Chile's Finance Council (CFA) has raised alarms over the deteriorating economic outlook, citing a direct threat to government revenue and effective income levels.
The warning comes as the national economic activity indicator, Imacec, recorded a decline in May, marking the fifth consecutive month of contraction.
Paula Benavides, a representative of the CFA, emphasized that the persistent weakness in economic activity presents a significant fiscal challenge.
This streak of negative growth has not been seen since the height of the pandemic in 2020, signaling a severe slowdown in domestic demand and production.
Paula Benavides, a representative of the CFA, emphasized that the persistent weakness in economic activity presents a significant fiscal challenge.
The council's concern centers on the lagging effect of reduced economic output on tax collections, which could force the government to reconsider spending plans or seek alternative financing.
With the economy contracting for five months running, the fiscal buffer is eroding, leaving policymakers with limited room for maneuver.