From the time when the effects of the economic crisis became evident in Chile, authorities have made it a priority to support the Small and Medium enterprises and employees that have been impacted by the quarantines, along with implementing measures to strengthen public health.
While it is still too soon to estimate the full extent of the economic impact that the pandemic will have in Chile, the Government has launched two economic and social plans, that have been presented gradually to face the emergency, which is valued at more that US$17 billion, which represents approximately 7% of Chile´s GDP. These plans include:
- Employment Protection Plan that would impact 4.7 members of the Chilean workforce that are receiving unemployment insurance.
- COVID-19 bonus that will benefit 2.7 million members of the at-risk population as well as emergency household income that will be distributed over a period of 3 months, aimed to support 4.9 million unorganized workers.
- Second Protection Network, which includes: a social protection plan for Chilean families, as well as improving pensions from the “solidarity pillar”-grouped with benefits for retired members of the population-which will benefit 1.6 million vulnerable senior citizens.
- Creation of a guaranteed minimum wage, which will benefit 700,000 low-income employees.
In addition to these measures, it is important to mention the recent approval of a flexible credit line from the International Monetary Fund to Chile, valued at nearly US$24 billion, the result of a request made by the Central Bank of Chile on May 12th. The President of the IMF, Kristalina Georgieva, indicated that the decision to adopt this measure was made considering the stability of the Chilean economy, macroeconomic factors and the stability of the institutional framework. In spite of these factors, it is noted that Chile is still “exposed to substantial external risks” due to the COVID-19 pandemic. Even though the current financial situation in Chile is in good standing, this credit line will allow the country to have a larger margin in continuing to face the effects of COVID-19.
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