Kast Administration Seeks Approval to Borrow Up to $25 Billion Amid Fiscal Adjustment for 2027 Budget

Original article: Presupuesto 2027: Kast pide autorización para endeudarse por hasta US$25.000 millones en medio de un ajuste fiscal

The government of José Antonio Kast has presented a request to Congress for authorization to borrow up to $25 billion during the year 2027. The president’s inaugural budget was formally delivered to Parliament this Monday, combining a more stringent deficit reduction target with increased borrowing capacity. The proposal outlines a net expenditure of $105.8 trillion and seeks to incur obligations up to this maximum limit.

This figure significantly exceeds the $17.4 billion originally included in the 2026 budget, the last under former President Gabriel Boric. It is important to note that José Antonio Kast’s administration also requested an additional authorization of $6.2 billion for the current budget, raising the existing limit for this year to $23.6 billion.

Thus, compared to the currently authorized amount, the request for 2027 reflects an increase of $1.4 billion.

The proposed $25 billion does not mean that the treasury will issue that entire amount as new debt, since Article 3 sets the maximum that the government can utilize and allows for the issuance of bonds and other instruments in national or foreign currency. It also excludes a range of amortized obligations during the 2027 fiscal year, as well as operations aimed at refinancing previous debt.

Additionally, the initiative includes another authorization for up to $600 million, bringing the total request to $25.6 billion.

Increased Borrowing Amid Fiscal Adjustment

This request comes at a time when the Ministry of Finance, led by Minister Jorge Quiroz, aims to establish a discourse of fiscal discipline. The proposed budget sets a structural deficit target of 1.8% of GDP for 2027, a decrease from the 2.8% anticipated for this year, while spending is projected to increase by 1.5% compared to the 2026 execution.

Kast’s proposed budget outlines a series of cuts in strategic areas, impacting the operation of specific programs such as the Bicentennial High Schools, which would see a 45% reduction in allocated resources. Additionally, the decision to end the program “I Choose My PC,” which began in 2009 and provided computers to 96,100 students this year through the ICT Access Grants from Junaeb, has been made.

Simultaneously, the Culture budget anticipates a cut of $49.381 million from the resources of the Ministry of Culture, Arts and Heritage, reducing it from $489.899 million in 2026 to $440.518 million in 2027. This budget cut would affect the National Fund for the Promotion of Books and Reading, which would see its funding reduced from $12.647 million to $10.416 million, while funding for the Sites of Memory Program would decrease by $231 million, equivalent to 25.3%.

In light of this scenario, the president of the Broad Front, Gael Yeomans, indicated that they will assess the cuts and the increase in the borrowing margin requested for 2027 in detail.

«Quiroz supposedly did not come here to put the country in debt,» she asserted, suggesting that the head of the Finance Ministry will need to explain the impact of this decision on fiscal accounts.

Yeomans criticized the decision to eliminate the ICT Grants —including “I Choose My PC”— and the resources allocated to programs related to the Cholito Law, as reported by El Mostrador.

From the PC, deputies such as Daniela Serrano expressed the need to reverse the planned cuts in the 2027 budget, while lawmaker Marcos Barraza denounced that the cut threatens social rights.

Following the same line, Deputy Irací Hassler described the Kast administration’s proposal as a “budget of cuts,” voicing her criticisms regarding reductions in education, housing, and social programs, as reported by El Mostrador.

Regional governors criticized the planned 6% cut for 2027. After a meeting with Minister Quiroz, representatives from the National Association of Regional Governors (Agorechi) described it as a “tough” and “intense” instance and warned that the reduction in resources could affect both investment projects and job creation in the regions.