IMF Praises Chilean Economy
In its annual report on Chile, the International Monetary Fund concluded that “growth has continued, and recent shocks have been absorbed in an orderly fashion,” despite the fact that the country “is operating in a difficult environment, for several years now coping with a sequence of negative shocks, most recently including the world economic slowdown, a further terms of trade decline, and spillovers from Argentina.” In its annual report on Chile, the International Monetary Fund concluded that “growth has continued, and recent shocks have been absorbed in an orderly fashion,” despite the fact that the country “is operating in a difficult environment, for several years now coping with a sequence of negative shocks, most recently including the world economic slowdown, a further terms of trade decline, and spillovers from Argentina.” Because of these factors, the IMF reduced its growth expectations for Chile to 2.6 percent. The Fund’s Executive Directors commended the authorities for their adherence to a sound and consistent policy framework – based on exchange rate flexibility, inflation targeting, and achievement of a structural fiscal surplus – which in 2001 had helped maintain macroeconomic stability, continued access to capital markets, and moderate growth. The IMF attributed these positive results to Chile’s political stability, its good governmental management and the credibility of its institutions. The report recommends increasing labor flexibility in order to boost employment, as well as bringing more private capital into state enterprises. Further recommended measures include continuing the country’s trade opening through unilateral tariff reductions and implementing trade agreements with additional countries, as part of a broad initiatives to diversify the economy.
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