MONTEVIDEO, Feb 25 (Reuters) - Uruguay’s economic expansion will hover at 3 percent both this year and next, but the country’s debts will remain sustainable and taxes should not be increased, outgoing President Jose Mujica said on Wednesday.
Mujica, a 79-year-old former guerrilla whose legalization of marijuana in late 2013 thrust the tiny South American nation into the global spotlight, hands power back to his predecessor, Tabare Vazquez, on Sunday after almost a decade of strong growth under the leftist coalition.
“For sure Uruguay will not grow at a pace of 5 or 6 percent, but we believe it will grow at about 3 percent,” Mujica said in an interview. “This will be an impressive figure when you look at forecasts in the region: zero for Argentina, nothing for Brazil.”
The economy of the beef-exporting nation grew by an estimated 3 percent in 2014 as well, after averaging above 5 percent annually from 2005 to 2013.
Mujica acknowledged Uruguay’s debt was “significant” but said the absence of payment obligations in the near term meant it would not strangle the economy.
“We have a big deficit but the door remains open for comfortable financing,” said the leader who has been criticised by opponents for an above-target deficit.
Uruguay picked size over tighter pricing when it returned to the international bond markets this week with a larger-than-expected $1.2 billion reopening of its 2050 bond, Thomson Reuters IFR reported.
Mujica, speaking at his ramshackle farmhouse where he has continued living throughout his presidency, said there was room to improve the efficiency of tax collection but said there was no need to increase the tax rates. (Reporting by Malena Castaldi; Writing by Richard Lough; editing by Matthew Lewis)