Chile’s Boric pledges to balance social reforms with fiscal caution

By Alexander Villegas

SANTIAGO (Reuters) -Chilean President Gabriel Boric, who took office last week, said on Monday his government would balance plans to expand the Andean country’s social programs, while being fiscally responsible, a message likely aimed at the domestic business community and global investors.

“We have to be very careful with public spending,” Boric said, noting that his government would be respectful of the country’s fiscal balance.

“Permanent spending has to be financed with permanent revenue,” Boric added.

With a fragile economy, high inflation, pandemic aftershocks and global uncertainty over the Ukraine war, Boric said he plans achieve his economic goals through a tax reform bill he hopes will increase tax collection by 5 basis points of the gross domestic product (GDP) over four years.

Boric added that economist Mario Marcel, his pick for finance minister, was a “progressive” and that the two were on the same page on economic policy.

Boric, a 36-year-old former student protest leader, has tempered anti-market rhetoric from the election campaign last year. He said he was inviting all sectors of Chilean society – including workers, business and other sectors – to take part tax reform discussions.

“We’re not going to say that this reform is against the most wealthy,” Boric said. “Tax reform has to have a high technical quality but also, hopefully, the greatest consensus.”

Throughout his first press conference with international media at La Moneda government palace, Boric emphasized his desire for regional cooperation. He said his first international trip would be to neighbor Argentina.

“It won’t just be symbolic, but something that will translate into concrete collaborations like easing border crossings, investments,” Boric said.

The country’s youngest president said he hoped to revise treaties to improve sharing technology and promote renewable energy. He said the region should tackle issues from immigration to climate change and the Ukraine war with a united front.

“The south has to make itself heard around the world.”

Speaking on international trade, Boric said Chile had strong economic ties with Asia and his government would wait until a new Constitution provides a roadmap to start debating the country’s role in the Trans-Pacific Partnership pact.

The Andean country’s constituent assembly began formally discussing in February motions for a new Constitution to replace a market-focused one dating back to the dictatorship of General Augusto Pinochet. It will be voted on later this year.

Boric emphasized plans for renewable energy and protecting water sources, adding Chile would this month join the Escazu Agreement, a treaty strengthening environmental and human rights in Latin America, which the country had held off signing under his predecessors.

(Reporting by Alexander Villegas; Writing by Alexander Villegas and Gabriel Araujo; Editing by Aurora Ellis)