The International Monetary Fund (IMF) issued its statement from the Article IV consultation on Chile on May 4, 2026, praising President José Antonio Kast's National Reconstruction Plan for boosting medium-term growth while warning of fiscal costs requiring further consolidation. The IMF lowered its 2026 GDP growth forecast to 2.2%.
The International Monetary Fund (IMF) issued its statement from the Article IV consultation mission on Monday, May 4, 2026, led by Andrea Schaechter. The report analyzes President José Antonio Kast's National Reconstruction Plan—a legislative package of about 40 measures including streamlining procedures, reducing labor costs, and gradually cutting the corporate income tax (IRE) from 27% toward the OECD average—which "contributes positively to medium-term growth prospects through facilitating private investment and employment."
However, the IMF cautions about fiscal costs from measures like the corporate tax reduction and employment tax credits. "Even considering the possible growth gains from the plan, which could be somewhat optimistic, additional fiscal consolidation efforts will be required to meet deficit and debt targets," the report states. It suggests targeted alternatives, such as accelerated amortization for non-mining investments or subsidies for net job creation.
The IMF cut its real GDP growth forecast to 2.2% for 2026 (from 2.6%) and 2.5% for 2027, assuming external improvements and gradual fiscal consolidation. Downside risks include trade tensions and high oil prices from the Middle East war, partially offset by elevated copper prices. Fiscally, it projects a 2.5% of GDP global deficit in 2026 and urges keeping debt-to-GDP below 45%.
The IMF commends Chile's fiscal framework, administrative spending cuts of 0.5% of GDP in 2026, and passing on fuel price increases in March. It recommends refining fiscal rules for transparency and preparing the Central Bank for potential monetary tightening if inflation persists.
