(Adds comments by finance minister, details and context on
SANTIAGO Oct 3 Chile's economy is expected to
recover from a weak 2016 to grow 2.25 percent in 2017, Finance
Minister Rodrigo Valdes said on Monday, underlining his
"orderly" approach to public finances on the back of an austere
The government expects the economy of the top copper
exporter to grow 1.75 percent in 2016, which would be the
slowest expansion since a 2009 recession.
Last week, it announced one of the lowest spending rises in
years for 2017, to the dismay of some lawmakers in what will be
an election year.
The economy has struggled since 2014 as the price of copper
has declined. That has complicated an ambitious reform drive by
center-left President Michelle Bachelet.
Valdes has been finance minister since May 2015. An
economist who is viewed as market-friendly, he has emphasized
that the government will not abandon fiscal discipline in a
country often lauded as one of Latin America's most orthodox
"This budget underlines that Chile maintains its idea of
being orderly, a good student that looks after its finances," he
said in a post-budget presentation to lawmakers.
"The most important thing for international markets is to
see an orderly country, that has a clear plan and that follows
Financing reforms to education and pensions will nonetheless
lead Chile's fiscal deficit to deepen to 3.3 percent of gross
domestic product from 3.1 percent this year, he said.
At a time of low global interest rates, the gap would be
filled by debt issuance rather than tapping the country's
sovereign wealth funds, he added.
Last week, the government said it could issue up to $10.5
billion in debt next year.
Chile's sovereign dollar bond yield spreads currently are
around 181 basis points over U.S. Treasuries,
considerably tighter than the emerging markets average. As of
August, its rainy day sovereign wealth fund was worth some $14.6
(Reporting by Antonio de la Jara; Writing by Rosalba O'Brien;
Editing by Matthew Lewis)