Abstract
Chile has successfully resisted contagion from neighboring countries' difficulties. Chile's inflation targeting framework has successfully anchored inflation expectations and increased the economy's resilience to external shocks while maintaining price stability. The floating exchange rate regime is an essential part of the macroeconomic policy framework and continues to serve Chile well. The interest in recapitalizing the central bank is welcomed. Executive Directors commend Chile for the transparency of monetary and fiscal policies. Chile faces the essential task of returning to sustained economic growth and relatively low unemployment.
I. Background
1. Chile has long stood out among developing countries for its pioneering economic reforms and for its success in raising real per capita income. Among emerging markets, Chile has also distinguished itself in avoiding a financial crisis for nearly 20 years and, more generally, for the stability of its growth and inflation rates.
2. The Chilean political and institutional framework has promoted a broad-based consensus in favor of market-oriented policies and the need for policy discipline. Constitutional arrangements have promoted stability of governments and coalition-building, and have curtailed incentives for fiscal indiscipline.1 The executive has dominant power in setting the fiscal stance, while monetary policy is set by an independent central bank. In other areas, however, economic policy action requires a substantial consensus-building effort, particularly as the center-left government coalition now half-way through its six-year term has only a slight legislative majority.
3. Recent scandals involving several public institutions have revealed some institutional weaknesses and prompted reform efforts. A private financial company (Inverlink) failed largely because of its corrupt practices, but systemic effects were avoided. Political fallout from the scandals has been significant, as the government nearly lost its congressional majority (after a number of representatives lost voting rights), and the heads of the central bank and securities regulatory body resigned under pressure. However, these incidents have served as catalysts to a series of reforms to increase transparency and accountability of the operation of the public and financial sectors.
II. Recent Economic and Policy Developments
4. Chile’s macro-policy framework and strong fundamentals have insulated the country from the regional financial crisis and permitted continued growth, albeit at a lackluster pace. Application of a policy framework involving inflation targeting and setting fiscal policy to meet an objective for the government’s structural balance has meant that automatic stabilizers have been allowed to operate, with some room for countercyclical policies.
Economic activity has mirrored global patterns of growth in 2001 and 2002.
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Economic activity has mirrored global patterns of growth in 2001 and 2002.
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Economic activity has mirrored global patterns of growth in 2001 and 2002.
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
5. During 2001–02, the Chilean economy mirrored the decelerating growth pattern of the world economy, but was able to grow faster than many other countries in its region, as it enjoyed continued access to external financing on favorable terms and was able to pursue countercyclical macro policies.
6. Economic activity has turned up since mid-2002, but the output gap remains wide.2 Domestic demand has begun to recover strongly, driven by a pickup in consumption in the context of lower interest rates, and improvements in the terms of trade and in the labor market (Figure 1, Table 1). Moreover, recent increases in copper prices have encouraged mining companies to step up production and contributed to an acceleration of exports (Figure 2). However, the unemployment rate has remained elevated—around 9 percent according to the official measure, but several points higher in the University of Chile’s survey—although both employment and labor force participation have picked up (Figure 3).
Chile: Selected Economic Indicators, 1996–2003
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Sources: Central Bank of Chile; Instituto National de Estadisiicas; IMF’s Information Notice System; Fund staff estimates.1/ Deseasonalization by Instituto Nacional de Estadisticas
Chile: Selected Economic Indicators, 1996–2003
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Sources: Central Bank of Chile; Instituto National de Estadisiicas; IMF’s Information Notice System; Fund staff estimates.1/ Deseasonalization by Instituto Nacional de EstadisticasChile: Selected Economic Indicators, 1996–2003
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Sources: Central Bank of Chile; Instituto National de Estadisiicas; IMF’s Information Notice System; Fund staff estimates.1/ Deseasonalization by Instituto Nacional de EstadisticasChile: Selected Economic Indicators
Excluding fuel and volatile food items.
End of period. A decline indicates a depreciation of the peso.
Nominal rates, in percent per annum, period average, on 90-day central bank promissory notes.
Net of estimated deficit of the central bank.
Staffs former presentation, to be replaced by measure closer to GFSM 2001.
Authorities’ measure. See Table 3.
Includes adjustments for effects on revenue of output gap and copper price fluctuations.
Includes errors and omissions.
Excludes direct short-term trade credits.
Chile: Selected Economic Indicators
| Projections | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | |||
| (Annual percentage change) | |||||||||
| Production, prices, and trade | |||||||||
| Real GDP | 3.2 | -0.8 | 4.2 | 3.1 | 2.1 | 3.3 | 4.5 | ||
| Real domestic demand | 3.7 | -5.8 | 5.7 | 2.1 | 1.9 | 4.2 | 5.6 | ||
| Consumption | 4.3 | -0.7 | 3.8 | 2.7 | 1.8 | 4.6 | 4.9 | ||
| Investment | 2.2 | -19.5 | 12.1 | 0.3 | 2.3 | 2.9 | 7.6 | ||
| Fixed capital formation | 1.9 | -18.2 | 7.7 | 2.5 | 1.4 | 2.9 | 7.7 | ||
| Consumer prices | |||||||||
| End of period | 4.7 | 2.3 | 4.5 | 2.6 | 2.8 | 3.3 | 3.1 | ||
| Average | 5.1 | 3.3 | 3.8 | 3.6 | 2.5 | 3.4 | 2.9 | ||
| Underlying inflation (end pd.) 1/ | 6.2 | 2.1 | 3.4 | 3.2 | 1.7 | 2.8 | 3.0 | ||
| Real wages (period average) | 2.7 | 2.4 | 1.4 | 1.6 | 2.0 | … | … | ||
| Unemployment rate (average, in percent) | 6.2 | 9.7 | 9.2 | 9.1 | 8.9 | … | … | ||
| Exports (U.S. dollars) | -8.7 | 5.1 | 11.9 | -3.9 | -0.7 | 10.4 | 13.3 | ||
| Imports (U.S. dollars) | -4.8 | -19.8 | 16.0 | -4.0 | -3.6 | 10.5 | 12.2 | ||
| Terms of trade | -4.5 | 5.6 | 5.1 | -7.9 | 1.9 | 2.5 | 4.0 | ||
| Real effective exchange rate (end pd.) 2/ | -6.1 | -6.2 | 2.5 | -9.5 | -6.4 | … | |||
| Money, credit, and interest rates | |||||||||
| Broad money | 8.4 | 6.0 | 4.7 | 2.9 | -0.5 | 8.7 | 7.5 | ||
| Credit to the private sector | 11.2 | 3.0 | 10.7 | 6.7 | 5.1 | 8.3 | … | ||
| Three-month interest rate 3/ | 16.4 | 10.7 | 10.8 | 7.2 | 3.9 | … | … | ||
| Velocity of money (MIA) | 12.3 | 11.8 | 12.5 | 11.7 | 10.9 | 10.9 | … | ||
| (In percent of GDP) | |||||||||
| Savings and investment | |||||||||
| Gross domestic investment | 26.9 | 21.1 | 21.8 | 21.9 | 21.9 | 21.8 | 22.0 | ||
| Public | 4.8 | 4.0 | 3.5 | 3.6 | 4.0 | 4.0 | 4.0 | ||
| Private | 22.1 | 17.2 | 18.4 | 18.3 | 17.9 | 17.8 | 18.0 | ||
| National savings | 22.0 | 21.2 | 20.8 | 20.1 | 21.1 | 20.9 | 20.9 | ||
| Public 4/ | 3.1 | 1.2 | 2.0 | 2.6 | 1.7 | 2.5 | 3.3 | ||
| Private | 18.9 | 20.0 | 18.8 | 17.5 | 19.4 | 18.4 | 17.6 | ||
| External savings | 4.9 | -0.1 | 1.0 | 1.7 | 0.8 | 0.9 | 1.1 | ||
| Public sector | |||||||||
| Central government balance | |||||||||
| Actual balance, staff presentation 5/ | -0.1 | -2.1 | -0.8 | -0.9 | -1.4 | -1.2 | -0.7 | ||
| Adjusted (basis for structural) balance 6/ | 0.0 | -2.2 | -0.8 | -0.7 | -1.2 | -0.9 | -0.1 | ||
| Structural balance 7/ | 0.1 | -0.8 | 0.1 | 0.9 | 0.7 | 0.8 | 1.0 | ||
| Central bank balance (cash basis) | -1.0 | -1.1 | -0.9 | -0.8 | -1.1 | -0.9 | -0.5 | ||
| State-owned enterprise balance | -1.0 | -0.2 | -0.8 | -0.4 | -0.9 | -1.0 | -1.1 | ||
| Balance of payments | |||||||||
| Current account | -4.9 | 0.1 | -1.0 | -1.7 | -0.8 | -0.9 | -1.1 | ||
| Capital and financial account 8/ | 2.2 | -1.1 | 1.5 | 0.9 | 1.1 | 1.1 | 1.6 | ||
| Overall balance of payments | -2.8 | -1.0 | 0.4 | -0.9 | 0.3 | 0.2 | 0.5 | ||
| External debt | |||||||||
| Gross external debt 9/ | 40.0 | 46.8 | 48.7 | 55.7 | 60.8 | 60.5 | 57.9 | ||
| Public | 7.2 | 8.0 | 7.4 | 8.4 | 10.8 | 11.5 | 11.7 | ||
| Private | 32.8 | 38.9 | 41.3 | 47.3 | 50.0 | 49.1 | 46.2 | ||
Excluding fuel and volatile food items.
End of period. A decline indicates a depreciation of the peso.
Nominal rates, in percent per annum, period average, on 90-day central bank promissory notes.
Net of estimated deficit of the central bank.
Staffs former presentation, to be replaced by measure closer to GFSM 2001.
Authorities’ measure. See Table 3.
Includes adjustments for effects on revenue of output gap and copper price fluctuations.
Includes errors and omissions.
Excludes direct short-term trade credits.
Chile: Selected Economic Indicators
| Projections | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | |||
| (Annual percentage change) | |||||||||
| Production, prices, and trade | |||||||||
| Real GDP | 3.2 | -0.8 | 4.2 | 3.1 | 2.1 | 3.3 | 4.5 | ||
| Real domestic demand | 3.7 | -5.8 | 5.7 | 2.1 | 1.9 | 4.2 | 5.6 | ||
| Consumption | 4.3 | -0.7 | 3.8 | 2.7 | 1.8 | 4.6 | 4.9 | ||
| Investment | 2.2 | -19.5 | 12.1 | 0.3 | 2.3 | 2.9 | 7.6 | ||
| Fixed capital formation | 1.9 | -18.2 | 7.7 | 2.5 | 1.4 | 2.9 | 7.7 | ||
| Consumer prices | |||||||||
| End of period | 4.7 | 2.3 | 4.5 | 2.6 | 2.8 | 3.3 | 3.1 | ||
| Average | 5.1 | 3.3 | 3.8 | 3.6 | 2.5 | 3.4 | 2.9 | ||
| Underlying inflation (end pd.) 1/ | 6.2 | 2.1 | 3.4 | 3.2 | 1.7 | 2.8 | 3.0 | ||
| Real wages (period average) | 2.7 | 2.4 | 1.4 | 1.6 | 2.0 | … | … | ||
| Unemployment rate (average, in percent) | 6.2 | 9.7 | 9.2 | 9.1 | 8.9 | … | … | ||
| Exports (U.S. dollars) | -8.7 | 5.1 | 11.9 | -3.9 | -0.7 | 10.4 | 13.3 | ||
| Imports (U.S. dollars) | -4.8 | -19.8 | 16.0 | -4.0 | -3.6 | 10.5 | 12.2 | ||
| Terms of trade | -4.5 | 5.6 | 5.1 | -7.9 | 1.9 | 2.5 | 4.0 | ||
| Real effective exchange rate (end pd.) 2/ | -6.1 | -6.2 | 2.5 | -9.5 | -6.4 | … | |||
| Money, credit, and interest rates | |||||||||
| Broad money | 8.4 | 6.0 | 4.7 | 2.9 | -0.5 | 8.7 | 7.5 | ||
| Credit to the private sector | 11.2 | 3.0 | 10.7 | 6.7 | 5.1 | 8.3 | … | ||
| Three-month interest rate 3/ | 16.4 | 10.7 | 10.8 | 7.2 | 3.9 | … | … | ||
| Velocity of money (MIA) | 12.3 | 11.8 | 12.5 | 11.7 | 10.9 | 10.9 | … | ||
| (In percent of GDP) | |||||||||
| Savings and investment | |||||||||
| Gross domestic investment | 26.9 | 21.1 | 21.8 | 21.9 | 21.9 | 21.8 | 22.0 | ||
| Public | 4.8 | 4.0 | 3.5 | 3.6 | 4.0 | 4.0 | 4.0 | ||
| Private | 22.1 | 17.2 | 18.4 | 18.3 | 17.9 | 17.8 | 18.0 | ||
| National savings | 22.0 | 21.2 | 20.8 | 20.1 | 21.1 | 20.9 | 20.9 | ||
| Public 4/ | 3.1 | 1.2 | 2.0 | 2.6 | 1.7 | 2.5 | 3.3 | ||
| Private | 18.9 | 20.0 | 18.8 | 17.5 | 19.4 | 18.4 | 17.6 | ||
| External savings | 4.9 | -0.1 | 1.0 | 1.7 | 0.8 | 0.9 | 1.1 | ||
| Public sector | |||||||||
| Central government balance | |||||||||
| Actual balance, staff presentation 5/ | -0.1 | -2.1 | -0.8 | -0.9 | -1.4 | -1.2 | -0.7 | ||
| Adjusted (basis for structural) balance 6/ | 0.0 | -2.2 | -0.8 | -0.7 | -1.2 | -0.9 | -0.1 | ||
| Structural balance 7/ | 0.1 | -0.8 | 0.1 | 0.9 | 0.7 | 0.8 | 1.0 | ||
| Central bank balance (cash basis) | -1.0 | -1.1 | -0.9 | -0.8 | -1.1 | -0.9 | -0.5 | ||
| State-owned enterprise balance | -1.0 | -0.2 | -0.8 | -0.4 | -0.9 | -1.0 | -1.1 | ||
| Balance of payments | |||||||||
| Current account | -4.9 | 0.1 | -1.0 | -1.7 | -0.8 | -0.9 | -1.1 | ||
| Capital and financial account 8/ | 2.2 | -1.1 | 1.5 | 0.9 | 1.1 | 1.1 | 1.6 | ||
| Overall balance of payments | -2.8 | -1.0 | 0.4 | -0.9 | 0.3 | 0.2 | 0.5 | ||
| External debt | |||||||||
| Gross external debt 9/ | 40.0 | 46.8 | 48.7 | 55.7 | 60.8 | 60.5 | 57.9 | ||
| Public | 7.2 | 8.0 | 7.4 | 8.4 | 10.8 | 11.5 | 11.7 | ||
| Private | 32.8 | 38.9 | 41.3 | 47.3 | 50.0 | 49.1 | 46.2 | ||
Excluding fuel and volatile food items.
End of period. A decline indicates a depreciation of the peso.
Nominal rates, in percent per annum, period average, on 90-day central bank promissory notes.
Net of estimated deficit of the central bank.
Staffs former presentation, to be replaced by measure closer to GFSM 2001.
Authorities’ measure. See Table 3.
Includes adjustments for effects on revenue of output gap and copper price fluctuations.
Includes errors and omissions.
Excludes direct short-term trade credits.
Chile: External Sector Indicators, 1996–2003
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Sources: Central Bank of Chile; London Metals Exchange.
Chile: External Sector Indicators, 1996–2003
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Sources: Central Bank of Chile; London Metals Exchange.Chile: External Sector Indicators, 1996–2003
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Sources: Central Bank of Chile; London Metals Exchange.
Chile: Labor Market Indicators, 1996–2003
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Source: Institute Nacional de Estadisticas.1/ Government employment programs include direct creation of gevernment jobs and the provision of wage subsidies for private sector jobs2/ December over December.
Chile: Labor Market Indicators, 1996–2003
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Source: Institute Nacional de Estadisticas.1/ Government employment programs include direct creation of gevernment jobs and the provision of wage subsidies for private sector jobs2/ December over December.Chile: Labor Market Indicators, 1996–2003
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Source: Institute Nacional de Estadisticas.1/ Government employment programs include direct creation of gevernment jobs and the provision of wage subsidies for private sector jobs2/ December over December.Indicators of Economic Activity, 2001-03
Indicators of Economic Activity, 2001-03
| 2002 | 2003 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2001 | 2002 | Q1 | Q2 | Q3 | Q4 | Q1 | ||
| (Percent change from corresponding period of previous year; unless otherwise indicated) | ||||||||
| Real GDP | 3.1 | 2.1 | 1.2 | 1.5 | 2.6 | 3.3 | 3.5 | |
| Real domestic demand | 2.1 | 1.9 | -0.9 | -0.4 | 4.2 | 4.8 | 3.4 | |
| Fixed capital formation | 2.5 | 1.4 | -0.8 | 3.7 | 0.3 | 2.5 | 0.6 | |
| Net exports (contribution to growth) | 0.9 | 0.3 | 2.1 | 1.9 | -1.7 | -1.3 | 0.3 | |
| Copper export volume | 4.3 | -3.0 | 2.6 | 3.5 | -17.2 | -0.7 | 2.7 | |
| Noncopper export volume | 14.0 | 4.3 | 3.7 | 7.7 | 5.0 | 2.5 | 8.5 | |
| Import volume | 0.2 | 0.2 | -7.6 | 3.2 | 1.9 | 3.8 | 6.0 | |
| Employment (percent growth) | 0.3 | 1.1 | 2.2 | 1.0 | 0.3 | 0.9 | 3.1 | |
| Unemployment rate (average, percent) | 9.1 | 8.9 | 9.2 | 9.1 | 8.7 | 8.9 | 8.7 | |
Indicators of Economic Activity, 2001-03
| 2002 | 2003 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2001 | 2002 | Q1 | Q2 | Q3 | Q4 | Q1 | ||
| (Percent change from corresponding period of previous year; unless otherwise indicated) | ||||||||
| Real GDP | 3.1 | 2.1 | 1.2 | 1.5 | 2.6 | 3.3 | 3.5 | |
| Real domestic demand | 2.1 | 1.9 | -0.9 | -0.4 | 4.2 | 4.8 | 3.4 | |
| Fixed capital formation | 2.5 | 1.4 | -0.8 | 3.7 | 0.3 | 2.5 | 0.6 | |
| Net exports (contribution to growth) | 0.9 | 0.3 | 2.1 | 1.9 | -1.7 | -1.3 | 0.3 | |
| Copper export volume | 4.3 | -3.0 | 2.6 | 3.5 | -17.2 | -0.7 | 2.7 | |
| Noncopper export volume | 14.0 | 4.3 | 3.7 | 7.7 | 5.0 | 2.5 | 8.5 | |
| Import volume | 0.2 | 0.2 | -7.6 | 3.2 | 1.9 | 3.8 | 6.0 | |
| Employment (percent growth) | 0.3 | 1.1 | 2.2 | 1.0 | 0.3 | 0.9 | 3.1 | |
| Unemployment rate (average, percent) | 9.1 | 8.9 | 9.2 | 9.1 | 8.7 | 8.9 | 8.7 | |
7. Inflation has stayed under control. The 12-month inflation rate has remained inside the 2–4 percent target band, with only brief stays near the upper and lower boundaries. The continued output gap, a significant drop in import prices, and slowing wage growth (to about 4 percent) have contributed to this inflation performance.
Inflation has generally remained within the Central Bank’s target band.
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Inflation has generally remained within the Central Bank’s target band.
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Inflation has generally remained within the Central Bank’s target band.
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
8. The peso’s volatility increased during 2001–02 reflecting turbulence in the region. At the height of market concern about Brazil last October, the central bank announced a special four-month window of potential exchange market intervention.3 The design of the potential intervention package was similar to the one applied in 2001 (amid concern about Argentina). In the event, the authorities did not intervene in the spot market but did issue US$ 1.4 billion in dollar-indexed debt (equivalent to about 10 percent of gross reserves).4
The exchange rate has fluctuated recently without market intervention…
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
The exchange rate has fluctuated recently without market intervention…
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
The exchange rate has fluctuated recently without market intervention…
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
…and the apparent impact of Brazil on the Chilean peso has declined…
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
1/ Regression of weekly change in Chilean peso/US$ exchange rate against change in Brazilian real/USS rate, in rolling 20-week samples.
…and the apparent impact of Brazil on the Chilean peso has declined…
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
1/ Regression of weekly change in Chilean peso/US$ exchange rate against change in Brazilian real/USS rate, in rolling 20-week samples.…and the apparent impact of Brazil on the Chilean peso has declined…
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
1/ Regression of weekly change in Chilean peso/US$ exchange rate against change in Brazilian real/USS rate, in rolling 20-week samples.9. Consistent with the inflation targeting framework, monetary policy has been eased since early 2002. The central bank cut its policy interest rate steeply over the first half of 2002, aiming to prevent inflation from dropping below the target band. In January 2003 the bank again lowered its policy rate—to 2¾ percent—citing the favorable evolution of labor costs and low foreign inflation. Since then it has held the policy rate steady. The reduction in interest rates has fueled a recovery of consumer credit and mortgage activity (Figure 4, Table 2).5
Chile: Financial Sector Indicators, 1996–2003
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Source: Central Bank of Chile; Superintendencia de Valores y Seguros; Superintendencia de AFP.1/ PRBC discontinued August 2001, PRC discontinued September 2002.2/ M1 plus sight deposits.
Chile: Financial Sector Indicators, 1996–2003
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Source: Central Bank of Chile; Superintendencia de Valores y Seguros; Superintendencia de AFP.1/ PRBC discontinued August 2001, PRC discontinued September 2002.2/ M1 plus sight deposits.Chile: Financial Sector Indicators, 1996–2003
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Source: Central Bank of Chile; Superintendencia de Valores y Seguros; Superintendencia de AFP.1/ PRBC discontinued August 2001, PRC discontinued September 2002.2/ M1 plus sight deposits.Chile: Selected Indicators of the Financial System 1/
Flows measured at constant exchange rates (at the level of the end of the year under consideration). The financial system comprises the central bank, commercial banks, nonbank financial institutions, and private pension funds.
Defined as currency, demand deposits plus sight deposits.
Includes time and savings deposits, deposits in U.S. dollars, and pension funds’ liabilities.
Annual average yield on 90-365 days indexed operations.
Chile: Selected Indicators of the Financial System 1/
| 1998 | 1999 | 2000 | 2001 | 2002 | Proj. 2003 | ||
|---|---|---|---|---|---|---|---|
| I. Central Bank | |||||||
| (Annual flows in millions of U.S. dollars) | |||||||
| Net international reserves | -2,066 | -683 | 198 | -421 | 199 | 146 | |
| Medium- and long-term net foreign liabilities | 0 | 0 | 0 | 0 | 0 | 0 | |
| (Annual percentage change with respect to liabilities to the private sector) | |||||||
| Net domestic assets | 108.1 | 81.1 | -14.5 | 33.8 | 69.2 | -24.0 | |
| Net credit to nonfinancial public sector | 34.1 | 93.8 | 20.1 | 34.6 | 51.8 | 18.9 | |
| Net credit to financial intermediaries | -33.2 | -75.3 | -90.3 | -61.8 | -63.5 | 11.7 | |
| Central bank promissory notes | 82.3 | 6.0 | -21.6 | 38.5 | 2.0 | -49.0 | |
| Other | 24.9 | 56.6 | 77.4 | 22.4 | 78.9 | -5.6 | |
| Liabilities to private sector | -3.1 | 38.9 | -4.9 | 9.3 | 7.2 | 5.3 | |
| II. Financial System | |||||||
| (Annual flows in millions of U.S. dollars) | |||||||
| Net international reserves | -1,160 | 1,720 | -686 | -2,166 | -57 | 180 | |
| Medium- and long-term net foreign liabilities | -1,817 | -3,645 | 197 | -453 | 638 | -264 | |
| (Annual percentage change with respect to liabilities to the private sector) | |||||||
| Net domestic assets | 9.3 | 6.4 | 10.8 | 11.3 | 8.7 | 7.6 | |
| Credit to the private sector | 4.2 | 2.0 | 6.5 | 4.8 | 4.0 | 6.5 | |
| Liabilities to private sector | 9.7 | 16.1 | 9.3 | 8.7 | 4.9 | 11.2 | |
| Of which: pension funds | 4.0 | 11.1 | 6.1 | 6.3 | 5.1 | 6.0 | |
| (In percent of GDP) | |||||||
| Narrow money (MIA) 2/ | 8.3 | 10.2 | 10.3 | 9.9 | 11.1 | 11.4 | |
| Broad money | 39.6 | 41.3 | 39.7 | 38.1 | 35.9 | 36.2 | |
| Liabilities to private sector 3/ | 88.0 | 100.9 | 101.8 | 103.9 | 103.8 | 106.9 | |
| Of which: pension funds | 40.3 | 49.2 | 51.0 | 53.5 | 55.7 | 57.4 | |
| Credit to private sector | 67.0 | 68.3 | 69.3 | 69.9 | 70.8 | 71.8 | |
| (Annual percentage change) | |||||||
| Memorandum items: | |||||||
| Growth of credit to private sector | 5.8 | 3.5 | 9.7 | 7.0 | 5.9 | 9.6 | |
| Growth of credit to private sector, excluding pension funds | 11.2 | 3.0 | 10.7 | 6.7 | 5.1 | 8.3 | |
| Growth of consumer credit | -3.0 | -3.5 | 2.7 | 4.4 | 15.3 | 14.0 | |
| Inflation rate (CPI, end of period) | 4.7 | 2.3 | 4.5 | 2.6 | 2.8 | 3.3 | |
| Narrow money (MIA) | -6.3 | 25.2 | 9.3 | 4.0 | 17.4 | 11.4 | |
| M3 (central bank defintion) | 11.1 | 11.6 | 8.9 | 3.3 | 6.1 | 9.1 | |
| Broad money (M3 less pension funds’ time deposits) | 8.4 | 6.0 | 4.7 | 2.9 | -0.5 | 8.7 | |
| (In percent: annual average) | |||||||
| Interest rates | |||||||
| Commercial bank deposits (in real terms) 4/ | 5.4 | 4.5 | 5.0 | 2.1 | 2.2 | … | |
| Commercial bank loans (in real terms) 4/ | 11.9 | 8.2 | 7.5 | 6.3 | 4.1 | … | |
| 90-day central bank promissory note (nominal) | 16.4 | 10.7 | 10.8 | 7.2 | 3.9 | … | |
Flows measured at constant exchange rates (at the level of the end of the year under consideration). The financial system comprises the central bank, commercial banks, nonbank financial institutions, and private pension funds.
Defined as currency, demand deposits plus sight deposits.
Includes time and savings deposits, deposits in U.S. dollars, and pension funds’ liabilities.
Annual average yield on 90-365 days indexed operations.
Chile: Selected Indicators of the Financial System 1/
| 1998 | 1999 | 2000 | 2001 | 2002 | Proj. 2003 | ||
|---|---|---|---|---|---|---|---|
| I. Central Bank | |||||||
| (Annual flows in millions of U.S. dollars) | |||||||
| Net international reserves | -2,066 | -683 | 198 | -421 | 199 | 146 | |
| Medium- and long-term net foreign liabilities | 0 | 0 | 0 | 0 | 0 | 0 | |
| (Annual percentage change with respect to liabilities to the private sector) | |||||||
| Net domestic assets | 108.1 | 81.1 | -14.5 | 33.8 | 69.2 | -24.0 | |
| Net credit to nonfinancial public sector | 34.1 | 93.8 | 20.1 | 34.6 | 51.8 | 18.9 | |
| Net credit to financial intermediaries | -33.2 | -75.3 | -90.3 | -61.8 | -63.5 | 11.7 | |
| Central bank promissory notes | 82.3 | 6.0 | -21.6 | 38.5 | 2.0 | -49.0 | |
| Other | 24.9 | 56.6 | 77.4 | 22.4 | 78.9 | -5.6 | |
| Liabilities to private sector | -3.1 | 38.9 | -4.9 | 9.3 | 7.2 | 5.3 | |
| II. Financial System | |||||||
| (Annual flows in millions of U.S. dollars) | |||||||
| Net international reserves | -1,160 | 1,720 | -686 | -2,166 | -57 | 180 | |
| Medium- and long-term net foreign liabilities | -1,817 | -3,645 | 197 | -453 | 638 | -264 | |
| (Annual percentage change with respect to liabilities to the private sector) | |||||||
| Net domestic assets | 9.3 | 6.4 | 10.8 | 11.3 | 8.7 | 7.6 | |
| Credit to the private sector | 4.2 | 2.0 | 6.5 | 4.8 | 4.0 | 6.5 | |
| Liabilities to private sector | 9.7 | 16.1 | 9.3 | 8.7 | 4.9 | 11.2 | |
| Of which: pension funds | 4.0 | 11.1 | 6.1 | 6.3 | 5.1 | 6.0 | |
| (In percent of GDP) | |||||||
| Narrow money (MIA) 2/ | 8.3 | 10.2 | 10.3 | 9.9 | 11.1 | 11.4 | |
| Broad money | 39.6 | 41.3 | 39.7 | 38.1 | 35.9 | 36.2 | |
| Liabilities to private sector 3/ | 88.0 | 100.9 | 101.8 | 103.9 | 103.8 | 106.9 | |
| Of which: pension funds | 40.3 | 49.2 | 51.0 | 53.5 | 55.7 | 57.4 | |
| Credit to private sector | 67.0 | 68.3 | 69.3 | 69.9 | 70.8 | 71.8 | |
| (Annual percentage change) | |||||||
| Memorandum items: | |||||||
| Growth of credit to private sector | 5.8 | 3.5 | 9.7 | 7.0 | 5.9 | 9.6 | |
| Growth of credit to private sector, excluding pension funds | 11.2 | 3.0 | 10.7 | 6.7 | 5.1 | 8.3 | |
| Growth of consumer credit | -3.0 | -3.5 | 2.7 | 4.4 | 15.3 | 14.0 | |
| Inflation rate (CPI, end of period) | 4.7 | 2.3 | 4.5 | 2.6 | 2.8 | 3.3 | |
| Narrow money (MIA) | -6.3 | 25.2 | 9.3 | 4.0 | 17.4 | 11.4 | |
| M3 (central bank defintion) | 11.1 | 11.6 | 8.9 | 3.3 | 6.1 | 9.1 | |
| Broad money (M3 less pension funds’ time deposits) | 8.4 | 6.0 | 4.7 | 2.9 | -0.5 | 8.7 | |
| (In percent: annual average) | |||||||
| Interest rates | |||||||
| Commercial bank deposits (in real terms) 4/ | 5.4 | 4.5 | 5.0 | 2.1 | 2.2 | … | |
| Commercial bank loans (in real terms) 4/ | 11.9 | 8.2 | 7.5 | 6.3 | 4.1 | … | |
| 90-day central bank promissory note (nominal) | 16.4 | 10.7 | 10.8 | 7.2 | 3.9 | … | |
Flows measured at constant exchange rates (at the level of the end of the year under consideration). The financial system comprises the central bank, commercial banks, nonbank financial institutions, and private pension funds.
Defined as currency, demand deposits plus sight deposits.
Includes time and savings deposits, deposits in U.S. dollars, and pension funds’ liabilities.
Annual average yield on 90-365 days indexed operations.
…while the differential between interest rates in the US. and Chile has remained low.
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
…while the differential between interest rates in the US. and Chile has remained low.
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
…while the differential between interest rates in the US. and Chile has remained low.
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
10. Automatic fiscal stabilizers have been allowed to operate, as the authorities have met their structural balance target (Table 3). In 2002, the structural balance of the central government was held steady, close to the targeted surplus of 1 percent of GDP. The actual balance (before adjusting for revenue effects of output and copper price gaps)6 widened to a deficit of 1.4 percent of GDP, from 0.9 percent of GDP in 2001. The central bank’s deficit was again broadly steady, close to 1 percent of GDP.7 Gross public debt ratios rose slightly, while net debt declined as currency depreciation raised the value of international reserves.
Chile: Summary Operations of the Central Government
(In percent of GDP)
Includes taxes paid and transfers made by the state-owned public enterprises.
Includes staff estimates of off-budget income from Codelco and off-budget military expenditure.
Includes net lending (thus loan recovery is not included under capital revenue).
The adjustments here relate to copper stabilization fund and privatization receipts (as in staff treatment) and include also: shifting to an accrual treatment of pension “recognition bonds;” excluding net lending activity and other transactions judged not to affect government’s net worth; incorporation of the quasi-fiscal activity implicit in the petroleum stabilization fund; and exclusion of certain one-time revenue windfalls.
Reflects adjustments for revenue effects of output gap and copper price deviations from reference price.
Excludes debt contracted by the armed forces, for which data are not available.
Consists almost exclusively of debt owed to the central bank.
Chile: Summary Operations of the Central Government
(In percent of GDP)
| Staff Projection | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | |||
| I. Traditional Staff Presentation | |||||||||
| Total revenue | 21.1 | 20.4 | 21.6 | 22.0 | 21.4 | 21.5 | 22.0 | ||
| Current revenue 1/2/ | 21.0 | 20.3 | 21.6 | 21.9 | 21.3 | 21.5 | 21.9 | ||
| Tax revenue | 16.3 | 15.6 | 16.4 | 16.8 | 16.7 | 16.6 | 16.8 | ||
| Income taxes (excluding Codelco) | 3.9 | 3.5 | 4.1 | 4.5 | 4.4 | 4.5 | 4.5 | ||
| VAT | 7.8 | 7.6 | 7.9 | 7.9 | 8.3 | 8.4 | 8.6 | ||
| Excise taxes | 2.0 | 2.2 | 2.2 | 2.3 | 2.3 | 2.3 | 2.3 | ||
| Other | 2.6 | 2.3 | 2.1 | 2.1 | 1.7 | 1.4 | 1.4 | ||
| Copper income (Codelco) 2/ | 0.4 | 0.4 | 0.9 | 0.5 | 0.5 | 0.8 | 1.0 | ||
| Other current revenue | 4.3 | 4.3 | 4.2 | 4.7 | 4.1 | 4.1 | 4.1 | ||
| Capital revenue | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | ||
| Total expenditure | 21.1 | 22.5 | 22.4 | 22.9 | 22.8 | 22.7 | 22.7 | ||
| Current expenditure 2/ | 17.6 | 18.8 | 19.0 | 19.4 | 19.3 | 19.1 | 19.1 | ||
| Pensions | 5.9 | 6.6 | 6.6 | 6.7 | 6.7 | 6.5 | 6.5 | ||
| Of which: payment of recognition bonds | 0.8 | 1.0 | 1.0 | 1.1 | 1.1 | 1.1 | 1.1 | ||
| Wages | 4.1 | 4.4 | 4.4 | 4.4 | 4.4 | 4.2 | 4.2 | ||
| Purchases of goods and services | 1.7 | 1.6 | 1.6 | 1.5 | 1.6 | 1.6 | 1.6 | ||
| Interest payments | 0.6 | 0.3 | 0.5 | 0.5 | 0.3 | 0.5 | 0.5 | ||
| Transfers and other 2/ | 5.2 | 5.9 | 5.9 | 6.3 | 6.4 | 6.4 | 6.4 | ||
| Capital expenditure 3/ | 3.6 | 3.7 | 3.4 | 3.4 | 3.5 | 3.6 | 3.6 | ||
| Overall balance | -0.1 | -2.1 | -0.8 | -0.9 | -1.4 | -1.2 | -0.7 | ||
| II. Authorities’ Presentations: Traditional, Adjusted, and Structural Balances | |||||||||
| Actual balance, traditional budget presentation | 0.4 | -1.4 | 0.1 | -0.3 | -0.8 | -0.9 | -0.6 | ||
| Adjusted balance (basis for structural balance) 4/ | 0.0 | -2.2 | -0.8 | -0.7 | -1.2 | -0.9 | -0.1 | ||
| Estimated cyclical effect of output gap | 0.6 | -0.5 | -0.4 | -0.6 | -0.9 | -1.0 | -0.8 | ||
| Estimated cyclical effect of copper price gap | -0.7 | -0.9 | -0.4 | -1.0 | -1.0 | -0.7 | -0.3 | ||
| Structural balance 5/ | 0.1 | -0.8 | 0.1 | 0.9 | 0.7 | 0.8 | 1.0 | ||
| Memorandum items: | |||||||||
| Deposits at Copper Stabilization Fund (flows) | -0.4 | -0.6 | -0.2 | -0.6 | -0.6 | -0.3 | -0.1 | ||
| Central government employment, percent of total | 2.5 | 2.6 | 2.7 | 2.8 | … | … | … | ||
| Central government debt (official measure) 6/ | 12.5 | 13.8 | 13.7 | 15.0 | 15.9 | 15.6 | 14.5 | ||
| Domestic debt 7/ | 9.3 | 9.8 | 10.1 | 10.5 | 10.1 | 9.4 | 8.7 | ||
| External debt 6/ | 3.2 | 4.0 | 3.7 | 4.6 | 5.8 | 6.2 | 5.8 | ||
Includes taxes paid and transfers made by the state-owned public enterprises.
Includes staff estimates of off-budget income from Codelco and off-budget military expenditure.
Includes net lending (thus loan recovery is not included under capital revenue).
The adjustments here relate to copper stabilization fund and privatization receipts (as in staff treatment) and include also: shifting to an accrual treatment of pension “recognition bonds;” excluding net lending activity and other transactions judged not to affect government’s net worth; incorporation of the quasi-fiscal activity implicit in the petroleum stabilization fund; and exclusion of certain one-time revenue windfalls.
Reflects adjustments for revenue effects of output gap and copper price deviations from reference price.
Excludes debt contracted by the armed forces, for which data are not available.
Consists almost exclusively of debt owed to the central bank.
Chile: Summary Operations of the Central Government
(In percent of GDP)
| Staff Projection | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | |||
| I. Traditional Staff Presentation | |||||||||
| Total revenue | 21.1 | 20.4 | 21.6 | 22.0 | 21.4 | 21.5 | 22.0 | ||
| Current revenue 1/2/ | 21.0 | 20.3 | 21.6 | 21.9 | 21.3 | 21.5 | 21.9 | ||
| Tax revenue | 16.3 | 15.6 | 16.4 | 16.8 | 16.7 | 16.6 | 16.8 | ||
| Income taxes (excluding Codelco) | 3.9 | 3.5 | 4.1 | 4.5 | 4.4 | 4.5 | 4.5 | ||
| VAT | 7.8 | 7.6 | 7.9 | 7.9 | 8.3 | 8.4 | 8.6 | ||
| Excise taxes | 2.0 | 2.2 | 2.2 | 2.3 | 2.3 | 2.3 | 2.3 | ||
| Other | 2.6 | 2.3 | 2.1 | 2.1 | 1.7 | 1.4 | 1.4 | ||
| Copper income (Codelco) 2/ | 0.4 | 0.4 | 0.9 | 0.5 | 0.5 | 0.8 | 1.0 | ||
| Other current revenue | 4.3 | 4.3 | 4.2 | 4.7 | 4.1 | 4.1 | 4.1 | ||
| Capital revenue | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | ||
| Total expenditure | 21.1 | 22.5 | 22.4 | 22.9 | 22.8 | 22.7 | 22.7 | ||
| Current expenditure 2/ | 17.6 | 18.8 | 19.0 | 19.4 | 19.3 | 19.1 | 19.1 | ||
| Pensions | 5.9 | 6.6 | 6.6 | 6.7 | 6.7 | 6.5 | 6.5 | ||
| Of which: payment of recognition bonds | 0.8 | 1.0 | 1.0 | 1.1 | 1.1 | 1.1 | 1.1 | ||
| Wages | 4.1 | 4.4 | 4.4 | 4.4 | 4.4 | 4.2 | 4.2 | ||
| Purchases of goods and services | 1.7 | 1.6 | 1.6 | 1.5 | 1.6 | 1.6 | 1.6 | ||
| Interest payments | 0.6 | 0.3 | 0.5 | 0.5 | 0.3 | 0.5 | 0.5 | ||
| Transfers and other 2/ | 5.2 | 5.9 | 5.9 | 6.3 | 6.4 | 6.4 | 6.4 | ||
| Capital expenditure 3/ | 3.6 | 3.7 | 3.4 | 3.4 | 3.5 | 3.6 | 3.6 | ||
| Overall balance | -0.1 | -2.1 | -0.8 | -0.9 | -1.4 | -1.2 | -0.7 | ||
| II. Authorities’ Presentations: Traditional, Adjusted, and Structural Balances | |||||||||
| Actual balance, traditional budget presentation | 0.4 | -1.4 | 0.1 | -0.3 | -0.8 | -0.9 | -0.6 | ||
| Adjusted balance (basis for structural balance) 4/ | 0.0 | -2.2 | -0.8 | -0.7 | -1.2 | -0.9 | -0.1 | ||
| Estimated cyclical effect of output gap | 0.6 | -0.5 | -0.4 | -0.6 | -0.9 | -1.0 | -0.8 | ||
| Estimated cyclical effect of copper price gap | -0.7 | -0.9 | -0.4 | -1.0 | -1.0 | -0.7 | -0.3 | ||
| Structural balance 5/ | 0.1 | -0.8 | 0.1 | 0.9 | 0.7 | 0.8 | 1.0 | ||
| Memorandum items: | |||||||||
| Deposits at Copper Stabilization Fund (flows) | -0.4 | -0.6 | -0.2 | -0.6 | -0.6 | -0.3 | -0.1 | ||
| Central government employment, percent of total | 2.5 | 2.6 | 2.7 | 2.8 | … | … | … | ||
| Central government debt (official measure) 6/ | 12.5 | 13.8 | 13.7 | 15.0 | 15.9 | 15.6 | 14.5 | ||
| Domestic debt 7/ | 9.3 | 9.8 | 10.1 | 10.5 | 10.1 | 9.4 | 8.7 | ||
| External debt 6/ | 3.2 | 4.0 | 3.7 | 4.6 | 5.8 | 6.2 | 5.8 | ||
Includes taxes paid and transfers made by the state-owned public enterprises.
Includes staff estimates of off-budget income from Codelco and off-budget military expenditure.
Includes net lending (thus loan recovery is not included under capital revenue).
The adjustments here relate to copper stabilization fund and privatization receipts (as in staff treatment) and include also: shifting to an accrual treatment of pension “recognition bonds;” excluding net lending activity and other transactions judged not to affect government’s net worth; incorporation of the quasi-fiscal activity implicit in the petroleum stabilization fund; and exclusion of certain one-time revenue windfalls.
Reflects adjustments for revenue effects of output gap and copper price deviations from reference price.
Excludes debt contracted by the armed forces, for which data are not available.
Consists almost exclusively of debt owed to the central bank.
Fiscal Indicators, 1999-2003
(In percent of GDP)
Net of liquid financial assets, the bulk of which are international reserves.
Fiscal Indicators, 1999-2003
(In percent of GDP)
| Proj. | ||||||
|---|---|---|---|---|---|---|
| 1999 | 2000 | 2001 | 2002 | 2003 | ||
| Central government balance | ||||||
| Balance, traditional staff presentation | -2.1 | -0.8 | -0.9 | -1.4 | -1.2 | |
| Adjusted (basis for structural) balance | -2.2 | -0.8 | -0.7 | -1.2 | -0.9 | |
| Structural balance | -0.8 | 0.1 | 0.9 | 0.7 | 0.8 | |
| Central bank balance | -1.1 | -0.9 | -0.8 | -1.1 | -0.9 | |
| Public enterprises | ||||||
| Current balance | 1.1 | 0.6 | 1.2 | 1.0 | 1.1 | |
| Overall balance | -0.1 | -0.7 | -0.4 | -0.8 | -1.0 | |
| Consolidated govt.-central bank debt | ||||||
| Gross debt | 35.7 | 36.3 | 36.9 | 37.3 | … | |
| Net debt 1/ | 9.4 | 10.6 | 9.4 | 8.3 | … | |
| Gross debt, unconsolidated | ||||||
| Central government | 13.9 | 13.9 | 15.4 | 15.9 | 15.6 | |
| Central bank | 35.5 | 35.6 | 34.6 | 32.2 | … | |
| Public enterprises | 5.3 | 5.0 | 5.3 | 6.6 | 7.0 | |
Net of liquid financial assets, the bulk of which are international reserves.
Fiscal Indicators, 1999-2003
(In percent of GDP)
| Proj. | ||||||
|---|---|---|---|---|---|---|
| 1999 | 2000 | 2001 | 2002 | 2003 | ||
| Central government balance | ||||||
| Balance, traditional staff presentation | -2.1 | -0.8 | -0.9 | -1.4 | -1.2 | |
| Adjusted (basis for structural) balance | -2.2 | -0.8 | -0.7 | -1.2 | -0.9 | |
| Structural balance | -0.8 | 0.1 | 0.9 | 0.7 | 0.8 | |
| Central bank balance | -1.1 | -0.9 | -0.8 | -1.1 | -0.9 | |
| Public enterprises | ||||||
| Current balance | 1.1 | 0.6 | 1.2 | 1.0 | 1.1 | |
| Overall balance | -0.1 | -0.7 | -0.4 | -0.8 | -1.0 | |
| Consolidated govt.-central bank debt | ||||||
| Gross debt | 35.7 | 36.3 | 36.9 | 37.3 | … | |
| Net debt 1/ | 9.4 | 10.6 | 9.4 | 8.3 | … | |
| Gross debt, unconsolidated | ||||||
| Central government | 13.9 | 13.9 | 15.4 | 15.9 | 15.6 | |
| Central bank | 35.5 | 35.6 | 34.6 | 32.2 | … | |
| Public enterprises | 5.3 | 5.0 | 5.3 | 6.6 | 7.0 | |
Net of liquid financial assets, the bulk of which are international reserves.
11. The authorities have increased the transparency of fiscal policy further. In response to analysts’ questioning, since late 2002 the authorities have stepped up their efforts to explain the structural balance rule, issued a new report covering the debt and liquid assets of the entire public sector, and begun an enhanced schedule of fiscal data releases. They have also moved to institutionalize some of the transparency-enhancing steps taken in the last few years, and participated in a fiscal ROSC.8 In consultation with an IMF technical assistance mission, they developed a phased plan for implementing the new GFS and have committed to publishing revised statistics along these lines early next year.
Fiscal discipline has allowed debt to remain at low levels.
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Fiscal discipline has allowed debt to remain at low levels.
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Fiscal discipline has allowed debt to remain at low levels.
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
12. Most vulnerability indicators are at comfortable levels (Table 5), although corporate external refinancing needs remain a potential concern.9 Official reserves, at US$16 billion (24 percent of GDP), are double the economy’s short-term external debt at residual maturity, and also exceed the public sector’s entire stock of exchange rate-linked liabilities. While the external debt/GDP ratio has risen to 60 percent, mainly reflecting real depreciation, most of this debt is owed by the private sector, roughly two-thirds of that by foreign-owned companies. Rolling over this debt dominates Chile’s external financing needs.
Chile: Operations of Other Public Sector Entities
(In percent of GDP)
Estimate for 2002 and projections for 2003 and 2004 based on legal budget constraint.
Excludes Banco del Eslado.
Staff estimates.
Excludes debt contracted by the armed forces, for which data are not available.
Consists mainly of central bank debt. Does not include pension liabilities.
Chile: Operations of Other Public Sector Entities
(In percent of GDP)
| Staff Projection | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | |||
| I. Central Bank | |||||||||
| Central bank balance [cash basis] | -1.0 | -1.1 | -0.9 | -0.8 | -1.1 | -0.9 | -0.5 | ||
| Net interest balance | -1.0 | -1.1 | -0.9 | -0.8 | -1.0 | -0.9 | -0.5 | ||
| Interest receipts (cash basis) | 1.4 | 1.2 | 1.4 | 1.3 | 0.8 | 0.8 | 1.1 | ||
| Interest payments | 2.5 | 2.3 | 2.3 | 2.1 | 1.8 | 1.7 | 1.5 | ||
| Operational result, net | 0.0 | -0.1 | -0.1 | 0.0 | -0.1 | -0.1 | -0.1 | ||
| II. Municipal Governments | |||||||||
| Overall balance 1/ | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||
| Revenue | 1.9 | 2.1 | 2.0 | 2.1 | … | … | … | ||
| Expenditure | 2.0 | 2.1 | 2.1 | 2.0 | … | … | … | ||
| III. State-owned Enterprises (nonfinancial) 2/ | |||||||||
| Current balance | 0.9 | 1.1 | 0.6 | 1.2 | 1.0 | 1.1 | 1.0 | ||
| Current revenue | 10.3 | 10.8 | 13.1 | 14.0 | 13.5 | 13.7 | 13.5 | ||
| Current expenditure | 6.4 | 6.7 | 8.5 | 9.0 | 8.9 | 9.0 | 9.0 | ||
| Taxes and transfers to central government | 3.1 | 3.0 | 4.0 | 3.8 | 3.6 | 3.6 | 3.5 | ||
| Capital balance | -1.9 | -1.2 | -1.3 | -1.6 | -1.9 | -2.1 | -2.1 | ||
| Of which: real investment expenditure | 1.8 | 1.2 | 1.2 | 1.3 | 1.8 | 2.2 | 2.2 | ||
| Overall balance | -1.0 | -0.1 | -0.7 | -0.4 | -0.8 | -1.0 | -1.1 | ||
Estimate for 2002 and projections for 2003 and 2004 based on legal budget constraint.
Excludes Banco del Eslado.
Staff estimates.
Excludes debt contracted by the armed forces, for which data are not available.
Consists mainly of central bank debt. Does not include pension liabilities.
Chile: Operations of Other Public Sector Entities
(In percent of GDP)
| Staff Projection | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | 2004 | |||
| I. Central Bank | |||||||||
| Central bank balance [cash basis] | -1.0 | -1.1 | -0.9 | -0.8 | -1.1 | -0.9 | -0.5 | ||
| Net interest balance | -1.0 | -1.1 | -0.9 | -0.8 | -1.0 | -0.9 | -0.5 | ||
| Interest receipts (cash basis) | 1.4 | 1.2 | 1.4 | 1.3 | 0.8 | 0.8 | 1.1 | ||
| Interest payments | 2.5 | 2.3 | 2.3 | 2.1 | 1.8 | 1.7 | 1.5 | ||
| Operational result, net | 0.0 | -0.1 | -0.1 | 0.0 | -0.1 | -0.1 | -0.1 | ||
| II. Municipal Governments | |||||||||
| Overall balance 1/ | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||
| Revenue | 1.9 | 2.1 | 2.0 | 2.1 | … | … | … | ||
| Expenditure | 2.0 | 2.1 | 2.1 | 2.0 | … | … | … | ||
| III. State-owned Enterprises (nonfinancial) 2/ | |||||||||
| Current balance | 0.9 | 1.1 | 0.6 | 1.2 | 1.0 | 1.1 | 1.0 | ||
| Current revenue | 10.3 | 10.8 | 13.1 | 14.0 | 13.5 | 13.7 | 13.5 | ||
| Current expenditure | 6.4 | 6.7 | 8.5 | 9.0 | 8.9 | 9.0 | 9.0 | ||
| Taxes and transfers to central government | 3.1 | 3.0 | 4.0 | 3.8 | 3.6 | 3.6 | 3.5 | ||
| Capital balance | -1.9 | -1.2 | -1.3 | -1.6 | -1.9 | -2.1 | -2.1 | ||
| Of which: real investment expenditure | 1.8 | 1.2 | 1.2 | 1.3 | 1.8 | 2.2 | 2.2 | ||
| Overall balance | -1.0 | -0.1 | -0.7 | -0.4 | -0.8 | -1.0 | -1.1 | ||
Estimate for 2002 and projections for 2003 and 2004 based on legal budget constraint.
Excludes Banco del Eslado.
Staff estimates.
Excludes debt contracted by the armed forces, for which data are not available.
Consists mainly of central bank debt. Does not include pension liabilities.
Chile: Indicators of External Vulnerability
(In percent; unless otherwise indicated)
The series starts in Jury 1997.
Official measure of nonperforming loans (recently, roughly half the level measured according to international norms).
This indicator is not available before 1998.
Includes errors and omissions.
Gold valued at end-period market prices.
Short-term external debt as measured by the central bank. Includes amortization of medium- and long-term debt falling due during the following year, but does not include direct trade credits.
Refers to the commercial banking sector including the Banco del Estado de Chile.
Includes private debt with public guarantee. Excludes debt contracted by armed forces, for which data are not available.
Ratings are only shown for the dates on which they were revised by the rating agencies.
Chile: Indicators of External Vulnerability
(In percent; unless otherwise indicated)
| 1998 | 1999 | 2000 | 2001 | 2002 | Proj. 2003 | ||
|---|---|---|---|---|---|---|---|
| Financial indicators | |||||||
| M3 (central bank definition, percent change) | 11.1 | 11.6 | 8.9 | 3.3 | 6.1 | 9.1 | |
| Broad money (M3 less pension funds’ time deposits, percent change) | 84 | 6.0 | 4.7 | 2.9 | -0.5 | 8.7 | |
| Ratio of bank credit to GDP (percent) | 58.5 | 59.3 | 60.3 | 60.0 | 60.4 | 60.5 | |
| 90-day central bank promissory note (nominal) interest rate (averages) 1/ | 16.4 | 10.7 | 10.8 | 7.2 | 3.9 | … | |
| Share of foreign currency deposits in total deposits | 6.9 | 9.9 | 11.6 | 13.8 | 14.9 | 14.7 | |
| Share of foreign currency loans in total credit (excluding pension funds) | 9.1 | 8.6 | 9.5 | 11.0 | 11.1 | 11.1 | |
| Share of nonperforming loans in total loans 2/ | 1.5 | 1.7 | 1.7 | 1.6 | 1.8 | … | |
| Loan-loss provisions as percent of nonperforming loans 2/ | 131.2 | 152.7 | 145.7 | 146.3 | 129.5 | … | |
| Risk-based capital-assets ratio, end of period 3/ | 12.5 | 13.5 | 13.3 | 12.7 | 14.0 | … | |
| Return on bank capital | 11.5 | 9.4 | 12.7 | 17.7 | 14.4 | … | |
| External indicators | |||||||
| Exports, U.S. dollars (percent change) | -8.7 | 5.1 | 11.9 | -3.9 | -0.7 | 10.4 | |
| Imports, U.S. dollars (percent change) | -4.8 | -19.8 | 16.0 | -4.0 | -3.6 | 10.5 | |
| Terms of trade (percent change) | -4.5 | 5.6 | 5.1 | -7.9 | 1.9 | 2.5 | |
| REER (end of period, percent change) | -6.1 | -6.2 | 2.5 | -9.5 | -6.4 | … | |
| Exchange rate (pesos per USS, period average) | 460.7 | 509.1 | 539.5 | 634.9 | 688.9 | … | |
| Current account (percent of GDP) | -4.9 | 0.1 | -1.0 | -1.7 | -0.8 | -0.9 | |
| Capital account (percent of GDP) 4/ | 2.2 | -1.1 | 1.5 | 0.9 | 1.1 | 1.1 | |
| Gross official reserves (in US$ billion) 5/ | 16.0 | 14.7 | 15.1 | 14.4 | 15.4 | 15.5 | |
| Central bank short-term foreign liabilities (in USS billion) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Gross official reserves, months of imports of goods and services | 9.9 | 8.1 | 8.5 | 8.3 | 8.1 | 7.2 | |
| Gross official reserves to broad money | 51.9 | 50.6 | 53.9 | 57.1 | 67.1 | 66.0 | |
| Gross official reserves to short-term external debt 6/ | 385.2 | 367.8 | 229.7 | 214.8 | 180.1 | 210.7 | |
| Short-term foreign assets of commercial banks (in USS billion) 7/ | 1.8 | 4.2 | 3.4 | 2.4 | 1.4 | 1.4 | |
| Short-term foreign liabilities of commercial banks (in USS billion) 7/ | 0.9 | 0.3 | 0.4 | 1.1 | 1.3 | 1.3 | |
| Total external debt (percent of GDP) | 40.0 | 46.8 | 48.7 | 55.7 | 60.8 | 60.5 | |
| Of which: public sector debt (percent of GDP) 8/ | 7.2 | 8.0 | 7.4 | 8.4 | 10.8 | 11.5 | |
| Total external debt to exports of goods and services | 156.3 | 162.5 | 156.6 | 168.5 | 181.1 | 172.4 | |
| External interest payments to exports of goods and services | 7.4 | 7.2 | 8.9 | 8.3 | 7.3 | 5.0 | |
| External amortization payments to exports of goods and services | 12.0 | 15.9 | 17.9 | 18.8 | 26.0 | 20.6 | |
| Financial market indicators | |||||||
| Stock market index (in USS; period average) | 74.8 | 75.6 | 82.9 | 72.2 | 61.4 | … | |
| Sovereign long-term foreign-currency debt rating 9/ | |||||||
| Moody’s | Baal (June 1995 to present) | ||||||
| S&P | A- (1995 to present; positive outlook since 2002) | ||||||
The series starts in Jury 1997.
Official measure of nonperforming loans (recently, roughly half the level measured according to international norms).
This indicator is not available before 1998.
Includes errors and omissions.
Gold valued at end-period market prices.
Short-term external debt as measured by the central bank. Includes amortization of medium- and long-term debt falling due during the following year, but does not include direct trade credits.
Refers to the commercial banking sector including the Banco del Estado de Chile.
Includes private debt with public guarantee. Excludes debt contracted by armed forces, for which data are not available.
Ratings are only shown for the dates on which they were revised by the rating agencies.
Chile: Indicators of External Vulnerability
(In percent; unless otherwise indicated)
| 1998 | 1999 | 2000 | 2001 | 2002 | Proj. 2003 | ||
|---|---|---|---|---|---|---|---|
| Financial indicators | |||||||
| M3 (central bank definition, percent change) | 11.1 | 11.6 | 8.9 | 3.3 | 6.1 | 9.1 | |
| Broad money (M3 less pension funds’ time deposits, percent change) | 84 | 6.0 | 4.7 | 2.9 | -0.5 | 8.7 | |
| Ratio of bank credit to GDP (percent) | 58.5 | 59.3 | 60.3 | 60.0 | 60.4 | 60.5 | |
| 90-day central bank promissory note (nominal) interest rate (averages) 1/ | 16.4 | 10.7 | 10.8 | 7.2 | 3.9 | … | |
| Share of foreign currency deposits in total deposits | 6.9 | 9.9 | 11.6 | 13.8 | 14.9 | 14.7 | |
| Share of foreign currency loans in total credit (excluding pension funds) | 9.1 | 8.6 | 9.5 | 11.0 | 11.1 | 11.1 | |
| Share of nonperforming loans in total loans 2/ | 1.5 | 1.7 | 1.7 | 1.6 | 1.8 | … | |
| Loan-loss provisions as percent of nonperforming loans 2/ | 131.2 | 152.7 | 145.7 | 146.3 | 129.5 | … | |
| Risk-based capital-assets ratio, end of period 3/ | 12.5 | 13.5 | 13.3 | 12.7 | 14.0 | … | |
| Return on bank capital | 11.5 | 9.4 | 12.7 | 17.7 | 14.4 | … | |
| External indicators | |||||||
| Exports, U.S. dollars (percent change) | -8.7 | 5.1 | 11.9 | -3.9 | -0.7 | 10.4 | |
| Imports, U.S. dollars (percent change) | -4.8 | -19.8 | 16.0 | -4.0 | -3.6 | 10.5 | |
| Terms of trade (percent change) | -4.5 | 5.6 | 5.1 | -7.9 | 1.9 | 2.5 | |
| REER (end of period, percent change) | -6.1 | -6.2 | 2.5 | -9.5 | -6.4 | … | |
| Exchange rate (pesos per USS, period average) | 460.7 | 509.1 | 539.5 | 634.9 | 688.9 | … | |
| Current account (percent of GDP) | -4.9 | 0.1 | -1.0 | -1.7 | -0.8 | -0.9 | |
| Capital account (percent of GDP) 4/ | 2.2 | -1.1 | 1.5 | 0.9 | 1.1 | 1.1 | |
| Gross official reserves (in US$ billion) 5/ | 16.0 | 14.7 | 15.1 | 14.4 | 15.4 | 15.5 | |
| Central bank short-term foreign liabilities (in USS billion) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Gross official reserves, months of imports of goods and services | 9.9 | 8.1 | 8.5 | 8.3 | 8.1 | 7.2 | |
| Gross official reserves to broad money | 51.9 | 50.6 | 53.9 | 57.1 | 67.1 | 66.0 | |
| Gross official reserves to short-term external debt 6/ | 385.2 | 367.8 | 229.7 | 214.8 | 180.1 | 210.7 | |
| Short-term foreign assets of commercial banks (in USS billion) 7/ | 1.8 | 4.2 | 3.4 | 2.4 | 1.4 | 1.4 | |
| Short-term foreign liabilities of commercial banks (in USS billion) 7/ | 0.9 | 0.3 | 0.4 | 1.1 | 1.3 | 1.3 | |
| Total external debt (percent of GDP) | 40.0 | 46.8 | 48.7 | 55.7 | 60.8 | 60.5 | |
| Of which: public sector debt (percent of GDP) 8/ | 7.2 | 8.0 | 7.4 | 8.4 | 10.8 | 11.5 | |
| Total external debt to exports of goods and services | 156.3 | 162.5 | 156.6 | 168.5 | 181.1 | 172.4 | |
| External interest payments to exports of goods and services | 7.4 | 7.2 | 8.9 | 8.3 | 7.3 | 5.0 | |
| External amortization payments to exports of goods and services | 12.0 | 15.9 | 17.9 | 18.8 | 26.0 | 20.6 | |
| Financial market indicators | |||||||
| Stock market index (in USS; period average) | 74.8 | 75.6 | 82.9 | 72.2 | 61.4 | … | |
| Sovereign long-term foreign-currency debt rating 9/ | |||||||
| Moody’s | Baal (June 1995 to present) | ||||||
| S&P | A- (1995 to present; positive outlook since 2002) | ||||||
The series starts in Jury 1997.
Official measure of nonperforming loans (recently, roughly half the level measured according to international norms).
This indicator is not available before 1998.
Includes errors and omissions.
Gold valued at end-period market prices.
Short-term external debt as measured by the central bank. Includes amortization of medium- and long-term debt falling due during the following year, but does not include direct trade credits.
Refers to the commercial banking sector including the Banco del Estado de Chile.
Includes private debt with public guarantee. Excludes debt contracted by armed forces, for which data are not available.
Ratings are only shown for the dates on which they were revised by the rating agencies.
Vulnerability Indicators, 1999-2003
(In percent; unless otherwise indicated)
Vulnerability Indicators, 1999-2003
(In percent; unless otherwise indicated)
| Proj. | |||||
|---|---|---|---|---|---|
| 1999 | 2000 | 2001 | 2002 | 2003 | |
| Financial system | |||||
| Foreign currency deposits/total deposits | 9.9 | 11.6 | 13.8 | 14.9 | 14.7 |
| Net short-term foreign assets of commercial banks, US$ bill. | 3.9 | 2.9 | 1.3 | 0.1 | 0.1 |
| Nonperforming loans/total loans | 1.7 | 1.7 | 1.6 | 1.8 | … |
| Risk-based capital-assets ratio | 13.5 | 13.3 | 12.7 | 14.0 | … |
| Balance of payments | |||||
| Current account/GDP | 0.1 | -1.0 | -1.7 | -0.8 | -0.9 |
| Short-term external debt/GDP | 5.5 | 8.8 | 9.8 | 11.8 | 10.6 |
| Memorandum item: | |||||
| Official reserves/short-term external debt (ratio) | 3.7 | 2.3 | 2.1 | 1.8 | 2.1 |
Vulnerability Indicators, 1999-2003
(In percent; unless otherwise indicated)
| Proj. | |||||
|---|---|---|---|---|---|
| 1999 | 2000 | 2001 | 2002 | 2003 | |
| Financial system | |||||
| Foreign currency deposits/total deposits | 9.9 | 11.6 | 13.8 | 14.9 | 14.7 |
| Net short-term foreign assets of commercial banks, US$ bill. | 3.9 | 2.9 | 1.3 | 0.1 | 0.1 |
| Nonperforming loans/total loans | 1.7 | 1.7 | 1.6 | 1.8 | … |
| Risk-based capital-assets ratio | 13.5 | 13.3 | 12.7 | 14.0 | … |
| Balance of payments | |||||
| Current account/GDP | 0.1 | -1.0 | -1.7 | -0.8 | -0.9 |
| Short-term external debt/GDP | 5.5 | 8.8 | 9.8 | 11.8 | 10.6 |
| Memorandum item: | |||||
| Official reserves/short-term external debt (ratio) | 3.7 | 2.3 | 2.1 | 1.8 | 2.1 |
13. The sovereign and most leading corporates have retained access to external debt financing on favorable terms. The main exception was a large foreign-owned electric company involved in Argentina and Brazil, which faced spreads above 1000 bp for a time, but this episode did not generate significant spillovers.10 The government raised US$1 billion early this year, at a spread below 200 basis points. However, private FDI inflows have remained at low levels since mid-2001.
Access to financing has been available on favorable terms.
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Access to financing has been available on favorable terms.
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
Access to financing has been available on favorable terms.
Citation: IMF Staff Country Reports 2003, 303; 10.5089/9781451807561.002.A001
14. Recent reform efforts have focused on ambitious measures to modernize the public administration, increase government transparency and reinforce the financial system (Annex I—Reform Agenda).11 The “Pro-Growth Agenda”, a set of microeconomic reforms agreed with business leaders in 2002, has also advanced, though less quickly.12
III. Economic Outlook
15. The mission presented a baseline scenario with growth accelerating to 3½ percent this year and 4½ percent in 2004, as recovery of demand—prompted by improved regional confidence, better terms of trade, and low real interest rates—takes up slack capacity. Growth would peak at 5½ percent in 2006, above the projected growth of potential output. The sizable output and copper export price gaps would gradually close over the medium term, bringing the actual government balance in line with the structural balance target of a 1 percent of GDP surplus. Headline inflation would remain around 3 percent. The authorities indicated that they had a broadly similar view of the outlook for both actual and potential output, while noting that performance over the next few years would depend substantially on the state of the world economy.
Medium-Term Baseline Scenario, 2002-2008
Figures are consistent with Ministry of Finance’s wonting estimates of potential output, in advance of annual update of official figures (to be drawn from expert panel’s medium-term forecasts).
Medium-Term Baseline Scenario, 2002-2008
| 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | ||
|---|---|---|---|---|---|---|---|---|
| Real GDP Growth (in percent) | 2.1 | 3.3 | 4.5 | 5.2 | 5.5 | 5.0 | 4.8 | |
| Potential output (percent growth) 1/ | 3.7 | 3.7 | 3.7 | 3.8 | 4.0 | 4.2 | 4.5 | |
| Output gap (level, in percent) 1/ | -4.5 | -4.8 | -4.0 | -2.7 | -1.2 | -0.4 | -0.1 | |
| Government balance/GDP | ||||||||
| Balance, traditional staff presentation | -1.4 | -1.2 | -0.7 | -0.2 | 0.1 | 0.3 | 0.4 | |
| Adjusted (basis for structural) balance | -1.2 | -0.9 | -0.1 | 0.4 | 0.7 | 0.9 | 0.9 | |
| Structural balance | 0.7 | 0.8 | 1.0 | 1.0 | 1.0 | 1.0 | 1.0 | |
| Government gross debt/GDP | 15.9 | 15.6 | 14.5 | 13.0 | 11.3 | 9.6 | 8.0 | |
| Current account/GDP | -0.8 | -0.9 | -1.1 | -1.3 | -1.7 | -2.1 | -2.4 | |
| Gross external debt/GDP | 60.8 | 60.5 | 57.9 | 56.0 | 54.8 | 54.1 | 53.8 | |
| Terms of trade (percent change) | 1.9 | 2.5 | 4.0 | 4.2 | 0.8 | 0.2 | 0.1 | |
Figures are consistent with Ministry of Finance’s wonting estimates of potential output, in advance of annual update of official figures (to be drawn from expert panel’s medium-term forecasts).
Medium-Term Baseline Scenario, 2002-2008
| 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | ||
|---|---|---|---|---|---|---|---|---|
| Real GDP Growth (in percent) | 2.1 | 3.3 | 4.5 | 5.2 | 5.5 | 5.0 | 4.8 | |
| Potential output (percent growth) 1/ | 3.7 | 3.7 | 3.7 | 3.8 | 4.0 | 4.2 | 4.5 | |
| Output gap (level, in percent) 1/ | -4.5 | -4.8 | -4.0 | -2.7 | -1.2 | -0.4 | -0.1 | |
| Government balance/GDP | ||||||||
| Balance, traditional staff presentation | -1.4 | -1.2 | -0.7 | -0.2 | 0.1 | 0.3 | 0.4 | |
| Adjusted (basis for structural) balance | -1.2 | -0.9 | -0.1 | 0.4 | 0.7 | 0.9 | 0.9 | |
| Structural balance | 0.7 | 0.8 | 1.0 | 1.0 | 1.0 | 1.0 | 1.0 | |
| Government gross debt/GDP | 15.9 | 15.6 | 14.5 | 13.0 | 11.3 | 9.6 | 8.0 | |
| Current account/GDP | -0.8 | -0.9 | -1.1 | -1.3 | -1.7 | -2.1 | -2.4 | |
| Gross external debt/GDP | 60.8 | 60.5 | 57.9 | 56.0 | 54.8 | 54.1 | 53.8 | |
| Terms of trade (percent change) | 1.9 | 2.5 | 4.0 | 4.2 | 0.8 | 0.2 | 0.1 | |
Figures are consistent with Ministry of Finance’s wonting estimates of potential output, in advance of annual update of official figures (to be drawn from expert panel’s medium-term forecasts).
16. Growth of potential output is expected to rise modestly over the medium term, based on current reform initiatives, faster capital accumulation, and a rise in labor participation rates.13 The sound macro-policy framework, stable institutional arrangements and open economy provide a favorable environment for investment. In addition, the state modernization and pro-growth agendas should help to increase economic efficiency and reduce growth bottlenecks. Nevertheless, potential growth would remain considerably below the rate achieved prior to the East Asian crisis (7½ percent on average during 1990–96).
17. The current account deficit would widen gradually over the medium term, as improving terms of trade partially offset the effect of growing domestic demand (Tables 6 and 7). Net international reserves would be broadly stable, while external debt to GDP would decline somewhat but remain above 50 percent in 2008, and total government debt would decline to just under 10 percent of GDP.
Chile: Balance of Payments—Medium-Term Projections
Includes errors and omissions.
Gold at market valuation. End-vear stock of reserves in relation to imports of the following year.
Chilean export price.
Net of estimated losses of the central bank.
Chile: Balance of Payments—Medium-Term Projections
| Projections | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |||
| (In billions of U.S. dollars) | |||||||||||
| Current account | -0.8 | -1.2 | -0.6 | -0.6 | -0.8 | -1.1 | -1.6 | -2.1 | -2.6 | ||
| Trade balance | 2.1 | 2.1 | 2.5 | 2.8 | 3.3 | 3.7 | 3.4 | 3.1 | 2.9 | ||
| Exports | 19.2 | 18.5 | 18.3 | 20.3 | 23.0 | 25.2 | 26.8 | 28.4 | 30.1 | ||
| Copper | 7.3 | 6.7 | 6.3 | 7.0 | 8.4 | 9.5 | 9.9 | 10.3 | 10.8 | ||
| Noncopper | 11.9 | 11.7 | 12.1 | 13.3 | 14.5 | 15.7 | 16.9 | 18.1 | 19.3 | ||
| Imports | -17.1 | -16.4 | -15.8 | -17.5 | -19.6 | -21.5 | -23.4 | -25.2 | -27.2 | ||
| Financial services (net) | -2.8 | -2.8 | -2.5 | -2.7 | -3.1 | -3.7 | -3.9 | -4.1 | -4.5 | ||
| Other services and transfers (net) | -0.1 | -0.5 | -0.5 | -0.7 | -1.1 | -1.1 | -1.0 | -1.1 | -1.0 | ||
| Capital account 1/ | 1.1 | 0.6 | 0.8 | 0.8 | 1.2 | 1.9 | 2.5 | 3.0 | 3.6 | ||
| Foreign investment (net) | 0.6 | 3.2 | -0.4 | -1.2 | -0.4 | -0.4 | -0.4 | -0.3 | -0.4 | ||
| Assets | -3.2 | -2.8 | -3.7 | -5.7 | -4.7 | -4.9 | -5.2 | -5.4 | -5.7 | ||
| Liabilities | 3.8 | 6.0 | 3.3 | 4.5 | 4.3 | 4.5 | 4.8 | 5.1 | 5.3 | ||
| Other capital flows | 0.5 | -2.6 | 1.2 | 2.0 | 1.7 | 2.3 | 2.8 | 3.3 | 4.0 | ||
| Medium- and long-term (net) | 0.1 | -0.2 | -0.6 | 0.6 | 0.6 | 1.0 | 1.2 | 1.4 | 1.8 | ||
| Disbursements | 4.3 | 4.1 | 5.2 | 5.6 | 4.0 | 5.9 | 6.5 | 6.0 | 6.5 | ||
| Amortizations | -4.2 | -4.2 | -5.8 | -5.0 | -3.4 | -4.9 | -5.3 | -4.5 | -4.7 | ||
| Other capital net 1/ | 0.4 | -2.4 | 1.8 | 1.4 | 1.0 | 1.4 | 1.6 | 1.9 | 2.2 | ||
| Overall balance | 0.3 | -0.6 | 0.2 | 0.1 | 0.4 | 0.8 | 0.9 | 1.0 | 1.0 | ||
| Reserve assets (increase -) | -0.3 | 0.6 | -0.2 | -0.1 | -0.4 | -0.8 | -0.9 | -1.0 | -1.0 | ||
| Valuation adjustment | -0.2 | -0.1 | 0.8 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||
| Change in official reserve stock (increase -) | -0.2 | 0.7 | -1.0 | -0.1 | -0.4 | -0.8 | -0.9 | -1.0 | -1.0 | ||
| (In months of imports of goods and services) | |||||||||||
| Gross official international reserves 2/ | 8.5 | 8.3 | 8.1 | 7.2 | 6.8 | 6.6 | 6.4 | 6.3 | 6.3 | ||
| Mam assumptions | |||||||||||
| Copper price (LME; U.S. cents per pound) | 82.2 | 71.7 | 70.8 | 74.9 | 81.6 | 86.2 | 87.1 | 88.0 | 88.9 | ||
| Volume of copper exports (thousand metric tons) | 4,402 | 4,592 | 4,453 | 4,694 | 5,114 | 5,426 | 5,589 | 5,756 | 5,929 | ||
| (Annual change in percent) | |||||||||||
| Copper export prices 3/ | 14.8 | -11.2 | -4.2 | 5.8 | 10.9 | 6.2 | 1.1 | 1.1 | 1.1 | ||
| Copper export volumes | 8.3 | 4.3 | -3.0 | 5.4 | 8.9 | 6.1 | 3.0 | 3.0 | 3.0 | ||
| Noncopper export prices | 2.2 | -13.2 | -0.8 | 4.9 | 2.0 | 2.8 | 1.0 | 1.1 | 1.0 | ||
| Noncopper export volume | 5.6 | 14.0 | 4.3 | 5.1 | 7.5 | 5.5 | 6.3 | 6.0 | 5.9 | ||
| Total export prices | 6.7 | -11.6 | -2.1 | 5.0 | 4.9 | 3.9 | 1.0 | 1.1 | 1.1 | ||
| Total export volume | 4.9 | 8.7 | 1.4 | 5.2 | 8.0 | 5.7 | 5.1 | 4.9 | 4.9 | ||
| Total import price | 1.5 | -4.0 | -3.9 | 2.4 | 0.9 | -0.2 | 0.2 | 0.9 | 0.9 | ||
| Total import volume | 13.9 | 0.2 | 0.2 | 6.9 | 11.2 | 9.9 | 8.5 | 7.0 | 6.7 | ||
| Terms of trade | 5.1 | -7.9 | 1.9 | 2.5 | 4.0 | 4.2 | 0.8 | 0.2 | 0.1 | ||
| Real GDP | 4.2 | 3.1 | 2.1 | 3.3 | 4.5 | 5.2 | 5.5 | 5.0 | 4.8 | ||
| LIBOR (in percent) | 6.6 | 3.7 | 1.9 | 1.3 | 2.8 | 5.2 | 5.5 | 5.5 | 5.5 | ||
| (In percent of GDP) | |||||||||||
| Gross domestic investment | 21.8 | 21.9 | 21.9 | 21.8 | 22.0 | 22.0 | 22.0 | 22.3 | 22.4 | ||
| Public sector | 3.5 | 3.6 | 4.0 | 4.0 | 4.0 | 3.9 | 3.9 | 3.9 | 3.9 | ||
| Private sector and inventory change | 18.4 | 18.3 | 17.9 | 17.8 | 18.0 | 18.1 | 18.2 | 18.3 | 18.5 | ||
| External current account balance | -1.0 | -1.7 | -0.8 | -0.9 | -1.1 | -1.3 | -1.7 | -2.1 | -2.4 | ||
| Gross national savings | 20.8 | 20.1 | 21.1 | 20.9 | 20.9 | 20.7 | 20.3 | 20.0 | 19.9 | ||
| Public sector 4/ | 2.0 | 2.6 | 1.7 | 2.5 | 3.3 | 3.7 | 4.0 | 4.2 | 4.2 | ||
| Private sector | 18.8 | 17.5 | 19.4 | 18.4 | 17.6 | 17.0 | 36.3 | 15.8 | 15.7 | ||
Includes errors and omissions.
Gold at market valuation. End-vear stock of reserves in relation to imports of the following year.
Chilean export price.
Net of estimated losses of the central bank.
Chile: Balance of Payments—Medium-Term Projections
| Projections | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |||
| (In billions of U.S. dollars) | |||||||||||
| Current account | -0.8 | -1.2 | -0.6 | -0.6 | -0.8 | -1.1 | -1.6 | -2.1 | -2.6 | ||
| Trade balance | 2.1 | 2.1 | 2.5 | 2.8 | 3.3 | 3.7 | 3.4 | 3.1 | 2.9 | ||
| Exports | 19.2 | 18.5 | 18.3 | 20.3 | 23.0 | 25.2 | 26.8 | 28.4 | 30.1 | ||
| Copper | 7.3 | 6.7 | 6.3 | 7.0 | 8.4 | 9.5 | 9.9 | 10.3 | 10.8 | ||
| Noncopper | 11.9 | 11.7 | 12.1 | 13.3 | 14.5 | 15.7 | 16.9 | 18.1 | 19.3 | ||
| Imports | -17.1 | -16.4 | -15.8 | -17.5 | -19.6 | -21.5 | -23.4 | -25.2 | -27.2 | ||
| Financial services (net) | -2.8 | -2.8 | -2.5 | -2.7 | -3.1 | -3.7 | -3.9 | -4.1 | -4.5 | ||
| Other services and transfers (net) | -0.1 | -0.5 | -0.5 | -0.7 | -1.1 | -1.1 | -1.0 | -1.1 | -1.0 | ||
| Capital account 1/ | 1.1 | 0.6 | 0.8 | 0.8 | 1.2 | 1.9 | 2.5 | 3.0 | 3.6 | ||
| Foreign investment (net) | 0.6 | 3.2 | -0.4 | -1.2 | -0.4 | -0.4 | -0.4 | -0.3 | -0.4 | ||
| Assets | -3.2 | -2.8 | -3.7 | -5.7 | -4.7 | -4.9 | -5.2 | -5.4 | -5.7 | ||
| Liabilities | 3.8 | 6.0 | 3.3 | 4.5 | 4.3 | 4.5 | 4.8 | 5.1 | 5.3 | ||
| Other capital flows | 0.5 | -2.6 | 1.2 | 2.0 | 1.7 | 2.3 | 2.8 | 3.3 | 4.0 | ||
| Medium- and long-term (net) | 0.1 | -0.2 | -0.6 | 0.6 | 0.6 | 1.0 | 1.2 | 1.4 | 1.8 | ||
| Disbursements | 4.3 | 4.1 | 5.2 | 5.6 | 4.0 | 5.9 | 6.5 | 6.0 | 6.5 | ||
| Amortizations | -4.2 | -4.2 | -5.8 | -5.0 | -3.4 | -4.9 | -5.3 | -4.5 | -4.7 | ||
| Other capital net 1/ | 0.4 | -2.4 | 1.8 | 1.4 | 1.0 | 1.4 | 1.6 | 1.9 | 2.2 | ||
| Overall balance | 0.3 | -0.6 | 0.2 | 0.1 | 0.4 | 0.8 | 0.9 | 1.0 | 1.0 | ||
| Reserve assets (increase -) | -0.3 | 0.6 | -0.2 | -0.1 | -0.4 | -0.8 | -0.9 | -1.0 | -1.0 | ||
| Valuation adjustment | -0.2 | -0.1 | 0.8 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||
| Change in official reserve stock (increase -) | -0.2 | 0.7 | -1.0 | -0.1 | -0.4 | -0.8 | -0.9 | -1.0 | -1.0 | ||
| (In months of imports of goods and services) | |||||||||||
| Gross official international reserves 2/ | 8.5 | 8.3 | 8.1 | 7.2 | 6.8 | 6.6 | 6.4 | 6.3 | 6.3 | ||
| Mam assumptions | |||||||||||
| Copper price (LME; U.S. cents per pound) | 82.2 | 71.7 | 70.8 | 74.9 | 81.6 | 86.2 | 87.1 | 88.0 | 88.9 | ||
| Volume of copper exports (thousand metric tons) | 4,402 | 4,592 | 4,453 | 4,694 | 5,114 | 5,426 | 5,589 | 5,756 | 5,929 | ||
| (Annual change in percent) | |||||||||||
| Copper export prices 3/ | 14.8 | -11.2 | -4.2 | 5.8 | 10.9 | 6.2 | 1.1 | 1.1 | 1.1 | ||
| Copper export volumes | 8.3 | 4.3 | -3.0 | 5.4 | 8.9 | 6.1 | 3.0 | 3.0 | 3.0 | ||
| Noncopper export prices | 2.2 | -13.2 | -0.8 | 4.9 | 2.0 | 2.8 | 1.0 | 1.1 | 1.0 | ||
| Noncopper export volume | 5.6 | 14.0 | 4.3 | 5.1 | 7.5 | 5.5 | 6.3 | 6.0 | 5.9 | ||
| Total export prices | 6.7 | -11.6 | -2.1 | 5.0 | 4.9 | 3.9 | 1.0 | 1.1 | 1.1 | ||
| Total export volume | 4.9 | 8.7 | 1.4 | 5.2 | 8.0 | 5.7 | 5.1 | 4.9 | 4.9 | ||
| Total import price | 1.5 | -4.0 | -3.9 | 2.4 | 0.9 | -0.2 | 0.2 | 0.9 | 0.9 | ||
| Total import volume | 13.9 | 0.2 | 0.2 | 6.9 | 11.2 | 9.9 | 8.5 | 7.0 | 6.7 | ||
| Terms of trade | 5.1 | -7.9 | 1.9 | 2.5 | 4.0 | 4.2 | 0.8 | 0.2 | 0.1 | ||
| Real GDP | 4.2 | 3.1 | 2.1 | 3.3 | 4.5 | 5.2 | 5.5 | 5.0 | 4.8 | ||
| LIBOR (in percent) | 6.6 | 3.7 | 1.9 | 1.3 | 2.8 | 5.2 | 5.5 | 5.5 | 5.5 | ||
| (In percent of GDP) | |||||||||||
| Gross domestic investment | 21.8 | 21.9 | 21.9 | 21.8 | 22.0 | 22.0 | 22.0 | 22.3 | 22.4 | ||
| Public sector | 3.5 | 3.6 | 4.0 | 4.0 | 4.0 | 3.9 | 3.9 | 3.9 | 3.9 | ||
| Private sector and inventory change | 18.4 | 18.3 | 17.9 | 17.8 | 18.0 | 18.1 | 18.2 | 18.3 | 18.5 | ||
| External current account balance | -1.0 | -1.7 | -0.8 | -0.9 | -1.1 | -1.3 | -1.7 | -2.1 | -2.4 | ||
| Gross national savings | 20.8 | 20.1 | 21.1 | 20.9 | 20.9 | 20.7 | 20.3 | 20.0 | 19.9 | ||
| Public sector 4/ | 2.0 | 2.6 | 1.7 | 2.5 | 3.3 | 3.7 | 4.0 | 4.2 | 4.2 | ||
| Private sector | 18.8 | 17.5 | 19.4 | 18.4 | 17.6 | 17.0 | 36.3 | 15.8 | 15.7 | ||
Includes errors and omissions.
Gold at market valuation. End-vear stock of reserves in relation to imports of the following year.
Chilean export price.
Net of estimated losses of the central bank.
Chile: External Debt and Debt Service
Excludes direct short-term trade credits.
Original maturity basis.
Chile: External Debt and Debt Service
| Projections | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |||||
| (In billions of U.S. dollars, end of period) | |||||||||||||
| Total debt outstanding 1/ | 36.5 | 38.0 | 40.4 | 42.1 | 44.2 | 46.6 | 49.5 | 52.7 | 56.4 | ||||
| Of which: external private debt | 31.0 | 32.3 | 33.2 | 34.1 | 36.2 | 38.6 | 41.5 | 44.7 | 48.4 | ||||
| percent change | 9.4 | 4.3 | 2.9 | 2.8 | 5.9 | 6.8 | 7.4 | 7.8 | 8.3 | ||||
| Of which: external public debt | 5.5 | 5.8 | 7.2 | 8.0 | 8.0 | 8.0 | 8.0 | 8.0 | 8.0 | ||||
| Medium- and long-term loans and bonds 2/ | 33.9 | 36.0 | 38.1 | 39.8 | 41.8 | 44.3 | 47.1 | 50.4 | 54.1 | ||||
| International organizations | 1.5 | 1.4 | 1.2 | 1.0 | 0.8 | 0.5 | 0.4 | 0.2 | 0.1 | ||||
| Official lenders | 1.6 | 1.7 | 1.8 | 1.6 | 1.4 | 1.3 | 1.2 | 1.1 | 1.0 | ||||
| Private creditors | 30.8 | 32.8 | 35.1 | 37.2 | 39.6 | 42.5 | 45.6 | 49.1 | 53.1 | ||||
| Private financial institutions | 15.8 | 16.2 | 16.7 | 18.0 | 19.9 | 21.9 | 24.3 | 26.8 | 29.5 | ||||
| Other | 7.9 | 8.0 | 7.9 | 7.1 | 5.9 | 4.8 | 3.4 | 2.1 | 1.0 | ||||
| Bonds | 7.1 | 8.6 | 10.4 | 12.1 | 13.9 | 15.8 | 17.9 | 20.1 | 22.6 | ||||
| Short-term debt 1/2/ | 2.5 | 2.1 | 2.3 | 2.3 | 2.3 | 2.3 | 2.3 | 2.3 | 2.3 | ||||
| Short-term debt, residual maturity basis 1/ | 6.6 | 6.7 | 8.5 | 7.4 | 5.7 | 7.2 | 7.6 | 6.8 | 7.0 | ||||
| Total debt service | 6.2 | 6.1 | 7.4 | 6.2 | 5.3 | 8.1 | 8.7 | 8.2 | 8.6 | ||||
| Amortization | 4.2 | 4.2 | 5.8 | 5.0 | 3.4 | 4.9 | 5.3 | 4.5 | 4.7 | ||||
| Interest | 2.1 | 1.9 | 1.6 | 1.2 | 1.9 | 3.2 | 3.5 | 3.7 | 3.9 | ||||
| IMF | |||||||||||||
| Credit outstanding | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||
| Repurchases | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||
| (In percent of GDP) | |||||||||||||
| Total external debt, end-period 1/ | 48.7 | 55.7 | 60.8 | 60.5 | 57.9 | 56.0 | 54.8 | 54.1 | 53.8 | ||||
| gross change (in percent) | 4.3 | 14.4 | 9.2 | -0.4 | -4.4 | -3.2 | -2.2 | -1.2 | -0.5 | ||||
| gross change of nominal stock (in percent) | 6.9 | 4.3 | 6.2 | 4.3 | 4.8 | 5.6 | 6.1 | 6.6 | 7.1 | ||||
| GDP growth (in USS) | 2.6 | -8.8 | -2.7 | 4.7 | 9.6 | 9.1 | 8.5 | 7.9 | 7.6 | ||||
| GDP growth (real) | 4.2 | 3.1 | 2.1 | 3.3 | 4.5 | 5.2 | 5.5 | 5.0 | 4.8 | ||||
| Of which: external private debt | 41.3 | 47.3 | 50.0 | 49.1 | 47.4 | 46.4 | 45.9 | 45.9 | 46.2 | ||||
| Of which: external public debt | 7.4 | 8.4 | 10.8 | 11.5 | 10.5 | 9.6 | 8.9 | 8.2 | 7.6 | ||||
| Interest payments on external debt | 2.8 | 2.8 | 2.4 | 1.7 | 2.5 | 3.8 | 3.8 | 3.8 | 3.7 | ||||
| (In percent of exports of goods and services) | |||||||||||||
| Debt-service payments | 26.8 | 27.1 | 33.3 | 25.6 | 19.3 | 26.8 | 27.0 | 23.8 | 23.6 | ||||
| Of which: interest | 8.9 | 8.3 | 7.3 | 5.0 | 7.0 | 10.5 | 10.7 | 10.7 | 10.7 | ||||
| IMF repurchases | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||
| Total external debt outstanding at year-end 1/ | 156.6 | 168.5 | 181.1 | 172.4 | 160.4 | 154.5 | 153.0 | 153.5 | 154.8 | ||||
| IMF credit outstanding | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||
| Memorandum items: | |||||||||||||
| Net international reserves, percent of GDP | 20.2 | 21.1 | 23.1 | 22.3 | 20.9 | 20.1 | 19.6 | 19.1 | 18.8 | ||||
| Net financial services payments, percent of GDP | 3.7 | 4.0 | 3.8 | 3.8 | 4.0 | 4.5 | 4.4 | 4.2 | 4.2 | ||||
Excludes direct short-term trade credits.
Original maturity basis.
Chile: External Debt and Debt Service
| Projections | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | |||||
| (In billions of U.S. dollars, end of period) | |||||||||||||
| Total debt outstanding 1/ | 36.5 | 38.0 | 40.4 | 42.1 | 44.2 | 46.6 | 49.5 | 52.7 | 56.4 | ||||
| Of which: external private debt | 31.0 | 32.3 | 33.2 | 34.1 | 36.2 | 38.6 | 41.5 | 44.7 | 48.4 | ||||
| percent change | 9.4 | 4.3 | 2.9 | 2.8 | 5.9 | 6.8 | 7.4 | 7.8 | 8.3 | ||||
| Of which: external public debt | 5.5 | 5.8 | 7.2 | 8.0 | 8.0 | 8.0 | 8.0 | 8.0 | 8.0 | ||||
| Medium- and long-term loans and bonds 2/ | 33.9 | 36.0 | 38.1 | 39.8 | 41.8 | ||||||||