Chile’s government will propose a “responsible” budget for 2026, with limited growth in spending relative to previous years, Finance Minister Nicolas Grau said in an interview with Reuters.
The new budget proposal would balance “fiscal discipline and space for the future government,” Grau said, and his appointment was made by President Gabriel Boric in August.
The minister did not provide a specific number for the increase, but said that Boric will announce the figure, stressing that from 2023 the tendency has been on a downward trend when the budget grew by 4.2%
With the new plan, Grau said the average annual increase in the budget would drop to about 2%.
“What we’re going to do is define a responsible budget with Congress that addresses the country’s needs and provides sufficient flexibility to the next administration,” Grau said.
The declaration comes as Chile prepares for a presidential election in November.
Boric, who has been in office since March 2022, will resign in March of next year because the constitution prohibits him from competing for re-election twice in a row.
Codelco’s strategy to close output gaps
Along with fiscal policy, the focus on Chile’s mining sector continues.
Copper makes up about a third of world production; therefore, copper is the backbone of the country’s economy.
However, state-owned miner Codelco has been facing production issues for several years, most recently a deadly accident in August at its flagship El Teniente mine, which forced it to lower yearly output guidance.
Grau expressed confidence in the recovery plan the company is putting in place to close production gaps and to ensure its long-term place in the world copper market.
One such episode is Codelco collaborating with Anglo American to exploit adjacent deposits, further evidencing its pivot to blend private and public.
“(Codelco) is creating these public-private partnerships that allow it to maintain its leadership in the copper sector,” Grau said.
Increasing growth through investment
The Chilean economy has suffered hurdles in recent years, but Grau remains optimistic about the near-term prognosis.
He predicts 2.5% growth this year, thanks in part to a more than 5% rise in investment towards carbon-neutral projects, which range from clean energy programs to digital infrastructure.
The minister emphasised that investment momentum will be critical in overcoming obstacles such as unemployment, which remains high despite recent improvements.
“Although the unemployment rate has dropped somewhat in the latest data, 8.7% is a challenging unemployment rate. We believe that rate must be reduced,” he said.
Policy priorities: pensions and permitting
In its final months, the government has prioritised structural reforms on the economic agenda.
Grau emphasised the importance of pension reform and improvements in permitting processes, both of which have been top priorities for big enterprises.
Large miners like BHP and renewable energy providers like TotalEnergies have advocated for speedier approvals to jumpstart projects and spur growth.
According to Grau, progress has been made in streamlining key permitting categories, resulting in higher investment estimates.
However, he recognised that environmental permitting is still a hurdle.
Approvals in that sector take longer than others, delaying the construction of projects critical to the country’s move to greener energy.
The minister acknowledged that the executive branch has made “significant efforts” to progress reform in this area, but he was hesitant to forecast whether it would be completed under Boric’s tenure.
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