Tensions To Continue

Chile's year-to-date central government fiscal deficit represented 3.8% of GDP in September, according to the country's budget director, Alberto Arenas. This marks a further deterioration on H109 data, which showed a fiscal balance equivalent to -2.6% of GDP, and lends further support to our view that 2009 will see the general government budget slip into deficit, to the tune of CLP3.0bn (-3.4% of GDP), for the first time since 2003. While not alarming, the deteriorating fiscal situation will place a burden on the new government, and could become a key issue ahead of December's presidential election.

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