Chile closed 2021 with a fiscal deficit below expectations: 7.6% of GDP, according to Dipres

Chile closed 2021 with a fiscal deficit of 7.6% of the estimated gross domestic product (GDP), even surpassing the 2020 mark when the pandemic caused an overdraft of 7.1%, according to the Budget Directorate (Dipres) of the Ministry of Finance.
In absolute terms, it is a negative balance of more than 23,000 million dollars, a figure not as high as the one that the Government had projected in the last quarter, more than 24,300 million -8.3% of GDP-, explained the Minister of Finance, Rodrigo Cerda.
“7.6% is an important number, but it is similar to that of other countries. In addition, it allowed us to recover our economy and help our compatriots,” he said.
The deficit is due to a “historic” growth in public spending, which reached 94,700 million dollars -which implies a growth of 33.2% per year-, said the official report, mainly influenced by the measures to help family economies dented by the restrictions imposed by covid-19.
This figure was not offset by 37.8% revenue growth, which reached $71.6 billion.
The pandemic, which leaves 2.1 million cases and almost 40,000 deaths, worsened between March and August 2021 and led the Government of President Sebastián Piñera to decree quarantines that lasted for more than three months.
Social assistance increased throughout the year in the form of subsidies and direct transfers to households, which reached 16 of the 19 million citizens and involved an expenditure of 26.5 million dollars, according to official figures.
At the same time, revenues increased mainly due to a 34.1% increase in tax collection from taxpayers, large private mining and Codelco, the state-owned copper company, a mineral of which Chile is the world’s leading exporter and whose price reached historic highs this year.
VAT revenues increased by 36.6% “due to the greater dynamism of private consumption, driven by the greater liquidity of households and the withdrawals of pension funds,” the report said.
Chile’s GDP, which fell by 5.8% in 2020 – the worst recession in four decades – could rise between 11.5% and 12%, according to the Central Bank’s latest estimate.
The pandemic has registered a massive uptick in infections in recent weeks due to the rapid expansion of the ómicron variant, although the country has not put new mobility restrictions.

Original source in Spanish