MercoPress. South Atlantic News Agency

Strong Chilean peso convenes first 2006 Congressional session

The Chilean Senate is scheduled to begin 2006 with a special session to consider the effects of a declining US dollar for Chilean exporters.

For the session next Tuesday January 3, the Senate has invited Central Bank president Vittorio Corbo and Finance and Economy and Energy ministers Nicolas Eyzaguirre and Jorge Rodríguez.

Originally convened for December 20, "agenda difficulties" forced the postponement of the meeting. Actually most Senators are involved in the presidential campaign leading to the January 18 runoff between the ruling coalition candidate Michelle Bachelet and conservative leader Sebastian Piñera.

The Chilean peso pushed by booming sales of copper, a strong economy and a favourable international scenario has consistently appreciated against the US dollar since 2003: 6,5% in 2004 and 8,2% in 2005, cutting the competitive edge of more traditional exports sectors such as fisheries, wine, forestry, fruit, manufactured goods, that have been complaining bitterly about the growing difficulties to keep profit margins.

The exchange rate for the US dollar is operating in the range of 514 Chilean pesos; three years ago it was above 650 pesos.

The Chilean Central Bank and Economy ministry officials insist that the fundamentals of the Chilean economy are vigorous and sustainable, "fiscal surplus and high level of investment", helping to increase the purchasing power of Chileans boosting domestic demand and further expanding the economy.

"We're going to hand the economy ticking like a Swiss watch; the economy next year will continue growing at a strong pace", said minister Eyzaguirre in direct reference to the next administration which takes over March 2006.

"Inflation and unemployment are under control and retreating, we estimate inflation this year to reach 3,6% and unemployment will contract to 8,1%" pointed out the minister.

Mr. Eyzaguirre added that growth in 2006 will be in the range of 5,5 to 6% with an unprecedented and record investment equivalent to 29/30% of GDP, far above the original estimates of the Central Bank.