Uruguay Repays IMF Debt Due in 2006

MONTEVIDEO, Uruguay
Uruguay said Thursday it will repay $630 million to the International Monetary Fund ahead of schedule, clearing all its 2006 obligations to the agency in a sign of the country's improving economic health.

The South American nation, which still owes the IMF $1.6 billion in outstanding debt, is working to leave behind the deep economic crisis that began in 2001 as recession struck neighboring economic powers Argentina and Brazil.

The early payments will save Uruguay $8.4 million in interest, Economy Minister Danilo Astori told a news conference.

He was flanked by a top IMF official, Agustin Carstens, who lauded Uruguay's progress since the crisis, saying the country had embarked on a "successful" economic restructuring plan that was triggering robust growth for the third straight year.

Astori did not rule out other payments ahead of schedule to the IMF if economic conditions allow. Uruguay and the IMF reached a three-year lending accord in 2005 as part of ongoing plans to revitalize the country's economy.

Authorities are predicting Uruguay's gross domestic product will expand 5.7 percent in 2006, adding to the 6.6 percent growth in 2005 and a record 11.8 percent jump in GDP in 2004.

Meanwhile, Astori described the early repayment as part of efforts by economic planners to improve debt portfolios and save interest.

The move by Uruguay follows in the footsteps of Brazil and Argentina -- which undertook far more ambitious moves to shed their IMF obligations.

In December, Brazil paid off its total $15.5 billion debt, the largest payment ever made by a member country to the IMF.

In January, Argentine President Nestor Kirchner announced early and full repayment of $9.75 billion in debt to the IMF, calling it a step by Argentina to gain a measure of "financial independence" from international lenders.