Tax experts approve 1.5% public spending and call for targeting it toward public investment to generate employment

The 2027 Budget will have a limited public spending space of 1.5% compared to the projected execution for this year. Experts agree that the spending increase is adequate to maintain the fiscal target self-imposed by the government of reducing the structural fiscal deficit from 2.6% of GDP to 1.8% of GDP. Given this scenario, economists indicate that within this narrow margin the government must focus spending on priority areas to boost employment, including resources for Public Works and Housing. 30-09-2026 JORGE RODRIGUEZ PHOTO: PEDRO RODRIGUEZ PEDRO RODRIGUEZ Jorge Rodríguez stated on La Tercera's streaming program, Desde la Redacción, that the public spending growth determined by the Executive is in line with maintaining the fiscal target, but he emphasized that what matters is that it is well executed in pro-employment ministries. "There is no more room (for public spending expansion), because the constraint comes from meeting the fiscal target again, which I subscribe to. I think it is important to meet the fiscal target and, therefore, we must operate within this margin. In that sense, the composition of the Budget becomes important. Since the overall framework is small, the composition can indeed be made more pro-employment than usual," Rodríguez stated. In that scenario, he added that "the President will have to say that he has a commitment to fiscal responsibility, and that is why he keeps the Budget limited, and that within those margins he will fight for employment," the economist predicted. Former Budget Director Cristina Torres analyzed the 2025 fiscal scenario. Cristina Torres, director of the Center for Public Policies at Universidad San Sebastián and former Budget Director under Sebastián Piñera's second government, adds that "a real growth of 1.5% compared to the projected execution for this year remains limited growth, consistent with the narrow fiscal framework that the 2027 Budget will face." However, she says that "the details of the bill and the update of structural revenues will need to be known to fully assess that consistency. What matters is that this greater margin does not imply abandoning the effort already underway." Macarena García, economist at LyD, stresses that "there is a lot of information that needs to be clarified, which mainly affects this year, making it extremely difficult to have clarity on how much spending should grow. However, the yardstick to use for evaluating spending growth is compliance with both targets, a structural balance of -1.8% and debt below 45%, both in 2026 and 2027." Meanwhile, Juan Ortiz, economist at OCEC-UDP, comments that "this growth is in line with meeting the fiscal target for next year 2027, considering that the fiscal policy decree estimates a structural deficit of 1.8% of GDP, therefore it is consistent with relatively limited spending growth to continue seeking compliance with fiscal targets." PrioritiesExperts agree that, given the little fiscal room, the government should focus spending on ministries that boost employment. "With such a narrow margin, prioritization is fundamental. And I think today one of the main urgencies is employment," Torres maintains. Therefore, she argues that "the available margin should prioritize measures with an effective capacity to mobilize investment and employment, including those areas of public investment that have mature projects and real execution capacity, along with instruments directly aimed at favoring hiring and job creation." For García, given the economic context, "how it is spent is more important than how much is spent, therefore resources must be focused on public investment for its impact on employment and long-term growth. There should also be resources for subsidies for job hiring. To make room for this allocation, it is necessary to move forward in reallocating resources that are being spent inefficiently." Ortiz maintains that "the most relevant element lies in the focusing of spending, and therefore the great challenge is how the execution capacity of public investment can be strengthened and increased in order to boost more construction, civil works, among others." And Rodríguez notes that "originally one would think this Budget would emphasize public safety, but the current situation will lead to an emphasis on employment," he indicated. NEWSLETTERPulso PMMonday to Friday, 12:30 PMThe most relevant news on markets, companies and business: timely information, context and content to make better decisions. By subscribing you are accepting La Tercera's Terms and Conditions and Privacy Policies.