Chile has been one of Latin America’s fastest-growing economies over the past decade. However, following the 2010-2012 economic expansion, GDP growth fell to 1.9% in 2014 as a result of the slowdown in the mining sector due to the end of the investment cycle, and the decline in copper prices and private consumption. The unemployment rate rose from 5.7% in July 2013 to 6.6% in June 2014.

The fiscal deficit increased following the economic slowdown, the decrease in copper prices and the implementation of expansionist policies. The fiscal balance of the central government shifted from a surplus of 0.4% of GDP in the first semester of 2014 to a deficit of 0.3% in the same period of 2015 due to reduced tax revenue resulting from weaker domestic demand and lower copper prices.

The tax reform approved in September 2014 seeks to increase fiscal revenue by 3 percentage points of GDP in order to finance additional expenditures in education and to reduce the fiscal gap.  This reform focuses on eliminating the Taxable Profits Fund (FUT) that firms use to postpone payment of taxes on revenue earmarked for investments.

Economic growth is expected to recover gradually as private-sector prospects improve, progressively increasing growth to an estimated rate of 3.1% in 2017. A slow recovery is expected in 2015, with an estimated GDP growth rate of 2.2% given the current fiscal impetus.  Growth is expected to accelerate in 2016 and 2017 in response to current expansive monetary and fiscal policies and the recovery of private investment and domestic demand.

Last Updated: Sep 29, 2015

The Country Partnership Strategy (CPS) for 2011-2016 builds on the successful experience of the prior World Bank Group strategy in Chile. The strong institutional framework, stable economy and relatively advanced development level facilitate an engagement in which the Bank’s added value lies mainly in the knowledge agenda.

In a context of low financing needs and abundant access to capital markets at low spreads, Chile’s demand for Bank services concentrates on the provision of technical assistance and other knowledge products in areas in which the Bank has a comparative advantage and can support the country’s efforts to achieve its development goals. This is an important two-way investment for the Bank given that Chile’s development experiences of the past decades are highly valued among other clients and continued engagement should allow for important spillovers into the Bank’s work in other countries, as well as stronger south-south cooperation.

To this end, the Government of Chile and the World Bank signed a cooperation agreement to establish this multilateral agency’s first Research and Development Center in Latin America and the second located outside of Washington DC (the other center is in Kuala Lumpur, Malaysia). The center, which has a regional and global focus, will implement an ambitious research program based on World Bank databases.

The CPS aims to support the Government of Chile's vision of eradicating extreme poverty and becoming a developed country by the end of the decade. This support will be carried out through focused interventions in specific themes in three areas that broadly coincide with the government's development agenda:

  • Public sector modernization;
  • Job creation and equity improvement; and
  • Promotion of sustainable investments.

The strategy includes a flexible program implemented mainly through studies requested by the Government of Chile and a portfolio of small loans and grants.

The CPS covers six years. The bulk of the knowledge work will be delivered through studies structured around a Joint Studies Program funded by the Bank (US$400,000 per year) and the Government of Chile (up to US$800,000 annually), with the possibility of additional timely assistance through fee-for-service. The Bank also will continue to provide some limited financing for projects where its support adds value in policy implementation in selected areas.

The main objective of support from the International Finance Corporation (IFC) is to foster entrepreneurship in advanced fields and to develop innovative business models in a narrow range of sectors. Investments target tertiary education, vocational training, infrastructure, energy and financial services.

Last Updated: Sep 29, 2015

The current World Bank program includes a portfolio of two ongoing operations in higher education and public expenditure management totaling US$ 46.1 million. The objective of the first project is to improve the quality and relevance of tertiary education by strengthening the link between funding of tertiary education institutions and performance accountability. The second project aims to increase the efficiency of operations regarding financial management, budget formulation and spending, and the transparency of public spending at the central and municipal levels through the implementation of an updated, enhanced and expanded financial administration system (SIGFE).

The World Bank’s contribution to the country has been centered on a programmatic cost-sharing program. Since 2010, the Bank has contributed 31 studies in higher education reform, the water sector, the infrastructure concession strategy and efficiency of the public administration.

International Finance Corporation (IFC) interventions in the country focus on activities with a strong potential for development results, mainly in infrastructure, energy, the financial sector, education and agribusiness, with small and medium enterprises being a crosscutting theme. Since July 2015, the IFC in Chile had a portfolio totaling US$1.028 billion, which consisted of approximately US$694 million for the IFC on its own, and about US$334 million with other financial sources, including commercial banks and other foreign direct investments to support projects.


Last Updated: Sep 29, 2015


Chile: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments