|  ElCiudadano.cl |  Noticias

El Ciudadano

Original article: El FMI le baja los humos a Kast: ajuste fiscal no alcanza y Chile crecería solo 1,8% en 2026

The International Monetary Fund (IMF) has sent a warning to the government of José Antonio Kast, stating that «additional fiscal efforts» will be necessary to meet economic goals, projecting that Chile’s growth will only be 1.8% in 2026.

This assessment was delivered following the completion of the Article IV Consultation for Chile, in which the IMF downgraded its economic growth forecast from 2.2% in May to 1.8%.

In April, the organization released its World Economic Outlook (WEO) report, where it had raised its estimate for Chile’s economic expansion in 2026 from 2% to 2.4%. However, this forecast was sharply revised downward just a month later.

In the latest assessment published on July 6, the IMF highlighted that economic activity grew by 2.5% in 2025, driven by non-mining domestic demand, but noted a resurgence in inflation due to rising energy prices linked to the conflict in the Middle East.

The report cautioned that «inflation is expected to remain temporarily above the target in 2026 and early 2027 before converging back to the target«.

Central Bank Must Be Prepared to “Tighten Monetary Policy«

Furthermore, it warned the Kast administration that reaching the goal of structural balance by 2030 and keeping debt below 45% of GDP will require additional fiscal efforts.

According to the IMF, in light of a prolonged period of high oil prices that could affect growth and inflation, the Central Bank of Chile must be prepared to «tighten monetary policy if necessary».

In its report, the IMF also pointed out the government’s flagship initiative, the controversial mega-tax reform, suggesting that the steps of the reforms should be prioritized and sequenced rigorously, while emphasizing the need to thoroughly examine «the fiscal costs and the impact on growth of tax reforms to ensure fiscal sustainability.».

Moreover, the financial entity stressed the urgency of optimizing the targeting of the Universal Guaranteed Pension (PGU) and consolidating fragmented social programs to enhance spending efficiency and protect the most vulnerable sectors.

Simultaneously, it called on La Moneda to also push for complementary reforms aimed at reducing competition and gender gaps in the labor market, as well as measures to «improve the minimum wage-setting process«.

For 2027, the organization forecasts a growth of 2.6% «supported by an increase in copper prices.

To read the full IMF report, you can access this link.

La entrada IMF Sends a Warning to Kast: Fiscal Adjustment Insufficient as Chile’s Growth Expected to Reach Only 1.8% by 2026 se publicó primero en El Ciudadano.