Chile's government is requesting congressional approval for an additional $6.2 billion in debt sales this year, on top of the $17.4 billion already authorized. This request follows a widening forecast for the fiscal deficit, just months after the new administration, led by President Jose Antonio Kast, took office with pledges to reduce the shortfall. The government has already raised over $8 billion this year.
The push for increased debt has raised concerns among lawmakers, with the lower house speaker noting that it risks Chile's reputation for fiscal prudence. The budget office now projects Chile's gross debt to exceed 45% of gross domestic product by 2028, a level the government previously defined as prudent. The new government has attributed the steeper fiscal challenge to the previous administration of President Gabriel Boric, claiming overestimations of revenue and overlooked expenses.
Despite these domestic concerns, foreign investors are showing record interest in Chile's local-currency government debt. This surge, observed in June 2026, is driven by a weaker peso, the prospect of interest rate cuts by the central bank, and the market-friendly stance of the conservative Kast administration. Finance Minister Jorge Quiroz also bolstered confidence by stating that the economy reached a turning point in June and is expected to recover in the second half of the year. The Chilean 10-year government bond yielded approximately 5.6% in June 2026, a decrease of about 0.69 percentage points from the previous year. Analysts project the fiscal deficit to narrow to about 1% of GDP in 2026, with public debt near 40%, which are considered comfortable figures by emerging-market standards. However, some caution remains regarding the peso's potential for further depreciation and the economy's reliance on copper demand from China and Europe.
