MercoPress. South Atlantic News Agency

The Economist's “not so shiny” description of Chile

Michelle Bachelet could be the last president of the ruling Concertación

Long regarded as Latin America's best-governed country, Chile has been tarnished lately by allegations of corruption and the mismanagement of public funds says The Economist under the title “Not so shiny” in its latest edition.

Since the return of democracy in 1990 Chile has been ruled y a coalition of centre and left wing parties Concertacion, which has prudently and successfully managed the economy and began to shore the deep divide left from the 1973/1990 Pinochet regime. However the not so long ago described by the InterAmerican Development Bank as the one of the most efficient public administrations in the region, is clearly showing signs of "fatigue in the state apparatus". The Economist goes further and suggests that if a quick remodeling is not soon implemented in the next presidential election, Chilean voters may conclude that the ruling Concertación "is part of the problem rather than the solution". The article follows: "At first the amounts involved were so small that they seemed to confirm the country's reputation for rectitude. Six years ago there was an outcry when $20,000 went into the wrong pockets at the Ministry for Public Works and Transport. The same ministry was later found to be using outsourcing contracts to boost the salaries of its civil servants. Since then, however, the scandals have come thicker, faster and, in some cases, grubbier. They include charges of fraud, actual or attempted, in the government's sports-promotion agency, the state passenger-railway service and, most recently, the civil registry. Yet the biggest blow to Chileans' faith in their public institutions was the discovery earlier this year of a hole of 263 billion pesos ($560m), equivalent to around 0.3% of GDP, in the education ministry's accounts for 2004-06. This led to the impeachmentâ€"the first of a cabinet member since the restoration of democracy in 1990â€"of Yasna Provoste, the education minister. The case of the missing education funds actually looks more like incompetence than fraud. All the indications are that most of the money was paid, as it should have been, to schools in the capital, Santiago. But the inability of a ministry that spends close to a fifth of the government's budget to keep its books in order suggests that Chile's public administration, which just two years ago was described by the Inter-American Development Bank as one of the most efficient in the region, is not all that it is reputed to be. "I'm enormously worried by the signs of fatigue in the state apparatus," admits Edmundo Pérez Yoma, Chile's interior minister since January. The underlying problem, however, is that public spending has increased faster than the public administration's ability to spend money properly. The budget has grown six-fold since 1990, to $36 billion this year. Meanwhile civil servants are stuck with old processes and technology. The education ministry is a case in point. The accounting practices of its division responsible for payments to schools in Santiago have been under scrutiny for a decade, but it was only last year that it began to replace hand-signed checks with electronic transfers. Part of the trouble can be traced to Chile's inheritance from the dictatorship of General Augusto Pinochet, which lasted from 1973 to 1990. It bequeathed a knot of laws which have made it difficult to change the workings of the state and have entrenched them in the constitution. As sustained economic growth boosted the public purse, the government has found it easier to create ad hoc programs that do not require congressional approval, rather than attempt the legislative challenges of restructuring the state in line with the demands that are now being placed on it. Money money everywhereThis trick has proved so convenient that some of these programs now have a larger budget than many government agencies, points out Rosanna Costa, an expert in fiscal affairs at Libertad y Desarrollo, a think-tank. Some of them do good things. One, Chile Solidario, is partly behind the country's success in reducing poverty. But, because they often involve several ministries, these programs have tended to dilute normal accountability procedures. "The state no longer waters the playing field with a hosepipe, but with sprinklers on many sides and, on the way, leaks can obviously occur," Ramiro Mendoza, head of the autonomous agency responsible for auditing the government, said in an interview with La Tercera,a newspaper, earlier this year. Yet much of the fatigue can also be attributed to the Concertación, the centre-left coalition that has governed Chile since 1990. Now in its fourth term, the Concertación has become so accustomed to power that the idea of government as a temporary trusteeship of the state has been half-forgotten. Officials privately recognise that some state agencies have been captured by the parties that make up the government coalition; that they use them as a source of jobs for members who happen to be temporarily out of office; and see them as a potential source of election finance. A law passed in 2003 to create a professional civil service has greatly reduced the number of political appointees in the public administration. When President Michelle Bachelet took office in 2006, she was allowed to appoint just 800 officials (out of a total of 160,000 in the central government administration), a quarter of the number appointed six years earlier by her predecessor, Ricardo Lagosâ€"though even the new merit-selected professionals can still be dismissed at the whim of their political bosses. But further remodeling of the state is needed if the government is to implement an agenda that includes better-quality state education and a big pension reform, which is due to come into force in July. Or, as seems increasingly likely, voters in next year's presidential election may conclude that the Concertación is part of the problem rather than the solution".