The Economic and Social Stabilization Fund (ESSF) was established on March 6th, 2007 with an initial contribution of US$2.58 billion, much of which (US$ 2.56 billion) was derived from the old Copper Stabilization Fund, which was replaced by the ESSF.
The Economic and Social Stabilization Fund allows financing of fiscal deficits and amortization of public debt. Thus, the ESSF provides fiscal spending stabilization since it reduces its dependency on global business cycles and revenue’s volatility derived from fluctuations of copper price and other sources. For example, budget reductions originated from economic downturns can be financed in part with resources from the ESSF, reducing the need for issuing debt.
According to the Fiscal Responsibility Law, the ESSF receives each year the positive balance resulting from the difference between the effective fiscal surplus and the contributions to the Pension Reserve Fund and to the Central Bank of Chile, discounting the payment of public debt and advances made the year before.