Category: Chile

President-elect of Chile, Michelle Bachelet, has appointed Andres Velasco as her finance minister to replace Nicolas Eyzaguirre on 11 March when her new government takes office. Velasco, a Harvard professor of international finance and development, was director of international finance at the finance ministry from 1990 to 1992. His appointment has been largely welcomed by the markets who expect him to follow the current policies of spending restraint and economic growth. However, as an academic, some have reservations about his political inexperience.

The world’s largest specialty fertilizer and inorganic industrial chemical producer, Chile’s SQM, is to issue UF3 million of local inflation-linked bonds (worth just over $100 million) to help fund its expansion plans. SQM recently bought two subsidiaries of Dutch chemical group DSM for around $72 million.

Chile’s central bank has reduced its forecast of annual inflation in 2006 from 2.8% to 2.7% as oil prices fall back and the peso continues to strengthen. Although consumer prices rose by 3.7% last year, the highest in five years, inflation in the last two months of 2005 slowed, falling by 0.2% in November and 0.3% in December. Last week the central bank left its benchmark lending rate unchanged at 4.5% for a second consecutive month on expectations of falling consumer prices.

The Chilean government has raised its economic growth forecast this year, from 5.5% to 6%, citing rising consumer demand and high levels of investment. Chile will benefit from investment levels that are nearing 30% of GDP as well as the continuing high international price of copper, the country’s main commodity export.

Outgoing president of Chile, Ricardo Lagos, has accepted an invitation to travel to Bolivia for the inauguration ceremony of president-elect Evo Morales and is awaiting approval from the Senate for the proposed visit. The invitation was extended personally by Morales and would make Lagos the first Chilean president to attend such an event in Bolivia since the two countries broke off diplomatic relations in 1978 because of a long-running dispute over Bolivian access to the sea. President-elect of Chile, Michelle Bachelet, has also been invited but has yet to confirm whether she will attend the ceremony due to take place this Sunday, 22 January.

The world’s largest specialty fertilizer and inorganic industrial chemical producer, SQM, headquartered in Chile says it is to buy two subsidiaries of Dutch chemical group DSM. The acquisition of the companies, located in Chile and the Netherlands, will allow SQM to produce iodine and derivative products in Chile and distribute them abroad. It is not known how much the deal is worth. SQM recently bought a fertilizer manufacturer in UAE as part of its expansion plans.

President-elect of Bolivia, Evo Morales, has invited both the outgoing and incoming presidents of Chile, Ricardo Lagos and Michelle Bachelet, to attend his inauguration ceremony in Bolivia on 22 January. Morales has said he wishes to discuss important political and economic matters, no doubt encompassing the sensitive topic of Bolivian access to the sea, the issue that caused diplomatic relations to be broken off between the two countries in 1978. Neither Lagos nor Bachelet have confirmed whether they will attend, although Bachelet has said she wishes to improve and deepen relations with both Bolivia and Peru.

Early indications in Sunday’s second-round election in Chile gave a clear victory to Michelle Bachelet, meaning that the country has elected its first female president. Bachelet, representing the ruling centre-left party, had polled 53% of the vote against the 46.8% of rival, conservative businessman Sebastian Piñera, with two-thirds of the vote counted. Second-round elections were called after neither candidate won more than 50% of the votes in December’s first round poll.

Chilean Masisa, Latin America’s leading wood board manufacturer, has issued two tranches of local inflation-linked bonds worth $163 million in total. The company issued $69 million worth of seven-year bonds priced at 4.59% and $94 million worth of 21-year paper, priced at 4.79%. The funds raised will be used to finance expansion and investment projects in Chile and abroad.

Chile’s exports in 2005 rose to just shy of $40 billion – up 23.5% compared with 2004, while imports rose 31.7% to $30 billion – pushing the trade surplus to record figures of just over $9 billion. Exports were given an unexpected fillip by exceptional international copper prices; Chile is the world’s largest copper producer.