Just 4 months into his term, Chilean President Gabriel Boric faces a complex political and economic landscape made worse by polls that signal a disapproval rate close to 60%.
The collapse of the Chilean peso and a rapid inflation that in June reached 12.5% y-o-y, the highest recorded in the Andean country in the last 28 years, forced the president to launch a package of winter social and economic aid for $1.2 billion, which includes a bond equivalent to about $120 for 7.5 million Chileans, out of a total of 19 million inhabitants.
The measures announced by the president and the Minister of Finance, Mario Marcel, include the extension until September of the payment of the IFE, an Emergency Family Income (EFI) for workers entering the labour market during the pandemic and also an employment allowance for mothers and fathers caring for children under one year of age, with parental leave being postponed until that date.
Due to the increase in social spending, part of its campaign promises, the ruling coalition promotes a tax reform with which it seeks to collect 4.1 points of GDP in 4 years, with a rise in income tax, the reduction of exemptions and the application of mining royalties.
But the proposed tax reform comes at a time when the country is suffering the cooling of its economy due to a combination of internal and external factors, including the depreciation of its currency against the dollar, the fall in the global price of copper, of which Chile is the world’s largest producer, in addition to the impact of the millionaire state aid to vulnerable sectors and the partial withdrawals of pension savings funds.
To the difficult economic situation described by Boric himself as “tremendously worrying”, adds the uncertainty due to the growing rejection of the New Constitution whose final text will be submitted to a plebiscite on September 4.
The text prepared by the Constituent Convention to replace the existing text inherited from the dictatorship of Augusto Pinochet, defines Chile, among other points, as a Plurinational and intercultural, social and democratic State of Law, which implies the recognition of 11 indigenous peoples and nations and guarantees of social rights, such as education, health, housing, work and pensions.
It also establishes gender parity in the occupation of public offices and eliminates the Senate, creating a Chamber of Regions to replace it.
According to the latest survey by Cadem Plaza Pública, 53% of those interviewed reject the new charter while 35% approve it, while the number of undecided reaches 12%.
Another survey carried out by Pulso Ciudadano shows that 46.3% would vote for Rejection and 28% for Approval, while the number of undecided is close to 16% and almost 3% would vote blank.
Faced with this uncertain panorama, Boric assured that, whatever the result of the referendum, negotiations will be opened in search of new consensus, a possibility surprisingly accepted with a public commitment by the right-wing opposition, reluctant for years to constitutional changes.
Should the rejection be imposed, the Pinochet constitution would remain in force.
To overcome this instance, options such as a new constituent convention or a congressional proposal are studied.
But efforts are focused on avoiding a defeat not only for the government but also for the entire social movement that drives a fundamental change for Chile.