IMF Executive Board Concludes 2026 Article IV Consultation with Chile
July 6, 2026
Chile’s economy remains resilient, with its outlook supported by higher copper prices, though the rise in oil prices has pushed inflation temporarily above target.
Heightened external risks calls for the central bank to stand ready to tighten monetary policy if oil prices remain higher for longer, while continuing to rebuild international reserves.
In line with the government’s core objectives, medium-term policy priorities are to sustainably and credibly rebuild fiscal buffers and durably lift Chile’s growth through structural reforms.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Chile.[1] The authorities have consented to the publication of the Staff Report prepared for this consultation.[2]
Economic activity has remained robust, with GDP growing at 2.5 percent in 2025 driven by strong non‑mining domestic demand. Inflation declined to the central bank’s target in early 2026 but has since increased due to higher energy prices associated with the conflict in the Middle East. Fiscal deficits have persisted due to revenue underperformance, but public debt remains moderate. The financial system is sound overall, although vulnerabilities persist in construction and real estate.
GDP growth is expected to soften to 1.8 percent in 2026, rising to 2.6 percent in 2027 supported by higher copper prices. Inflation is expected to remain temporarily above target in 2026 and early 2027 before converging back to target. The implementation of announced fiscal consolidation measures should help gradually narrow the fiscal deficit over the medium term. However, achieving the government’s objective of reaching structural balance by 2030 and keeping the debt-to-GDP ratio below 45 percent will require additional fiscal efforts. The external position is expected to remain broadly in line with medium‑term fundamentals.
The outlook remains subject to elevated uncertainty, with near‑term risks tilted to the downside. A more prolonged period of high oil prices could weigh on growth and inflation, and the central bank should stand ready to tighten monetary policy, if necessary. At the same time, persistently high copper prices and a successful implementation of growth‑enhancing reforms could strengthen medium‑term prospects. Rebuilding fiscal and external buffers, including continuing with the reserve accumulation plan, while advancing structural reforms, will be critical to maintain resilience and enhance Chile’s long‑term growth potential.
Executive Directors agreed with the thrust of the staff appraisal. They commended Chile’s very strong policies and institutional frameworks that have supported the economy’s resilience amid heightened global uncertainty. Directors welcomed the authorities’ commitment to improve structural fiscal balances, strengthen fiscal and external buffers, and advance structural reforms to preserve macroeconomic stability and enhance sustainable and inclusive growth.
Directors welcomed the authorities’ plans to reduce the structural fiscal deficit to 1.5 percent of GDP by 2030 and to keep debt below 45 percent of GDP. While welcoming enhanced realism in macroeconomic assumptions, they noted that additional measures would be needed to achieve these objectives amid rising spending pressures. In this context, Directors welcomed proposed measures to rationalize expenditures, enhance spending efficiency, and support medium term growth. They emphasized that reforms under the National Reconstruction Plan should be carefully prioritized and sequenced, and that the fiscal costs and growth impact of tax and other reforms should be carefully considered to ensure fiscal sustainability. Directors noted that better targeting of the minimum guaranteed pension and consolidation of fragmented social programs could further strengthen spending efficiency while protecting the most vulnerable. They also encouraged further refinements to the already strong fiscal framework.
Directors highlighted the central bank’s robust inflation targeting framework, encouraging the authorities to stand ready to tighten monetary policy should second round inflation effects materialize. They also welcomed the central bank’s international reserve accumulation program that will strengthen resilience against external shocks, reinforcing the support from the FCL.
Directors agreed that the financial sector remains resilient and well supervised. Positively noting recent regulatory improvements, Directors encouraged the authorities to continue advancing the outstanding 2021 FSAP recommendations and welcomed progress made in strengthening the AML/CFT framework. Monitoring sectoral vulnerabilities in the real estate and construction sectors remains important. Directors also stressed the need to implement the recent pension reform in a well coordinated and gradual manner to avoid abrupt asset reallocations.
Directors supported the authorities’ objective of fostering higher medium term growth, including through deregulation. They encouraged the authorities to also pursue complementary reforms to narrow labor market skill and gender gaps, as well as measures to improve the minimum wage setting process. Reform efforts to facilitate trade and support innovation and diversification would further boost productivity and investment.
Sources: Central Bank of Chile, Ministry of Finance, Haver Analytics, and IMF staff calculations and projections.
1/ Poverty rate and Gini coefficient are from CASEN (new methodology 2024), and are calculated based on national poverty line.
2/ The structural fiscal balance includes adjustments for output, copper prices, and lithium revenues based on IMF calculations.
3/ Includes liabilities of the central government, the Central Bank of Chile and public enterprises. Excludes Recognition Bonds.
[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
[2] Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the country page.
[3] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.
