(Bloomberg) — Uruguay is on the cusp of becoming the latest country to oust an incumbent party this year, with violent crime and an economic recovery that has left many behind bolstering the hopes of the leftist opposition candidate in Sunday’s presidential election.
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Polling shows leftist Yamandu Orsi holding a slim lead over Alvaro Delgado, a former senior aide to President Luis Lacalle Pou, heading into election day, with the outcome likely hinging on which way a small pool of undecided voters breaks as the country heads to the polls.
A victory for Orsi and his Broad Front party would add Uruguay to the list of places in which disappointed voters have punished incumbents across a tumultuous year of votes — although absent in the the South American nation is the sort of fury-filled ideological swing that has hit the US, neighboring Argentina and a litany of other countries over the past year.
Orsi, 57, is pitching himself as the “safe change” candidate, while Delgado’s campaign slogan is to “re-elect a good government” in reference to the Covid-19 policies and job growth under Lacalle Pou. Both are running as predictable options rather than disruptive outsiders. Uruguayans, meanwhile, have already rejected a proposal to dismantle the country’s $23 billion pension system that had markets on edge about the nation’s safe-haven reputation.
It’s the sort of race that has come to typify famously stable Uruguay, a country of 3.4 million people that has avoided the populist firebrands that have roiled the region’s politics. Investor-friendly policies and its aversion to radical political change help rank the nation as one of Latin America’s wealthiest, with a tech sector that punches above its weight and cities like Montevideo and Punta del Este that serve as popular homes for foreign billionaires.
Even so Orsi has emerged as the slight favorite due to voter perceptions that Lacalle Pou, who won the 2019 election, has failed to fulfill promises to reduce crime and improve salaries — problems that have afflicted incumbent parties across the world in the pandemic’s wake.
“There is a certain degree of disillusionment among people who voted for the parties of the coalition in 2019 and feel defrauded with respect to the change they expected,” Eduardo Bottinelli, a director at pollster Factum, said in an interview.
Hundreds of thousands of Uruguayans are struggling to make ends meet in a country where growth averaged a meager 1% per year over the last decade. And while while impoverishment among elderly Uruguayans is now a rarity thanks to a broad welfare state, almost a fifth of children and teenagers live in poverty.
In Montevideo, the capital, more than 130,000 people are thought to inhabit shanty towns. The number of workers taking home less than 25,000 pesos ($586) a month swelled to 548,000 people last year from 453,000 in 2019, according to think tank Cuesta Duarte.
The Lacalle Pou administration has also struggled to contain violent crime, with 10.7 murders for every 100,000 inhabitants last year, according to government data. That’s more than double the same measure in Argentina, where a deep economic crisis helped fueled the rise of libertarian outsider Javier Milei a year ago.
Both candidates agree on the need to fight crime, lower child poverty, boost growth and avoid increasing the country’s already high taxes.
Orsi, a former two-term governor and history teacher, has also pledged to lower the minimum retirement age to 60 from 65 as part of his plan to overhaul the social security system. Delgado, a 55-year-old former National Party lawmaker, promises to continue the coalition’s pro-business policies to make Uruguay the most developed country in Latin America by 2030.
Uruguay’s sovereign dollar bonds have lost almost 0.6% so far this year, compared to a 12.7% gain for Latin American sovereign debt, according to the Bloomberg EM USD Sovereign index. Uruguay’s peso has fared better than most of its regional peers, weakening just 8.8% against the greenback this year.
The Broad Front won a majority in the 30-member Senate in general elections Oct. 27. Neither it nor the ruling coalition control the 99-seat lower house, where an upstart anti-establishment party won two seats last month.
If Orsi wins, he should be able to convince at least two lower house lawmakers from the coalition to back his legislative agenda in exchange for government funding for their districts, said Daniel Chasquetti, a political scientist at the University of the Republic.
The Broad Front will be able to block any legislation a Delgado presidency submits to congress as well as his nominations to the board of directors of the central bank and state-run companies that dominate key industries, he said.
“The program on which Alvaro Delgado is elected won’t end up being his program of government, rather it will be one that is negotiated with the Broad Front. It will be a major test for Uruguay’s democracy,” Chasquetti said.
About 2.72 million Uruguayans are eligible to vote Sunday. Polls open from 8:00 a.m. to 7:30 p.m. local time, with the Electoral Court expected to publish the preliminary results later that evening.
