical Assistance Project

The objective of the additional financing Institutions Building Technical Assistance Project for Uruguay is to improve the borrower’s public sector performance by: (i) supporting its public sector modernization program in the areas of monitoring and evaluation, performance-based budgeting, e-government, tax administration and statistics; and (ii) strengthening its institutions involved with the design and implementation of public policy reforms in the areas of taxation, promotion of the business environment, and social protection.

The additional financing will support an expansion of four of the original seven components of the original project, and the addition of two new components. Project consists of the following components. (1) Improving the borrower's institutional planning, monitoring, and evaluation; (2) Institutional strengthening of Borrower's Social Security Fund (BPS) for the implementation of tax and social protection reforms; (3) Supporting capital markets and corporate transparency reforms; (4) Project coordination and strategy development; (5) Supporting institutional strengthening of Directorate General of Taxation (DGI); and (6) Supporting institutional strengthening of the National Statistics Institute (INE).

World Bank.Document Date: 2011/11/02.Document Type: Project Paper.Report Number: 65011.Volume No: 1 of 1

Uruguay. Institutions Building Technical Assistance Project

Uruguay-OSE Response to Climate Change

The proposed project is based on OSE's need for a holistic approach to respond to climate change, through looking at adaptation and mitigation measures along a spectrum of engagements. These engagements include investments in water supply and sanitation systems, monitoring and planning, and stakeholder involvement.

The project also focuses on institutional and public engagement, as well as knowledge-based activities to strengthen local capacities and enable sustainability. The investment loan would be centered on strengthening OSE's ability to adapt to climate change by reducing water supply and sanitation vulnerability while contributing to the nation's mitigation efforts to reduce green house gasses (GHGs).To that end, OSE will apply a disaster risk management approach combining climate change science with local conditions to assess existing systems and new infrastructure investments.

Considering the project's climate change optic, the new investment loan is more appropriate than to continue implementing the APL. However, the proposed project will draw from the AP institutional renewal and unaccounted for water programs, consolidating OSE's modernization objectives. The total cost of the proposed project has been estimated at US$100 million and the World Bank loan has been tentatively set at around US$60 million. A brief description of the
components follows:

Component one - Investing in Climate Change Adaptation and Mitigation Measures

Component two - Institutionalizing Climate Change into OSE's service management and operations

Component three - Integrated Watershed Management in the Santa Lucia Watershed and the Sauce Lagoon

Component four - OSE as a Climate Change Observatory for South-South Knowledge Collaboration

Document Date: 2011/11/10.Document Type:Integrated Safeguards Data Sheet.Report Number: AC6112.Volume No: 1

Uruguay-OSE Response to Climate Change