UPDATE 2-Chile finance minister sees $2 bln income shortfall in 2014
(Adds detail on cost of quake/fire reconstruction)
By Anthony Esposito
SANTIAGO May 19 (Reuters) - Chile's government will have to find a financing mechanism to make up for an income shortfall in 2014 as economic growth in the world's top copper producer cools to around 3.4 percent, Finance Minister Alberto Arenas said.
He estimated the government's coffers would receive $2 billion less in income this year than that estimated in the fiscal budget in September.
"There was an over-estimation of the income that could be obtained for 2014 based on the macroeconomic scenario (the previous government) presented to Congress in September 2013," Arenas told lawmakers on Monday.
Socialist President Michelle Bachelet took office in March, following conservative Sebastian Pinera's four-year term.
Less than a month after Bachelet took over, the country was hit by two natural disasters. A powerful 8.2 earthquake and tsunami shook northern Chile in early April, followed two weeks later by a huge fire that devastated parts of port city Valparaiso.
The cost of reconstruction after the two disasters would be some $1.25 billion, Arenas said to reporters after the presentation to Congress.
Arenas said the government estimated economic growth would be around 3.4 percent in 2014, in line with predictions by the central bank.
The bank's last official economic projection, published in its quarterly Monetary Policy report on March 31, forecast Chile would expand between 3.0 percent and 4.0 percent this year. That compares with 4.1 percent growth in 2013.
Data published earlier on Monday showed Chile's economy grew 2.6 percent in the first quarter compared with a year earlier, its slowest quarterly expansion in four years, as investment contracted. (Reporting by Anthony Esposito, Fabian Cambero and Felipe Iturrieta, Writing by Anthony Esposito and Rosalba O'Brien; Editing by Chizu Nomiyama and Andrew Hay)
Trending On Reuters
We are living longer but not creating financial plans to keep pace. Advisers give tips on how to make sure you don’t outlive your money. Video