Uruguay’s New Debt Strategy: Going Local and Growing Global

In a bold move, Uruguay’s finance chief announced that the country will start issuing half of its government debt in its own currency, the peso. This change is part of a wider plan to reduce reliance on the U. S. dollar and shield the economy from foreign currency swings. Back in the early 2000s, about nine out of ten dollars of Uruguay’s debt were issued in U. S. currency because there was little demand for peso‑denominated bonds and borrowing in dollars was cheaper. Today, the government believes that issuing debt in pesos, even though it costs more upfront, offers a steadier repayment schedule since taxes are collected in the same currency. Investors from around the world are increasingly interested in emerging market debt that isn’t tied to the dollar. Last year, Uruguay sold 40% of its international bonds in pesos—its highest ever level. This year the country plans to raise roughly $6 billion, mainly through bond sales, and will also issue another green bond in 2027 to keep its environmental commitments fresh.While Uruguay’s economy grew by about 2. 5% last year, inflation has slowed and the government faces a rising fiscal deficit—just over 4% of GDP by the end of 2025. The finance minister says reforms, better tax collection, and incentives for key sectors will help lower the deficit and attract more investment. Uruguay also wants to deepen ties with its Mercosur neighbors, the European Union, China and Canada, hoping that a stronger trade network will boost growth. Overall, the country is aiming to be both a leader in its regional bloc and a more connected player on the global stage, using local currency debt as a tool to manage risk and attract foreign capital.