The Political Economy of the Budgetary Process in Uruguay

Sep 2005
This paper explores the extent to which Uruguayan institutions (as interbranch relations, electoral rules, budgetary rules, etc.) and political actors (parties, factions, interest groups and bureaucrats) involved in the budgetary process affect the fiscal performance of governments in terms of sustainability, efficiency and representativeness. Since the early nineties and the beginning of the structural adjustment and the economic reforms of the Washington Consensus, Uruguay has been strongly committed to implement a restrictive fiscal policy. However, unlike most Latin American countries, Uruguay has been able to sustain a relatively large public sector and particularly the largest welfare state in the region. To a large extent, this particular combination is the result of a Uruguay's particular democracy where the budget law has become the most important piece of legislation for all incumbent governments and relevant political actors. The paper includes a description of the broad policy making process and the set of actors and institutions characterizing the Uruguayan political system; a description of the budgetary policy making process; a set of hypotheses dealing with the level of Sustainability, Efficiency and Representativeness of the fiscal policy.