In 2022, Chile achieved fiscal surplus  - a chart that reads "Government spending vs. government revenues, %YOY"

The country has a chance to rebuild its reputation as a regional leader for sound macroeconomic policy in the long run

While President Gabriel Boric’s commitment to balanced government accounts came as a positive surprise for many analysts, the fiscal surplus obtained in 2022 will be short-lived, as the expected 2023 recession will likely generate a worsening of government accounts. In the long run, however, if Chile continues its efforts to achieve fiscal balance despite the challenges, firms should expect the country to slowly regain its reputation as a regional leader for sound macroeconomic policy. Business leaders should monitor the second constitutional rewrite process, which we expect to be more moderate than the rejected first draft and will significantly impact the country’s investment environment and government spending outlook.


  • Chile achieved a fiscal surplus of 1.1% of GDP in 2022, the best result for government finances since 2012, due to both higher revenues and less spending. 
  • Despite a contraction in Q4, revenues grew 6% YOY in real terms during 2022. While royalties stemming from the CODELCO state-owned copper company contracted due to lower commodity prices, property tax revenues increased by more than 500% and corporate tax by 28%. Additionally, private mining revenues increased by 24% on the back of new lithium projects. 
  • On the spending front, the government’s commitment to fiscal responsibility was remarkable, although the high 2021 base helped the 24% YOY reduction the country achieved in Q4 2022. The subsidies and donations category fell by 45.6% in real terms, mainly caused by the end of the Emergency Family Income (IFE) and other programs implemented during the pandemic.

Our View

The 2019 protests in Chile challenged the country’s relatively low government spending tradition and put pressure on fiscal accounts, even before Boric took office in March 2022. While many observers feared that he would massively increase spending due to his left-leaning ideology and ambitious campaign promises, his administration’s efforts had surprising and positive results in fiscal terms. However, as the economy shrinks and consumption suffers, Boric will face more significant social demands for new social spending programs. Moreover, the end of the 2021 base effects will make adjustments challenging, and the slowdown will affect revenues. Not surprisingly, Chile’s Ministry of Finance expects a 2.4% fiscal deficit in 2023.

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