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Chile’s new rightwing government is aiming for 4 per cent growth and a balanced budget by 2029, the incoming finance minister has said, as the country enjoys a surge in copper prices.
The red metal rally would complement sweeping spending cuts to eliminate the fiscal deficit, said Jorge Quiroz, who is planning corporate tax breaks and eased regulations to unlock growth.
“Our package will start to show results at the end of next year and ultimately converge to a trend growth of 4 per cent,” said Quiroz, who will take over Chile’s powerful finance ministry in March.
Chile is one of Latin America’s most prosperous economies, but has been gripped by a structural slowdown in recent years. Annual growth averaged about 2 per cent over the past decade, down from about 4 per cent in the 1990s and 2000s.
Anger over the cost of living drove mass protests in 2019, and the IMF warned last year that Chile must lift growth “to raise living standards and tackle social and fiscal pressures”.
Quiroz said a wave of investment would come from reversing corporate tax increases, introducing more hiring incentives, and simplifying Chile’s labyrinthine permit processes — all aided by the copper rally.
Chile is the world’s biggest producer of the red metal, which has climbed nearly 40 per cent in price since August on fears over supply disruption and possible US tariffs. The country enjoys profits from state miner Codelco and taxes on private companies.
Quiroz said if today’s high prices continued, they “may allow us to reach an effective surplus before the end of this government”.
“But our main goal is structural balance,” he added. “We aim to eliminate the deficit for the long term by our final year, so we must adjust spending to long-term prices.”
However, critics on the left argue that the government’s goal of making $6bn spending cuts, which Quiroz said would happen in 18 to 24 months, could trigger a recession. The cuts, pledged by hardline conservative president-elect José Antonio Kast, are equivalent to 7 per cent of Chile’s 2025 budget.
Quiroz, a consultant who has worked for many of Chile’s biggest companies, ruled out cuts to health, housing and public pensions, but claimed scrapping “non-essential programmes”, such as some run by the culture ministry, could save about $2bn.
“There are programmes that come from another era when Chile had surpluses and money to spare,” he said.
A further $2bn could come from “efficiency improvements” in public investments and another $2bn from stamping out public sector “abuses”, he said.
However, he toned down Kast’s campaign pledge for a massive audit, reminiscent of the US Doge experiment, saying “we don’t want a long, drawn out witch-hunt”.
Analysts said the cuts would be tough to deliver.
“It may be feasible but not in 18 months, and it will be very difficult,” said Cecilia Cifuentes of ESE Business School Chile, noting many cuts would need approval from congress, where Kast’s allies are short of a majority.
Kast’s government will also face a balancing act between the US and China. Beijing buys about 40 per cent of Chile’s exports, and has invested heavily in the country’s electricity system and other infrastructure.
US President Donald Trump has called Kast, a fellow rightwinger, “a very good person”. Quiroz said their relationship would allow a “return to normality” for US relations, after current President Gabriel Boric clashed with Trump.
But he noted that China was crucial for Chile since “no other country is going to buy the copper they buy from us at the moment”, saying Chile would “look kindly on any investments”.