Chile President Gabriel Boric Tells Investors He Wants Political System Reform

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(Bloomberg) -- Chile President Gabriel Boric said that he’s set on overhauling the nation’s political system as many of his marquee economic proposals remain bogged down in Congress.

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Congress should legislate on political changes by the time his mandate ends in early 2026, Boric said at the annual Enade conference in Santiago on Thursday. He noted that, while the government has tried to be more flexible, in general it’s been difficult to reach deals across the aisle amid a tense backdrop.

In recent years, Chile’s Congress has become increasingly fragmented, prompting calls for stricter rules for political parties to have representation in the legislature. Several lawmakers have refused to follow party-line commands which has resulted in the rejection of some of Boric’s proposals.

“I am in favor of a reform of our political system, and I consider many of the proposals that have been made in this regard are valuable,” Boric said. “The government will encourage an agreement between different political forces that includes the majority of them, and hopefully all of them.”

Boric is seeking to leverage an improving economic outlook and rally investor support following a dismal 2023. Local activity surprised analysts to the upside at the start of the year, political uncertainty has waned and the central bank is cutting its interest rate. Still, business leaders have expressed concerns over issues ranging from crime to the government’s reform agenda.

Read more: Chile Central Bank Sees Cautious Rate Cuts Amid Global Risks

In public speeches over recent weeks, Boric has urged investors to become less pessimistic, show more confidence in his administration and recognize better growth prospects for one of Latin America’s richest nations.

In his speech on Thursday, Boric said policies for economic growth and improved living standards should go hand-in-hand. He reiterated calls to pass legislation that would raise tax income to fund programs including crime-fighting initiatives and increased pension payouts.

Still, many investors say the government has shown increased hostility toward the private sector and remain wary of Boric’s flagship proposals. One particular concern is a plan to eliminate current pension fund managers, known as AFPs, which represent the bedrock of the Chile’s capital markets.

Read more: Chile’s Finance Minister Signals Tougher Stance in Pension Talks

Businesses are also clamoring for more results in the fight against crime as concerns rise over the presence of transnational gangs and drug trade.

Chile’s government expects economic growth to accelerate to 2.5% this year after inching up just 0.2% in 2023. That pick-up contrasts with forecasts of a slowdown in other Latin American nations like Brazil and Mexico.

--With assistance from Emma Sanchez.

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