Strong fiscal institutions have contributed to Chile’s macroeconomic stability, and recent reform initiatives have focused on enhancing these institutions and fiscal transparency. This report assesses fiscal transparency practices in Chile in relation to the requirements of the IMF’s Fiscal Transparency Code and confirms that many elements of sound fiscal transparency practices are already in place. Chile’s practices meet the principles of the code at a good or advanced level for 21 out of the 36 principles. This is a good score, compared to the average for Latin American Countries and Emerging Market Economies. On a further nine principles, Chile meets the basic standard of practice. Chile’s fiscal transparency practices are very strong for fiscal forecasting and budgeting, followed by fiscal reporting, while fiscal risk analysis and management demonstrate more mixed results. Further improvements could be achieved relatively easily through the publication of some internal analyses or through a more timely or user-friendly publication of already available information.

The Chilean government has succeeded in constructing and disseminating a clear view of its objectives and targets, both at the macroeconomic level and for individual budget programs. Government accountability to congress and the public is demonstrably being strengthened. A general reform challenge for Chile will be to institutionalize the many recent advances in transparency, so that they become permanent components of fiscal management. The flexibility inherent in such instruments as protocols and time-bound laws may contribute importantly to speedy and effective policy responses.

This paper presents an update to the Report on the Observance of Standards and Codes on Fiscal Transparency for Chile. Chile has completed the first stage of the migration of its fiscal statistics to the IMF’s Government Finance Statistics Manual (GFSM 2001). A main result of this migration is the production of the operating statement, corresponding to flow transactions, for the central government, the general government, and the consolidated public enterprises. However, the treatment of interest payments on inflation-indexed bonds and on debt owed to the central bank differs from that in GFSM 2001.

The Central Bank of Chile (CBC) has implemented broadly advanced transparency practices. This reflects the CBC’s strong public commitment to transparency, which is anchored in the law and has been designated by the CBC as a strategic objective to fulfill its mandate. This policy has earned the CBC the broad trust of its stakeholders and has paid significant dividends for the CBC in terms of safeguarding its autonomy and ensuring its policy effectiveness.