AFP / JAVIER TORRES Passersby in
front of foreign exchange offices in Santiago, Chile, December 2, 2019

The Chilean government on Monday put $ 5.5 billion on the table to try to resolve the country’s unprecedented social crisis, where economic activity collapsed in October, when the protest movement broke out. .

Finance Minister Ignacio Briones announced a plan to support the economy, with the program an increase in public spending in 2020 of some $ 3 billion, financial assistance of $ 1.9 billion to SMEs (small and medium companies) and $ 525 million in various measures, such as the reconstruction of the metro in the capital Santiago, which has been badly damaged since the beginning of the crisis on October 18.

The government plan is expected to create 100,000 additional jobs, according to the minister, and lead to a 9.8% increase in public spending in 2020 compared to 2019. The budget deficit, meanwhile, could reach 4.4% of GDP .

“Like any Chilean household facing a difficult and unforeseen situation, we will use our savings and our borrowing capacity, knowing that these two elements have limits not to exceed,” said Briones , stressing that these measures were made possible by “previous years of budgetary responsibility of all governments”.

Financing requirements for next year are estimated at $ 16.6 billion, financed by a $ 9 billion debt issue.

– Worse drop in ten years-

The government announcement came the same day that the Chilean central bank announced a sharp decline of 3.4% of the country’s economic activity, the worst performance since that recorded in 2009 (-3.5%), the strongest of the international financial crisis.

AFP / CLAUDIO REYES

Chilean President Sebastian Pinera (D) shakes hands with Finance Minister Ignacio Briones after cabinet reshuffle in Santiago on October 28, 2019

This drop in activity, well above the expectations of the market, which was forecast to fall by around 1%, is attributable in particular to the near-paralysis of businesses and services since the beginning of the crisis, according to the monetary institute.

This sharp contraction has led the authorities to downgrade their GDP growth estimates for 2019 to 1.4% from 2.5%, and to 2020, where it should be between 1% and 1.5%.

“The crisis has caused a very sharp deceleration of growth and the fourth quarter should be in the red.The unemployment rate should start rising again and the banks began to limit credit,” said AFP. economist Francisco Castañeda.

The Central Bank of Chile announced in late November the injection of $ 20 billion into the economy, to curb the plummet of the peso, impacted by the crisis.

The social crisis broke out on October 18, with student protests against a rise in the price of the metro ticket, which then turned into a massive social revolt, the most serious since the end of the dictatorship of the General Augusto Pinochet (1973-1990).

The Chileans have not stopped protesting against the inequalities that prevail in a country with a prosperous economy and where the state is failing in the areas of education, health and pensions.

On the night of Monday to Tuesday, violent commercial attacks occurred in Concepcion (south), following a massive demonstration. Thousands of protesters gathered in the main square of the city and erected barricades, before being dispersed by the police using tear gas and water cannons.

In Santiago, a thousand people demonstrated in Plaza Italia, the epicenter of the protest, and were then expelled by the police. Clashes then took place at night in the surrounding streets.

After 46 days, the movement left 23 dead, including five after the intervention of the police, and more than 2,000 wounded. After a historic mobilization on November 25, which had brought together 1.2 million people, events more or less followed continue to demand more social justice.

The crisis also forced the Chilean government to renounce hosting the UN COP 25 climate conference – transferred to Madrid – and the Asia-Pacific Economic Cooperation (Apec) summit in mid-November.

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