By Lucinda Elliott

MONTEVIDEO (Reuters)

A Uruguayan pension reform plan, aiming to lower the retirement age to 60, will be presented in a referendum on Sunday. Conservative candidate Alvaro Delgado warned that its approval could destabilize the country’s economic model.

The plebiscite coincides with the first round of the presidential election on October 27. If approved, it would eliminate private pension schemes and enhance state payouts, which could jeopardize public finances and impact markets negatively.

Delgado stated, “If the plebiscite is approved, everything would change. The model of economic stability and social protection that we Uruguayans have given ourselves will be blown up.”

He emphasized that plans would need reevaluation, while speaking from his National Party’s campaign trail.

Uruguay, a small and relatively affluent nation of 3.4 million, is recognized for free markets and private enterprise. Despite this, the future government must address significant fiscal deficits.

Delgado ruled out tax increases and indicated that spending cuts would be the likely strategy to balance finances: “We are totally convinced there is no room for new taxes here.”

Center-left opposition candidate Yamandu Orsi, currently leading in polls, shares a similar stance on avoiding tax increases or drastic structural reforms.

Delgado, the continuity candidate for President Luis Lacalle Pou's coalition, plans to advance free-trade agreements, particularly with China, despite regional tensions within Mercosur.

He noted, “The case of China is one we are promoting,” as China is a major buyer of Uruguay's beef, wood-pulp, and soybeans. Delgado also expressed intentions to finalize the EU-Mercosur treaty, join the CPTPP (Trans-Pacific Partnership), strengthen U.S. relations, and examine a trade agreement with Turkey.