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(Bloomberg) — Chile’s government is preparing measures to boost productivity and is in a position to step up aid for the poor progress of an economic recovery that probably won’t begin until May next year, the country’s finance minister said in a statement. interview.
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“We will continue to work to stay ahead of difficult times for families with fewer resources,” Marcel said Friday in Washington for the annual meetings of the World Bank and the International Monetary Fund. “We have the will and, within our budget, the ability to reallocate and mobilize resources in this regard. “
The Cambridge University-trained economist seeks to pull one of Latin America’s richest countries out of a sharp slowdown, without fueling annual inflation that is more than 4 times higher than the target level. This year, it has cut public spending and recently announced a modest 4. 2% accumulating spending above inflation for next year.
The government will unveil productivity proposals in the coming weeks, Marcel said, without elaborating.
The central bank expects gross domestic product to contract by as much as 1. 5% next year as domestic demand and investment decline. This is a notable update after the record 11. 7% stimulus-induced increase in 2021.
Mining royalties
Financial markets applauded Marcel’s appointment in January, believing it would bring economic restraint and fiscal duty to President Gabriel Boric’s left-wing administration. He had won awards in previous positions, central bank president and head of the government’s budget office.
In his first months in his new role, Marcel has become the lead architect of Boric’s flagship economic plan, a tax reform that plans to raise taxes on the wealthy to increase investment in health and pensions. He also took the initiative to provide the plan to lawmakers.
Next week, the government will make adjustments to its mining royalty proposals, adding reduction of the sales tax component, converting the source of tax brackets on revenues and introducing depreciation as a thing, he said.
“We will create a proposal that will generate similar revenue, given the long-term value of copper we are operating with, and also taking into account production and collection customers in the industry,” Marcel said.
Moderate Constitution
Chile’s outlook presents no challenges, as evidenced by Wednesday’s eleventh interest rate hike and declared the end of its tightening cycle. While policymakers said inflation figures were worse than expected and customer value forecasts remained above target, they also saw a slowdown in consumption. Creation of tasks and bank credit.
Lawmakers are in the midst of negotiations over how to proceed with adjustments to the country’s statutes after a draft of new statutes was rejected in last month’s referendum. Any sign of slow progress on the country’s statutes, coupled with a weak economy, may threaten to reignite the social unrest that erupted in 2019.
While talks continue, there are signs that the procedure will be more streamlined and structured than last year’s Constitutional Convention, making it less difficult to reach agreements, Marcel said.
“Everything turns out to imply that the procedure is moving towards a new, more moderate constitutional proposal,” he said.
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