In Chile, a stimulus plan far from protesters' demands

Demonstration against the government in Santiago, 18 November.
Demonstration against the government in Santiago, 18 November. JOHAN ORDONEZ / AFP

Week after week, it's the same refrain. "I know premiums do not solve everything, but it should be a big relief"said Chilean President Sebastián Piñera on Tuesday (December 3rd), when he announced the granting of an exceptional bonus of 50,000 pesos (56 euros) per child for the most vulnerable families. The measure is expected to affect nearly 6 million Chileans – out of the country's 19 million – and be voted on urgently by Congress by the end of the year.

The right-wing government has multiplied the economic announcements in recent days, while the social protest movement, which is entering its seventh week, continues.

Monday, Finance Minister Ignacio Briones announced an economic stimulus package worth nearly 5 billion euros for 2020. " After forty-five days of near-paralysis of economic activity in Chile, measures were needed, says Marco Kremerman, economist and researcher at the Sol Foundation, but those announced by the government do not respond to protesters' demands. "

Read also Chile's social crisis: the government presents a plan of over $ 5 billion

Especially since most are not new, especially with regard to public investment in infrastructure, such as the Santiago Metro. Several stations were ransacked during the first days of the movement – originally launched by students and students who protested against the increase in ticket prices.

Tax reform will be essential

The plan of "Economic reactivation", as it was baptized by the Piñera government, also provides for a rise in the minimum old age, aid for the most vulnerable Chileans and for SMEs, strongly affected by the social crisis: economic activity contracted by 3.4% in October.

The peso and the Chilean Stock Exchange collapsed: in late November, in order to support the local currency, the Central Bank of Chile authorities said they would inject up to 20 billion dollars (18 billion euros) on the foreign exchange market until May 2020.

"The government's measures are small pushes, similar to those that could have been taken following a punctual event, such as an earthquake", denounces Mr. Kremerman, according to which the cost of this plan is "Perfectly manageable for the Chilean State. "

The projected increase in public spending is expected to widen the country's budget deficit to 4.4% of GDP in 2020, a level similar to that of 2009, the time of the subprime crisis, which had strongly affected the country's budget. country.


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