The crisis has been hard on Chile. Gross domestic product (GDP) contracted by 5.8% in 2020, compared to a year earlier. In 2020, poverty increased by 0.2 percentage points to reach 10.9% according to the latest international comparable estimations available, one of the lowest rates in the Latin America and the Caribbean (LAC) region (30.9%). Extreme poverty (1.6%) is also one of the lowest in LAC (average 10.0%). Between March 2020 and May 2021 schools were fully closed for 14 weeks, much lower than the LAC average (26 weeks) and close to the Organisation for Economic Co-operation and Development (OECD) average (15 weeks). The negative impact on education was partially offset by online learning, which was present in 38.7% of schools, higher than in LAC (32.5%) but significantly lower than in the OECD (54.1%). The healthcare system was put under pressure by the pandemic, but earlier investment by the government functioned as a cushion. Public expenditures on health have risen by two percentage points in the last decade to reach 8.9% of GDP, close to the OECD average (8.8%) and much higher than the LAC average (6.8%). However, people’s perceptions of the quality of health services deteriorated. In 2020, only 34.2% of people declared being satisfied with health care, down by six percentage points in a decade. This figure is lower than in LAC (48.2%) and the OECD (70.7%). According to Gallup data on citizens’ perception, in 2020, 84.9% of Chileans perceived the government as corrupt. This figure compares to 72.4% in LAC and 58.8% at the OECD level.

Since the start of the COVID-19 pandemic, Chile deployed a co-ordinated and far-reaching strategy to support the most vulnerable households, workers and enterprises. Chile effectively mobilised resources to expand and strengthen the social protection network for nearly 17.68 million Chileans. To support households, Chile allocated around USD 1.2 billion through the emergency cash transfer programme (Ingreso Familiar de Emergencia) for formal and informal households whose incomes were negatively affected by the crisis. Likewise, Chile implemented Bono COVID-19, a special transfer scheme aimed at supporting the most vulnerable families. Additionally, to protect middle-income households, Chile provided Bono Clase Media. To sustain workers, Chile established extraordinary transitory measures (Ley de Protección del Empleo) to protect income stability and jobs for formal workers. In addition, Chile implemented an employment subsidy as an economic reactivation measure to encourage hiring and retention of workers. To support micro, small and medium-sized enterprises, Chile instituted a fund for loans by providing guarantees (FOGAPE), established additional credit lines and provided tax refunds. Last, Chile encouraged programmes that provide technical assistance and promote digital and technical skills for MSMEs and enhance productivity for firms in this sector (Digitaliza tu Pyme, Ruta Digital, Pymes en Linea, Pymes de Barrio, Elijo Pyme, Espacio del Emprendedor and Despega Mipe).

Going forward, Chile designed the public investment plan for the period 2020-22, which aims to solve social and productive transformation demands and the water shortage threats. Special emphasis has been placed on projects that contribute to accelerating the transition to sustainable development and to mitigating and adapting to climate change. Moreover, Chile is taking a series of measures to support market competitiveness, including new transparency requirements and a new digital model regarding the means of payment.

As part of Chile’s international co-operation framework within LAC, the Chile-Mexico Joint Cooperation Fund transferred over USD 1 million to the country for the acquisition of medical supplies to face the COVID-19 pandemic. Beyond LAC, Chile takes part in the Bilateral Fund for Development in Transition Chile-European Union, which allocated EUR 365 million to its newest project to provide support for the recovery of prioritised productive sectors of the macro-central-southern region of the country within the framework of COVID-19. The project aims to support the economic recovery of four regions of the country and to develop specific actions to boost employment. In addition, as a result of Chile’s engagement with Japan’s socio-economic development programme, the country became a beneficiary of a non-refundable USD 4.6 million financial donation to purchase medical equipment, which will be used in various health centres in the country.


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