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Uruguay’s Left-Wing Party Faces Its Toughest Election in 15 Years

Uruguay’s Left-Wing Party Faces Its Toughest Election in 15 Years

(Bloomberg) -- Uruguayans head to the polls on Sunday, with slowing growth jeopardizing the prospect of a fourth mandate for the Broad Front.

The left-wing party faces its toughest electoral contest since it won the presidency and a majority in Congress in 2004, which it used to revive a wide-ranging -- but costly -- welfare state. While the party still enjoys impressive levels of support, more than half a dozen parties from the far left to the hard right will seek to tap into Uruguayans’ discontent over a stagnant economy, high unemployment and crime.

“The Broad Front will probably lose its congressional majority and that will make negotiations more difficult,” said Rafael Porzecanski, a director at pollster Opcion Consultores. “No party will have a majority and at the same time there will be more parties to negotiate with.”

Uruguay’s Left-Wing Party Faces Its Toughest Election in 15 Years

Uruguay has enjoyed relatively stable politics in the past two decades at a time when its two larger neighbors, Brazil and Argentina, swayed between pro-market and more interventionist governments. The election also coincides with a crucial vote across the River Plate, where Argentines are expected to turn back to the left after four years of rule marked by recession and inflation under the pro-business presidency of Mauricio Macri.

With no consecutive presidential re-election, Daniel Martinez, a former governor of Montevideo, is running for the Broad Front. His promises include retraining 400,000 people and creating jobs by supporting key sectors where Uruguay can compete in the global economy.

His closest rival, ex-senator Luis Lacalle Pou of the center-right National Party, has pitched potentially unpopular plans to cut superfluous government spending to restore public finances and investor confidence.

Polls show Martinez receiving the most votes Sunday, but falling short of the absolute majority of 50% plus one needed to avoid a runoff Nov. 24 that will likely pit him against Lacalle Pou.

Uruguay’s Left-Wing Party Faces Its Toughest Election in 15 Years

Heavy Investment

Uruguay has avoided the financial crises and recessions that have gripped neighboring Argentina and Brazil. The economy hasn’t stopped growing since 2003, allowing the government to invest heavily in social programs, pensions and health care.

However, Uruguay’s enviable poverty and inequality ratios have come at the cost of unsustainable deficits that threaten its access to cheap credit. The overall deficit reached 4.8% of GDP by the end of August, according to finance ministry data, up from 0.9% in 2005.

Meanwhile, growth this year looks set to come in at a miserly 0.5%. The unemployment rate reached 9.1% at the end of August, up from around 7.1% when the Broad Front’s Tabare Vazquez started his second presidential term in 2015.

The Broad Front has also struggled to address rising crime with the murder rate climbing to 11.8 per 100,000 last year, more than double that of the U.S. Only 43% of Uruguayans finish high school.

Uruguay’s Left-Wing Party Faces Its Toughest Election in 15 Years

Unusually for a Latin American election, pledges to cut the deficit have played an outsized role in the presidential campaign, with opposition candidates making the issue one of their top priorities. Even the Broad Front has promised to reduce the non-financial public sector deficit by 2 percentage points.

The balance of power in Congress -- where all 30 Senate seats and 99 Lower House seats will be assigned on a proportional basis -- will influence the runoff and Lacalle Pou’s stated goal of building a governing coalition with other opposition parties.

“If the Broad Front gets close to 45% it has a good chance of winning the second round,” Diego Lujan, a political scientist at the University of the Republic, said. That should also mean it obtains “a majority at least in the lower house or in the senate due to the fragmentation of the rest of the political system,” he added.

Voting is obligatory for Uruguay’s 2.7 million registered voters. Voting stations open from 7:00 a.m. to 6:30 p.m. EDT with the Electoral Court expected to publish the preliminary results later that evening.

To contact the reporter on this story: Ken Parks in Montevideo at kparks8@bloomberg.net

To contact the editors responsible for this story: Daniel Cancel at dcancel@bloomberg.net, Bruce Douglas

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