| Palocci: tightening the reins |
At the end of August, there was something of a showdown in Uruguay. Leftist president Tabare Vázquez wanted to revise the country's multi-year budget plan so that it would guarantee expenditure on education of at least 4.5% of GDP. That was, after all, one of his campaign promises.
But Vázquez's finance minister, Danilo Astori, had other ideas. Fiscal constraints, he said, meant that the government could guarantee education expenditure of only 3.5% of GDP. So he quit.
Soon, however, Astori was back in the finance ministry, and the budget plan had no explicit assurances with respect to education. "As expected, the Uruguayan government's budget is austere and places strong emphasis on fiscal responsibility with a social twist," says Franco Uccelli, an analyst at Bear Stearns.
The clash between a left-wing president and his fiscally conservative finance minister was rare only insofar as it was played out in public. For that combination, once thought impossible, is now very much the norm in Latin America: it's not just tiny Uruguay preaching fiscal prudence in spite of the fact that the president is more conversant with communist guerrillas than Chicago School economics.