Chilean government abandons zero-deficit plan after protests

SANTIAGO

The government of Chile's new right-wing President Jose Antonio Kast backed away from a campaign promise to erase the budget deficit after encountering strong resistance to its belt-tightening measures.

Setting out the fiscal policy of Chile's most right-wing government since the 1973-1990 military dictatorship, Finance Minister Jorge Quiroz said he aimed to reduce the deficit progressively from 3.6 percent last year to 1.5 percent in 2030.

Kast had initially promised to balance the budget by slashing public spending by 4 billion dollars.

Since taking office three months ago, he has cut spending across the government and ended fuel price subsidies, leading to spiraling costs at the pump.

The budget cuts have eaten into support for the ultra-conservative lawyer, whose approval rating fell from 57 percent at his inauguration to 43 percent in a recent Cadem poll.

Last week, riot police clashed with students and teachers who demonstrated over the spending cuts in the capital Santiago.

The government says it inherited a calamitous situation from the previous left-wing government, which missed its deficit reduction targets for three years in a row.

"We always imagined that (the situation) could be somewhat complex, but not on the scale we discovered," Quiroz said.

Kast has set himself a goal of accelerating economic growth from 2.5 percent last year to 4 percent by the end of his four-year term.

Congress is debating a sweeping reform bill which the government says will drive growth, mainly by lowering corporate taxes.