Chile’s Piñera: ‘Without economic growth, there's no sustainable social agenda’

Without economic growth, "all the rest is music."

The phrase was used by Chile’s socialist former head of state Ricardo Lagos in 2017 when stressing the role of economic expansion in helping governments bankroll plans to achieve greater development.

And on Wednesday, conservative President Sebastián Piñera echoed his predecessor’s message when outlining measures being implemented to help ease social tensions and reduce inequality.  

Piñera underscored the importance of growth in helping generate, in a sustainable manner, the funds needed to bankroll increased spending to improve the likes of public healthcare and pensions – key demands voiced in the recent protests and encompassed in the government’s social agenda. 

“In these confusing times, I want to stress the importance of economic growth, which has been overlooked in debates,” Piñera told company chiefs and other decision-makers in capital Santiago at a conference held by business federation Icare.

“Without economic growth, there's no sustainable social agenda,” he said, citing the importance of continued investment.

In the short term, the government plans to cover increased spending via debt issues and its sovereign wealth fund. In the long term, the government expects higher revenue from a tax reform bill – approved Wednesday in congress – and more efficient spending to help cover larger social outlay. 

Chile’s structural deficit is expected to widen to 3.2% this year from 1.5% in 2019. Authorities forecast the deficit will be running at 1% in 2024.

GDP growth is expected to accelerate this year but private investment is forecast to remain dampened amid fallout from the protests and a degree of uncertainty related to a possible new constitution. 

Finance minister Ignacio Briones – who said Chile had made strides in recent decades but that the country’s leaders must “recognize what we haven’t done” – used Lagos’ words.

“Let’s be clear, without healthy, sustainable fiscal accounts, there's no social agenda possible; the rest is music, the rest is a siren call,” said Briones, who called for carefully thought-out policies and their gradual implementation, warning of the hazards of knee-jerk measures. He also cited the importance of leveling the playing field of opportunities for all Chileans, adding that implementing the social agenda is needed to ensure growth over the long term. 

Icare president Claudio Muñoz cited the importance of dialogue and accord-building. He added that the business community faces higher costs and other challenges associated with the social agenda but that it will gladly assume these if it helps to achieve a “better, fairer and more inclusive” country.   

Meanwhile, delegates explored the issue of the protests and violence, with lawmaker Pablo Vidal of the left-wing Democratic Revolution party laying the blame at the door of politicians and business leaders. 

Icare vice president Vivianne Blanlot, echoing messages voiced during the conference, said changes were needed within the business sphere and beyond to address issues of “inequality, fragility and poor standards of living.”

Indeed, a key takeaway from the conference is that Chile’s economic success has pulled people out of poverty but not into a secure middle class, with many Chileans worried about falling ill and not being able to receive proper care - or entering old age with a meager pension.

Claudio Castro, mayor of Renca, a disadvantaged municipality in Santiago, told the conference: “A large proportion of our fellow Chileans live in a state of anguish and frustration. This is not a statistic, a number; it's an experience. This is what we have to face.”

Last year Castro resigned from the centrist Christian Democrat party to run as an independent in upcoming municipal elections.