Chile: the balanced view : a recopilation of articles about the Allende years and after

According to some commentators, the situation presented between the years of 1970 to 1973 was mainly due lo a credit blockade against Chile. The facl is, Mr. President, that during the years of 1970 lo 1973 Chile's external debl increased subslantially. Even íf il is Irue thal some ínslítutions did nol grant new loan in sufficíent quantilíes, thís attitude was not caused bytheír lack of desíre to help but, simply, by the problem of lack of capacity for reímbursement of the Chilean Government of the time. We belíeve, Mr. President, that the new Government has made a seríous effort, syste– matic and well guided, to obtain the recovery of Chilean economy, and that the opportuní– tíes of quickly reaching thís are very promíssing, in sight of Ihe following facts: Fírst, the copper. The copper production, as it was pointed out, is augmenting and the goals to increase production for 1975 are very good, whích fact, together with compara– tívely high prices, wi II 9 ive satisfaclory results. Second, the incitement which the Government gave the industrial production, special– Iy in the agricultural field, where there is the possibility that in the next year there could be made a substitution of imports up to a certain point, which now so strongly weigh on the balance of payments, Third, the fiscal policy. We share the Government's judgment on reduction ofthe fiscal deficit ota fifty per cent (50 '1,,) of expenses in 1973, to a liltle over twenty per cent (20% ) this year. The salary policy is particularly remarkable in the sense of recognizing the urgent necessity of promoting an increase of the real salaries, which descended to the fífty per cent (50 ";, ) of their level of 1970. With an adequate poi iCy, al ready started by the Govern– ment, jI can be reached this quantity to be around the seventy-five per cent (75 %) during 1974. It is very satisfactory lo see that social policy recognizes the necessily of proceeding with agrarian reform and that it also recognizes that it is necessary to grant subsidies lo the more marginated classes in order lo balance the effects ofthe liberation of many prices. It is important to poínt out that the autHorities maintain a series of prices under control, of articles ;:Jf primary consumption. In the private sector, the poliCy of price liberation and other steps probably will induce toward a rationalization of methods and costs of produc– tion, with the result of considerable increases of the lalter. Above all, Mr. President, the solutíon of any problem which the Government must face depends, in its last instance, on the men who handle the policy. And, in this case, one can appreciate the equipment of so extraordinary tehcnícians as Mr. the Mínister and Mr. the Advisor of the Government Junta, who are handling Chilean economy seriously, with decísion and great patriotic sense. At the same time, some preliminary evidence as to the result of the reconstruction policy can be noticed. For instance, a considerable increase of savings can be seen in the last month; an increase of copper and industrial production; a drastic slowdown of the inflation, specially in the month of December; and with the restoration of laboral peace, the absence of which was one of the main causes of low productivity in the last months of the preceding Government. Above all, the fact can be noticed that the Government is decid~d to entirely comply with its international obligations. The beginning of conversations with foreign private companies, damaged by the expropriation problem, reflect this good will of the Government. ' Nevertheless, in spite of these favorable tendencies, there is an enormous financial breach, which is considered of about one thousand three hundred mili ion dollars (US$ 1,300,000,000) for 1974. Of this lump sum, four hundred millíon (US$ 400,000,000) are still . uncovered. We expect to form a working group tomorrow, in order to consider the way of howthis deficit could be covered, which partly is due to the increase of petroleum prices. In this sense, we would like to point out that the renegotiation of Chile's external debt under favorable conditions and covering a sufficiently long period as to permit the execution of the reconstruction program, is of capital importance. This is why the next meeting of the "Club de París" is so important, not only for the short-term recovery, but also to permit the 216