The fiscal budget for 2026 was approved on Wednesday night, concluding a process marked by creative accounting practices according to an economist. Michelle Labbé criticizes the systematic overestimation of revenues under the current administration, which has increased deficits and debt. The budget appears designed to constrain a potential opposition-led new administration.
The approval of the fiscal budget for 2026, processed on Wednesday night, has raised concerns among analysts regarding public finance management under Gabriel Boric's administration. In a letter to the editor of La Tercera, economist Michelle Labbé expresses nostalgia for times when authorities were 'serious' in their estimates, contrasting with what she describes as 'makeup or creative accounting' in this government's budgets.
Labbé details that, between 2006 and 2022, budgets overestimated revenues only three times: the 2009 global crisis, the 2019 social crisis, and the 2020 pandemic. On average, the overestimation was 1.4%, indicating realistic projections. However, for 2023, 2024, and 2025—all under the current administration—the average overestimation reached 5.4%. This allowed for approving higher spending increases, resulting in fiscal deficits 17% higher than those approved by Congress since 2023, equivalent to 2.4% of GDP.
As a result, by June 2025, gross external debt reached 42.8% of GDP, a 5% of GDP increase during Boric's term. Labbé highlights the use of the economic stabilization fund without an intervening crisis, plus new 'creative' off-line expenditures. The 2026 budget, according to the economist, overestimates revenues and underestimates expenses, built assuming the opposition would win the presidential election, 'tying the hands' of the new administration.
This viewpoint underscores tensions in Chile's fiscal management, emphasizing the need for precision in projections to maintain economic stability.