Chile Government Adds Stimulus With Soft Loans for Middle Class

(Bloomberg) -- Chile’s government announced new economic stimulus measures aimed at the middle class whose income has been affected by the coronavirus health crisis.

The measures include as much as 2.6 million pesos ($3,240) of low-interest loans, postponement of mortgage payments for up to six months, rental subsidies and student loan extensions to those who didn’t previously qualify.

Unemployment in Chile has jumped to more than 11% and about 650,000 people have had their employment contracts suspended as the country ground to a halt due to the coronavirus lockdown. An economic indicator contracted more than 15% year-on-year in May.

So far, the Chilean government has announced stimulus measures equivalent to about 7.9% of GDP. These have included state guarantees for corporate loans and emergency income for poorer Chileans.

The new middle-class measures will mean “mobilizing” about $1.5 billion of funds, of which about $800 million will correspond to soft loans.

The government won’t need to recognize the total amount as an expense, said Finance Minister Ignacio Briones in a press conference today. “The Treasury will recover part of the loans handed out, so any percentage that isn’t recovered will then be counted as an expense,” he said.

The South American country has the sixth-highest number of Covid-19 cases in the world, with 295,532 infections. Deaths have climbed to 6,308, according to the government’s website.

Still, the government isn’t considering easing its lockdown. “We won’t run any risks,” Health Minister Enrique Paris said earlier today. “We will be extremely prudent.”

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