Development studies

U.S. and Latin American (third-country and indigenous) specialists will conduct the studies under the direction of a U.S. economist. Five principal studies will be conducted: (1) Inflation Control and Balance of Payments (the highest priority study) will cover short-term exchange rate management; monetary adjustments of salaries, interest rates, and other financial transactions; and alternative stabilization strategies; and also examine the administration of taxes on agricultural exports and short-term price policies affecting agricultural products not currently exported. (2) Fiscal Policy and Tax Reform will focus on the incidence of taxation by sector, tax simplification, increasing the flexibility of the tax system to alleviate chronic budget deficits, and designing alternative tax policies to provide investment and export incentives. (3) Commercial Policy will emphasize exchange rate policy, prices of inputs and agricultural products, and nontraditional export expansion among other trade issues. (4) Employment, Unemployment, and Underemployment will look in particular at the structure and causes of these and the social costs of employing un- or semi-skilled labor. (5) Lastly, an analysis of the causes of economic stagnation in Uruguay over the past 15 years will provide an overall framework for the other four studies. Other needed studies will be identified during the course of the project. Short-term TA will also be provided on a case by case basis to the GOU"s Planning Unit, the Central Bank, and the Ministry of Economy and Finance to enable them to deal with unanticipated policy or program problems not covered under the studies component and for which expertise is not available within the GOU or from other sources of external assistance.