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By Malena Castaldi
MONTEVIDEO, June 15 (Reuters) - Uruguay's government said on Wednesday it would hedge against oil prices rising above $55 a barrel to avoid exposing the country to volatile swings in the commodity's price.
The country, which imports all the crude oil it uses, said it would hedge 6 million barrels of oil with the World Bank, in case crude's price averages more than $55 per barrel over the next 12 months.
It is the first hedging deal Uruguay has reached since 2008, when the South American nation signed an agreement with Citibank. Under the $16 million agreement with the World Bank. risk would be transferred from the World Bank to the market, officials told a news conference.
"We took this insurance measure to mitigate the impact on public finances and control the effect that a rise in oil prices could have on the entire economy," Herman Kamil, head of the Finance Ministry's debt unit, told reporters.
"What we are doing is buying certainty."
Uruguay's heavily indebted state-run oil company, Ancap, posted losses of $198 million in 2015. The 6 million barrels represent half the amount Ancap is expected to buy in the next 12 months, which it uses to produce fuels, lubricants and other products. (Reporting by Malena Castaldi; Writing by Caroline Stauffer; Editing by Tom Brown and Peter Cooney)