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Chile: Staff Report for the 2008 Article IV Consultation—Informational Annex

Author(s):
International Monetary Fund
Published Date:
July 2008
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Appendix I. Chile: Fund Relations

(As of April 30, 2008)

I. Membership Status: Joined December 31, 1945; Article VIII. Chile maintains a floating exchange rate system free of restrictions on the making of payments and transfers for current international transactions.

II. General Resources Account:

SDR Million%Quota
Quota856.10100.00
Fund holdings of currency802.0993.69
Reserve Position54.016.31
Holdings Exchange Rate

III. SDR Department:

SDR Million%Allocation
Net cumulative allocation121.92100.00
Holdings38.2331.36

IV. Outstanding Purchases and Loans: None

V. Latest Financial Arrangements:

TypeDate of ArrangementExpiration DateAmount Approved (SDR Million)Amount Drawn (SDR Million)
Stand-ByNov 08, 1989Nov 07, 199064.0064.00
EFFAug 15, 1985Aug 14, 1989825.00806.25
Stand-ByJan 10, 1983Jan 09, 1985500.00500.00

VI. Projected Payments to Fund (in SDR Million)

20082009201020112012
Principal
Charges/Interest1.752.302.302.302.30
Total1.752.302.302.302.30

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

VII. Implementation of HIPC Initiative: Not Applicable

VIII. Implementation of Multilateral Debt Relief Initiative (MDRI): Not Applicable

Appendix II. Chile: Statistical Issues

Economic and financial data are timely, of good quality, and adequate for surveillance purposes. Chile is in observance with the Special Data Dissemination Standards (SDDS).

Monetary statistics

Monetary and financial statistics are broadly in line with the Fund’s Monetary and Financial Statistics Manual (MFSM). Deviations from the guidelines of the MFSM include treatment of nonbank financial intermediaries as part of the private sector, and the use of accounting valuation criteria, which are not always in line with measurements at market prices. Nevertheless, for purposes of expressing in local currency, assets and liabilities in foreign currency and indexed units of account, the accounting criterion is consistent, in general terms, with the MFSM. Due to a change in the chart of accounts for other depository corporations (ODCs) at the beginning of 2008, the central bank has not been receiving data from the Superintendency of Banks in a format adequate to complete the compilation of monetary statistics. The latest available data for ODCs correspond to December 2007. Efforts to solve the problem are underway, and it is expected that by mid-2008 periodicity and timeliness of the ODC survey will again comply with SDDS requirements.

Real sector

The central bank carried out a project for changing the benchmark and base year of the national accounts to 2003. Annual and quarterly GDP series for 1986–2003 were released in 2007. An STA mission that prepared the Report on the Observance of Standards and Codes for Chile in April-May 2007 found that the legal and institutional frameworks for compiling macroeconomic statistics are generally adequate, but the independence of the National Statistics Institute (INE) needs to be reinforced. Also, there are no legal precepts empowering the central bank to require private non financial institutions to respond to data requests, except for information on foreign exchange transactions.

A much improved business register has been available since 2006. However, updates of INE’s business register are partial and conducted on an irregular basis. The household budget survey (HBS) is conducted every 10 years, instead of every five years. The data available for agriculture, fishing, some services, and quarterly estimates are limited in scope. Nonetheless, income tax and VAT records are used to fill in the gaps. Source data reasonably approximate national accounts’ requirements and their coverage is satisfactory, although the timeliness of the INE’s source data could be further improved.

Chile’s national accounts are well established. There is some room for improvement with respect to the treatment of mineral exploration; agricultural work in progress; own-account production of computer software, databases, and manufacturing products; classification of copper derivatives; the functions of government, and individual consumption by purpose.

Coverage of price and labor market statistics should be widened. For the CPI, expanding the survey sample outside Santiago and updating the weights to the 2006-2007 HBS would considerably improve the index. INE compiles a producer price index that contributed to the improvement of national accounts estimates at constant 2003 prices. On labor market statistics, INE introduced a new household survey in 2006, modeled on the U.S. BLS surveys and in line with standards set by the International Labor Organization. The labor market survey of business establishments could benefit from a similar overhaul.

Government finances

Following agreements reached with the Fund in 2002, the authorities have made substantial progress in implementing the GFSM 2001. The authorities have developed a statement of central government operations with consolidation of extrabudgetary central government units, and the reclassification of budgetary revenue and spending. A new functional classification of total outlays for the central government aligned with international standards has been disseminated. In addition, separate sets of accounts were compiled for municipalities and for public corporations. A detailed description of the methodologies, institutional tables on coverage, and data for the entire public sector were made available in the October 2004 publication Estadísticas de las Finanzas Públicas 1987-2003.

Following FAD recommendations, the Ministry of Finance increased the publication of statistical data beginning with its October 2004 Public Finance Report. The report now includes debt liabilities and financial assets of the central government, contingent liabilities (especially government guarantees and concessions), and tax expenditures. In 2006, the government began to publish a report of investments of its assets.

Progress in fiscal accounts is ongoing. The authorities expect to produce estimates for the consumption of fixed capital, and apply accrual and cash accounting using the System of Information for the Financial Management of the Public Sector. This will permit the compilation of opening and closing balance sheets covering the central government, municipalities and public corporations.

However, further improvements are needed. The most urgent are: disaggregating subsidies and grants by level of government; disseminating more detailed data on functional outlays by the level of government; disseminating data on military debt; and reconciling the recording of interest across liabilities, especially with regard to dollar-denominated bonds versus dollar-indexed bonds.

Balance of payments and external debt

The central bank compiles balance of payments and external debt statistics on a quarterly basis, and publishes selected statistics on the external sector on a weekly basis. Beginning in 2002, the central bank has been publishing the International Investment Position consistent with the fifth edition of the Balance of Payments Manual (BPM5).

The coverage of the military sector in the external statistics is incomplete. In particular, the accuracy of data on military imports needs to be verified, as imports that do not go through customs are estimated by the central bank. Also, if the military receives external credits, information on this may not be available to the central bank; therefore, such financing may not appear in the balance of payments or external debt statistics. Published data on military expenditure are outdated.

Chile: Table of Common Indicators Required for SurveillanceAs of June 9, 2008
Date of latest observationDate receivedFrequency of Data6Frequency of Reporting6Frequency of Publication6Memo items7:
Data Quality – Methodological Soundness8Data Quality Accuracy and reliability9
Exchange RatesJune 4June 5, 2008DDD
International Reserve Assets and Reserve Liabilities of the Monetary Authorities1May 23, 2008June 2, 2008WWW
Reserve/Base MoneyApril 2008May 23, 2008MMMO, O, LO, OO, O, O, LO, O
Broad MoneyApril 2008May 23, 2008MMM
Central Bank Balance SheetApril 2008May 23, 2008MMM
Consolidated Balance Sheet of the Banking SystemApril 2008May 23, 2008MMM
Interest Rates2June 4, 2008June 5, 2008DDD
Consumer Price IndexMay 2008June 5, 2008MMMLO, LNO, LNO, LOLO, LO, LO, O, LO
Revenue, Expenditure, Balance and Composition of Financing3 – General Government4Q1 2008April 30, 2008QQQO, LO, LNO, LOLO, O, O, LO, O
Revenue, Expenditure, Balance and Composition of Financing3– Central GovernmentApril 2008May 30, 2008MMM
Stocks of Central Government and Central Government – Guaranteed Debt5March 2008March 31, 2008AQQ
External Current Account BalanceMay 23, 2008June 2, 2008WWWO, O, LO, LOO, O, O, O, O
Exports and Imports of Goods and ServicesMay 23, 2008June 2, 2008WWW
GDP/GNPQ1 2008May 23, 2008QQQO, LO, LO, LOLO, LO, LO, LO, O
Gross External DebtMarch 2008May 7, 2008MMM
International Investment position10Q1 2008May 23, 2008QQQ

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

Reflects the assessment provided in the data ROSC, (published on June 10, 2005 and based on the findings of the mission that took place during October 14–28, 2004) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).

Same as footnote 7, except referring to international standards concerning source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.

Same as footnote 8, except referring to international standards concerning source data, statistical techniques, assessment and validation of source data, assessment and validation of intermediate data and statistical outputs, and revision studies.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Includes reserve assets pledged or otherwise encumbered as well as net derivative positions.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes, and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).

Reflects the assessment provided in the data ROSC, (published on June 10, 2005 and based on the findings of the mission that took place during October 14–28, 2004) for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).

Same as footnote 7, except referring to international standards concerning source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.

Same as footnote 8, except referring to international standards concerning source data, statistical techniques, assessment and validation of source data, assessment and validation of intermediate data and statistical outputs, and revision studies.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Appendix III. Chile: World Bank–Fund country-Level Work Program Under JMAP

TitleProductsProvisional timing of MissionsExpected delivery date
A. Mutual information on relevant work programs
Bank work program in next 12 monthsA. CAS, CAS PR

None
B. DPL
1. Chile Institutional Strengthening of the Ministry of Public Works DPL (P100854) (TTL: Tomas S. Serebrisky)Approved 2007
C. ESW
1. Chile Higher Education Report (with OECD) (P106874) (TTL: Michael F. Crawford)August 2008
2. Chile Regional Development Study (P103331) (TTL: Fernando Rojas)December 2007
D. Lending (Including Technical Assistance Loans)
1. Chile Technical Assistance Loan for the Ministry of Public Works (P102931) (TTL: Tomas S. Serebrisky)Approved 2007
2. Chile Infrastructure for Territorial Development (P076807) (TTL: Nicolas Peltier-Thiberge)Approved 2004
3. Chile Lifelong Learning and Training Proj (Chile Califica) (P068271) (TTL: Michael F. Crawford)Approved 2002
4. Chile Solidario: Technical Assistance (P08203) (TTL: Theresa Jones)Approved 2003
5. Chile Santiago Urban Transport (Transantiago): Technical Assistance (P082412) (TTL: Mr Jorge M. Rebelo)Approved 2005
6. Chile Tertiary Education Financing for Results APL1 (P088498) (TTL: Michael F. Crawford)Approved 2005
7. Chile - Second Public Expenditure Management (SIGFE II) (P103441) (TTL: Roberto O. Panzardi)Approved 2007
E. Fee-Based Service Activity (Technical Assistance)
1. Chile Financial Sector Reform and Strengthening Initiative (FIRST): Advisory Services (TTL: Mario Guadamillas)

Strengthening the regulation and supervision in the areas of pension, securities and insurance supervision.
June 2008
2. Chile Management of Financial Assets (with the World Bank Treasury) (TA-P106653) (TTL: Roberto Panzardi)

The objective of the advisory services is to support the MoF in assessing the existing institutional capacity and designing a strategic plan to strengthen its investment and debt management operations in line with international best practice.
Original December 2007 – end date being extended
3. Chile Management Enhancement Program (TA-P106231) (TTL: Fernando Rojas)

Impact evaluation of Chile’s management enhancement program 2001-2006.
May 2008
April 2008
4. Chile Credit Reporting System (TA-P107663) (TTL: Mario Guadamillas)

Assessment of credit reporting systems.
December 2007
5. Chile Governance of National Innovation System (TA-P107052) (TTL: Esperanza Lasagabaster)

Preparation of a study on the institutional and governance structure of Chile’s support system for Science, Technology, and Innovation (STI).
mid-2008
IMF work program in next 12 monthsTechnical Assistance
1. Strategic Asset Allocation for SFWs3rd quarter of 20083rd quarter of 2008
Staff VisitDecember 2008
Article IV ConsultationApril 2009July 2009
B. Requests for work program inputs (as needed)
Fund request to Bank (with summary justification)None
Bank request to Fund (with summary justification)None
C. Agreement on joint products and missions (as needed)
Joint products in next 12 monthsNone

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