The international rating agency, S&P Global Ratings, revised today the outlook for Chile's long-term foreign currency credit rating from “Negative” to “Stable”, affirming the “A” rating. According to the rating agency, “this rating reflects Chile's solid institutions, which remain stronger than those of its peers”. In addition, the decision is based “on the government's commitment to fiscal consolidation that will stabilize debt in the coming years”, as well as “on monetary flexibility and price stability, despite recent inflation”.

In its report, the rating agency highlighted the resilience of Chile's democratic institutions and its capacity to manage internal and external shocks. It highlighted the role of the rules-based policy framework, both from a fiscal and monetary perspective, as an anchor for stabilizing economic performance. The rating agency believes that the government's commitment to fiscal consolidation will stabilize its debt as a percentage of GDP in the coming years.

In response to this information, the Minister of Finance, Mario Marcel, stated: “This is a positive news for the country, and a recognition of the substantial progress made in fiscal consolidation since this Government took office, in line with the authorities' commitment to a strict adherence to the Balance Rule and to recover the health of public finances”.

In addition, the authority highlighted the steps that have been reaffirming this challenge: “Fiscal responsibility materialized with the approval of the Tax Compliance Law, which will increase tax collection, allowing debt levels to remain within a prudent framework of less than 45%, the ceiling suggested by technical agencies in the following years. In addition, the approval in a period of 8 months of the Tax Compliance bill by means of a broad agreement between the opposition and the government is a concrete demonstration that the political system can agree to approve reforms that are important for the country”.

This improvement in the outlook comes just when important advances have been made in the Fiscal Pact agenda, which is laying the foundations for increasing economic growth, and an increase in investment projects is observed. In fact, the rating agency mentions in its report that “the current account deficit is expected to be fully financed with foreign direct investment”.

This action by S&P comes after the rating agency revised Chile's outlook to Negative, in October 2023, arguing that a lower political consensus could weaken the country's growth capacity, as well as delay the approval of key reforms and a fiscal profile vulnerable to shocks. Since then, the rating agency recognizes that this scenario has been reversing and assumes that the consolidation of fiscal accounts in the context of a 2.4% annual growth, together with measures to increase revenues, will allow financing higher expenditures to a large extent. In the same vein, and given the importance it assigns to these factors, the report maintains that if, in a two-year horizon, policy implementation is affected by political impasses that weaken economic growth, the rating could be revised downward. 

Chile's credit rating is at the same level of European countries such as Spain, Latvia and Lithuania, and above the economies of the region.