Chile Votes in Election Likely to Usher Pinera Back to Power
Chileans Vote in Election Likely to Usher Pinera Back to Power
(Bloomberg) -- Chile voted Sunday in an election that is likely to usher billionaire Sebastian Pinera back into the presidency on pledges to cut taxes and double economic growth, though he probably won’t win by enough to avoid a second round on Dec. 17.
Voting finished at 6 p.m. (4 p.m. EST), with the first official results expected at about 7 p.m. from the Electoral Service. There are no exit polls in Chile. Congressional elections are being held at the same time.
After the current President Michelle Bachelet oversaw the slowest four years of growth since the early 1980s, voters must decide if they want to consolidate her reform agenda, including free higher education, deepen it or swing to the right under Pinera. Opinion polls indicate the country will follow Peru and Argentina and choose a more business-friendly candidate.
Don’t expect any radical changes though. Pinera has offered to perfect and adapt Bachelet’s reforms rather than overhaul the whole system. The only tax cut he plans is for corporations and would amount to about 2 percentage points to 25 percent, and there is no clear time frame for that.
“Pinera is going to be pragmatic,” said Cristobal Belollio, a professor at the Universidad Adolfo Ibanez School of Government. “He isn’t going to destroy what Bachelet has built, even if the more radical sectors of the right demand it. He will build on what has already been done.”
Words of Warning
“Today Chileans will take a decision that is going to affect our lives for many decades,” Pinera said after voting today. “And, because I know my compatriots well, I know that we will choose the right path.”
If no candidate wins a majority, the two leading contenders will go to a run-off Dec. 17. The latest opinion poll by the Centro de Estudios Publicos showed Pinera with 44.4 percent support in the first round, more than double any other candidate.
Second in the polls is Alejandro Guillier, the leading candidate for the ruling alliance, followed by Beatriz Sanchez, head of a left-wing coalition that didn’t even exist a year ago. Guillier has pledged to continue the reforms of Bachelet’s administration, while Sanchez has pledged to go even further, introducing a 5 percent royalty tax on the mining industry.
Juan Andres Camus, president of the Santiago Stock Exchange, has warned that if Pinera loses “the probability that we have a collapse in share prices is high.”
The benchmark IPSA index has rallied as much as 20 percent since Pinera announced his plans to run in the election on March 21. The index has fallen about 4 percent since Oct. 30 on concern stocks have become overvalued.
In the run up to the vote, Pinera has pledged to double growth during his term in office to more than 3 percent. With prices for copper, Chile’s leading export, rebounding and emerging markets back in fashion among investors, that looks a good bet.
During his first term in office from 2010 to 2014, soaring copper prices pushed growth to an average 5.4 percent, cut unemployment, slashed the poverty rate and financed reconstruction after the 2010 earthquake.
Still, many view Pinera with suspicion, saying the billionaire is too ambitious. One of his nicknames is piranha. In 2007, Pinera paid a fine of more than half a million dollars for violating securities regulations. In 1982, a judge accused Pinera of bank fraud, charges later thrown out by the Supreme Court.
To contact the reporters on this story: Philip Sanders in Santiago at psanders@bloomberg.net, Javiera Quiroga in Santiago at jquiroga5@bloomberg.net.
To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Robert Jameson
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