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Briefing

Chile: Fiscal Policy

Appears in: Latin America, Macroeconomy, Chile, Fiscal Policy

Critical Issues

Background:

Chile's fiscal prudence has allowed the government to implement a powerful stimulus package in an attempt to mitigate the effects of the economic crisis. The government and central bank continue to work together to optimize the use of dollars from the country's Social Stabilization Fund. In 2010, Moody's raised Chile's foreign debt rating to Aa3 from A1, which positions Chile as the only Latin American country rated at that level or its equivalence with a stable outlook. Moody’s cited that the upgrade was due to years of solid macroeconomic policies, including a structural fiscal surplus rule meant to smooth government revenues and expenditures.

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Associated Readings

Analysis BNP Paribas Rafael de la Fuente, Diego Donadio and Alexandre Lintz Jun 16, 2009 Chile: Government to continue selling dollars; CB to neutralise issuance. CB cut rates by a further 50bps to 0.75%. Analysis Citibank Marcos Buscaglia and Nicolás Kohn May 22, 2009 Chile: New Fiscal Package Lowers Inflation Estimate News Bloomberg James Attwood Mar 23, 2009 Chile’s Foreign Debt Rating Raised to A1 by Moody’s Blogs Dani Rodrik's weblog Dani Rodrik Apr 24, 2009 Chile: When textbook macro pays off Analysis Citibank Mar 20, 2009 Chile. The peso will likely appreciate nearer USD/CLP570 Analysis BNP Paribas Rafael de la Fuente Jan 12, 2009 Chile: Bring On the Stimulus! News Bloomberg Sebastian Boyd Jan 06, 2009 Bachelet to Spark Growth in Chile With Spending, Budget Deficit Analysis Morgan Stanley Global Economic Forum Luis Arcentales Nov 25, 2008 Chile: Time to Shine Analysis Chile Ministry of Finance Nov 11, 2008 Chilean Government announces US$1.15 billion allocation to boost home purchases and finance small businesses

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