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© 2009 International Monetary Fund

September 2009

IMF Country Report No. 09/271

Chile: 2009 Article IV Consultation—Staff Report; Staff Statement and Supplement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Chile

Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2009 Article IV consultation with Chile, the following documents have been released and are included in this package:

  • The staff report for the 2009 Article IV consultation, prepared by a staff team of the IMF, following discussions that ended on June 5, 2009, with the officials of Chile on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on July 8, 2009. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.

  • A staff statement of July 22, 2009, updating information on recent developments.

  • A staff supplement of July 8, 2009, updating information on recent developments

  • A Public Information Notice (PIN) summarizing the views of the Executive Board as expressed during its July 22, 2009 discussion of the staff report that concluded the Article IV consultation.

  • A statement by the Executive Director for Chile.

The document listed below has been or will be separately released.

  • Selected Issues Paper

The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.

Copies of this report are available to the public from

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Price: $18.00 a copy

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Staff Report for the 2009 Article IV Consultation Discussions

Prepared by the Western Hemisphere Department (In consultation with other departments)

Approved by Miguel Savastano and Michele Shannon

July 8, 2009

  • Mission. A staff team comprising Messrs. Cerisola (head), Chan-Lau and Di Bella (all WHD), and Gracia (FAD) conducted the 2009 Article IV consultation discussions during May 26-June 5. Staff met with Central Bank Governor De Gregorio, Minister of Finance Velasco, Budget Director Arenas, other key senior officials, and representatives of the private sector. Mr. Rojas-Olmedo (OED) participated in several meetings.

  • Previous consultations. There has been broad agreement between the authorities and staff on macroeconomic policies in recent years. At the time of the 2008 Article IV Consultation on July 11, 2008, Directors commended Chile’s adherence to a prudent, rules-based macroeconomic policy framework, which had been instrumental for managing the copper boom and several adverse shocks. They also noted the economy’s remarkable resilience to the impact of global food and fuel price shocks, which have been exacerbated by domestic energy shortfalls and a severe drought, and considered that monetary policy had been appropriately geared to returning inflation toward the 3-percent target. Directors also commended the government’s strict adherence to the structural fiscal surplus rule, the focus on improving the already high quality of public spending, and the ongoing efforts to strengthen further the management of Sovereign Wealth Funds.

  • Analytical work. Topics for selected issues papers were discussed with the authorities early in the process and preliminary results were presented in a seminar hosted by the Central Bank of Chile during the mission. The Selected Issues paper includes work on: (i) the global financial crisis and risks in the domestic banking system; (ii) a longer-term approach to fiscal policy; (iii) the role of new investment in machinery and equipment, and its implications for productivity.

  • Exchange System. Chile has accepted the obligations of Article VIII and maintains a free floating exchange rate system free of restrictions on the making of payments and transfers for current international transactions.

  • Statistical Issues. Chile is in observance with the Special Data Dissemination Standards (SDDS).


  • I. Staff Appraisal and Executive Summary

  • II. The Global Crisis and the Policy Response

  • III. The Economic Outlook and Risks

  • IV. Policy Discussions

    • A. The Role for Macroeconomic Policies

    • B. The Reforms to Solidify the Policy Framework, the Financial System and Capital Markets

  • Boxes

  • 1. A Sequence of Policy Action and Risk during the Crisis

  • 2. The Global Crisis and Potential Output in Chile

  • 3. Bank Lending Conditions and Monetary Policy

  • Figures

  • 1. A Short Tale of Two External Shocks, 1998 and 2008

  • 2. Current Account and Capital Flows

  • 3. Domestic Demand and Net Exports

  • 4. Inflation, Labor Markets, and Monetary Policy

  • 5. Energy Supply: Gradual Normalizing But Still Tight

  • 6. Yields, Spreads, and Credit

  • Tables

  • 1. Selected Social and Economic Indicators

  • 2. Summary Operations of the Central Government

  • 3. Summary Operations of the Public Sector

  • 4. Indicators of External Vulnerability

  • 5. Medium-Term Framework

  • 6. External Debt and Debt Service

  • 7. Social and Demographic Indicators

  • 8. Monetary Survey

  • 9. Measures Announced by Government

  • Annex

  • Debt Sustainability Analysis

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Staff Report for the 2009 Article IV Consultation—Informational Annex

Prepared by the Western Hemisphere Department

July 8, 2009



1. Fund Relations

2. Statistical Issues Appendix

3. World Bank—Fund Country-Level Work Program Under JMAP

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Public Information Notice (PIN) No. 09/111


September 9, 2009

International Monetary Fund

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Washington, D. C. 20431 USA

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Chile: 2009 Article IV Consultation: Staff Report; Staff Statement and Supplement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for Chile
Author: International Monetary Fund