Chile receives its new president with healthy fiscal accounts

Despite the financial crisis, whoever takes over as chief of state on 10 March will have an unsurpassable financial situation for the first year of his term.

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have an unsurpassable financial situation for the first year of his term.

The next Chilean president will have a healthy financial situation for the first year of his government. Thanks to an appropriate management of macroeconomic indicators and high copper prices, the current administration will leave its successor almost US$ 20 billion in two sovereign funds and in public system assets.

In this way, the next president will have an unsurpassable scenario to reactivate the economy and to create jobs.

Analysts agree that regardless of who succeed Michelle Bachelet there will not be a change of course on the economic front. Instead, everything indicates the use of the sovereign funds and the capacity to obtain credit to handle the country’s needs, avoiding having to strengthen the peso even more against the dollar.

“Fiscal and monetary policy are well-rooted and operate in a relatively stable and institutional context, meaning that it is unlikely that they will change much with either of the candidates,” states Guillermo Mondino, chief of Latin America research Barclays Capital.

The country has the economy with the lowest credit risk rating of all Latin America. The Chilean state’s decision to save the money it earned form high copper prices in sovereign funds was applauded by international experts, while at the same time allowing elevated fiscal spending to be maintained in the midst of the global financial crisis.

Next year’s budget contemplates allocating US$ 7.8 billion to the new government for public investment and US$ 450 million will be available for free use. In addition, it will be able to take out debt for close to US$ 6 billion.