## Chile: Staff Report for the 2014 Article IV Consultation

_IMF Staff Country Reports, July 22, 2014_

## Source details

**Canonical URL:** [Chile: Staff Report for the 2014 Article IV Consultation](https://www.imf.org/en/publications/cr/issues/2016/12/31/chile-staff-report-for-the-2014-article-iv-consultation-41771)

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## Bibliographic details
- Published: July 22, 2014
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781498380331.002

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### Key Issues — Politics
- President Bachelet won the Presidential election on a platform to foster inclusive growth and reduce inequality.
- Her government took office in March 2014 and is launching an ambitious policy agenda that includes important reforms in taxation, education, productivity, and energy.

### Key Issues — Outlook and risks
- Chile’s global environment is shifting, with a dimmer outlook for its main export, copper, and normalization of global monetary conditions.
- Growth has slowed markedly, resulting in a modest output gap.
- The peso has depreciated, feeding into inflation.
- Staff projects growth to bottom out in 2014 and then gradually recover.
- Key risks relate to a large and lasting drop in copper prices and global financial volatility.

### Key Issues — Policy mix
- The freely floating peso is working as a shock absorber and will support the economic recovery.
- The policy mix with broadly neutral fiscal and accommodative monetary policy is appropriate.
- Room for further monetary easing has narrowed but space remains if domestic demand flounders, so long as inflation expectations remain well anchored.
- On fiscal policy:
  - Given the strong public finances, automatic stabilizers should be allowed to operate unimpeded.
  - There is space for stimuli in the event of a major downturn.
  - The commitment to close the structural fiscal deficit by 2018 is appropriate and should be phased in a way that avoids undue drag on the recovery.
- Should risks materialize, the freely floating currency is the first line of defense.

### Key Issues — Growth and equity reforms
- Achieving strong growth while reducing inequality will require structural reforms.
- The authorities’ agenda focuses on the right areas but many details remain work in progress.
- Clarity on the details, timetables, and prioritization will reduce uncertainty and the risk of delays.

### Key Issues — Financial stability
- Risks to financial stability appear contained.
- It will be important to push through regulatory reforms underway, including initiatives currently in Congress.
- Further effort will be needed to close regulatory gaps, in particular bank capital requirements, relative to international benchmarks.

### Subject tags and identifiers (as presented)
- Subject: Banking, Exports, External debt, Financial regulation and supervision, Fiscal policy, Fiscal stance, International trade, Metal prices, Prices, Public debt
- Publication date: July 22, 2014
- Pages: 71
- Volume: 2014
- Issue: 218
- Series: Country Report No. 2014/218
- DOI: https://doi.org/10.5089/9781498380331.002
- ISBN: 9781498380331
- ISSN: 1934-7685

*International Monetary Fund — Chile: Staff Report for the 2014 Article IV Consultation*

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## Content in this bundle

- **_cr14218 — Spillover Transmission Channels and Effects**
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_Source: https://www.imf.org/en/publications/cr/issues/2016/12/31/chile-staff-report-for-the-2014-article-iv-consultation-41771_