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Minister: Chile will curb budget growth while Codelco accelerates recovery

Minister: Chile will curb budget growth while Codelco accelerates recovery

The new Chilean finance minister said on Wednesday that the country will have a budget for 2026 with a "responsible increase" while the state-run Codelco tries to recover from production problems. Nicolas Grau, who was appointed by President Gabriel Boric in August, told reporters in his Santiago office that the budget for 2026, which is due to Congress, will have a "limited" increase in spending. Boric will announce the exact amount, but budget increases have been declining since 2023, when they grew by 4.2%. Grau stated that the average annual growth rate would be around 2% with this budget. He said that he would work with Congress to define a budget that is responsible, addresses the needs of the country and gives the next administration enough flexibility. Chile will hold a presidential vote in November, and Boric is not eligible to run again for reelection.

CODELCO’S RECOVERY OF COPPER Chile is the largest copper producer in the world, and its primary source of revenue. Codelco, the state-owned company, has struggled to increase production for many years. It cut its production target in August due to an accident that killed a worker at the mine's flagship El Teniente. Grau reaffirmed his confidence in Codelco’s strategy to close the production gap in previous years and highlighted initiatives such as its partnership with Anglo American for two adjacent deposits.

Grau stated that "Codelco is creating public-private partnerships to allow it maintain its leadership in copper."

SPEEDING UP PERMITTING WILL BOOST INVESTMENT According to Grau, he is confident that the economy will grow by 2.5% this coming year. This growth will be boosted by a 5% increase in investment for carbon-neutral initiatives such as clean energy and digital infrastructure. Grau has made reducing unemployment a priority for his final months in office. Jeannette Jara is the coalition candidate for the leftist government in the upcoming elections. "The latest data show that the unemployment rate is down a bit, but 8.7% still represents a high rate of unemployment. Grau stated that "we believe this rate must be reduced".

He said that policies such as pension reform and better permitting, a demand of large miners such as BHP and renewable companies like TotalEnergies, have led to greater economic growth. He acknowledged, however, that environmental permitting reform has made less progress than other categories. He said that although the executive branch made "significant" efforts to advance the reform, he could not predict if it would be approved under this administration. (Report by Fabian Andres Cambero, Editing by Alexander Villegas & Richard Chang)

(source: Reuters)