In detail, the Minister of Finance, Mario Marcel, presented to the Joint Budget Commission the Statement of the State of the Public Treasury (EEHP) 2024; and immediately afterwards, the Budget Director, Javiera Martínez Fariña, presented the Public Finances Report for the third quarter. Both milestones constitute the beginning of the processing of the fiscal budget project for next year. 

In his speech, Marcel highlighted that the first quarter of this year was largely favorable in terms of growth, with a moderate correction in the second quarter, while the figures available for july and august indicate that the economy is well positioned to grow at a rate similar to the 2.6% forecast by the Ministry of Finance for this year. 

The authority's outlook for 2025 forecasts that Gross Domestic Product (GDP) will increase by 2.67%, non-mining GDP 2.5%, domestic demand 3.4%, the current account deficit will be around -2.3% and the CPI at 4.2%, with a resumption of convergence to the target, past the peak generated by the normalization of electricity tariffs in the first half of the year. 

“If these prospects for economic activity in 2025 are fulfilled, Chile's annual growth from before the pandemic until now would be higher than the average for Latin America for the same period. Likewise, the growth of per capita income for the 2022-2025 quadrennium will be higher than that of the two previous quadrenniums, which would meet the goal set by the President of the Republic in his public account last June. With this growth rate, the country will also be well positioned to achieve the goal of creating 700,000 jobs during the current administration”, added the authority. 

Regarding public finances, Marcel reiterated the Government's commitment to fiscal responsibility and recalled that the State's financial management has always been guided by the fiscal policy rule. In 2024, the goals continued with the fiscal consolidation effort with additional reductions in the effective and structural deficit according to the target set for this year. Even the minister admitted that in order to comply with these parameters, adjustments have been required on the expenditure side due to lower revenues given the lower result of Operation Income and the drop in the price of lithium, compensated only by a more dynamic VAT collection. 

“These adjustments have avoided affecting public investment and, on the contrary, capital spending in the first eight months of this year has performed much better than in previous years, being executed at almost 55%, compared to just under 50% in previous years. As a government, we will continue working to ensure compliance with fiscal targets, both on the revenue and expenditure sides”, he explained. 

By 2025, the draft Budget Law will fully comply with the fiscal policy targets, reducing the effective and cyclically adjusted deficit to 1.0% of GDP and 1.1% of GDP, respectively. To achieve this, Minister Marcel explained: “There will be an expansion of fiscal revenues that will not only reflect the higher GDP growth, but will also add the effects of policy measures of the current administration, including the new Mining Royalty, the revenues from the exploitation of lithium in the Salar de Atacama by the Codelco-SQM agreement and the Tax Compliance Law. These three elements together imply higher structural fiscal revenues of around 1% of GDP, which in turn means some room for public spending in compliance with the fiscal rule, which will then allow public spending to grow at a similar rate to activity, without compromising the progress of fiscal consolidation, because we are moving from a structural deficit of 1.9% of GDP to 1.1%”.

The Minister of Finance emphasized that the public debt will be close to US$20,000 million below what it would have been if the trend of the 12 years prior to the beginning of the Government had been maintained, which will imply a saving in interest payments of approximately US$1,400 million per year. 

“With this, public debt will stabilize slightly above 41% of GDP and significantly below the prudential limit of 45% of GDP. This will put an end to 17 years of uninterrupted growth of this debt, an issue that has worried observers, analysts and risk rating agencies. Taken as a whole, President Boric's government will be the one with the lowest growth of public debt during his term of office in the last 16 years and the only one in the last 50 years that will end with a lower level of public expenditure than at the end of the previous presidential term”, added Marcel. 

Public Finances Report for the third quarter 

Subsequently, the Budget Director presented the updated fiscal scenario through the Public Finance Report (IFP) for the third quarter of 2024, which accompanies the 2025 Budget Bill.

The projections presented by Minister Marcel, the director explained, are consistent with a 2025 Budget with a public expenditure of $82.5 trillion (US$93,046 million), which represents a growth of 2.71% with respect to the 2024 Budget Law.  “The Public Sector Budget 2025 advances in the fiscal consolidation committed by the Government of President Gabriel Boric and, in turn, gives fulfillment to the priorities of the citizenry in terms of public, social and economic security, fostering social cohesion and driving the development of the Chile to come,” she described. 

“The 2022 fiscal adjustment in conjunction with the execution of 100% of the 2023 budget, equivalent to $70.83 billion, allowed progress in meeting the Cyclically Adjusted Balance (CAB) target, maintaining a prudent public debt level of 39.4% of GDP. The figures expected for 2024 keep us on a convergence path, in addition to maintaining the level of public debt well below the prudent level of 45% of GDP. Thus, taken as a whole, President Boric's government will be the one with the lowest growth in gross public debt during his term of office in the last 16 years”, summarized Director Martínez.

Better public spending 

Within the framework of the formulation of the Budget 2025, the ex ante and ex post evaluation processes were recently closed, which this year considered the review of 128 programs and 15 evaluations of one or more programs, respectively. In view of the results of these evaluations and the conditions made in the monitoring process, the Executive's proposal contemplates an average reduction of 5% in the resources allocated in the Budget 2025 bill for a set of 119 programs with weaknesses in their design and/or performance. Meanwhile, for programs with good evaluation or at least without conditions, the Budget bill implies an average increase of 6% for 2025 compared to the resources allocated in 2024. This translates into reductions of Ch$77,566 million related to poorly evaluated programs or those with technical objections, resources that were reallocated to other budgetary priorities.  

The Budget Director explained that “there is indeed a relevant effort to evaluate, identify and then make a budgetary impact of this evaluation. But we must bear in mind that not every poorly evaluated program can necessarily be reduced or closed. Why? Because the public problem that this initiative has probably still exists or because it may also be a legal matter. That is why it cannot be downgraded”. She added that “what is done with the evaluated programs depends on each one of them. We make reductions that mobilize to improve the use of public resources, and in specific cases we have also closed programs. When this happens, the important thing is to continue to take charge as a State of the problem that this public policy was intended to solve”.

For the second consecutive year, together with the Public Finances Report, a report on the Variation of Public Program Budgets was published, which summarizes the main variations in the allocation of resources to 97 public programs between the 2024 Budget Law and the 2025 Budget Bill and its link with the results of the instruments of the Monitoring and Evaluation System.  

Macroeconomic variables for 2025