To fight inflation, Chile readies $1.2 billion aid plan

The Andean nation of Chile is struggling with rising inflation and an economic downturn after a post-pandemic recovery, so the government of Chile on Monday unveiled a $1.2 billion economic aid plan that includes bonuses and labor subsidies.

7.5 million of the nation’s 19 million residents will get a one-time payment of $120, according to President Gabriel Boric and Finance Minister Mario Marcel. Additionally, the plan increases a program to increase formal employment and extends a benefit for new mothers.

The Ukrainian conflict, skyrocketing fuel costs, and the decline in the price of copper—of which Chile is the world’s top producer—all contributed to the present inflation crisis, according to Boric. “There is significant strain on families owing to the rise in the cost of living,” he added.

Without compromising our dedication to budgetary prudence, Boric said, “We are making every effort to support the sectors most impacted by this crisis.”

According to Marcel, the actions taken today are more constrained and targeted than those taken during the pandemic. The new measures “won’t have an influence on inflation,” he continued, because external forces dominate the nation’s inflation.

The administration is currently proposing a tax reform to pay for its ambitious social program, which is why Monday’s statement is timely.

After a quick post-pandemic rebound aided by state aid and the government allowing numerous pension withdrawals, Chile’s economy has cooled. A significant increase in prices has been brought on by both external forces and the strong recovery.

The local currency has plunged more than 15% in the past month, breaking the barrier of 1,000 pesos per dollar for the first time. Inflation as of June was 12.5 percent annually.

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