Category: Chile

Chile’s congress annulled constitutional provisions put in place by former dictator Augusto Pinochet that reserved seats in the senate for military officers and blocked the president from firing armed forces commanders. The number of Chilean senators will drop by 10 to 38 and the presidential term will be shortened from six to four years. Presidential elections are set for December, with Michelle Bachelet of the Socialist Party leading in the polls.

Chile’s currency rose for a ninth straight session to 533.50 to the dollar as the price of copper, the country’s biggest export, hit record levels. The peso was also supported by last week’s decision by the central bank to raise its benchmark rate 25 basis points to 3.75 percent after inflation in July rose to a two-year high. Chile’s $94 billion economy, Latin America’s fifth-largest, grew 6.1 percent in 2004, the fastest since 1997, and Finance Minister Nicolas Eyzaguirre forecasts a 6 percent expansion this year.

Lucia Hiriart, the wife of former Chilean dictator Augusto Pinochet, and Marcos Antonio, Pinochet´s youngest son, were indicted as accomplices to income tax evasion and other charges brought against the ex-military leader. The two were charged with participating in the creation of false bank accounts in Chile and in foreign countries, theft and falsification of public documents and passports, and the acquisition of jewels and other luxury items with special “reserve” presidential funds. Augusto Pinochet, while continuing to deny wrongdoing, said that if laws were broken he alone should be held responsible.

The IMF released a report predicting Chile´s economy will expand a healthy 5.5-6.0 percent this year, helped by high copper prices, increased private investment and strong domestic consumption. The report went on to say that Chile needs better supervision of its insurance sector and should move toward introducing more competition among private investment firms managing pension funds.

Chilean consumer prices rose .6 percent in July as transportation costs jumped, adding to speculation the central bank will raise its benchmark lending rate for a sixth time this year when it meets next week. Inflation over the past 12 months quickened to 3.1 percent, the highest rate in two years. Rising fuel prices that made public transportation costlier and higher housing, health and food costs led the inflation pickup, according to a government report. Chile´s economy is surging as copper prices stand near record levels.

LAN, Chile´s leading airline, reported a net profit of $26.6 million in the second quarter, down 16 percent year-on-year. The company attributed the decrease to higher fuel costs, as crude oil prices hover near record levels. Revenue rose 23 percent to $570 million. LAN operates in Chile, Ecuador, Peru, the Dominican Republic, and recently introduced a new subsidiary, LAN Argentina.

Chile´s business confidence rose in July to the highest level in five months after miners reported a rise in production, a survey of over 500 companies published by the central bank showed. The monthly indicator rose 1.96 points to 61.66 from 59.71 in June and from 57.55 in July 2004. The indicator among miners rose to 82.88 from 65.62 in June, the highest level since the survey began in November 2003. Copper prices are near record levels, thanks largely to increased demand from China.

Chilean state-run copper company Codelco announced that it will receive a $550 million payment from Chinese Minmetals in September. The two companies have signed an agreement under which Codelco will priode Minmetals with 57,000 tons of copper per year. The contract also envisages the establishment of a company which will invest in mining projects in Chile and abroad. Earlier this year China overtook the US as the leading importer of Chilean copper.

More than 500 striking workers at Placer Dome’s Zaldivar copper mine in Chile voted to accept a new three-year contract and will return to work on Wednesday. Although the company has made no comment regarding lost production, most analysts believe the impact on total production will be minimal since the company processed reserves throughout the week-long strike. The Zaldivar mine is scheduled to produce 150,000 metric tons of copper this year.

Chile´s trade surplus grew to $980 million in June, up from $580 million a year earlier, on surging copper prices. Demand abroad and rising spending at home will lead the country´s economy to grow about 6 percent this year, according to Chilean Finance Minister Nicolas Eyzaguirre. The economy grew 6.1 percent last year, its fastest pace in seven years.