Chile: Improved near-term fiscal dynamics, additional structural consolidation still needed

Research evidence excerpt

Chile: Improved near-term fiscal dynamics, additional structural consolidation still needed

J P M O R G A N Latin America Economic Research

20 July 2026

Chile

Improved near-term fiscal dynamics, additional

structural consolidation still needed

Economic and Policy Research

Diego W. Pereira

(1-212) 834-4321

diego.w.pereira@jpmorgan.com

J.P. Morgan Securities LLC

Chile’s latest Public Finance Report (IFP 2Q26) paints a more favorable near-term

fiscal picture, with higher mining-related revenues and additional expenditure

restraint narrowing the projected 2026 fiscal deficit to around 2% of GDP despite

a softer growth outlook. Yet, despite the spending correction, the improvement

largely reflects cyclical factors rather than a lasting strengthening of the fiscal

position. Looking ahead, the government’s investment-focused Reconstruction

Bill could lift growth meaningfully, but it also widens the structural fiscal gap,

implying that further expenditure adjustments will likely be needed to ensure

compliance with fiscal targets and preserve a prudent buffer below the debt anchor.

2026 effective fiscal deficit expected to narrow towards

2% of GDP despite lower growth

The second-quarter Public Finance Report (IFP 2Q26) delivers a more favorable

near-term fiscal outlook than the first-quarter update. Effective central-

government revenue for 2026 is now projected at 21.9% of GDP, with structural

revenue estimated at 21.3% of GDP, while total expenditure is expected to reach

23.9% of GDP. As a result, the official projections point to an effective fiscal deficit

of 2.0% of GDP and a structural deficit of 2.6% of GDP.

The improvement stems from two distinct factors. First, higher copper and lithium

prices have boosted projections for mining-related revenues, driving the upward