Uruguay will receive US$1.5 billion from the IMF and freeze some bank deposits as part of a plan to stop the mass withdrawals that have threatened to cripple the financial system.
Economy Minister Alejandro Atchugarry said the IMF would vote as soon as Wednesday to approve the funds. A proposed law would freeze up to US$2.2 billion of term deposits at Banco de la Republica Oriental del Uruguay and Banco Hipotecario del Uruguay for three years.
Widespread withdrawals of bank deposits, prompted by trade partner Argentina's US$95 billion debt default and devaluation, have drained deposits and forced Uruguay to shutter its weakest banks.
Economists said Uruguay's willingness to control spending and close banks may prevent a collapse like Argentina's.
"Uruguay has done the things they need to do," said Abel Viglione, a senior economist at the Fiel economic research company in Buenos Aires. "They closed down the banks that are doing badly and now will reinforce the good banks with these foreign loans."
By emptying reserves, a run on the banks could also force Uruguay to default on its US$6.6 billion sovereign debt. Unlike neighboring Argentina, Uruguay said it would limit its deposit freeze to certificates of deposits at the state-owned banks.
Argentina froze term as well as savings and checking accounts at all of its banks in late 2001, setting off a week of protests and food riots that left 27 dead and toppled President Fernando de la Rua. Uruguay, which posted riot police this week to quell looting near the Capital, is seeking to avoid the kind of social unrest that followed Argentina's bank freeze.
"I would be surprised if Uruguay makes the same mistake that Argentina made and imposed an across-the-board freeze," said Fernando Losada, a senior economist at ABN Amro Securities LLC in New York.
The economy minister didn't provide details on how the IMF money would be spent. Uruguay is seeking to restore confidence in its banking system and prevent more withdrawals by depositors, including Argentines who have used Uruguay as an offshore banking center for generations.
Part of the IMF funds may be delivered through a bridge loan from the US Treasury that will be paid back later with IMF money.
The government will seek congressional approval to set up a special US$1.1 billion fund to back savings and checking accounts at the two state banks, the economy minister said at the press conference.
Speaking on live television in Uruguay and Argentina, Atchugarry pleaded for understanding from depositors who have withdrawn about US$100 million a day, or about US$2 billion, this month. The country, which devalued its currency on June 20, has been hard hit by economic collapses at its trade partners Argentina and Brazil.
"We're asking for the understanding of fixed-term depositors so that this situation stabilizes," Atchugarry said. "We need to ask them to wait, which we don't want to have to do but this will allow the banks to be totally stable."
Analysts said legislators are likely to approve the deposit freeze this weekend. Under it, a quarter of the assets will be returned at the end of the first year, 35 percent after two years and the remaining 40 percent after three years. Interest paid on the assets will be raised by an amount yet to be determined.
Luis Alberto Heber, a senator from President Jorge Batlle's ruling coalition, said approval of the law is a condition for receiving the IMF money.
Taiwan’s Lee Chia-hao (李佳豪) on Sunday won a silver medal at the All England Open Badminton Championships in Birmingham, England, a career best. Lee, 25, took silver in the final of the men’s singles against world No. 1 Shi Yuqi (石宇奇) of China, who won 21-17, 21-19 in a tough match that lasted 51 minutes. After the match, the Taiwanese player, who ranks No. 22 in the world, said it felt unreal to be challenging an opponent of Shi’s caliber. “I had to be in peak form, and constantly switch my rhythm and tactics in order to score points effectively,” he said. Lee got
‘CROWN JEWEL’: Washington ‘can delay and deter’ Chinese President Xi Jinping’s plans for Taiwan, but it is ‘a very delicate situation there,’ the secretary of state said US President Donald Trump is opposed to any change to Taiwan’s “status quo” by force or extortion and would maintain that policy, US Secretary of State Marco Rubio told the Hugh Hewitt Show host on Wednesday. The US’ policy is to maintain Taiwan’s “status quo” and to oppose any changes in the situation by force or extortion, Rubio said. Hewitt asked Rubio about the significance of Trump earlier this month speaking with Taiwan Semiconductor Manufacturing Co (台積電) chairman C.C. Wei (魏哲家) at the White House, a meeting that Hewitt described as a “big deal.” Asked whether the meeting was an indication of the
‘RELATIVELY STRONG LANGUAGE’: An expert said the state department has not softened its language on China and was ‘probably a little more Taiwan supportive’ China’s latest drills near Taiwan on Monday were “brazen and irresponsible threats,” a US Department of State spokesperson said on Tuesday, while reiterating Washington’s decades-long support of Taipei. “China cannot credibly claim to be a ‘force for stability in a turbulent world’ while issuing brazen and irresponsible threats toward Taiwan,” the unnamed spokesperson said in an e-mailed response to media queries. Washington’s enduring commitment to Taiwan will continue as it has for 45 years and the US “will continue to support Taiwan in the face of China’s military, economic, informational and diplomatic pressure campaign,” the e-mail said. “Alongside our international partners, we firmly
KAOHSIUNG CEREMONY: The contract chipmaker is planning to build 5 fabs in the southern city to gradually expand its 2-nanometer chip capacity Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, yesterday confirmed that it plans to hold a ceremony on March 31 to unveil a capacity expansion plan for its most advanced 2-nanometer chips in Kaohsiung, demonstrating its commitment to further investment at home. The ceremony is to be hosted by TSMC cochief operating officer Y.P. Chyn (秦永沛). It did not disclose whether Premier Cho Jung-tai (卓榮泰) and high-ranking government officials would attend the ceremony. More details are to be released next week, it said. The chipmaker’s latest move came after its announcement earlier this month of an additional US$100 billion
RSS