IMF Says Chile’s Financial System Works Well and Warns of Pension Withdrawals

Chile’s financial system is functioning well and responded with skill to two “twin” shocks, the outbreak of social unrest and the coronavirus pandemic, but new withdrawals from pension funds should be halted, the International Monetary Fund (IMF) said on Thursday.
The IMF’s Financial Sector Stability Assessment report recommended halting shifts from the individual capitalization system, noting that it was “threatened due in part to a series of withdrawals.”
Last week, Chile’s Congress rejected a bill that would have allowed Chileans to make a fourth partial withdrawal from their retirement savings. The center-right government of President Sebastián Piñera has opposed all these movements.
The IMF added that “the twin shocks of social unrest in late 2019 and COVID-19 were handled skillfully,” due to well-coordinated fiscal policy and surveillance responses, as well as massive liquidity support from the Central Bank.
“The diagnosis of the evaluators (…) accounts for a deep financial system, with sound regulatory and supervisory frameworks, and sufficiently capitalized banks,” the central bank said in a statement.
The report contains recommendations for the Ministry of Finance, the Central Bank, the Commission for the Financial Market and the Superintendency of Pensions. The evaluated entities “will advance in the realization of the recommendations,” the issuing institute added in its note.

Original source in Spanish