The proposed Chile budget 2012 has increased public expenditure by 5 percent and an estimated profit of 7.2% in the education sector.
Chile Budget 2012 Highlights:
According to the President of Chile, Sebastien Pinera, who was formerly a billionaire investor, aggregate public expenditure in 2012 will go up by 60 billion dollars from 2011 fiscal.
The 2012 budget will aim at reducing educational expenses for the families, deal with crime in a better way and also address various poverty related issues.
The increase in expenditure for the 2012 budget is at par with the predictions of economic growth.
He has stated that the increased expenses will not endanger the austerity program of the Chilean government. The austerity measures have helped Chile become the only net creditor throughout the Americas.
The education sector will be allotted $11.65 billion in 2012 and a fund of 4 billion dollars will be created for providing scholarships.
Pinera has revealed that this is the biggest allotment provided to the educational sector in Chile.
Deputy Finance Minister, Julio Dittborn, has stated that the educational fund will be used throughout the next 4-6 years.
Felipe Larrain, the Finance Minister of Chile, has stated that the government will not increase the tax rates or introduce new ones in order to finance the additional expenditure in the educational sector.
Public expenses will increase by 4.6 percent in 2012, if inflation is considered.
Larrain has stated that the 2012 budget will focus on retaining control over the economy at any cost.
Chile Budget 2012 – Expectations:
It is expected that the proposed 2012 Chile budget will be able to end months of protests across the country, where approximately 250,000 students have missed their classes and clashed with the police every other week.
Pinera has stated that Chile s economic growth will be good in the days to come but has stated that it has to be based on a solid ground. He opined that the 2012 budget has been formulated keeping in mind the objectives and requirements of the Peruvian middle class as well as the economically disadvantaged sections of the society.
The government is looking to have a fiscal surplus of 1.3% of GDP in 2011. They will also look to reduce structural deficit to 1 percent of the GDP by 2014. The central bank of Chile has stated in its newest fiscal policy report that economic growth in 2012 will range between 4.25 and 5.25 percent in 2012, down from 6.25-6.75% in 2011 fiscal.
Larrain is presently coming up with some emergency plans in case Chile is affected by a possible global financial meltdown. It is estimated that the government might have to use Chile s sovereign funds that are worth approximately 18 billion dollars. He has said that it will be remarkable to achieve a growth rate of 6.5 percent in 2011 given the present condition of the global economy.
Chile Tax Reforms:
Pablo Longueira, the Finance Minister of Chile, has stated that policymakers will look into changing the tax structure in the budgets after 2012 fiscal. He has stated that these discussions will go along with the budgetary procedures. The basic challenge for the tax reform will be deciding on the area to focus among the following:
Finding new ways to make economic growth stronger
Promotion of investment