MercoPress. South Atlantic News Agency

Chilean businessmen warn government

An economic assessment agency that responds to strong Chilean business lobbies forecasted the country will continue, --for the sixth consecutive year--, with a “flat” growth index in 2003, and recommended more dynamism in taking advantage of trade opportunities as well as “austerity and efficiency” in government management.

In its annual report the Liberty and Development Institute indicates that given the better global prospects for 2003, the main recommendations for a small country that is open to world trade are "the preservation of internal equilibriums, austerity in government outlays and efficiency in the use of scarce resources".

If Chile is to persist in its purpose of becoming a developed country, it is critical to take advantage of the new opportunities that have emerged from the trade agreements and insist in reforms that ensure productivity and greater competitiveness, says the report.

This new business environment has modified "private consumption and investment decisions, and must also force government towards targets far more modest than those estimated at the beginning of the current administration".

Further on the report indicates that even when Chilean economic growth in 2003 is expected to reach 3%, an improvement from 2% in 2002, it's still quiet distant from the country's potential and record during most of the nineties.

Finally the report underlines that given the recent evolution of monetary and fiscal variables, "there's not much room for monetary stimulus and therefore priority must be given to reforms that thrust the country's productivity".

Chilean president Ricardo Lagos administration has been trapped for months in a still unresolved controversy over how to stimulate the economy. On the one side those who favour a stronger government intervention particularly to help promote employment, (Mr. Lagos main campaign promise), and on the other, those who preach strict fiscal and monetary discipline and demand reforms in several fields, labour, health and education.