MercoPress. South Atlantic News Agency

Chile: “We can manage”

In spite of a strong reaction in Santiago's currency markets to Argentina's decision to close banks and ban financial activities for the rest of the week, Chile “can live with the situation, if things don't get worse”, according to Mr. Carlos Massad, president of Chile's Central Bank.

"We don't expect any insurmountable effect of the Argentine situation", said Mr. Massad during a conference before the Council of the Americas in New York. "Investors are looking at countries individually and not at the neighborhood, which is very important and significant", added Mr. Massad.
Argentina closed all banking activities while Congress considers several bills mainly one that will convert savings and deposits into long term bonds in a desperate attempt to prevent further financial losses. The measure has had an impact in Santiago, Montevideo and Brazilian currency markets where there were mounting pressure and demand for US dollars. However Mr. Massad also recalled that only a week ago Chile was able to sell sovereign bonds at very reasonable interest rates.
"Our economy is expected to grow 3,3% this year and 5,3% in 2003", indicated an optimistic Mr. Massad adding that "IMF forecasts were actually more encouraging than our own".

Regarding oil prices, Mr. Massad said that for oil dependent Chile, if the barrel averages 27/28 US dollars for the rest of the year, it could mean annual inflation would be between 2 and 4%, just above target. Mr. Massad admitted that the consistent official policy of decreasing interest rates had not yet had full impact in the economy and for consumers. "Monetary decisions take between six months and two years to filter to the whole economy and it was only last year that we began with this policy. However we expect a greater impact beginning the third quarter", indicated Chile's Central Bank president.

Census in Chile
Chile is holding this week a population and housing census for which 400,000 people have been mobilized. The census will cover the estimated four and a half million houses in the country with an average 15 units per trained pollster. All military and police personnel plus provincial and municipal staff must be on duty to support the operation which takes place every ten years according to Chilean legislation.

"The census is universal and will help supply essential information in the social and economic fields", indicated this week in Santiago, Mr. Máximo Aguilera head of the National Statistics Office and responsible for the two days operation.

Collaboration is compulsory and those who refuse to be polled can be fined up to 120 US dollars. Shops and retailers have been requested to open their businesses after 15:00 hours. People will be polled according to where they spent the night before, be it at home, in a public transport, in school, hospital or the public square for the homeless.