Why Chile govt is upbeat about public works investment

Chile’s public works ministry (MOP) executed 41.1% of its annual budget worth 3.5 trillion pesos (US$3.71 billion) in the first half, representing a 12.5 percentage point increase year-on-year.

The level of execution is the highest for the first six months of any year since 2016, when it reached 42.7%, public works minister Jéssica López said during a congressional hearing. 

Over half of the 1.47tn pesos executed in H1 came from MOP’s roadworks department with 774bn pesos between January and June. The amount represents 40% of its 2024 budget and is nine percentage points higher than 1H23. 

The department also launched 225 tenders worth 618bn pesos in the first half, while starting construction works on projects totaling 148bn pesos.

All MOP departments showed higher execution numbers compared to last year’s first half.

REGIONS

Half of the country’s 16 regions saw investment execution levels above 40% in January-June, while five surpassed 30% and three were above 20%.

The southern Aysen region had a 29% execution rate, with 36.4bn pesos worth of investments in 131 projects. 

Aysén senator David Sandoval criticized a lack of advancement with infrastructure commitments for his region, saying that the current government pledged to pave 140km of roads and there has been zero progress on this initiative in the past two years. 

The lower execution rate in some regions is due to the fact that they did not have as many ongoing projects from previous years as other regions, according to MOP planning director Danilo Núñez.

López said the ministry would work to fulfill the pledge made to Aysén, pointing out that this commitment had also been made by President Gabriel Boric. 

In relation to projects that had to be halted due to cost overruns or bankruptcy, 126 out of a total of 198 contracts have been either resumed or re-tendered.