Ministry of Finance will withdraw US$2.4 billion from the Economic and Social Stabilization Fund (ESSF) during 2019 and 2020

Wednesday, november 13, 2019

According to Chile’s fiscal institutional framework, fiscal policy is guided by the Structural Balance Rule, which reflects the long-term financial profile of the Central Government, excluding cyclical variations derived from economic activity and copper prices, as well as other similar factors.

In this context, the ESSF is an additional source of financing for the Central Government, that may finance fiscal deficits and the amortization of public debt. Although the Republic of Chile has ample access to international markets, the use of the ESSF has the advantage of avoiding additional issuance of public debt to fund fiscal expenditures.

By the end of September, 2019 the total market value of the ESSF reached US$14,163.61 million.

During the second quarter of 2019, a total of US$563.89 million was withdrawn from the ESSF to finance the annual mandatory contribution to the Pension Reserve Fund (PRF), equivalent to 0.2% of GDP for 2018.

The mandatory contributions to the PRF were also transferred from the ESSF in 2014-2016 and 2018.

In light of the updated macro-fiscal scenario, presented recently during the Budget discussion in the National Congress, and the financing needs for the current year, a total of US$1.0 billion will be withdrawn from the ESSF in the next few days, which will be converted to pesos, according to the government’s needs.

Additionally, due to the weaker than expected fiscal revenue estimations for 2020 discussed in the Congress’ Budget Commission (Comisión Mixta de Presupuestos), a total of US$1.4 billion are expected to be withdrawn from the ESSF during the first few months of 2020. These will be converted to pesos according to the government’s needs.



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