Chee, K., J. Kiholm Smith, and R. Smith, 1999, “Evidence on the Determinants of Credit Terms Used in Interfirm Trade,” Journal of Finance, 54(3), 1109–1130 (July).
International Monetary Fund, 2002, “Assessing Sustainability,” Staff Memoranda 02/166, (Washington: International Monetary Fund).
International Monetary Fund, 2002, “Forecasting Copper Prices in the Chilean Context,” Chile—Selected Issues, IMF Staff Country Report No. 02/163, (Washington: International Monetary Fund).
International Monetary Fund, 2000, “Assessing External Vulnerability: The Case of Chile,” Chile—Selected Issues, IMF Staff Country Report No. 00/94, (Washington: International Monetary Fund).
Prepared by Rodolfo Luzio.
Current work at the Central Bank of Chile (BCCh), in preparation of a Financial Stability Report, has focused on developing a more detailed and comprehensive assessment of Chile’s external position.
The analysis in this chapter does not refer to the more demanding question of the optimal level of international reserves. Rather, the level of reserves is here compared to the level of financing needs under various scenarios. To consider the optimal level of international reserves, a more comprehensive analysis of the costs and benefits of liquidity holdings would be required, including with greater attention to the probability of adverse shocks.
Using a narrow definition of liquid assets, which includes only short-term deposit and currency holdings, but excludes short-term credits, would indicate that private sector liquid holdings would cover more than two thirds of the private sector’s short-term debt on a residual maturity basis.
Total external debt excludes trade credit liabilities which are expected to be published in September 2003.
From end 1997 to end 2002, the Chilean peso dropped by 31 percent in real effective terms.
The negative effect on the trade balance would be somewhat larger, but the effect on the current account would be partially offset by reduced profit outflows by foreign-owned mining companies.
See Selected Issues volume from the 2002 Article IV consultation, “Forecasting Copper Prices in the Chilean Context.”
Enersis, recently agreed with foreign banks to reschedule its loan commitment worth $2 billion coming due in 2003 and 2004 beyond 2008. (See accompanying note.)