In a definitive move to bolster fiscal sovereignty, Uruguay’s Finance Minister, Gabriel Oddone, announced today that the South American nation will accelerate its pivot away from U.S. dollar-denominated debt.
Speaking to Reuters in London, Oddone outlined a strategic vision to transform the country’s debt profile, aiming to have roughly half of its sovereign obligations issued in Uruguayan Pesos in the near future.
Uruguay Aims for 50% Peso-Denominated Debt Issuance
The shift represents a historic structural change for Uruguay. In the early 2000s, approximately 90% of the nation’s debt was tied to the greenback — a dependency that left the economy highly vulnerable to external shocks and currency volatility. Today, that figure has been drastically reduced, and the new administration under President Yamandú Orsi intends to push the local currency share to the 50% milestone.
Last year, Uruguay issued 40% of its international debt in pesos – the highest level in the country’s history.
Oddone acknowledged that borrowing in pesos often carries a higher interest rate than borrowing in dollars, as international investors typically demand a premium to offset inflation risks in emerging market currencies. However, he framed the higher cost as a necessary “insurance premium.”
“Issuing in pesos is more expensive than using dollars,” Oddone told Reuters. “But it protects the government from currency swings outside its control. We are buying stability.”
By aligning debt obligations with its primary revenue source — local tax collection — Uruguay is effectively immunizing its budget against the “original sin” of emerging market finance: the risk of a domestic currency collapse making dollar debts impossible to service.
The pivot comes at a time when global investors are reconsidering traditional “safe haven” assets. Oddone noted that some market participants now view the Uruguayan peso as “more stable than the dollar,” particularly as the USD faces geopolitical headwinds and shifting trade dynamics.
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Furthermore, Uruguay’s macroeconomic indicators support this conviction. Annualized inflation in the country fell to 4.09% in late 2025, marking a 20-year low. Meanwhile, major credit agencies like S&P Global and Moody’s recently reaffirmed the nation’s investment-grade rating of BBB+/Baa1, citing strong institutional frameworks. Uruguay continues to make its mark in sustainable leadership, as it leverages the Green Bond framework to link debt costs to target carbon emission reductions.
Despite several countries pulling back from “Environment, Social, and Governance” (ESG) investment goals, Oddone confirmed that Uruguay is planning to issue new green bonds in 2027 to tap into European investor demand.
The government is expected to raise approximately $6 billion in financing this year, with the vast majority coming from domestic-currency debt sales.
Beyond de-dollarization, Oddone emphasized that Uruguay’s growth depends on broad trade ties. While China remains the primary partner for goods, the U.S. leads in services, and the EU remains the top source of Foreign Direct Investment (FDI). He signaled that the upcoming EU-Mercosur deal remains a priority for the Orsi administration to diversify its export markets further.
The Central Bank of Uruguay (BCU) recently cut its interest rates to a four-year low of 6.50% to prevent the peso from becoming too strong, which could hurt the agriculture sector – the country’s biggest export.
As the meeting concluded, the Minister sent a clear message to the international community: Uruguay is no longer content to be a passenger to the dollar’s whims. It is building a digital, green, and — most importantly — peso-powered fortress.
