Chile | 2015 Budget: Initial reactions

The 2015 Budget, which was sent to Congress recently, provides for a significant expansion in public spending next year, close to a real 8% (compared to the forecast for this year) just as we anticipated a few weeks ago. The rate of growth, the biggest since 2009, is not a surprising one, given that it fits perfectly into the context of the fiscal rule. Thus, we agree the 2015 Budget is countercyclical for a number of reasons: the magnitude of the increase in spending, the high component of public investment it contains and the fact that a start is not being made during 2015 on convergence toward structural balance. Finally, the budget ask authorization for debt issuances of USD7.5bn, for which reason we believe assets will have to be liquidated for a figure close to USD3bn, considering our estimation of USD11bn in financial needs, putting more pressure on the CLP to appreciate.

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