By Rosalba O‘Brien
SANTIAGO, March 12 (Reuters) - Chile’s new center-left president Michelle Bachelet said on Wednesday she will forge ahead with ambitious reform plans to combat steep income inequality despite an economic slowdown that is deepening.
With growth slowing to a near four-year low and prices for top export copper tumbling to 44-month lows, some had speculated she may tone down her program, which is expected to begin with tax reform, including a corporate tax hike.
But when asked by Reuters whether the gloomier global outlook could lead the administration to scale back its reform pledges, Bachelet brushed aside concerns.
“When the economy is doing well there’s an excuse to say tax reform isn’t needed because the economy is doing well and there are resources. When the economy is doing poorly they say we can’t because the economy isn’t doing so well,” Bachelet said during a press conference on Wednesday.
She said the reform would be done “responsibly” but in accordance with the mandate that voters gave the government.
“The tax reform (plan) has been crafted with responsibility and seriousness and will be implemented gradually in such a way that those in question can make the necessary adjustments so that it won’t affect the development of their company or the economy.”
Her comments chimed with earlier remarks from new finance minister Alberto Arenas, who said the planned 56 reforms in 100 days were fully financed.
While top copper producer Chile is often lauded as an economic star in Latin America, many in the Andean country are clamoring for the spoils of a copper boom to be more fairly shared and for improved education, health and pension systems.
Moderate socialist Bachelet was sworn in on Tuesday, vowing a raft of measures including overhauling the education system and tearing up the dictatorship-era constitution.
One of her major challenges will be navigating the slowdown in Chile, whose open, mining-dependent economy is closely tied to the health of global markets.
Bachelet did say some budget adjustments may be in the cards given the economic outlook.
Still, with the central bank forecasting growth at between 3.75 percent and 4.75 percent this year, the Chilean economy looks enviable to many in the developed world- and social issues may end up dominating Bachelet’s agenda more than economic ones.
“Despite slowing economic growth and concerns from investors and the outgoing government, Bachelet seems unlikely to backtrack on her tax reform plans, mainly because of the social risks this will imply,” said Maria Luisa Palomino, analyst with Eurasia Group.
“High expectations over her reform agenda, and a persistent risk of student protests, suggest that the incoming government will follow through on plans,” she added.