The truth is that we have already devoted enough time and energy to the issue of withdrawals in the last few days and now is the time to focus on those structural reforms that are most important”.
Mario Marcel, Minister of Finance in Chile
The Chamber of Deputies in Chile rejected the projects for a fifth withdrawal from the pension funds after an eight-hour debate, first the general one promoted by parliamentarians and then the “limited” initiative promoted by the government, which did not have sufficient support to advance the idea of legislating.
The House first ruled on the idea of legislating a fifth universal withdrawal of 10% of pension funds from merged initiatives of parliamentarians, which had 70 votes against and 70 in favor of the 93 required to be approved.
Next was the turn of the government’s “restricted” initiative, which sought to have resources from the AFPs to pay debts for alimony, health, the purchase of the first home, the payment of mortgage debts for the first home, among others, that it was rejected by 83 votes and achieved only 68 in favor, in a first setback in the Legislative for the administration of President Gabriel Boric.
The Minister of Finance, Mario Marcel, addressed the rejection and indicated that they will analyze the panorama in the Senate before deciding if they will continue with the processing of their project for the restricted transfer of pension funds.
“It is an issue that is going to be evaluated. I have not had the opportunity to discuss it with other authorities, but to insist on it in the Senate a very large majority is required, and therefore a fairly high degree of agreement in the Senate would be required. is what we have to evaluate, as well as the alternatives that may exist with respect to insisting on the same project. There are many other ways to address the same issues that were addressed in this project,” said Marcel, accompanied by the Undersecretary of Finance, Claudia Sanhueza, in the activity at the University of Chile.
He explained that the most positive thing is that responsibility prevailed, reason prevailed in terms of not pushing the country into a scenario in which the costs could have been paid by the vast majority of citizens through inflation, a higher cost of credit. He added that it is time to stop talking about a sixth withdrawal of funds and focus on agenda items such as the minimum wage and tax and pension reforms.
On the other hand, for Diego Pereira, JP Morgan’s chief economist for the Southern Cone, the result of the denial of both initiatives is not negative for the government. This, because “it could be interpreted that the rejection of both bills strengthens the position of the Minister of Finance, Mario Marcel, who was firmly opposed to withdrawals from pension savings,” he says from New York.
The expert recalls that the regulations of the Congress propose that the bills associated with pension withdrawals cannot be discussed again for a year, “which limits in principle to reducing the risk of a new withdrawal of pension funds in the short term. term”.
From Goldman Sachs, the team led by Alberto Ramos describes the refusal of Congress as something “positive in the short term”, but agrees that it could be transformed into demands for more aid. “We anticipate additional pressure on fiscal authorities for more fiscal transfers, particularly to cohorts most exposed to rising inflation,” the bank said.