The Government presents the Economic Stimulus Agenda with measures to address the global economic crisis
The measures announced today, together with those already being implemented by the Chilean government in order to boost the Chilean economy, add up to around US$3 billion, This is because the measures reported in June totaled over US$2.4 billion, while those added today amount to around US$600 million.
Treasury Minister Felipe Larraín announced new measures today to reactivate the Chilean economy as part of the Economic Stimulus Agenda. The measures announced today entail public spending of around US$600 million and will be implemented in 2019 and 2020.
Minister Larraín gave details of these measures, along with the following ministers whose teams have also worked on these measures: Agriculture Minister Antonio Walker, Social Development Minister Sebastián Sichel, Economy Minister Juan Andrés Fontaine, Public Works Minister Alfredo Moreno, Health Minister Jaime Mañalich and Housing Minister Cristián Monckeberg.
Minister Larrain explained, "the government is aware that it needs to continue to support the economy. We are therefore announcing a set of measures today, as requested by President Sebastián Piñera. Many of them are practically ready, as they already have an RS, which is an approval report from the Social Development Ministry. They add up to around US$600 million."
The Minister added that the bulk of these resources will be invested during the second half of 2019: US$355 million are for works this year, and US$216 million for 2020.
The measures announced today together cover the areas of Housing and Urban Development, Public Works, Regional Governments, Health and Agriculture. They aim to stimulate the economy by emphasizing the development of investment.
Minister Larraín continued, "these new measures mean that we are investing around US$3 billion through the Economic Stimulus Agenda. All these measures are more investment, which our country needs and they represent improvements in future productive capacity and accordingly in growth potential,” he emphasized.
The Treasury Minister explained that the measures described today are complementary to the initial part of the Economic Stimulus Agenda announced in June. The first tranche of the Public Works portfolio comprised an investment plan with a combination of concessions and traditional public works worth around US$1.4 billion. This tranche will be invested during the second half of this year and in 2020. Furthermore, the next tranche of the Agenda was added in the same month by the Housing and Urban Development Ministry, which consists of bringing forward 15,000 new Social and Territorial Integration subsidies (DS 19), in order for Chile’s disadvantaged and middle class families to become home-owners. The largest investment within this measure is very labor-intensive and it is estimated that this section of the plan will create 45,000 new jobs, requiring a total investment of US$1 billion (just over 0.3% of GDP).
The first two tranches of the Stimulus Agenda total over US$2.4 billion, equivalent to approximately 0.8% of GDP. Today's announcement means that the total impact of all the Stimulus Agenda measures is close to 1% of GDP.
With regard to the fiscal impact of these measures, the Treasury Minister explained that they all fall within the fiscal balance rule. He said, "we are definitely going to fulfil what we proposed to do; we are still committed to structural balance. Therefore, these measures are covered by the flexibility provided in the budget. We are accelerating US$3 billion in investment projects, which means that we are replacing expenditure with investment."
Details of the measures
The measures announced today are as follows:
1. New measures to strengthen investment by the Housing and Urban Development Ministry (MINVU): US$218 million to boost housing programs
• 5,000 new elective housing subsidies (Fondo Solidario de Elección de Vivienda) (DS 49)
• Increase in the value of the Family Equity Protection Program subsidy (Programa de Protección al Patrimonio Familiar, PPPF) associated with the Energy Efficiency Housing Program
• Bring forward the payment of subsidies to 2019
• Bring forward 88 Urban Works to 2019
2. New Public Works Ministry (MOP) Investment Plan: US$150 million in new works across Chile.
3. Stimulus among Regional Governments: US$114 million
4. Stimulus at the Health Ministry: US$26 million in 2019
5. Agriculture Ministry Irrigation Projects: US$63 million