The International Monetary Fund has published the staff concluding statement for its 2026 Article IV mission to Chile, saying the economy remains resilient but faces elevated uncertainty, especially if the conflict in the Middle East keeps oil prices high and global financial conditions tight. IMF staff says the central bank should be ready to tighten monetary policy if the shock creates second-round effects on wages and other prices, while the government should continue targeted support for vulnerable groups and put the fiscal position on a credible medium-term consolidation path. Staff projects real GDP growth of 2.2 percent in 2026 and 2.5 percent in 2027, with inflation temporarily above target in 2026 and early 2027. It estimates the 2026 headline fiscal deficit at about 2.5 percent of GDP and says achieving a broadly balanced structural position by 2030 and keeping debt below 45 percent of GDP will require cumulative fiscal measures of 2 to 3 percentage points of GDP. Planned measures with the largest fiscal cost, including a gradual cut in the corporate income tax rate from 27 to 23 percent and a tax employment credit, should be weighed against fiscal space and matched by compensating expenditure or revenue measures. Staff also says banks remain sound, welcomes the completed implementation of Basel III capital and liquidity requirements in 2025, supports a gradual move in the countercyclical capital buffer to 1.0 percent of risk-weighted assets from 0.5 percent, and calls for gradual, well-coordinated implementation of pension reform. Completing the central bank's three-year reserve accumulation program, which had added about USD 4 billion by end-April, remains a priority, alongside further work on broader access to the Real-Time Gross Settlement System, stronger bank governance and recovery planning, industry-funded deposit insurance, a new Bank Resolution Law, and risk-based supervision of insurers. The statement reflects IMF staff's preliminary views rather than those of the Executive Board. A full report will be prepared for Board discussion and decision, subject to management approval.
International Monetary Fund 2026-05-04
International Monetary Fund staff urges Chile to prepare for monetary tightening if oil shock feeds inflation and to deepen fiscal consolidation
The IMF’s 2026 Article IV staff statement on Chile notes a resilient economy but elevated external risks, urging readiness to tighten monetary policy if second‑round inflation effects appear, alongside targeted fiscal support and a credible medium‑term consolidation plan. Staff projects real GDP growth of 2.2 percent in 2026 and 2.5 percent in 2027, and a 2026 headline fiscal deficit of about 2.5 percent of GDP. Achieving a broadly balanced structural position by 2030 while keeping debt below 45 percent of GDP will require fiscal measures of 2–3 percentage points of GDP and careful calibration of tax cuts. Banks remain sound; the IMF welcomes full Basel III implementation, a gradual increase in the countercyclical capital buffer to 1.0 percent of risk‑weighted assets, completion of the central bank’s reserve accumulation program, stronger financial market infrastructure and bank resolution, and progress on pension reform.