Countries › Chile › Guide › 2. Macro and country context › Chile public finances: the budget process, sovereign funds, debt and credit ratings

Chile public finances: the budget process, sovereign funds, debt and credit ratings

Last verified: 2026-10-26 · Status: Changing

Chile's budget is drafted only by the President, Congress can cut but not raise spending, and if Congress misses its 60 day deadline the President's bill becomes law. Two sovereign funds held about US$14.6 billion at the end of August 2026 (FEES US$3,885 million, pension reserve fund US$10,713 million), gross Central Government debt is projected at 42.7 percent of GDP for 2026 and 42.5 percent for 2027, under a 45 percent prudent level. The 2027 budget bill targets a 1.8 percent of GDP structural deficit, spending growth of 1.5 percent and record debt amortizations of US$17,423 million, with ratings at A (S&P), A minus (Fitch) and A2 (Moody's).

USD figures use the Central Bank exchange rate of CLP 986.58 per US dollar published in the Diario Oficial for 23 October 2026 (Ley Nº 18.840 art. 44) and UF 1 = CLP 41,221.08 for 26 October 2026. Conversions are for orientation only; DIPRES and the Treasury report their own dollar figures at their own exchange rates (the August 2026 Treasury assets report used CLP 929.18), so spot conversions of peso aggregates will not match official dollar figures.

Key facts

Central Government total spending in the 2027 budget bill	91175816 CLP million (2027 pesos)Proyecto de Ley de Presupuestos 2027; DIPRES IFP 3T26, as of 2026-10-06 · pending
Real growth of 2027 spending against projected 2026 execution	1.5 %DIPRES IFP 3T26, as of 2026-10-06 · pending
Structural balance target for 2027 (Decreto Nº 486 of 2026)	-1.8 % of GDPDecreto Nº 486 of 2026, Ministerio de Hacienda, as of 2026-09-22 · in force
Projected effective Central Government balance, 2026	-1.8 % of GDPDIPRES IFP 3T26, Cuadro 2, as of 2026-10-06 · in force
Projected gross Central Government debt at end 2027	42.5 % of GDPDIPRES IFP 3T26, as of 2026-10-06 · in force
Projected gross Central Government debt at end 2026	157511633 CLP millionDIPRES IFP 3T26, as of 2026-10-06 · in force
Debt amortizations due in 2027, highest ever for a Budget Law	17423 USD millionDIPRES IFP 3T26, section II.6, as of 2026-10-06 · in force
Projected 2027 debt issuance	21675540 CLP million (2027 pesos)DIPRES IFP 3T26, Cuadro II.6.1, as of 2026-10-06 · in force
Borrowing authorization in the 2026 Budget Law (plus a further US$600 million)	17400 USD millionLey Nº 21.796 art. 3, as of 2025-12-12 · in force
FEES market value, 31 August 2026	3885.14 USD millionLey Nº 20.128 art. 10, as of 2026-08-31 · in force
Pension Reserve Fund (FRP) market value, 31 August 2026	10713.05 USD millionLey Nº 20.128 art. 5, as of 2026-08-31 · in force
Consolidated Treasury assets (FEES, FRP, other Treasury assets and other funds), 31 August 2026	24897.69 USD millionLey Nº 20.128 art. 12, as of 2026-08-31 · in force
Annual FRP contribution cap	0.5 % of previous year GDPLey Nº 20.128 art. 6, as of 2024-08-14 · in force
FRP level at which surplus contributions stop	900000000 UFLey Nº 20.128 art. 6, as of 2024-08-14 · in force
Long term copper reference price for the 2027 budget	537 US cents per lb (2027 dollars)DIPRES IFP 3T26, section III.6, as of 2026-10-06 · in force
Copper price assumed for 2027 (LME average)	565 US cents per lbDIPRES IFP 3T26, Cuadro 3, as of 2026-10-06 · in force
Ministry of Finance GDP growth assumption for 2027	3.3 %DIPRES IFP 3T26, as of 2026-10-06 · in force
Unemployment rate that activates the Unemployment Contingency Program	10 %Ley Nº 20.128 art. 3, as of 2006-09-30 · in force
S&P long term foreign currency rating (local currency A+), stable outlook	A ratingMinisterio de Hacienda release, as of 2026-09-25 · in force
Fitch long term foreign currency rating, stable outlook	A- ratingMinisterio de Hacienda release, as of 2026-09-21 · in force
Moody's rating, stable outlook	A2 ratingMinisterio de Hacienda release, as of 2025-10-24 · in force
Members of the Autonomous Fiscal Council	5 membersLey Nº 21.148 art. 3, as of 2019-02-16 · in force
Days Congress has to dispatch the budget bill before the President's bill takes effect	60 daysConstitución art. 67, as of 2005-09-22 · in force

The rule

1. The President must submit the Budget Law bill to Congress at least three months before it is due to take effect (so by the end of September for a calendar year budget). If Congress does not dispatch it within 60 days of its presentation, the President's bill takes effect as presented. Congress may not change the revenue estimates and may only reduce spending items, except spending fixed by permanent law; it may not approve any new spending without naming the funding source. Revenue estimates are the exclusive call of the President, on the advice of the technical agencies.
Example: The 2027 bill was submitted on Wednesday 30 September 2026 according to the Ministry of Finance; 60 days from presentation runs to about 29 November 2026. It projects Central Government spending of CLP 91,175,816 million, 1.5 percent real growth on projected 2026 execution. / About US$92.4 billion of 2027 Central Government spending at CLP 986.58 per dollar.Constitución Política de la República (Decreto Nº 100 of 2005), Art. 67, 2005-09-22 official text · verified 2026-10-26

2. Only a law can authorize the State, its agencies and municipalities to borrow, the loan must fund specific projects and the law must name the source of debt service; borrowing that matures after the end of the current presidential term needs a qualified quorum law. Bills on public borrowing, guarantees or any operation that can commit the State's credit, as well as bills creating or changing taxes, are of the President's exclusive initiative. These rules do not apply to the Central Bank.Constitución Política de la República, Art. 63 Nº 7 and Nº 8; art. 65, inciso cuarto, Nº 1 and Nº 3, 2005-09-22 official text · verified 2026-10-26

3. The 2026 Budget Law authorizes the President to borrow, in Chile or abroad and in pesos or foreign currency, up to US$17,400 million included as debt in general revenue, plus a further US$600 million; debt amortized within 2026 and debt raised to prepay earlier borrowing (net of the amortizations already in the budget) does not count against the ceiling. It also lets the President guarantee loans and bonds of public sector companies and state universities up to US$500 million in 2026. Each borrowing is made by supreme decree through the Ministry of Finance, with copies sent to the finance committees of both chambers within 15 days.
Example: Combined borrowing authority for 2026: US$18,000 million, about CLP 17.76 trillion at CLP 986.58. / US$17,400 million plus US$600 million; US$500 million of state guarantees for public companies and state universities.Ley Nº 21.796, Ley de Presupuestos del Sector Público 2026 (DO 12 December 2025), Art. 2 and art. 3, 2025-12-12 official text · verified 2026-10-26

4. The Pension Reserve Fund (FRP) exists to help finance the State's obligations for the Pensión Garantizada Universal and solidarity disability benefits. Each year it receives a contribution equal to the actual fiscal surplus, capped at 0.5 percent of the previous year's GDP and paid in the first half of the year, plus its own returns; the obligation stops once the fund reaches the equivalent of 900,000,000 UF. Withdrawals follow a rule set by the Minister of Finance designed to keep annual withdrawals stable and predictable and to preserve the fund's real value over time. The fund may invest in Chile and abroad in the instruments allowed to pension funds by DL Nº 3.500 art. 45, excluding the shares in letter g), through managers hired by public tender for terms of up to ten years.
Example: The 900,000,000 UF stop point equals about CLP 37.1 trillion at UF 1 = CLP 41,221.08. / About US$37.6 billion; at US$10,713 million on 31 August 2026 the FRP stood at roughly 28 percent of that level.Ley Nº 20.128 (DO 30 September 2006), as amended by Ley Nº 21.683 (DO 14 August 2024), Art. 5, art. 6, art. 7, art. 8 and art. 9, 2024-08-14 official text · verified 2026-10-26 · changed: Ley Nº 21.683 (DO 14 August 2024) amended Ley Nº 20.128, including the fiscal policy decree rules and the FRP withdrawal rule in art. 8; its transitory article provides that withdrawals under art. 8 cannot be made until one year after that law took effect. Earlier, Ley Nº 21.225 (DO 2 April 2020) suspended the surplus based contribution for 2020 and 2021.

5. The Economic and Social Stabilization Fund (FEES) merged the earlier copper compensation and revenue stabilization funds. Its inflows include, when positive, the actual surplus left after deducting the FRP contribution and any capital contribution to the Central Bank under art. 11; when the actual surplus is below the structural balance, that deposit is optional. Investment of the FEES, the FRP and other Treasury assets is decided by the Minister of Finance, may be outsourced to portfolio managers in Chile or abroad or entrusted to the Central Bank as fiscal agent, and is advised by a Financial Committee whose members are published on the Ministry's website.Ley Nº 20.128, Art. 10, art. 12 and art. 13, 2006-09-30 official text · verified 2026-10-26

6. An Unemployment Contingency Program, funded every year as a Budget Law item, may be activated when the national quarterly unemployment rate measured by INE exceeds its average for the previous five years or reaches 10 percent or more; it may also apply in any region, province or commune where unemployment is 10 percent or more. It funds labor intensive programs and hiring subsidies.
Example: INE measured national unemployment at 9.6 percent for June to August 2026, 0.4 points below the 10 percent trigger; regions above 10 percent can trigger the program locally.Ley Nº 20.128, Art. 2, art. 3 and art. 4, 2006-09-30 official text · verified 2026-10-26

7. The Autonomous Fiscal Council (Consejo Fiscal Autónomo) is an autonomous technical body that evaluates DIPRES's cyclical adjustment of revenue, observes the expert committees on trend GDP and the copper reference price, monitors compliance with the fiscal rules and opines on deviations, and assesses medium and long term fiscal sustainability, sending its reports to the finance committees of both chambers. Its five members are appointed by the President with the agreement of two thirds of the Senate for five year terms, renewed one a year.Ley Nº 21.148 (DO 16 February 2019), Art. 1, art. 2 and art. 3, 2019-02-16 official text · verified 2026-10-26

8. The current fiscal policy decree, Decreto Nº 486 of 2026 of the Ministry of Finance, published in the Diario Oficial on 22 September 2026, sets structural deficit targets of 1.8 percent of GDP for 2027, 1.7 percent for 2028, 1.6 percent for 2029 and 1.5 percent for 2030, with gross debt kept below a prudent level of 45 percent of GDP. DIPRES's third quarter 2026 report projects that, on current medium term spending plans, the cyclically adjusted balance would be minus 2.2 percent of GDP in 2028, minus 2.5 percent in 2029 and minus 2.8 percent in 2030, so spending compatible with the targets is below planned spending by 0.5 to 1.3 percent of GDP a year.Decreto Nº 486 of 2026, Ministerio de Hacienda, issued under Ley Nº 20.128 art. 1; DIPRES Informe de Finanzas Públicas, third quarter 2026, Ley Nº 20.128 art. 1; IFP 3T26 summary and Cuadro 4, 2026-09-22 official text · verified 2026-10-26

9. With the signature of all Ministers, the President may decree payments not authorized by law to meet urgent needs from public calamities, external aggression, internal unrest, serious danger to national security or the exhaustion of funds for essential services. Total drawings for these purposes may not exceed 2 percent of the spending authorized by the Budget Law in a year, and officials who authorize spending in breach of this rule are personally and jointly liable to repay it.
Example: Two percent of the CLP 91,175,816 million of 2027 Central Government spending in the bill is about CLP 1.82 trillion. / About US$1.85 billion.Constitución Política de la República, Art. 32 Nº 20, 2005-09-22 official text · verified 2026-10-26

Year	Structural deficit target (Decreto Nº 486)	Projected cyclically adjusted balance	Gross debt (projection)
2026	Not stated in the report summary	minus 2.3	42.7
2027	1.8	minus 1.8 (budget bill)	42.5
2028	1.7	minus 2.2	43.5
2029	1.6	minus 2.5	44.0
2030	1.5	minus 2.8	44.0
2031	No target yet	minus 2.0	43.2

Fiscal path in the DIPRES third quarter 2026 report (6 October 2026) against the fiscal policy decree. Percent of GDP.

Agency	Rating	Outlook	Date of action
S&P Global Ratings	A foreign currency; A+ local currency	Stable	25 September 2026
Fitch Ratings	A minus (A-) foreign currency	Stable	21 September 2026
Moody's Ratings	A2	Stable	24 October 2025

Sovereign ratings as reported by the Ministry of Finance.

Asset	Market value	Note
FEES	3,885.14	69 percent in US dollars; 99.6 percent investment grade fixed income
FRP	10,713.05	Includes the FAPP of US$224.31 million
Other Treasury assets (OATP)	9,646.88	Sale proceeds and seasonal cash surpluses
Public transport and regional connectivity fund (FAR)	643.71
High cost treatment fund (TAC)	8.92	Reported quarterly
Total	24,897.69

Treasury assets at 31 August 2026, Treasury consolidated assets report of 30 September 2026 (US$ million).

Worked example

Sizing the sovereign. 2027 Central Government spending of CLP 91,175,816 million is about US$92.4 billion at CLP 986.58 per dollar; projected end 2026 gross debt of CLP 157,511,633 million is about US$159.7 billion at the same spot rate (DIPRES's own dollar figure uses a different rate).
Refinancing wall. DIPRES puts 2027 amortizations at US$17,423 million, more than double 2026 and about 63 percent of 2027 financing needs of CLP 24,665,217 million (about US$25.0 billion). Expect heavy peso and dollar sovereign issuance in 2027: CLP 21,675,540 million (about US$22.0 billion) of planned debt issuance.
Copper sensitivity. The 2027 budget uses a long term copper reference price of 537 US cents per pound against a 2027 LME assumption of 565 cents, a gap of 4.9 percent, down from 28.8 percent in 2026. A smaller gap means less of the copper windfall is treated as cyclical, so a copper price fall would hit the structural balance more directly than in 2026.

Step by step

1. Track the budget cycle: bill by the end of September, 60 days in Congress (Constitution art. 67), Budget Law published in December (the 2026 law, Ley Nº 21.796, was published on 12 December 2025). Put these dates in your /calendar/.
2. Read DIPRES's quarterly Informe de Finanzas Públicas for the official fiscal, debt and copper price assumptions; use the copper reference price and trend GDP figures when you stress test public contracts or concessions.
3. Watch the Autonomous Fiscal Council's opinions (Ley Nº 21.148 art. 2) for early warning on target slippage, and the monthly Treasury assets report for FEES and FRP balances.
4. If your business depends on public spending (concessions, health, public works, housing), map the 2027 bill's priorities and remember Congress can cut but not add spending.
5. For sovereign debt exposure, follow the borrowing authorization in each Budget Law (art. 3) and the rating agencies' actions as published by the Ministry of Finance.

Common traps

Assuming Congress can rescue a program. Congress can only reduce spending in the budget bill and cannot raise revenue estimates (Constitution art. 67); new spending needs a presidential initiative and a named funding source.
Expecting tax breaks or new taxes from a congressional motion. Any bill that imposes, removes, reduces or exempts taxes is of the President's exclusive initiative (Constitution art. 65 Nº 1); a motion signed only by legislators on these matters is not admissible.
Treating the FEES as a deep cushion. At US$3,885 million on 31 August 2026 the FEES had received US$27,763 million since 2007 and paid out US$28,293 million; it is far smaller than in past copper cycles.
Reading the 45 percent debt level as a hard legal cap. It is a prudent level in the fiscal policy decree under Ley Nº 20.128 art. 1, and the escape clause in art. 1 ter allows up to two years of deviation for extraordinary events.
Ignoring the medium term gap. DIPRES's own October 2026 projection shows planned spending above what the Decreto Nº 486 targets allow for 2028 to 2031; expect either spending restraint or target revisions.
Using spot conversions as official dollar figures. DIPRES and the Treasury report dollar amounts at their own exchange rates; use their dollar figures when citing debt or fund values in dollars.

Sources

← Chile macro at a glance: the rules behind rates, inflation, the budget and the pesoChile's political system and how laws are made: what investors need to know →