Ministry of Finance (Chile)
The Ministry of Finance of Chile (Spanish: Ministerio de Hacienda) is the cabinet-level administrative office in charge of managing the financial affairs, fiscal policy, and capital markets of Chile; planning, directing, coordinating, executing, controlling and informing all financial policies formulated by the President of Chile.
Since January 2021, the Minister of Finance is Mr. Rodrigo Cerda.
History[]
In 1814 the Secretary of Finance was created, as Supreme Director Bernardo O'Higgins sought to develop an administrative framework for the then newly formed nation, considering the need to ascertain its independence from the Spanish crown.[1] The office was first organized by a Presidential Decree on June 2, 1817, and was named "Secretariat of Finance" (1818 - 1824). Hipólito de Villegas was appointed to lead the new institution.[1] The present structure, duties and attributions were defined by Presidential Decree N° 7912, "General Law of Ministries", on November 30, 1927.
Institutional framework[]
According to Article 6 of Decree 7,912 of 1927, the Ministry of Finance responsibilities include, among other:[2]
- Management of State's financial policy
- Collection and administration of public revenue
- Public accounting
- Study of custom policy and intervention in trade agreements
- Issues concerning monetary laws, banks and credit institutions
- Issues concerning corporation oversight, stock exchange and insurance
- Everything related to public credit and the presentation in Congress of projects affecting public finance
- The development and technical study of the Budget of the Nation and investment account
In practice, the Ministry of Finance executes policies through several related and dependent institutions.
Related Institutions:[3]
- BancoEstado
- Government Procurement Directorate
- Civil Service Directorate
- National Customs Service
- Internal Tax Service
- Public Purchasing and Recruiting Department
- Superintendency of Banks and Financial Institutions
- Superintendency of Securities and Insurance
- Superintendency of Game Casinos
- Financial Analysis Unit
Dependent Institutions:[4]
- Budget Office
- General Treasury of the Republic
Policies[]
One of Chile's fiscal policy central features has been its counter-cyclical nature. This has been facilitated by the voluntary application since 2001 of a structural balance policy based on the commitment to an announced goal of a medium-term structural balance as a percentage of GDP.[5] The structural balance nets out the effect of the economic cycle (including copper price volatility) on fiscal revenues and constrains expenditures to a correspondingly consistent level. In practice, this means that expenditures rise when economic activity is low and decrease in booms.[6] The target was of 1% of GDP between 2001 and 2007, it was reduced to 0.5% in 2008 and then to 0% in 2009 in the wake of the global financial crisis[7] In 2005, key elements of this voluntary policy were incorporated into legislation through the Fiscal Responsibility Law (Law 20,128).[6]
However, the financial crisis of 2008 together with the reconstruction following the 2010 Chile earthquake undermined the financial position of the country, resulting in a structural deficit that was reduced to 1/2 percent of GDP in 2012, two years ahead of government expectations to pass the 1% threshold.[6][8] The 2013 budget was devised with a target structural deficit of 1%.[9]
The Fiscal Responsibility Law also allowed for the creation of two sovereign wealth funds: the Pension Reserve Fund (PRF) and the Economic and Social Stabilization Fund (ESSF). The PRF was created as a response to the expected increase in liabilities related to old-age pensions and benefits, especially for the poor,[6][10] and it had accumulated US$5.883 million (market value) by the end of 2012.[11] The PRF is set to receive yearly capital injections between 0.2% and 0.5% of the previous year's GDP depending on the fiscal surplus, so new resources are secured every year.[12] The ESSF's objective is to stabilize fiscal spending by providing funds to finance fiscal deficits and debt amortization[10] and had market value of US$14.998 million by the end of year 2012.[11] Each year, the ESSF accumulates any fiscal surplus remaining after the contributions to the FRP and to the capital of the Central Bank of Chile, excluding debt service and anticipatory contributions during the previous year.[13] The funds are managed by the Central Bank of Chile and a Financial Committee advises on their investment policy.[10] Chile also participated in the discussion and agreed to the Santiago Principles.[10]
The main taxes in Chile in terms of revenue collection are the value added tax (45.8% of total revenues in 2012) and the income tax (41.8% of total revenues in 2012).[14] The value added tax is levied on sales of goods and services (including imports) at a rate of 19%, with a few exemptions. The income tax revenue comprises different taxes. While there is a corporate income tax of 20% over profits from companies (called First Category Tax), the system is ultimately designed to tax individuals. Therefore, corporate income taxes paid constitute a credit towards two personal income taxes: the Global Complementary Tax (in the case of residents) or the Additional Tax (in the case of non-residents). The Global Complementary Tax is payable by those that have different sources of income, while those receiving income solely from dependent work are subject to the Second Category Tax. Both taxes are equally progressive in statutory terms, with a top marginal rate of 40%. Income arising from corporate activity under the Global Complementary Tax only becomes payable when effectively distributed to the individual. There are also special sales taxes on alcohol and luxury goods, as well as specific taxes on tobacco and fuel. Other taxes include the inheritance tax and custom duties.[15]
In 2012, general government expenditure reached 21.5% of GDP, while revenues were equivalent to 22% of GDP.[5] Gross financial debt amounted to 12.2% of GDP, while in net terms it was of -6.9% of GDP, both well below OECD averages.[5]
Chile's prudent fiscal policy along with low debt levels have been cited as contributing factors to Chile's exceptionally high credit rating in the context of the region.[16] Chile's AA- S&P rating is the highest in the Latin America, while Fitch Ratings places the country one step below, in A+.[17]
List of Ministers of Finance[]
Patria Vieja period[]
Picture | Name | Entered Office | Exited Office | Notes | Appointed by |
March 14, 1814 | July 23, 1814 | Secretary of Government | Francisco de la Lastra | ||
July 23, 1814 | August 10, 1814 | Secretary of Government and Finance | |||
Manuel Rodríguez Erdoyza | August 10, 1814 | October 2, 1814 | Secretary of Government and Finance |
Ministers of Finance[]
Picture | Name | Entered Office | Exited Office | Notes | Appointed by |
Hipólito de Villegas y Fernández | September 7, 1817 | March 30, 1818 | Bernardo O'Higgins | ||
Anselmo de la Cruz y Bahamonde | March 30, 1818 | April 14, 1818 | |||
José Miguel Infante y Rojas | April 14, 1818 | June 27, 1818 | |||
Anselmo de la Cruz y Bahamonde | June 27, 1818 | May 2, 1820 | |||
José Antonio Rodríguez Aldea | May 2, 1820 | January 28, 1823 | |||
January 28, 1823 | April 8, 1823 | Government Junta | |||
April 8, 1823 | July 12, 1823 | Ramón Freire | |||
Diego José Benavente Bustamante | July 12, 1823 | February 22, 1825 | |||
February 22, 1825 | June 18, 1825 | ||||
June 18, 1825 | October 8, 1825 | ||||
Diego José Benavente Bustamante | October 8, 1825 | October 17, 1825 | |||
October 17, 1825 | September 9, 1826 | ||||
September 12, 1826 | October 20, 1826 | Agustín Eyzaguirre | |||
October 20, 1826 | October 22, 1826 | ||||
Ventura Blanco Encalada | March 8, 1827 | July 23, 1828 | Reappointed | Ramón Freire | |
Francisco Ruiz-Tagle Portales | July 23, 1828 | July 16, 1829 | Francisco Antonio Pinto | ||
July 16, 1829 | November 9, 1829 | Francisco Ramón Vicuña | |||
November 9, 1829 | December 7, 1829 | ||||
Mariano Egaña Fabres | February 20, 1830 | March 18, 1830 | Francisco Ruiz-Tagle | ||
Juan Francisco Meneses Echanes | March 18, 1830 | June 15, 1830 | |||
Manuel Rengifo Cárdenas | June 15, 1830 | November 9, 1835 | José Tomás Ovalle | ||
Joaquín Tocornal Jiménez | November 9, 1835 | April 14, 1841 | José Joaquín Prieto | ||
April 14, 1841 | September 18, 1841 | ||||
Manuel Rengifo Cárdenas | September 18, 1841 | April 10, 1845 | Manuel Bulnes | ||
José Joaquín Pérez Mascayano | April 10, 1845 | September 22, 1846 | |||
Manuel Camilo Vial Formas | September 22, 1846 | May 9, 1848 | Interim | ||
Salvador Sanfuentes Torres | May 9, 1848 | June 12, 1849 | Interim | ||
June 12, 1849 | April 19, 1850 | ||||
April 19, 1850 | May 7, 1852 | Appointed by | |||
Reappointed by | Manuel Montt | ||||
May 7, 1852 | January 7, 1854 | ||||
January 7, 1854 | September 18, 1856 | Interim | |||
José Francisco Gana López | September 18, 1856 | October 31, 1856 | Interim | ||
October 31, 1856 | September 29, 1857 | ||||
September 29, 1857 | January 8, 1858 | ||||
January 8, 1858 | October 3, 1859 | ||||
Jovino Novoa Vidal | October 3, 1859 | October 1, 1861 | |||
October 1, 1861 | July 9, 1862 | José Joaquín Pérez | |||
José Victorino Lastarria Santander | July 9, 1862 | January 16, 1863 | |||
Domingo Santa María González | January 16, 1863 | May 10, 1864 | |||
Alejandro Reyes Cotapos | May 10, 1864 | January 7, 1869 | |||
Melchor de Concha y Toro | January 7, 1869 | August 2, 1870 | |||
José Antonio Gandarillas Luco | August 2, 1870 | September 18, 1871 | |||
September 18, 1871 | April 12, 1872 | Federico Errázuriz Zañartu | |||
Ramón Barros Luco | April 12, 1872 | September 18, 1876 | |||
September 18, 1876 | October 27, 1877 | Aníbal Pinto | |||
Augusto Matte Pérez | October 27, 1877 | August 5, 1878 | |||
August 5, 1878 | April 17, 1879 | ||||
Augusto Matte Pérez | April 17, 1879 | June 16, 1880 | |||
José Alfonso Cavada | June 16, 1880 | September 18, 1881 | |||
Luis Aldunate Carrera | September 18, 1881 | April 25, 1882 | Domingo Santa María | ||
Pedro Lucio Cuadra Luque | April 25, 1882 | January 18, 1884 | |||
Ramón Barros Luco | January 18, 1884 | September 5, 1885 | |||
Pedro Nolasco Gandarillas Luco | September 5, 1885 | October 13, 1885 | |||
Hermógenes Pérez de Arce Lopetegui | October 13, 1885 | September 18, 1886 | |||
Agustín Edwards Ross | September 18, 1886 | April 13, 1888 | José Manuel Balmaceda | ||
April 13, 1888 | November 2, 1888 | ||||
November 2, 1888 | June 11, 1889 | ||||
June 11, 1889 | October 23, 1889 | ||||
Pedro Montt Montt | October 23, 1889 | January 21, 1890 | |||
Pedro Nolasco Gandarillas Luco | January 21, 1890 | August 7, 1890 | |||
August 7, 1890 | October 15, 1890 | ||||
October 15, 1890 | December 26, 1890 | ||||
Anfión Muñoz Muñoz | December 26, 1890 | January 5, 1891 | |||
December 27, 1890 | January 5, 1891 | Interim | |||
José Miguel Valdés Carrera | January 5, 1891 | March 29, 1891 | |||
March 29, 1891 | July 29, 1891 | ||||
Manuel José Yrarrázaval Larraín | July 29, 1891 | August 29, 1891 | |||
September 7, 1891 | December 26, 1891 | Revolutionary Junta of Iquique | |||
December 26, 1891 | March 14, 1892 | Jorge Montt | |||
Agustin Edwards Ross | March 14, 1892 | July 9, 1892 | |||
Enrique Mac Iver | July 9, 1892 | April 22, 1893 | |||
April 22, 1893 | April 26, 1894 | ||||
April 26, 1894 | December 7, 1894 | ||||
December 7, 1894 | August 1, 1895 | ||||
Enrique Mac Iver | August 1, 1895 | November 24, 1895 | |||
Hermógenes Pérez de Arce Lopetegui | November 24, 1895 | September 18, 1896 | |||
September 18, 1896 | November 20, 1896 | Federico Errázuriz Echaurren | |||
November 20, 1896 | June 26, 1897 | ||||
June 26, 1897 | August 25, 1897 | ||||
Elías Fernández Albano | August 25, 1897 | December 23, 1897 | |||
December 23, 1897 | April 14, 1898 | ||||
April 14, 1898 | June 28, 1898 | ||||
Rafael Sotomayor Gaete | June 28, 1898 | June 27, 1899 | |||
June 27, 1899 | October 14, 1900 | ||||
October 14, 1900 | November 3, 1900 | ||||
November 3, 1900 | March 15, 1901 | ||||
March 15, 1901 | May 1, 1901 | ||||
Juan Luis Sanfuentes Andonaegui | May 1, 1901 | October 3, 1901 | |||
Luis Barros Borgoño | October 3, 1901 | November 18, 1901 | Germán Riesco | ||
November 18, 1901 | May 6, 1902 | ||||
May 6, 1902 | November 20, 1902 | ||||
Ricardo Cruzat Hurtado | November 20, 1902 | April 7, 1903 | |||
April 7, 1903 | September 1, 1903 | ||||
Miguel Cruchaga Tocornal | September 1, 1903 | January 10, 1904 | |||
January 10, 1904 | April 12, 1904 | ||||
April 12, 1904 | May 12, 1904 | ||||
May 12, 1904 | October 30, 1904 | ||||
October 30, 1904 | March 18, 1905 | ||||
March 18, 1905 | October 21, 1905 | ||||
October 21, 1905 | March 19, 1906 | ||||
March 19, 1906 | May 7, 1906 | ||||
May 7, 1906 | September 18, 1906 | ||||
September 18, 1906 | October 29, 1906 | Pedro Montt | |||
Rafael Sotomayor Gaete | October 29, 1906 | June 12, 1907 | |||
June 12, 1907 | October 25, 1907 | ||||
October 25, 1907 | August 29, 1908 | ||||
August 29, 1908 | January 22, 1909 | ||||
January 22, 1909 | June 15, 1909 | ||||
June 15, 1909 | September 15, 1909 | ||||
September 15, 1909 | June 25, 1910 | ||||
June 25, 1910 | December 23, 1910 | ||||
December 23, 1910 | January 11, 1911 | Ramón Barros Luco | |||
April 11, 1911 | August 15, 1911 | ||||
August 15, 1911 | May 20, 1912 | ||||
May 20, 1912 | August 8, 1912 | ||||
August 8, 1912 | April 8, 1913 | ||||
August 8, 1913 | June 16, 1913 | ||||
Arturo Alessandri Palma | June 16, 1913 | November 17, 1913 | |||
November 17, 1913 | September 3, 1914 | ||||
September 3, 1914 | September 6, 1914 | ||||
September 6, 1914 | September 15, 1914 | ||||
September 15, 1914 | December 15, 1915 | ||||
December 15, 1915 | December 23, 1915 | ||||
December 23, 1915 | January 8, 1916 | PC | Juan Luis Sanfuentes | ||
January 8, 1916 | July 1, 1916 | PR | |||
July 1, 1916 | November 20, 1916 | PLD | |||
November 20, 1916 | July 14, 1917 | PN | |||
July 14, 1917 | October 12, 1917 | PR | |||
October 12, 1917 | January 18, 1918 | PC | |||
January 18, 1918 | April 27, 1918 | PN | |||
Luis Claro Solar | April 27, 1918 | September 6, 1918 | PL | ||
September 6, 1918 | November 25, 1918 | PR | |||
Luis Claro Solar | November 25, 1918 | July 9, 1919 | PL | ||
July 9, 1919 | November 8, 1919 | ||||
November 8, 1919 | March 26, 1920 | PNa | |||
March 26, 1920 | June 16, 1920 | PR | |||
June 16, 1920 | July 1, 1920 | PN | |||
July 1, 1920 | December 23, 1920 | PL | |||
December 23, 1920 | May 12, 1921 | PR | Arturo Alessandri | ||
May 12, 1921 | August 16, 1921 | ||||
August 16, 1921 | November 3, 1921 | ||||
November 3, 1921 | March 22, 1922 | PL | |||
March 22, 1922 | April 1, 1922 | PR | |||
April 1, 1922 | August 29, 1922 | PL | |||
August 29, 1922 | December 21, 1922 | ||||
December 21, 1922 | January 12, 1923 | ||||
January 12, 1923 | March 16, 1923 | PN | |||
March 16, 1923 | June 14, 1923 | PR | |||
June 14, 1923 | July 2, 1923 | PLD | |||
July 2, 1923 | January 3, 1924 | PN | |||
January 3, 1924 | February 1, 1924 | PLD | |||
February 1, 1924 | March 14, 1924 | PL | |||
March 14, 1924 | July 20, 1924 | PLD | |||
July 20, 1924 | September 5, 1924 | PLD |
- PAL - Partido Agrario Laborista
- PC - Partido Conservador
- PCCh - Partido Comunista de Chile
- PCSC -
- PCU -
- PDC - Partido Democrata Cristiano
- Ind - Independiente
- PL - Partido Liberal
- PLD - Partido Liberal Democrático
- MAPU - Movimiento de Acción Popular Unitaria
- PN - Partido Nacional
- PNa -
- PR - Partido Radical
- PRDe -
- PS - Partido Socialista
Sources[]
- República de Chile (1942). "VI. Poder Ejecutivo - Nómina de Gobernantes, Presidentes y Ministros desde la Independencia.". Manual del Senado. 1810-1942 (PDF) (in Spanish). Santiago de Chile: Imprenta Universitaria.
- Valencia Avaria, Luis (1986). Anales de la República: textos constitucionales de Chile y registro de los ciudadanos que han integrado los poderes ejecutivo y legislativo desde 1810 (in Spanish) (2ª edición ed.). Santiago de Chile: Editorial Andrés Bello.
References[]
- ^ Jump up to: a b Ministry of Finance website, History.
- ^ Decree 7,912 (in Spanish), LeyChile.
- ^ Ministry of Finance of Chile website, Related institutions (in Spanish)
- ^ Ministry of Finance of Chile website, Dependent institutions (in Spanish)
- ^ Jump up to: a b c OECD (2013), OECD Economic Surveys: Chile 2013.[permanent dead link] OECD Publishing.
- ^ Jump up to: a b c d Rodríguez, J., C. Tokman and A. Vega (2007). “Structural balance policy in Chile". OECD Journal on Budgeting 7(2), pp.59-92.
- ^ Corbo, Vittorio. La política fiscal chilena. Blogs from El Mercurio Newspaper. August 25, 2013.
- ^ Chile 2013 Article IV Consultation, IMF Country Report No. 13/198, International Monetary Fund, July 2013.
- ^ IMF Executive Board Concludes 2013 Article IV Consultation with Chile, Public Information Notice (PIN) No. 13/77, International Monetary Fund, July 8, 2013.
- ^ Jump up to: a b c d Ministry of Finance of Chile website, Sovereign Wealth Funds, About the Funds.
- ^ Jump up to: a b Ministry of Finance of Chile, Sovereign Wealth Funds Annual Report 2012 (in Spanish).
- ^ Ministry of Finance of Chile website, Sovereign Wealth Funds, Pension Reserve Fund.
- ^ Ministry of Finance of Chile website, Sovereign Wealth Funds, Economic and Social Stabilization Fund.
- ^ Internal Tax Service (Servicio de Impuestos Internos) website, Statistics, Annual tax revenue 2009-2012 (in Spanish)
- ^ Internal Tax Service (Servicio de Impuestos Internos) website, Chilean Taxation Archived February 26, 2015, at the Wayback Machine
- ^ RPT-Fitch affirms Chile's FC IDR at 'A+'; outlook stable, Reuters, October 25, 2013.
- ^ Sebastian Boyd, “Chile Raised to 4th-Highest Rating at Standard & Poor’s". Bloomberg News, December 26, 2012.
External links[]
- [Official website (in Spanish)
- Government ministries of Chile
- Finance in Chile
- Finance ministries
- Ministries established in 1817
- 1817 establishments in the Captaincy General of Chile