March 2, 2015 / 2:33 AM / 3 years ago

New Uruguayan leader says he'll stick to economic targets

MONTEVIDEO (Reuters) - The new Uruguayan government will keep to the path set out by the outgoing administration to curb above-target inflation and a ballooning fiscal deficit, President Tabare Vazquez said in his first message to the country after being sworn in on Sunday.

Uruguay's President Tabare Vazquez gestures after receiving the presidential sash from his predecessor Jose Mujica (L, partially obscured) in Montevideo March 1, 2015. REUTERS/Andres Stapff

Vazquez, 75, a leftist who formerly led the small South American nation from 2005 to 2010, succeeded Jose Mujica, an ally and former guerrilla whose down-to-earth style won him widespread affection at home and abroad. Vazquez was elected to a second term in November.

“We will continue the planned track for now through control of the fiscal balance and by taking the necessary measures to get inflation to the 3-to-7 percent target range, and in the middle of that range in around 18 months,” Vazquez said in remarks broadcast on television and radio.

In the 12 months to January, Uruguay notched a fiscal deficit equivalent to 3.3 percent of gross domestic product, with inflation topping 8 percent.

Vazquez has said he wants to reduce the spending of public companies, while maintaining welfare programs that have cut poverty.

In his first term, his mix of welfare programs and pro-business policies was credited with kick-starting a decade of robust growth and falling poverty.

It will not be so easy this time, political analyst Carlos Doyenart said.

“Today he is confronting a cooling economy, a global context where prices have fallen ... a society that has got used to living well and very strong unions. ... It will be a challenge.”

Additional reporting by Esteban Farat; Writing by Rosalba O'Brien; Editing by Peter Cooney

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