Chile Rolls Out Its Third Multi-Billion Dollar Covid-19 Stimulus

(Bloomberg) --

Chile’s government reached a deal with opposition lawmakers for a $12 billion stimulus package over the weekend as infections hit a record and the health minister quit.

The new measures will boost income for poor families and the unemployed, subsidize job creation and cut taxes for small and medium-sized companies, the government said.

The program will be financed through new debt, the drawing down of savings in the country’s sovereign wealth funds as well as the reallocation of budget spending.

“The plan is very powerful and allows us to be optimistic about overcoming the crisis,” Finance Minister Ignacio Briones said in a press conference Sunday. “It also allows us to create a responsible fiscal framework for the medium term.”

Even before the latest measures, the government of President Sebastian Pinera had announced stimulus measures worth about $17 billion, equivalent to about 7% of gross domestic product, to fight the crisis. Chilean economists expect the economy to contract 4.8% this year, according to the latest Central Bank survey, which would be the deepest slump in nearly four decades.

Health Minister Jaime Manalich resigned Saturday as Chile’s coronavirus outbreak continued to get worse. The Health Ministry reported a record 6,938 new cases on Sunday, and 222 additional deaths. Chile has more coronavirus cases per capita than any country except Qatar and Bahrain.

©2020 Bloomberg L.P.

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