Chile proposes public spending increase to jumpstart economy

Chile's President Jose Antonio Kast ​on Wednesday proposed a 2027 budget ​that would raise public spending by ‌1.5% from ​this year, as he seeks to accelerate economic recovery, investment and job creation while pledging fiscal discipline.

Kast, in a televised address ‌announcing his first budget since taking office in March, said spending would remain consistent with the government's deficit target and prioritize growth, security and social benefits. "Our government expected spending to increase between 0% ‌and 1%," Kast said. "We decided to make an additional half-point push to speed up economic ‌reactivation, investment and employment."

There are about 980,000 jobseekers in an economy where unemployment has stayed above 8% for over three-and-a-half years, Kast said. Kast, the most right-leaning leader since Chile's return to democracy in 1990, has blamed former leftist President ⁠Gabriel Boric ​for strained public finances ⁠and previously said he would lead an "emergency government" focused on recovery.

On Wednesday, Kast said his administration had inherited ⁠a state that spent beyond its means for over a decade, resulting in a heavy debt burden and ​rising interest costs. Still, he said the answer was not austerity alone but targeted spending ⁠backed by financing. He said more than 600 of every 1,000 pesos spent by the state already go ⁠into ​areas his government would protect such as pensions, health and education.

Kast's budget included police hiring and prison resources, as well as resources to address issues including migration and organized crime, ⁠reflecting the themes of security and public order that were central to his election campaign. The government ⁠submitted the budget ⁠bill to Congress on Wednesday. Lawmakers have 60 days to review, amend and approve it and related borrowing legislation for next year.