Chile: 2024 Article IV Consultation-Press Release; and Staff Report
IMF Staff Country Reports, February 5, 2025
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Bibliographic details
- Published: February 5, 2025
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798229000321.002
Macroeconomic assessment
- The economy is "broadly balanced" but external risks are "elevated".
- Chile’s macroeconomic position is sound due to its "very strong fundamentals, policies, and policy frameworks".
- Lifting Chile’s growth potential is necessary to raise living standards and tackle social and fiscal pressures.
Fiscal outlook and framework
- The goal of a "broadly balanced fiscal position by 2027" remains appropriate but has become more challenging.
- Continuous enhancements to Chile’s already "very strong fiscal framework" would foster fiscal policy formulation and transparency.
- Key policy emphasis:
- Preserve fiscal sustainability while managing the increased difficulty of reaching the 2027 fiscal balance objective.
- Strengthen transparency and tools for fiscal policy formulation through incremental framework improvements.
Pension system findings and recommendations
- A pension reform is described as essential to ensure adequate pensions and to address the fiscal costs of population aging.
- Specific reform priorities:
- Raise contribution rates.
- Increase the number of contribution periods.
- Ensure old-age pensions are sustainably self-financed.
- The minimum guaranteed pension has:
- Strengthened the system’s solidarity.
- Increased replacement ratios.
- Reduced old-age poverty.
- Also incurred high fiscal costs.
Financial sector resilience and vulnerabilities
- The financial system remains resilient.
- Rising vulnerabilities are noted, specifically:
- Real estate sector-related vulnerabilities.
- Lower financial market depth.
Cross-cutting policy implications
- Policies should balance strengthening social outcomes (for example, via the minimum guaranteed pension) with fiscal sustainability given high fiscal costs.
- Structural reforms to raise growth potential are prioritized to alleviate social and fiscal pressures.
- Ongoing supervision and macroprudential vigilance are implied to address real estate vulnerabilities and limited market depth.
Source: Chile: 2024 Article IV Consultation-Press Release; and Staff Report, International Monetary Fund
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