Ministry of Finance (Chile)

Rodrigo Cerda, the current Minister of Finance.

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[]

External links[]

• [Official website (in Spanish)