MercoPress. South Atlantic News Agency

Chile with record fiscal surplus in 2007: 8.7% of GDP

Chile finished 2007 with a record fiscal surplus of just under 14.5 billion US dollars, government officials acknowledged Wednesday. This figure represents 8.7% of Chile's overall GDP, which is also an all-time record.

Budget Director Alberto Arenas said high copper prices are the driving force behind Chile's record-breaking income. Chile's state-owned copper company CODELCO is the largest such enterprise in the world. With copper prices now at a record levels CODELCO alone provided Chile roughly 8 billion US dollars of its 2007 surplus. "The sharp increase in the country's surplus is due to the economy's overall growth and the high price of copper," Arenas said. "Fortunately for Chile, this means that we are exceptionally well prepared to confront any financial uncertainty on the world's markets". Arenas acknowledged that CODELCO contributed 10% less to Chile's treasury in comparison to 2006, but he attributed this trend to higher labor costs. "This (decline) is due to higher production costs, higher energy costs, and the effect of the low exchange rate (with the U.S. dollar). All of these factors have lessened the effects of record copper prices". Meanwhile, taxes from private mines accounted for 6.1 billion of the country's surplus, a figure that may grow as private mines continue to increase their operations in Chile. Aside from financing new projects, Arenas believes that the government will use the surplus funds to pay off its debts. In 2006, government debt was 5.6% of the GDP, and this year it went down to 4.9%. According to current estimates, in 2008 it will fall to 4.1%. SOURCE: LA TERCERA AND LA NACIÓN By Matt Malinowski (editorATsantiagotimes.cl)