Uruguay’s 2024 presidential election heads to a November 24 runoff between left-leaning candidate Yamandú Orsi (Frente Amplio) and Álvaro Delgado (Multicolor Coalition). With no clear majority in the October 27 first round, the election spotlights key issues like fiscal policy, social programmes and recent reforms, including a controversial social security referendum that drew significant opposition.

The failure of Uruguay’s pension reform referendum, backed by 40% of voters, signals notable discontent with the existing pension system. “There will still be some lobby from trade unions to make some changes,” commented a former President of Central Bank. “In particular, private pension funds will still be questioned.”

If elected, the left coalition, Frente Amplio, intends to develop more social programmes with a market-friendly approach. However, “the new president to be elected will have a difficult time since no one has a clear majority, and the Parliament is very strong in the Uruguayan system,” evaluated a political scientist. “If the ruling coalition from the centre-right wins, it will be extremely difficult to pass laws since Frente Amplio has a majority in the Senate.”

“If the ruling coalition from the centre-right wins, it will be extremely difficult to pass laws since Frente Amplio has a majority in the Senate.”

Political scientist, Uruguay

As the presidential election approaches, it remains challenging to predict the outcome. “Governability will not come across easily to whoever becomes president in October, but it will prove more difficult for the right coalition, now in power and its candidate, Mr. Delgado, since they will not have any majority in any of the chambers,” agreed the former Central Bank President.

The rejection of the pension reform raises concerns about its implications for the Frente Amplio, especially since exit polls indicated that 61% of voters opposed the reform. The former Central Bank President asserted, “Generally, parties in Uruguay tend to respect what has been done by the previous one, but this time Frente Amplio seems determined to revoke some of the reforms.” This setback may weaken their electoral position while concurrently strengthening the conservative coalition led by Álvaro Delgado.

The close electoral race underscores this dynamic, with Yamandú Orsi from the Frente Amplio receiving approximately 41.5% of the votes in the first round compared to Delgado’s 28.7%. The political scientist added, “If they win the second round, Frente Amplio will have to reach a consensus for the sustainability of the pension system, probably by raising 1% or 2% of the employer’s contribution.” He continued, “No one will touch the pension funds run by private identities because the biggest fraction in the coalition has already designated who would be the Minister of Finance and Economics, Gabriel Oddone, someone who is viewed as amicable to entrepreneurs and the private sector.”

“No one will touch the pension funds run by private identities.”

Political scientist, Uruguay

The internal divisions within the Frente Amplio regarding the pension reform may further alienate voters, complicating their efforts to garner support for the second round. Consequently, while a significant base still backs the left, the prospects for the conservative coalition’s victory appear heightened in light of the recent electoral outcomes. “The left coalition has a more detailed economic programme, including many social issues, though they are not very explicit about funding and tend to rely on growth,” explained the former President of the Central Bank. The political scientist added, “The ruling coalition tends not to interfere.”

The differences between a potential new government led by the opposition and the current administration centre on fiscal and economic policies, particularly concerning foreign investment. The former Central Bank President highlighted that “Uruguay has a strong consensus on keeping a financial and macroeconomic stability,” with the ruling coalition emphasising fiscal discipline and aiming to reduce the deficit through austerity measures.

Their taxation policies diverge significantly; the current government favours lower taxes to attract foreign investment, while the opposition proposes a more progressive tax structure focused on wealth redistribution. The present administration promotes deregulation to create a favourable investment climate, whereas the opposition might implement regulations to protect national interests and ensure local economic benefits. Furthermore, the opposition’s emphasis on social programme investments seeks to foster long-term stability, contrasting with the current government’s focus on enhancing private investment. These fundamental divides make “it very difficult to predict who will be elected.” The political scientist concluded, “Chances are very even for both.”