In any economy, the fiscal budget is a key matter, both from a macroeconomic and a growth perspective. Since the Minister of Finance presented his budget proposal for 2027 this week, we will discuss it in this column. There is consensus among economists that—as a rule—fiscal accounts should be approximately balanced. This is for a variety of reasons, among them that such balance reflects a country with good public policies, in which one would not expect, for example, significant and unexpected tax variations. Indeed, Chile's economic history seems to support this concept. Chile's per capita GDP tended to converge with that of developed countries during the periods in which the country had fiscal surpluses. On this matter, the budget proposed by the government—which proposes a reduction of the structural deficit—takes an important step in the right direction. Nevertheless, in practice, in recessionary times most economists propose increasing public spending to reactivate the economy, thus incurring a (greater) fiscal deficit. That is precisely what the government is doing with the Chile Despega Plan. On another front, and as a rule, fiscal deficits translate into greater spending by the generation in which the deficit is incurred, at the expense of lower spending by future generations, which brings to the fore an evident ethical dilemma. It is a topic that is generally avoided, but it deserves greater attention. Well then, the fiscal deficits we have incurred in recent decades have translated into the loss of the Treasury's reserves and into a debt that rises to 43% of GDP, but they have not significantly affected our risk rating and, therefore, the level of interest rates. An increase in the latter would translate into a decline in the country's economic growth rate. The government is clearly aware of this relationship, and the budget proposal includes the necessary measures to ensure this does not happen. In summary, the Minister of Finance presented, in his excellent State of Public Finances address, a roadmap for economic growth recovery based on three pillars: regulatory facilitation, tax competitiveness, and fiscal consolidation. Regarding the latter, it proposes achieving real annual public spending growth of 1.5 percent of GDP, in an economy that would be growing at 3.3 percent annually, thereby generating greater space for private investment. It also aims at a reduction of the projected structural deficit, from 2.9 percent of GDP to 1.8 percent of it, a reduction that should later be deepened until reaching fiscal balance. By Rolf Lüders, economistNEWSLETTEROpinionSaturday, AMTense ideas, opposing views, and clear analysis: elements to unravel the issues that divide opinions and will shape the agenda. By subscribing you are accepting the Terms and Conditions and Privacy Policies of La Tercera.