Chile: Request for an Arrangement under the Flexible Credit Line and Cancellation of the Current Arrangement-Press Release; Staff Report; Staff Supplement; and Statement by the Executive Director for Chile

International Monetary Fund

No 2026/232, IMF Staff Country Reports from International Monetary Fund

Abstract: This paper presents Chile’s Request for an Arrangement under the Flexible Credit Line (FCL) and Cancellation of the current arrangement. Chile’s economic growth has moderated, with a temporary slowdown in mining activity partly offset by higher copper prices. The war in the Middle East has further weighed on activity via higher oil prices. The economy remains resilient, though fiscal buffers have shrunk and structural challenges persist. Growth is projected to moderate in 2026 amid temporary weakness in the mining sector, partly offset by higher copper prices, and with higher oil prices following the war in the Middle East adversely affecting activity. The new administration aims to raise potential growth through deregulation and tax reforms, while consolidating the fiscal position via expenditure cuts. The FCL arrangement will continue to provide a valuable buffer against tail risks and a signal of Chile’s policy and institutional strengths. The authorities remain committed to treating the FCL arrangement as precautionary and gradually reducing access, in the context of their exit strategy, conditional on external risk developments. The proposed new commitment and cancellation of the current arrangement would have a net positive impact on the IMF’s liquidity position.

Pages: 71
Date: 2026-08-27
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