Boric increases public spending by 4.2% in Chile

The President of Chile, Gabriel Boric, announced on Thursday (29) his first general budget, which provides for an increase in spending from 4.2% to 2023 and places emphasis on public security, social assistance and economic reactivation.

On national television, the Chilean president stated that the project of Budget Law, which will be presented this Friday (30) in Congress and should be approved in the next 918 days, “it was designed to solve people’s problems, with a solid basis of fiscal responsibility”.

“It will have a countercyclical effect. This means that, in a context of lower tax collection due to the adjustment of the economy, we will maintain the increase in spending, ensuring the continuity of good public policies and mobilizing a significant volume of resources for economic reactivation”, explained Boric.

The project includes a 1.6 trillion pesos (about R$8.7 billion) plan for public infrastructure government, which will generate 200 a thousand new jobs “without causing more inflation”, according to the president.

“I am aware of the difficult situation that our country and the world face”, said Boric, who became the youngest president in Chilean history last March.

In terms of public security, one of the greatest concerns of the government and citizens, the budget foresees an increase of 164 billions of pesos (about R$ 918 million), which represents an increase of 4.4 % in relation to this year’s accounts.

“We know that we have a threat, which is organized crime and we will not allow it to continue advancing (…) Therefore, we will also increase in 25 billions of pesos (about R$ 140 million) the budget for the Carabineros de Chile ( institution of ostensible police)”, announced Boric.

For social spending, the project foresees an increase of 8%, with more than half of this increase destined to finance the basic pension un iversal approved last year during the government of former President Sebastián Piñera.

The measure includes a monthly pension of 193.000 pesos (about R$ 1.080) and benefits almost 2 .3 million people.

“We cannot rest easy, continuing to increase pensions for the elderly in the short term is the objective that we have set ourselves as a government”, stressed the Chilean government official, who also defended a greater reinforcement of mental health care.

The Chilean economy grew historically 12, 7% in 2021, after the sharp drop of 5.8% in 2020 due to the pandemic, and registered an accumulated inflation of 7.2%, the highest in 14 years.

Economic aid provided by the Chilean government to mitigate the impact of the pandemic, as well as anticipated withdrawals of pension funds, significantly boosted consumption last year, in addition to the effects of the war in Ukraine, according to ing specialists.

To combat inflation, the Central Bank of Chile withdrew monetary stimulus and in a few months raised interest rates to 10,75%.

In May, the Chilean government reduced its growth forecast for 2022, from 3.5% to 1.5%, and raised its estimate of accumulated inflation in 30 months to 8.9% by the end of the year.

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