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Chile needs to lure foreign investment and expand mining to overcome the tough economic times that lie ahead in the divided nation, according to a former finance minister who’s now running for president.
Ignacio Briones, who served under President Sebastian Pinera, warned that this year’s strong economic recovery won’t be sustainable unless the country, currently rewriting its constitution following the most severe social unrest in a generation, sends the right signals to investors abroad. These include a broad tax reform that eliminates exemptions, as well as policies that encourage mining and allow for more employment subsidies.
“We’re going to enchant and attract foreign investment because we need it,” Briones, 48, said in a video interview with Bloomberg News. “We’re going to boost the economy. Without investment, there’s no growth.”
Chile’s economy will expand as much as 9.5% this year thanks to emergency spending and a relatively fast vaccination campaign, but Briones said more needs to be done to revive the labor market and to ensure growth reaches poorer areas of the country and not only Santiago, the capital.
Briones is gunning for the nation’s top job after steering one of Latin America’s richest countries through its worst economic downturn and a series of protests for social justice.
During his tenure, he was praised by investors and recognized as the region’s best finance minister by The Banker magazine. But his messages, including his opposition to early pension withdrawals, haven’t been received with the same enthusiasm by the population: he comes third in polls for the primary that will pick the ruling coalition’s candidate for the November election.
Briones is running for president as a member of Evopoli, a center-right political party that was founded in 2012. His advisers include Raphael Bergoeing, the former head of the nation’s banking regulator, and Klaus Schmidt-Hebbel, former chief economist for the Organisation for Economic Co-operation and Development.
Extending employment subsidies that translate into more cash in workers’ pockets and creating a council that would elaborate proposals to modernize the government are two of the first actions he would take in office.
Briones is against charging royalties on sales of the crucial mining sector. Instead, he would seek to boost government revenue by reviewing rules on licenses and exploration rights, arguing that Chile charges much less than other countries like Canada.
Other goals of his would be to foment competition across the economy, strengthen energy policies and revive tourism after the pandemic dies down.
In order to boost pensions, Briones proposes a charge on consumption whose revenue would eventually be distributed in people’s individual retirement accounts.
“It’s the way to make everyone contribute something, and then have more retirement income,” he said.
Pinera tapped Briones as finance minister in October 2019, when Chile was rocked by nationwide protests. While in government, he implemented a series of loans and employment subsidies that helped many citizens ride out the economic hit from the coronavirus. He tried hard but failed to convince lawmakers not to allow early pension fund withdrawals during the crisis. Before stepping down as minister in January, he said the government wasn’t “fast enough” in getting help to those who needed it most.
Briones was previously dean of the school of government at the Universidad Adolfo Ibanez, a local university, as well as Chile’s ambassador before the OECD and the finance ministry’s coordinator of international finance. He holds a doctorate in economics from Scienes-Po in France.
Briones is racing against time to boost his support ahead of the July 18 primary for center-right candidates. A Cadem poll from late June showed him garnering just 2% of voter intentions, behind former social development minister Sebastian Sichel, with 9%, and Joaquin Lavin, one of Chile’s best-known politicians, with 13%. Former defense chief Mario Desbordes also had 2%.
The election remains wide open, Briones said, adding that public opinion surveys have failed before in Latin America, including in Peru’s presidential vote. Furthermore, those numbers won’t distract him from his campaign strategy of having frank conversations with voters.
“Difficult times are coming. We are going to have a difficult and demanding economic situation in 2022,” he said. “There’s no solution other than doing your homework — boosting the economy, supporting entrepreneurship and recovering jobs.”
(By Matthew Malinowski and Eduardo Thomson)
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