Chile: Fiscal Guidance Continues to Show a Need for Spending Restraint to Meet the Recently Set Fiscal Rule Targets

Research evidence excerpt

Chile: Fiscal Guidance Continues to Show a Need for Spending Restraint to Meet the Recently Set Fiscal Rule Targets

Economics Research

15 July 2026 | 12:29PM EDT

Chile: Fiscal Guidance Continues to Show a Need for Spending Restraint

to Meet the Recently Set Fiscal Rule Targets

Bottom Line: The Ministry of Finance published its quarterly public finance report Sergio Armella

+1(212)357-9077 |

corresponding to the second quarter of 2026. The report reflects the recently sergio.armella@gs.com

Goldman Sachs & Co. LLC

established structural balance targets set out by the Kast administration within its

first 90 days. The decree sets out a narrowing path for the structural deficit from a

2.6% of GDP deficit in 2026, to a 1.5% of GDP deficit by 2030. The debt anchor

ceiling was left unchanged at 45% of GDP. Under the baseline committed-spending

scenario, however, gross debt breaches the 45% level in 2029 and reaches 45.5% by

2030.

The fiscal guidance provided by the government continues to show a need for

greater spending restraint. Critically, the latest guidance shows that the path of

already committed spending would breach the 45% debt ceiling threshold by 2029

and is inconsistent with the structural balance targets set out in the recently enacted

fiscal decree that outlines the fiscal rule commitment for the Kast administration. All

in all, the government estimates that additional fiscal efforts of between 0.2% and

0.5% of GDP are needed and sees headline deficits of around 1.1-1.2% of GDP as

compatible with the fiscal rule. Under an alternative scenario, in which congress

approves the Reconstruction bill currently being discussed, the government projects

that higher growth would offset the fiscal cost of the bill—it entails both lower