About US$ 90 billion. Sixty days of processing. And more than 90% of the resources under discussion previously committed by laws or allocated to essential State functions. These are the figures that will frame what is already anticipated as a stalled discussion of the 2027 Budget Law project, whose debate in Congress must begin on October 1.
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The first Budget Law of José Antonio Kast’s Government will not only be an information piece showing the cards in terms of the State’s room for maneuver for 2027, but will implicitly point to a roadmap towards 2031, based on the new reality shaped by the National Reconstruction Law regarding taxes and the expected effects it will have on activity and tax collection.
The Budget director, José Pablo Gómez, anticipated this week before Congress that this is the expectation with which the Government hopes the Law discussion will be approached, noting that the Fiscal Responsibility Law “requires coherence and visibility with medium-term spending.”
A significant expectation, given the history of fiscal breaches and the increase in public debt relative to GDP recorded by the country and which, everything indicates, will continue to rise in the coming years. In fact, on the same day Gómez outlined the government’s expectations regarding the Budget Law, the Autonomous Fiscal Council (CFA) marked the ground by stating that “gross debt shows a high probability of exceeding the prudent level of 45% of GDP from 2029.”
The task that the Treasury will have to undertake in the coming weeks will be highly tense, especially because Minister Jorge Quiroz has already established that he expects the real spending increase to be between 0% and 1% in 2027, which will impose the need for budget surgery. The narrow fiscal starting point, the inertia shown by spending, and the aforementioned new reality shaped by the Reconstruction Law are all ingredients that will add to the challenge, to which must be added the high level of political expectations that are already taking shape among experts and politicians, including his cabinet peers.
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This foreseeable budget surgical intervention must consider a key input that the Treasury will receive this Monday, August 24, when the Advisory Committees of the Non-Mining Trend GDP and the Copper Reference Price deliver their estimates for these two parameters, which will be very technically relevant to close the circle of a puzzle that is already anticipated to be complex.
Thus, everything points to Minister Jorge Quiroz regaining prominence on the national agenda in the coming weeks. These will be weeks in which he will have to put his negotiating skills to the test, first before his cabinet colleagues, who will defend their respective territories; then, before the ruling parties, where there are nuances regarding the degree of adjustment that is politically viable; and finally, before the opposition, which will probably try to revive the argument that the Kast government does not shy away from removing benefits and undermining people’s rights, all as a consequence of tax reductions that, as they have repeated to exhaustion, only favor “the rich.”
The 60 days of processing the Budget Law will not only be an arithmetic exercise or a race against time. They will be 60 days in which the Kast administration, through the Treasury, will have to build a political balance between what it promised, what its ministers want, what parliamentarians need to defend, and what the fiscal accounts allow.
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