The policy notes have two objectives: (i) to present the incoming government team with a menu of policy options in areas where the World Bank has local and international experience
and (ii) to provide a framework for the dialogue between the new governments and the World Bank on the new Country Partnership Strategy (CPS). As such, the discussion of these notes with the authorities was also an opportunity to undertake preliminary consultations on the Bank's support to Uruguay for 2010-2015. The themes of the notes were selected by the outgoing authorities based on ongoing and completed World Bank work, and they prioritize areas where Bank cooperation would add the most value. Uruguay's economy is small, but it has many strengths and high potential for growth and social development. The country has a long democratic tradition, a political system characterized by clear rules of the game and governability, and solid institutions at all levels. Uruguay is one of the most equitable countries in Latin America and enjoys a social peace notable in the region. Good macroeconomic management following the 2002 crisis has reduced country vulnerabilities and strengthened confidence in its institutions. These characteristics are very valuable assets for promoting foreign and domestic investment, essential to sustain the high growth achieved in recent years. Another asset is the high coverage of the education system, although education quality has recently become a challenge.