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On July 15 Chile's Congress approved the unprecedented decision to allow citizens the withdrawal of 10 percent of their pension funds to tackle the effects of the COVID-19 pandemic.
Chile's Ministry of Economy Lucas Palacios acknowledged on Wednesday that the withdrawal of the 10 percent of the pension funds is reactivating the economy. This, after his government was forced to accept the decision following a massive defeat in Congress.
"It is beginning to reactivate the economy and also expectations, and that is something very positive because the economy is included in a very significant part concerning future expectations," Palacios said to the local radio station Radio Universo.
The latest report from the Superintendency of Pensions reveals that 8.5 million people have asked to access their share of the pensions, and more than $5 billion have been handed over to 3.5 million affiliates who requested the fund.
Después de meses de deterioro de las expectativas económicas, este mes la visión de los analistas registró un leve repunte que da un poco más de luz al complejo escenario que viven muchas familias de nuestro país. (Sigue...����)
"After months of deterioration in economic expectations, this month, the analysts' vision registered a slight rebound that sheds a little more light on the complex scenario experienced by many families in our country."
The Ministry of Economy recognized he strongly opposed the measure. Nevertheless, it has stimulated consumption. "We did not like this project very much because it has a very expensive counterpart, which is the issue of pensions, and that is going to be a problem that later on we will have to solve. But it does have a positive impact because it has an injection of liquidity that activates domestic consumption," Palacios added.
On July 15, Chile's Congress approved the unprecedented decision to allow citizens the withdrawal of 10 percent of their pension funds to tackle the effects of the COVID-19 pandemic. The bill enables people to take a maximum withdrawal amount of US$5,477 and a minimum amount of US$1,279.
In this sense, the Ministry of Economy points out that there has been a decrease in the domestic consumption of families. However, "this injection of 10%, is a significant part, is going to reactivate that and mitigate the fall in growth this year," Palacios remarked.