Chile Finance Chief Sees Years of Stability With New Charter
Chile’s constitutional rewrite will make room for several more decades of steady rules, ensuring social peace and investor interest in what has historically been one of Latin America’s most stable economies, according to the nation’s finance minister.
Rodrigo Cerda said the new charter will be a positive development for the country after civil unrest erupted in 2019 due to growing discontent over laws implemented under the dictatorship of Augusto Pinochet.
“We are going to have stable rules for the next 30 to 40 years,” he said in an interview with Bloomberg TV. “That’s a very good thing for our country but also for investment in Chile, that’s going to be stable too.”
The University of Chicago-trained economist is steering Chile out of its worst downturn in four decades amid an ongoing pandemic. Political tension remains high, with presidential elections in November on top of the new constitution that should be complete by 2022. Lawmakers are expected to debate hot-button topics such as private property, natural resources and public services.
Cerda, who previously served as director of state-controlled copper company Codelco and the head of the government’s budget office, assumed his position in late January, saying his priorities included bringing back jobs and driving economic growth.
Yet Chile’s economic recovery slowed in the beginning of the year, according to central bank data released on Monday, as the government imposed tighter restrictions aimed at halting the coronavirus spread. While officials loosened social distancing rules in some regions in February, central parts of Santiago, the nation’s capital, were again put on strict weekend quarantines in early March.
Chile will start to post “more interesting” economic growth figures in March, Cerda said. The finance ministry currently expects gross domestic product to increase by 5% this year, though growth may come in higher than that due to factors including an improved external backdrop.
“At least in the short-term, China is doing quite well,” he said, referring to Chile’s top trading partner. “That will give more reasons why Chile will start growing faster in the next few months, and that’s one of the reasons why we will be growing at 5% or more this year.”
Since the start of the pandemic, President Sebastian Pinera’s administration has spent billions of dollars on stimulus including grants, low-interest loans and job protection programs. Last week, the government said it will extend economic aid through April to help poor families confront the pandemic.
Cerda said the extra spending is largely temporary, and that any decision to cut back on stimulus would hinge on how the local virus outbreak evolves.
Boosting Chile’s outlook is its Covid-19 vaccination program, the fastest in Latin America, and surging prices of copper, whose exports are likely to increase fiscal revenue, according to Cerda.
“We know that copper prices and commodity prices are very volatile,” he said. “We need to wait a little bit and be cautious.”
(Updates with chart and details in final section)
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