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International Monetary Fund. Western Hemisphere Dept.

1. The pandemic hit Chile while it was recovering from the impact of social unrest in October 2019. The economic performance before the unrest was solid, with growth averaging 3 percent in the preceding two years. The unrest triggered broad policy actions (see Country Report 2020/183) and the economy started recovering. Then, the Covid-19 outbreak induced a larger decline in growth, and prompted wide-ranging and unprecedented policy responses, accompanied by the approval of an FCL arrangement in May 2020.

International Monetary Fund. Western Hemisphere Dept.
The Chilean economy has been hit by the pandemic while recovering from the social unrest in late 2019, requiring substantial adjustment of economic policies and the appropriate use of existing policy buffers. Following a sharp decline in mid-2020, economic activity started recovering in 2020H2 in the wake of ample policy stimulus. Inflation remains near the policy target, with inflation expectations anchored, and the current account balance has improved amid a sharp drop in imports and relatively resilient exports. Fiscal and monetary policies remain guided by the structural fiscal balance rule and the inflation-targeting framework, respectively. Beyond the pandemic-related risks, there is uncertainty stemming from a series of elections and the outcome of a New Constitution process—scheduled to finish in mid-2022—which are expected to shape the public discourse and influence the policy agenda.
International Monetary Fund
This paper updates the projections of the Fund’s income position for FY 2021 and FY 2022 and proposes decisions for the current and next financial year. The Fund’s overall net income for FY 2021 is projected at about SDR 4.1 billion, higher than both the interim estimate of SDR 3.2 billion and the April 2020 estimate.
International Monetary Fund. Western Hemisphere Dept.

On behalf of the Chilean authorities, I wish to thank staff for their open and constructive dialogue during the Article IV consultation, as well as the insightful report on the Chilean economy. The authorities attach great importance to staff’s assessment and policy recommendations.