CONFIDENTIAL 66869 EXTERNAL CREDIT OF CHILE Economic Department Prepared by; Jaeques Torfs March 16, 1949 Dr. Harold Larsen Copy No. 1n CONTENTS Page Essential Statistics • • • • • • • • • • • ·. . • • • • • • • i Summary and Conclusions • • • • • • • • • • • • • • • • • • ii Balance of Payments and Foreign Transactions • • • • • • • • • • 1 Balance of Trade • • • • • • • • • • • • • ~ • • • • • • 1 ]!xport s • • • • .. • • • • • • • • . • • • . ~ • • • . • • • 1 Cower ..."....................... 2 ~i trates ....«.......... . . . ... .... g Distribution of Exports by Countries ••• • •• • ••• Imports • • ~ • • • • • " • • • • • • • • ~ • •• •••• 7 Origin of Imports • • • • • • • •• ••••••••••• g Balance of P~ents • • • • • • • • • • • • • •• •••• 9 Copper in the Balance of P~ents , • • • • • • • • • • • • 10 Gold Movements • • • • • • • • • • • • • • • • " ~ • • • • 10 Foreign Debt of Chile ·. ...... . . ... ..... , .. Foreign Exchange and Gold Reserves • • • • • • • " . . • • Foreign Exchange Rates • • • • • • • • " .• • • • • ~ • • Trade and Pa;yments Agreement •• • • • ·.., • • • • ·, . 15 .............. " ... Argentina-Chile • • • United Kingdo~Chi1e · . . . . . . . . . . . . . . . ,. , . 15 16 Public Finance • • • • • • · . . .. . • • • • •• • • • • • • • • 17 Ordinary Budget • • • • • • • • • • • • • • • • • • • • • • 19 Revenues • • • • ~ • • • • • •• ••••••• • • • • 19 Expendi tures •••• • • • • • • • • • • • • • • • • 20 Tax Revenues Outside the Budget . . . . . . . • • · .. . 22 Leyes Alspeciales • • • • • • • • .' • Government Expenditures for Development , • • • , • ·.· . • • • • • 22 23 Fublic Debt • • • • • • • • • • • • • • • • • • • • • ·. , . 25 Foreign Debt • • • • • • • • • · • • • • • • • • t • 25 26 Internal Debt Total Debt , • • • • • • • • • • • • • • • • • • · • • • • • • • • • • • • • • • • • • ·,• • • • • · 26 Money .. . , . .. .. • • • • • • • • • • • • • • • • • • • 21 National Income and Cap;i tal Formation · . . . ., . . . . , . . ~ Statistical Tables CHILE ESSENTIAL STATISTICS Area: 296,717 square miles Population, 1947: 5,574 ,175 Currency: Unit; Paso ParIty: 31 pesos = US$ 1 Trade: Total Imports, 1947: US$ 283.3 million 'T"otaI EXPorts: Totar value in foreign exchange, 1947: US$ 306.5 million Total exchange revenue accruing from exports, 1947: - US$ 242.2 m:U1ion Total Gold and Exchange Reserves: December 1947: US$ 55.8 million December 19415: US$ 53.1 million Ordinary Budget 1948, Estimated: .Revenues: Pesos 12,328 million 'EXPenditures: Pesos 13,328 million EaIance: Pesos 1,000 Internal Debt, December 1947: Pesos 6,265.4 million External Long-Term Debt, December 1948: US$ 295.0 million US$: US$ 175.0 million -ot1ler: US$ 120.0 million Cost of Living, September 1948 (base year 1937): 475 Wholesale Prices, All Goods, June 1948 (base year 1937): 347 -i- SU.M.lvlJL1l.Y AND CONCLUSIONS Balance of Payments • • • 'T 1. The future pattern of the Chilean Balance of PaJ~ents is likely to be mainly determined by the following considerations: (a) Chilets capacity to maintain the volume and value of her exports of (i) couper and (ii) nitrates, and, to a smaller extent, her capacity to increase exportable sur- pluses of locally produced agricultural ~roducts (notably wine and forest products). (b) Her need to imnort substantial quantities of agri- cultural nroducts of heavy consul:lPtion which cannot be domestically produced. (c) A probable continuing desire on her part to import, during a period of expansion of her economy, "develormlentll goods in the form of capital equipment. Exports 2. The Chilean copper situation presents the follovdng features: (a) Copper exports produce (net) about 40% of the total for- eign exchange accruing to Chile. (b) Prospects for Chilean copner exports are closely linked with the level of U. S. production of durable goods; a fall -i - of 20% in which would reduce U. S. copper consumption by the whole amount of present U. S. imports from all countries. In such an event, continued U. S. purchase of Chilean copper would depend upon copper price reductions; a fall from 23.5 cents to 16 Gents a pound would carry an annual los s to Chile of about US$ 33 million (net). This could occur with U. S. prices at 18 cents if U. S. import duties are re-imposed. 3. :'Tith recard to nitrates - (a) Nitrate exports produce (net) about 15% of Chile's foreign exchange accruals. (b) Long-run prospects for Chilean nitrate exports are not promising. In the U. S. market, shorter-run :orospects depend upon U. S. farm income, notably from cotton and tobacco •. 4. Foreign exchange receipts from present export leaders are likely to decline rather than increase. Imports 5. Import pressures are likely to be continuing and difficult to resist for the reasons contained at (b) and (c) in paragraph 1. 6. The volume of some present heavy items of food imports (notably cattle) could be diminished by more attention to expansion of local pro- duction. ii - Foreign Debt Service 7. The peak load of debt service (on a total foreign c.ebt of approx- imately US,; 295 million plus USC 59.2 Exim-Bank and TBRD authorized, but not drrovn) vall be U&,~ 21.7 million annually in 1951 and 1952. This rep- resents 6.5% of 1947 current balance of payments receipts. Currency Parity 8. Devaluation of the peso is being effected by progressive move- ment of categories of transactions from the present official rate of 31 pesos per US:}!; to the new intended parity of 43 pesos. Internal Finance 9. Total Government expenditures have increased from arrnlnd 16% of national income in 1942 to 20;~ to 24% in 19h8. Exnendi tures on defense and development account for 18% and 20% respectively 01' total Govern.lJlent expenditures. lO~ Deficit finance has been continued up to 1948, when new incor.:e taxes may have at l~ast temporarily brought about budget balance. Domes- tic monetary inflation has, how'ever, resulted largely from commercial bank lending to the public, vdth little Central Bank intervention. 11; Public debt charges amount to about 11.5% of GoverThuent expendi- tures (5.5% for external, and 6% for internal debt). 12. Development investment is proceeding. IJ~asurable gross capital formation .vas some 11% to 13% of national income in 1947, vdth the Govern- ment undertaking something like 30% of measurable gross capital formation • . -iii - 13. For the past eight years, development has brought about an in- crease in real national income, but not yet an improvement in standards of consumption. In fact, increase of population has resulted in fal1~of real income Der capita. Conclusions 14~ Heavy additional foreign borrowings T'Quld be inadvisable. 15. Having regard to the inflationary effects, e~::pensive Tojects not providing early additional output of consumer goods should not be financed by foreign borrmving. 16. Small borro'lJ'lings for projects which v{ould quickly i-ncrease con- surner goods output could be undertaken, particularly they have a favor ... able short-term impact on the balance of Dayrnents, or if their service is small before 1953 or 1954. 17. For projects even' in these categories, bor!'Owing over US~; 10 million would be inadvisable until completion of a part of current develop- ment projects permits examination of their effects both domestically and upon the balance of payments, and ~~til more permanent pattern of foreign trade and of price levels emerges. - iv B.ALANCB OF PAYrlJI:NTS AND FOREIGN TRANSACTIOl\fS Fluctuations of the Chilean balance of payments are largely determined by the value of (a) copper e~orts, (b) nitrate e~rts. (c) exporte of agrl of her own production. Chilean cop- per mining has very small by-product values and is almost wholly for export. Her prospects are thus far more intimately linked wi th the level of durable goods output in the United States than any other copper producing country, In the short..,rw1, U.S. stockpiling may add to this demand, but stockpiling is unlikely to be a continuous long-term factor. In 1948 the U. S. was a net importer of copper to the extent of 350,000 tons. Total consumption including old scrap approximated 108 malion tons. A decline in U.S, durable goods activities of around 20% could be expected to reduce copper consULqption proportionately to levels which could be supplied com~letely from domestic U.S, sources (including scrap). The degree to which Chilean copper could then maintain its U.S. market would depend largely upon pr'!ce falls so severe as to reduce -4- domestic U.S. mine production appreciably. Under current cost conditions (which may well ease under the circumstances visualized) this would in- volve a reduction to between lS¢ and 2fJ¢ per pound as compared ~lith the present price of 2~¢. Moreover, at present U.S. copper imports are temporarily duty free; in fact, renewal of the existing legislation, \Thich expires March 31, is now under Congressional discussion t ~t must be assumed that in the event of price decline below sa;y 20t, the previous 2¢ duty will be re-introduced. The incidence of such a duty would, under recession conditions. be upon Chilean producers, either by way of reduced realization price or reduced export volumes to the U.S. Gross copper export real~zations do not. however, accrue wholly to the Chilean economy; this is discussed further in the section upon Balance of Payments. It is importfIDt, however, to notice here that this circurnsta..Tlce in fact reduces the impact of a given fall of copper prices upon the Chilean economw, which looses receipts to less propor- tion than the full fall. Under present Chilean taxation laws, under which an excess profits tax operates above a copper price of 1~¢ per pound, dividing equally between the Government and the mine operators all net profits above this base level, a fall of Nevl York copper prices from 23lif, to 16¢ per pound would involve a loss of about US$ 33 million to the Chilean economy. After considerable discussion with tbe Chilean Government. the Anaconda Copper interests have decided to invest approximately $130 million in their Chuquicamata property (largest mine in the world) for the conversion of this plant from copper oxide to copper sulphide pro- cessing" -5- About half of this investment would be for local expenditures and will thus increase the foreign exchange receipts of Chile by more than US$ 10 million a year for about six years. Nitrates Ni trates t unfortunately, did not enjoy the same recovery from the depression of the thirties as did copper. Although, as shown in Table 7, prices in 1935 fell only to one-half of their 1927 levels and to less than one half of their 1929 levels, and although they are now at the pre-crisis level, the Chilean nitrate industry was seriously and perhaps permanently damaged by the crisis and by gro~lling com:petition of synthetics which became serious in the same decade. In 1929, production of nitrates had reached 3,233,000 tons. This fell to 437,000 tons in 1933, and the maximum production level attained before 1946 Was not higher than 1,485,000 tons (1940). The extent of the blow dealt by the crisis is illustrated in Table 1, which shows a fall from US~ 127 to $7 million from 1929 to 1932. Recently pt'ices increased sizeably and production volumes have overtaken the 1927 figures (although still well below 1928-30 levels). This does not indi- cate the possibility of a new booPl. The condition of the nitrate industry in Chile has changed considerably since the t11'fenties. Nitrate has now to meet the co,Jpetl tion of synthet ics. Conseq nently, profi ts margins in natural nitrate have decreased considerably t and only three large Chilean producers provided ~i th uP'"'to-dete equipment can compete. Increased production of synthetic nitrates is being plal1ned by many countries now irJporting natural nitrates. This shrinkage of -6- markets can be expected to exert constant downward pressure upon natural nitrate prices. In the U.S. market, the future of nitrates is intimately related to farm incomes in the U.S. t particularly incomes of cotton e..nd tobacco growers. New eJ.."Periments have been carried out by the Anglo-Chilean nitrates which involve the processing of nitrate ore througll solar evapo- ration. The process, ','!hich has been proven successful, reduces production costs considerably. If, when applied on a large scale, it lives up to expectation, this process may permit Chile to ruaintain its share of pre- sent markets. Total consw]ption in these markets, notably the U.S., is dependent upon satisfactory farm price levels and avoidance of severe acreage restrictions. Distribution of Exports by Countries As shO\Vll in Table 5, the United States and the United Kingdom are the major clients of Chile, and the first has gro~ considerably in importance since 1937. Before the war European (and especially German) demand for Chilean copper and nitrate was important. It is now in great part replaced by a demand for copper, nitrates and agricultural products by countries paying in dollars, such as Argentina, Peru and the rest of South America; Egypt (for nitrates); and even Asia and Australia. AS a result, ChUe suffers from no convertibility problem. There is no ex- pectation of such a problem since Chilean capper is purchased mainly in the United States, since the major derik'lnd for nitrate emanates from the United States, and finally, since demand for agricultural products mainly originates from Latin America. It is likely that if Chile manages to expa","1d its export trade only throue;h increased sales to -7- Europe, its demand for machines and equipment will equal its soft cur- rency availabilities. Imports The distribution of Chilean imports has been characterized Ul1.til 1947 by the increasing importance taken by purchases of agricul ... tural products releti ve to textiles, chemicals, machines end metrJ.lurgi- cal goods. Before the ~ar (from 1937 to 1939) these iraports amounted to less than one-fUth of the total. In 1945 they were more than one-third. They declined to one-fifth again in 1948 partly as a result of a con- siderable effort on the part of the Chilean authorities. It is very difficult if not impossible for Chile to reduce certain categories of agricultural imports. The country produces no cotton for its textile factories and no sugar, coffee, tea and mate 1f.rhich are in he8~VY con- sumer demand. This creates trade problems with Peru, supplier of cotton and S'..lgar; and Brazil, which supplies coffee and mate. The problerJ t",ith Brazil is of minor magnitude and irnpOJI'tance. The trade relationship with Peru remains difficult. The promoters of the steel plant in Concepcion hope for an exchange of their surplus steel production against the Peruvian products. The real problem of ag;I'icultural imports, however, arose during the war from the necessity to import l"rheat end cat- tle, notably from Argentina; in tl1.9t period, domestic production fell behind population increase, and since the vvar has been unable to meet demands arising from income increase. As a result, there has been increasing attention paid to agri- cultural productivity. Following a wheat prodl,lction drive, wheat imports fell in 1947 and "'Jere avoided in 1~48. Cattle ill!port$ occurred until the -8- end of 1948 when the Argentine authorities, resentful of the attitude taken by Chile in recent political events, declared an embargo upon the transfer of cattle from Southern Argentina to the gra.zing grounds of Southern Chile. The resulting meat shortage in Chile may occasion emer- gency imports from Bolivia. It is the consensus of opinion in {)!IJ.le that the country should take the long-run measures to attain self- sufficiency in meats. Of the other imports, about 287& are capital goods. This ratio seems relatively small; it is kept down by the need for agricultural imports mentioned above, and for imports of textiles '7ihich may be re- duced in value within a few years, by the installation of new plants. Origin of Imports As sho\v.n in Table 5, the United States is the major supplier of imports. Its importance in the total amount of foreign purche.ses of Chile clilllbed from 297" in 1937 to 44% in 1947. The States, however, did not succeed in replacing completely Germany which supplied 26;O:J of the total imports in 1937. Major suppliers after the United States in 1947 were Peru end Argentina. These three major suppliers accounted in that year for 6810 of all imports. The balance was provided by a scattering of other countries. It is likely that the importance of the United States as supplier of Chilean equipment will increase inasmuch as there is no dollar problem and as Chile ShOVIS a di stinct preference for United States supplies, since a tm.rq world war could deprive it of any source of replacements were it equipped by Eu,fope. -9- Balance of Payment s There are good estimates of the balance of payments of Chile, The official account provided by the Banco Central de Chile since 1942 is very co~lete and has been used in this analysis. .Af3 ShoVlIl in Tables 2 and 9, receipts are mainlY from cOlllIllodity exports amongst which mineral exports play a major role. Non-mineral exports have stabilized at about 2C1jo to 25% of all exports, and no im:mediate improvements is expected in the future. Inasmuch as both tIle visible and the invisible trade balance is almost neutral, H is in the capital payments item that Chile's foreign exchange difficulties arise. Large trensfers are made to cover the profits, the dividends, the reserves and the administrative expenses of foreign-ov,1fled mines. The iwpact of these invisible outflows is such that mineral export figures do not represent the real position and iwportance o:f these exports for the Chilean economy. Table 11, in which the value of copper and ni tra.te exports is decreased by the value of theli?e transfers, shows more accurately the position of various re- ceipt items in the balance of payments of Chile. As seen in this table. from 1944 to 1947 copper exports accounted for 31Yo to 4l.f,k of total foreign exchange receipt s accruing to Chile. The iIlq;rortance of nitrate was increased relative to copper, and represented 10';& to 19';0 of all receipts. .Agricultural products exports ranked equal to or even above nhirate as a source of revenue. Of all the other items producing receipts, intergovernmental loans accounting for ?flo to 516 of all receipts between 1944 and 1947 occupieq. the largest position. The extreme dependence of Chile on copper and nitrate exports -10 - is thus reduced when a global view is taken of balance of payments receipts. Copper in the Balance of Payments As shol"lIl in Table 12, the gross traneferred profits after taxes of the copper mines and supplies are large. They amounted to . 2J/o of the total value of sales in 1944 and reached about 3c:f/o of the total value of sales in 1947. In 1944 and 1947 these high gross trans- ferred profits were approximately equalled by the taxes levied by the Government t while, in 1945 and 194G the proportions shifted in favor of the companies, However, the Chilean Government elso secured the equiva- lent of a tax yielding about $13 million a year by requiring the cO!Jpe~ mines to sell the dollars necessary to cover their local production expenditures at the rate of 19.37 pesos per US$ instead. of the of:fi cia! rate of 31 pesos. All in all, over a period of four years, bet'.'!een 1944 and 1947 t the taxes recovered by the Goverrunent amounted to roughly US$ 175 million while the provision for profi ts, reserves and adminis- trative expenditures abroad of mines were US$ 145 million. The nitrate industry which enjoys smaller profits and is much more closely controlled by the Government accounts for much smaller capital outflows. Gold Movements The production of gold is not an important factor in the Chilean economy. Gold is mined either as a by-produce of copper by the large foreign corporation or by a number of Chilean prospectors who manage to cover their expenses only when gold sales race! va a -11 - premium exchange rate. Before the ~ar, annual production of gold reached approxi- matelyU~ 12 million in 1940. Production dropped drastically during the war although the Fomento Corporation made some efforts to stimulate it through the import of modern equipment. It might, however, increase if the peso price of gold rises. FOBElON DEBT OF CHILE The long-term foreign debt of Chile can be estimated as fol- lows (as of December 31, 1948): (in thousand US$) OUtstanding undisbursed Consolidated Public Debt US$ 125,685 ~ 91,517 Swiss Francs 24,809 Nitrate Debt uS$ 16,936 -t 3,391 IBlID uS$ 16,000 EximBank US$ 32,585 46,243 Total 294,923 62,243 Grand Total 357,166 Debt service estimate has been made in. Table l~o .. 14. A peak service load is to be anticipated in the years 1949-1951 at which time it will reach US$ 21.7 million or 6.%. of the current balance of payments re- ceipts in 1947 t or 6.5;& of exports in 1948. Starting in 1952 the ser- vice load decreases from uS$ 18.1 milliof. . to US$ 14.5 million in 1958. From that time on and until 1968 it stabilizes at a level of US$ 14 mil- lion. Anticipated service payments drop off considerably starting in 1969, and, provided no net'r loans are engaged in by Chile, its total external debt could be extinguished in 1973. About one-half of the service of the debt represents amortization and inter6st of the consoli dated public debt and of non-guaranteed nitrate bonds o This debt has -12...,. -13 - been in default, or partial default. since 1931-32, although it has been serviced up to a maximum amount of usp 7 million a year before the "'ar and in recent years. The settlement 1.'rith various bondholders councils in 1948 was favorable to Chile, for the new service is only slightly higher than prevalent in a period of default,±! The balance of the external debt is an International Bank loan of US$ 16 million for e1ec..., tric plants and agriculturo1 machinery t an outstanding RII10unt on Exim Bank loans totaling US$ 32.5 million. and en undisbursed US$ 46.2 mil- lion from the Exim Bank~ So far, ~xiIJl Ban.1{ funds have been utilized for railroad equipment, construction of bydro-electric plants and a steel rulll, and for purchase of agricultural equipment. The aLl0unts undisbursed consist mainly of an additional US$ 31 million for the steel mill and an additional US$ 6.3 million for the Chilepn railroad. Foreign Exchange and Gold Reserves Table 8 shows that the foreign exchange reserve of Chile (Central Bank and Amortization Fund holdings) increased from US$ 43.6 million in 1939 to US$ 115.4 million at the end of 1945. Purchases of gold account for about US$ 45 million of the increase and US$ trade sur- plus constitute the 11Irhole of the balance. In 1946 and 1947 Ohi1e started catching up with the backlog of capital goods imports and agri- cultural purchases increased. Notwithstanding a considerable increase in the values of e.xports as a result of a rise in price of copper from Y The mechanism of settlement is described in a study of the External Iebt of Ohile (Economic Department, lharch l-5). The new service schedule covers arrears owed to bondholders whQ assented to the 1935 debt settlement with delay. Only US$ 3,4 million of the $23.7 million diverted from amortization payIllents betweEn 1939 and 1945 were re- ~p11ed in 1946 and 1947 an~ the new settlement does not include any provision for 1;'estitution of the balance,_ - 14- 12¢ to 23t~ per pO'Wld, and almost as spectac.u1ar an increase in the price of nitrate, reserves dropped to about US$ 56.5 million in J'Wle 1947. They were maintained at approximately that level up to the end of 1948 and to the present, thanks to a rigid policy of exchange control and the continua~ tion of a favorable market for copper and nitrates. Reserves of US$ 55 million are now virtually a working balance for the banking system. Reserve requirements, however, do not constitute a restriction to this utilization inasmuch as the Central Bank is freed of any obligation to carry specific reserves. The fate of the foreign exchange balance of Chile is thus en- tirely in the hands of the foreign exchange authorities who have dis..,. played so far a considerable competence. Foreign Exchan~ Rates Par value of the Chilean peso is 31 pesos per US$, A complicated multiple exchange rate system exists, with buying rates ranging frou 19.37 pesos to 43.0, and selling rates from 19.47 to 43.10. The bulk of trade transactions, both import and export (except mineral exports), are presently made at the 31.10 rate. The Fu.nd has, however, consented to a progressive devaluation to 43 pesos, to be accomplished by increa.sing the categories of tra.nsactions made at this rate 'Wltil it is carrying the bulk of trans- fers~ In the transitional period exporters benefit from any rate between 31 and 43 according to their ability to meet foreign markets - while ex~ porters of copper receive 19.37 pesos per uS$ for a part of their exchange. Some imports of basic raW materials are still carried out at the rate of 25 pesos. per. US$ while the bulk of imports occurs at the rate of 31 peso~ per US$. A free or curb rate exi~ts 'llhich fluctuates be~ween 60 and 70 pesos per US$. This rate, however, is confined to a smaJ,.l amoUo.'1t ., of transactions only. such as purchaees of travelers check s from tourists . or purchBses of doll::>rs from diplomats, . Y Executive Board 11.1F: Meeting 265, 1/30/48 TRADE AHD PAYr-1ENTS AGREEMENT Argentina-Chile An important project of financial and trade aGreements 1:,l'.ich "lould he.ve involved a loan of US$ 175 million by Argentina to Chile, and the creation of a customs union did not materialize. However, the Insti- tuto Argentino de Promocion del Intercambio made a short-term credit to Fomento to cover the cost of impcrts of Argentine oils, and to the Insti- tuto de Economia Agricola for the imports of wheat. The total credit utilized in 1947 amounted to 73.1 million Argentine pesos, the equivalent of US$ 17.3 million~ Some small cash payments 1.'Iere applied in March 1948 to the balance of the debt. An agreement of il-larch 4, 1949 provides for the settlement of this debt. Chile 1:rill obtain Argentine pesos by the use of cash funds belonging to its nationals in Argentina, or the sale of their properties. These pesos will be utilized by Chile to buy U.S, dollars from Argentina at the IIfree market" rate. an (1 Argentina "Jill immediately re 1Jurchase them at the rate of 4.01 Argentine pes~s per U.S. dollar. The resulting amount in Argentine pesos ,,,Ul be aDplied to amortization of the Chilean debt. Payment to Argentina must take place uhen made out of cash funds 90 days, and ,,,hen made out of the proceeds of sales 180 days after the twenty-third of March, 1949. At least 10 million Argentine pesos must be cancelled as above described "lithin 180 days from Narch 23. 1949. In deflClult of this, the Chilean debtors will be required to make up the balance by July 31, 1950 -16- by the payment of pesos accruing from either (a) the negotiation in tl:e Argentine market of U.S. dollars at the rnte of 4.01 pescs per dollor; and/or (b) tlSpecial Export Accounts" opened in the name of Ch11e8n be.nks. The Agreement further provides that, in order to comply ,:ri t}l Argentine legal monetary requirements, the aggregate Chilean debtor balance sho1tTn on the accounts shall be considered to be equivalent to the quantity of gold resulting from applying to that bal::tnce the exc:le.ne;e rp.te of 401 Argentine pesos per 100 U.S. dollars and the ~rice of gold ruling in Net" York (at present 35 dollars per fine ounce). In the evel:t of a change in the price of eold, the balance on each of the accounts shall be adjusted accordingly. Interest on the ChileM debtor bS.lances viII be nayable in U.S. dollars at the rate of exch~.nge ruling in the Argentine market on the date of payment. Interest accrued up to March 2,3, 1949 ';'fill be ppyable before A:::;ril 24, 1949, and interest accrued thereafter v!ill be payable before June ,30, 1950. United Kingdom~Chile A payment agreement signed by Chile ~md the United lCine:dom in June 1948 states that trade and financial payments bet':.reen Chile and the sterling area ui11 be settled in terms of sterlin:",:. CO",)~1er l1il1, hOi'rever, be sold on the dollar basis. The ne'lll system does not alter the situ"tion of Chile, inasmuch as (1) the trade '.'rith the sterling 9.rea is very small, (2) the trade balance with the United Kingdom is unfavora.b1e to Chile, (J) Chile has service upon sterling debt. (4) cOP!ler is the most important ex-port item of Chile sold in dollars. All netional, provinciel and m'Ullicipal bu.dgets are handle,l by centrel government authorities. Ordinary expenditures c1nd receipts, [nd some "ordinary" borro1 .'Jings for investment purposes are clearly accomltE:d. for in the receipts of the Budget Controller. H01-lever, a large l)Ulk of government transactions takes place outside of the ordinary budget; te.xes levied and spent outside of the budget, borro'.-rings umwcounted for in nor- mal acco'Ullts of the government, expenditures and receipts of entities with ~arious degrees of independence obscure the budgetary situation. Table 16 consolidates all sources of revenues and items of ex- penditures controlled ~irectlY l' by the eovernment.-' Deficit financing has been current practice since 1939 and on a large scale since 1943. Total annual taxation receipts from 1939 to 1946 (the last date for ilhich t~ley are available) increased from 2,284.8 million pesos to 7.958.0 mil- lion pesos. In the me~~time, expenditures increased from 2,322.6 million pesos to 8,861.3 million pesos. Revenue increases of 248% ,-rere thus matched by expenditure increases of 281%. Deflation of these fis~res by the cost of living index, ho\.rever. rev""als a much lO\Jer rate of real grm'rth, as follows (millions of 1939 pesos): 1939 1946 Index of Increase (1939 :::: 100) Receipts 2,284.8 2,980 130 Expenditures 2,322.6 ),318 143 17 Thls excludes revenues of entities resulting from business trans- actions. -18- Such deflation of budgetary figures by the cost of living index may be ~~s­ leading. Hm'1ever, fair na.tiona1 income estimfltes have been made for Chile, and their matching against government eXl)enditures f:ives similar inc.icHtion. In 1942 total expenditures controlled b~l the covernment 'lZlounted to 16% of 1942 national income. They climbed to 18.5% in 1943 8.nd. 1'744, reached 22.5% of current national income in 1945, Bnd must have remained at the level above 21% in 1946 and 1947. On the basis of tentative esti- mates setting the total government expenditures in 1948 at 15,326 million pesos and the national income at 63,838 million pesos, this ratio may have attained 24% last year. It is likely, as \'r111 be d.iscussed later, that this relative gro\l1th arose me.inly from grm·,th of development expenditures, and the service of internal and external debt. This level of official revenues to national income may not be too high for a period of prosperi ty, al tl':ough ::Jany revenue i terns seem vulnerable to economic recession. A large part of revenues emanates from the copper industry 1;!hich currently enjoys very large profit margins, and can at present sup:)ort a taxation burden of about 2 billion pesos ner year lrithout great difficulty. Import taxes also play an important role in the balancing of the budget. ::Soth these sources of revenues could be hit by shri:rJcage in foreign trade. Income tax, which has increased considerably in recent years, could probably do little to fill a revenue gap at such time, even though its present levels sUf~gest some margin for increased tax rates. In general a fairly efficient fiscal administration enables Chile to match closely expected and actual revenues. -19- Ordine_ry Budget As shown in Table 17, ordinary expenditures of Chile, which amounted in 1946 to about 75% of tote.l expenditures assumed by the govern- ment, have increased enormously since the beginning of 1940. llhen deflA-ted by the increase of the cost of living, however, ordinary expenditures dis- playa much less serious increase. Ordinary expenditures of the government, although they were never particularly high, ranging from 125; of the national income in 1940 to 18% in 1947, '''ere never covered completely by tax. revenues and revenues from national properties and services. Revenues Budgetery figllres for 1948 are estimated, end their detailed present"..tion '·,ould be misleading, The various interpretations can be S11.'1l- marized as follows (million pesos): (a) "Contraloria" (b) "Alessandri" (c) :t;;stimated Ordine.ry Ordinary Total Budget Budget Budgets Revenues 12,)28 15,326 Expenditures 1),328 15.326 The first present:,tion takes into consideration on),y revenues from normal taxes, ex.cluding ex.traordinary income and excess profit taXdS voted for six months a.t the end of 1947 but maintained ever since, thanks to the insistence of the Ninister of Pinance. It includes as expenditures only those of the various Ministries. The second includes the extre_ordinary taxes, on revenue side, and underestimates them. It includes among the expenditures provisions for salary increases, a participation of :Womento, the rai1lll'tys, etc. -20- The third includes taxes levied outside of the builget, and t:'.e participations of Fomento and other entities, both from inside and from outside the budget. It is estimated that no recourse 1;la8 made to deficit financing in 1948. Table ],7 shows that since 1940 the importance of iml10rt taxes and duties has progressively decreased re1e.tive to llEarmarked funds from specific la",s" composed mainly of exchange profits on copper and the extra- ordinary tax on excess profits of cop~er. In 1940 the first category of revenues accounted for 41% of the total revenues as age.inst 13;; for the latter. In 1947 the res'Jective ratios '!lere 26;; and 18%. This resulted in 'oart from the relFtive decrease of value of imports in relation to total taxable activities, and in 'Dart from the conslderable increase in the sales of the copper mines, the major contributor to income tax. The nicture for 1948 revenues is not yet clear. Increases in income end excess profit taxes inaugurated f'.t the end of 1947 as an emergency measure and maintained in 1948 at the insistence of the Minister of Finance. seem to have increased tax revenues considerably above the figure anticipated at the end of the year (12,328 million pesos), The im:,:,ortance of incone tax in total revenues (12% in 1940 and IJfb in 1947) is likely to have climbed to 187~ to 20;) in 1948. It is believed that former ordinary budgets were never balanced for lack of the heavier income taxes '11ic11 have been in operation no\'! for a year. Henceforth ordinf'.ry revenues are lil<:ely to be adequate and at least this source of deficit financing might disappear. Exoenditures There have been some changes in the structure of ordinary -21- expenditures (as presented b::.r the Contraloria). The main spenders have ahlays been the fiiinistries of National Defense. of the Interior, of Education, of Public ~';orks, nnd. of :5'in8.11ee. The share of national defense expenditures in total eXUGnditures h2S never been as high as in neighboring countries such as Argentina. }'rom 25~Q in 1940 i t has been reduced to 22% in 1947. and is anticipated to f82.1 to 21;:' in 1949. The consensus of opinion in Chile, h01:1eVer, is tha.t this ratio could still be considerably reduced. The Department of the Interior, 1,'lhich spent 18% of total ordinary expenditures in 19l1 0, "!as reduced to 145; in 1947 and 1949. The share of the Ivlinistry of ;E;duc!ttion is high, fluctuating be- t\veen 145~ and 1.5~~. The share of Public i1orks. '..'hieh benefited f:::'om n;j of ordinary expenditures in 1940, has been considerably reduced, but this is due to the fact that entities have been entrusted '.'lith many of the major expend! tures in this field, and that public "lorks expendi tuxes finenced by borrol'lings are not covered in the ordinary budget. The shR.re of the ~':1n1st:ry of Finance has climbed sts::tdily 2nd takes no\'! one c:uarte:r of the total expenditures. These funds are used to supplement other funds of the Caja de Amortization devoted to debt service (as discussed later) and for contribution to various development agencies. In 1948 a ne1,T method of :!?resento.tion of the or(Hnary bud{;et, tend- ing t01.'lard eonso1idetion, l',as introd.uced by the i'lin:i ster of }'111anoe. Enti- ties in constant need of funds, such as Fonento, the Chilean railroads. etc., started competing "/i th regu1E-.r ministries for ordinary budget exnendi ture -22- allocations. This \1[111 in the future permDnently modify the relative im- portance of expenditure items. Tax Revenues Outside the Budget Various 1a'''8 allocate the yield of certain taxes directly to de- velopment institutions and to the Caje. de Amortizacion, entrusted 11i th the service of the interne,l and external debt. The total of these taxes, hO"lever, is never received by these entities inasmuch as the government a;)-;1ropriates and thrO':ls in its ordinary tax revenues a large segment of their total yield. Line 0, Table 16, rep- resents an estimate of tax yield actually available to entities', ",hile Line d indicates estimated dra\dngs from these texes by the same entities. In 1946 approximately 23% of total tax revenues were thus going directly to the Amortization Institute, the Reconstruction Cor:?oration, the Develop- ment Corporation and the Institute of Popular HousinG. These fiscal con- tributions were amalgamated with other resources such as earnings and borrm'lings of those entities. The funds dra\ill from these special taxes, plus the borro\·Tings of the entities, represent their actual l)articipation in government expenditures. Leyes 31s-;Jeciales Most of the government borro'lfings are clEissified under the heading of "funds dedicated to s~lecinl lavis". Tllese funds, originally borrowed abroad, are utilized through the Ce" tral ?cu12.:: for .'} nUJ:lber of ~)urposes which could theoretically fall under the heading of development. This in~ cludes purchases of equipment by the milit8ry, road and railroad construction, su,bsiliies to,,- th~ .nattonaJ..airline .. S110siri.ias to development enter:?riseS sucp. as the Institute for Agricultural Credit, and Fomento, etc. -2:3- A portion of the Leyes =~speciales. together "ri th other €;overn~ ment borro':rings, is used to cover the c;overnment deficit, and outside of the Leyes Es:neciales, short-term borrollTines are made from the 'DubHc and central bank \',hich sometimes 1?re for development projects of i'omento or Auxilio. Government Exuenditures for DevelOp~ent Table 18 attempts to describe the size of goverr;.:nent e:xnendi- tures for development. As most of these expenditures occur outside the budget t and the picture is therefox'e necesse,rily clouded, this reTlresents no more than a tentative estim8te. The method used is to sum (a) expendi- tures in the ordinary budget for construction and development subsidies and public \'lorks purposes. (b) taxes outside of the budget dedicated to development institutions, (c) loans to development institutions made by the Amortization Institute out of soeoial taxes pnd (d) investments under Leyes Esneciales minus sums used to cover the ordinary clefici t. This method suggests that development expenditures \-rere main- tained around 14;J of total government expenditures in 1942-44. In 1945, perhaps as a result of the Availability of foreign eCluipmen t t they climbed to 211" of total expenditures. A reduction to 16.550 \01aS noticeable in 1946. In the last t\olO years total deve1o:;Jment expenditures htwe prooably exceeded 20;0 of all expenditures controlled b~- the government. In terms of gross capital form?tion, the ,,;overnment shE're could be described as follows (millions of pesos): 1942 1943 1944 194~ 1946 (1) Gross capital formation 2080 2566 3284 3714 5450 (2) Government expenditures on development 607 699 8:34 1606 1469 (:3) 2 in %of 1 29~ 275; 25'1 4:3% 27% ,'" -24- This is only a very rough yardstick of government partici::;etion in development of the country, inasmuch as the figures under (2) include elements ",,,fhich could not be strictly classified und.er the headinr; of invest- ment in capital goods and does not include investments made by entities out of their own resources. PUBLIC DEBT It is very difficult to ascertain the actual size of Chilean public debt, and almost impossible to determine with any real accuracy the peso charges of total lJub1ic debt service. This is due to the fact that official documents show the peso equivalent of external debt sorvice at a fictitious rate of exchanl"e. This is because taxes used to service foreign debt are levied to clollars. Al thour,h the outstandtnr am01mt of internal debt fuaranteed by the GovernI'1ent is shmm in Government docu- nents most of the service is as sUlned not by the Goverrl1'nent, but by the actual borrower, throug:h the channel of the Al]lOrtization Institute. Finally, the records of t.he Amortization Institute and of the Controller General of the Republic do not indicate similar aJ:tounts. Hesort to esti- mates is therefore necessary. 1/ Foreign I:ebt- Table 13 nresents the total foreign debt outstandinz at the end of the years 1944 to 19L7. The sum total of the Government external debt (long-term), of advances and bank credits, port works credits, other short- term loans, and of loans guaranteed by the Government was US;!!; 323.3 million in December, 19h4 and was reduced to us;1l; 283.6 million in December,1947. (US,~ 149.1 million in US Dollar5J US~ 109.5 million in b Sterling; US:"; 25.0 million in Swiss Francs). In :peso terms (current De80s) this ren- resents a decrease from 10,022 billion 'lesos to 8,791 billion Desos. The total service of the foreign debt, as shown in Table 20, has repre- y Foreign exchange aspects of the Foreign Debt are discussed +' "ne section dealing with the Balance of Pa:~1]'nonts. - 26 - sented 4.4% of the total Govern.'1lent exnenditure in 1945 and 5.5% in 1946. By 1951-52 total services in nesos may not represent more than L5% to 5% of the emenditures if they are Flaintained at their current level. Internal Debt AccordinG to the records of the Controller General, internal debt increased from t~,li63.0 million pesos at the end of 1944 to 6,265.L. million pesos at the end of 19h1. From these docUlnents it a1')')ec,rs that net borrowing has been ar:mroximately 833 million 1916 and 789 million in 19h6, while amortization exceeded borrm'ling in 19h1. About one-half of the funds borrowed by the GoverTh'1lent and entities originated from the Central Bank. The Com:aercial Banks financed a third, and the r:aja de Amortizacion and the public the remainder. As shown in 'Table 19,i';ross borrovrinr by the Government and entities was rouGhly one bi] lion pesos in 1945 and in 1946, and dro1')ped to 275 million in 19h1. 20, in- dicates that service of the internal c~ebt of Chile apparently repre- sented 67~ of the total Government c:cpendi ture in 19h5 ('.nd in 1946. In 1947 it amounted to 8% of ordinary expendj.tures. Total Debt As shown in 'Table 19, total Government c~ebt of Ohile fluctuates around 15 billion pesos, a figure hich is likely to equal the totc:l in- 1I'r ternal Government expenditures in 19h9, and "I'Ihich is equivalent to le ss than 25~ of national income. - 27 - The total service of the debt amounting to 10.«% of total E'X- nenditures in 1945 and to 11.5% in 1946 is not narticu1arly heavy. It estinated that it became smaller in relative value in 1947, and re- presented about 8% of total expenditures in 1948. It will, hovr6vor, incre~se if, as expected, the nesolis devalued to 43 Desos ner US~. l.;OKEY Inflation has become a chronic nhenomenon in Chile. Private and public deve1opr.-lent has been in effect financed by forced savin[;s broue:ht about by the e:xpCl,nsion of credit and the -;;rintinr of currency. The last major attem?t to checl: this trend was made in 1946 by the Hinister of Finan~e, "achholz, "\'rho was l:l.nable to uursue his efforts, as a result of the political pressures brought about by the commercial banks and Chilean Businessmen. lJ!ith a cabinet shift and aupointnent of Jorge luessandri as Hinister of Finance at the end of 1947 it 1'ras expected that nffi'T en- deavors would be made to stop or rather reduce the rate of inflation. Alessandri attemnts to fiGht inflation progressively, but continually meets considerable obstacle s in (1) lar ge blldr,etary needs and (2) the laissez-faire attitude of the Central B2~k. He is ha~pered the danr-er of alienat5.nc the entrepreneurial class in Chile and the danger of stOD- ping industrial development. So far his attempts have only been success- ful in the budgetary field, '.fhere a balance seems to exist, but in the credit field expansion aD'JearS to continue. On the basis of official docu,'1lents of the Su:)srintenclencia de 28 - BancDS, the money sU1)1')ly in June, 1948 reached 16,287.7 million 1)8808, or 15% above the level recorded in Pecember, 1947, as shovm in Table 21. Looking further, bank money su})ply ":as in Ju..rw, 19h8, l03::~ hi.0'her, and cost of living 95% higher than in Jecember, 1944. Analysis of t:le consolidated balance sheet of the Central Bank, the com:raercial banl:s, and the major savings bank (Caja de Ahorr~s), summariz,ed in Table 22 'Jrov1.des some indications as to the mechanism which has maintained inflation during the period. Inflation from 1945 to 191..~7 I'r as Drilnarily based on the extension of loans from the Central Ba..'1k and commercial banks to entities entrusted wi th development and to the Government. Honey SUDl')ly "eras not sizeably increased by these operations, but commercial banks were provided with cash and promissory notes issued by develonment cnti ties, both of ,·Thich could be utilized as leeal reserves. On this basis the COl11mercial banks considerably exoanded loans to the public, pri~ari1y for the purnose of financing commercial trans';:'.ctions. In order to expand further, they ob- tained rediscounts from the Central Dank, ""hich, acco~'dinr: to the spirit of the Kemmerer legislation on 1':hich it VIaS founded, vTaS cor:::;frlled to accept all IIfirst quality papers II • The Central Bank did not, as it '."'as empowered to do, 'Vdthin limits set by lavr step up the rediscount rate, nor increase the reserve requirements of the co~mercial banks, nor stop the issue of notes. The business community, the powerful cOFlf>:ercial oanks, and (except under Viachholz) the Government practieal1y forced it to acceut the situation r:assively. Fluctuations in rrold and exchange reserves had little influence on money sup~ly inasmuch as the Central Bank is free of any obligation to maintain specific reserves. -29 - Changes in public demand deposits, in time deposits and in deposi ts of official entities indicate that the major beneficiar;'T of the m:pansion policy has been the general public rather than the Government. The rate of increase of time deposits has been hirh except in 19h7. In that year it dropped, nresumably as an effect of a sudden ava.iJ.ahil-t ty of imported cons~~ers goods. At the end of 1947, although major efforts had been :"r1ade by the Goverr'Jnent to balance the budp:et, the I\Iinister of Finance "ras faced 1'.1'i th a deficit of 1,000 million pesos. Law 8913 ,'[as nassed, 'Jermitting the Central BanI" to revalue its Hold cold reserve!! fro!'\ a Darity of 1:.85 pesos per dollar to the official parity of 31 !"lesos per (lollar. The operation yielded 845 million pesos, which, accordinr: to the laYT, ';ere turned over to the Government in order to finance the deficit. All of this, however, VIas not inflationary. Simul taneously, the Government borr01fled from the cOlTlJ'!lercial banks 400 million pesos against which short-term Government notes bear- ing an interest of 7 .5~~ were issued. This resulted, in the short-run, j n a monetary contrartion as the Government oromissory notes issued against the loan could not be included in commercial ban.~ reserves. In addition three hundred r:lill~"on nesos of the revaluation nrofi ts v:ere used to re-purchase short-term oblifations of the Government held by the Central Bank, a deflationary move. However, cOTIl1'1ercial banks h<:l.ve the privilece of selling these notes to the Central nan};: ','hich, in the long- run, may release all or part of the 400 million peso loan. Ferrtunately few notes were sold to the Central Bank in 1948, but the liquidity of the money market remained unaffected. - 30 - The process of inflation continued in 191+8 mostly as a secondary effect of the financing of the 19tJ.7 budr;et. The Central Bank, though encouraged by the Governnent, still hesitated to utilize its limit- ing powers, and did not stop note issue. The COLTInercial ban):s, althrmgh repeatedly 'warned by the Goverrunent and the Central Banh:, did much !:;cre to agpravate the situation by lending for many unproductive nurposGs, including real estate and speculation. In March, 19h9 the Central Rank issued strong statements con- demning these practices and threatened to put them to an end. It is un- fortunately likely that as Ion'.: as a nB1ff Central Bank lav,j is not passed, removing it from the influence of the commercial banks, broadening the margin vfithin which it can modify reserves and rediscount requirerrlents of commercial banks, and checkinG its issuinr rir,hts, these statel:1ents cannot be effectively enforced. - 31 - NATIONAL INCOi'iE AND CAPITAL FOqr"ATION An elaborate study of the national income of Chile has been made by FOU1ento. It provides detailed information for the years 1940-h3. Fi£:Ures for later years have been estimated by the Bank as shown in ~able 24, and appendices, and, unofficially, by an economist of Foracnto. It seems, tentatively, that the figures of the International Bank for Re- construction and Development are over-estimated, and those of the econ- omist of Fomento under-estimated. Using the last estimate the national income Chile appears to have increased from 16.9 billion pesos in 1940 to 54.1 billion nesos in 1947. This figure, adjusted py the cost-of-living index, indicates the possibility of national income of 63.8 billion DeBOS in 1948, or a little !l'ore than the equivalent of US.~ 2 billion. This spectacular Gro~~h in current peso national income does not reflect any imprOVement in the IJresent real condition of the Chilean Deople. Total real national income has nrobably increased somey!hat over the past eif:ht years, the increase being in capital fornation rather than consumption. A::E:regate real in':ome avai~.ab1e for consll:r:r:;tion has reJ1ainc'd v.Lrtually unchanged, w'hile population has increased. Ls shoV'm in Table 23, although the Der capita. money income has increased from 3,380 pesos (US~, 109) in 1940 to 9,800 Desos (lISe 368) in 1948, the real income per capita (19ho pesos) has decreased from 3,380 pesos in 1940 to 3,OL.o Desos in 19[18. This decrease in real term.s may be over- estimated inasmuch as the cost-of-living index used to denate the current peso values, the population figures, and the national income fip:ures for the various -;f8ars must be regarded as estimates and are not quite adequate - 32 - for this purpose. At any rate, it can safely be said that per capita real income in Chile has not increased over the nast eight years~ As shovm in Tables 23 and 25, gross capital formation was lo.8"b of the national income in 1940~ and Vias still 10.8% in 19h7. Hovrever, 1f capital fornation statistics are deflated by the cost-of-living index for locally produced [oods and by the value index of United states e}morts lor the imported capital equipment, the following fieures result: (in million 1940 pesos) ------~--------------~----------~~~--~~---------------~---- 19ho 19lf7 1/ (in 19ho pesos) National Income- 16,963 17,500 Gross Capital Formation by DTIDorted Goods 851 1,190 Gross Capital Formation by Locally Produced Goods 982 1,150 Total 1,833 2,340 Total in %National Income 10.8% 1).4% This suggests that gross capital fonnation has in fact increased, both absolutely and in relation to national income. Net capital formation, after having been kept at a Imr level until 1943, increased suddenly in 194h and has remained at a level above 1940. This shift from investments for maintenance to neVi capital invest- ments is partly due to the fact that maintenance of obsolete equipment had been extremely costly between 1940 and 1944, and could revert to aSS11.\1;ed pre-war levels only when new equipment became available again. This analysis Obtained as follows: Total 1947 minus capital formation in 1947 neaos. Balance deflated by cost of living. New balance increased by deflated Gross ca;:Jital Formation figures. - 33 - suggests that in recent years new industries VTere established, represent- ing (new) net capital formation. This theoretical conclusion is confirmed by the record of Chile in recent years. Since 1944 three major hydro-electric nlants, several textile factories, a conper aDuliance ulant, and a rubber tire factory, for example, have been built, and some are coming into operation, as well as a multitude of other smaller industries. Furthermore, the construction of a steel plant ond ot'1er large hydro-electric plants been started. Although imports accounted for al)Y)roxinately )~6:~ of [ross capital formation in 1940 and only for 38% in 19L7, tJ1e real quantity of machines and equipment represented by 1947 inports VTas higher than in 19)~0. The strain on national resources exerted by the real and woney costs of j_n- stallations of iroportedequinment (which is Edfecti vely related t a real volume of installations rather than to their monetary value) can thus be estimated to have been much greater in 19Lt7 than in 1940. Since 1940 the share of industry in national income has been greater than either agriculture or mini.ng, accounting for 17'[1, of the national income in 1940 af,ainst 16. and 10% for the other activities. ratios are estimated to have bC"'come 22.5~~, 17 .3"~ and lO.3;'~ res- pecti ve1y in 19h7. The relati vcly small importance of r'lininr; is due to the fact that the large foreiGn-armed mines export their net T)rofi ts and make considerable provisions to cover reserves and administrative mmenses abroad. - 34- As seen before, the Government plays an important role in copi- tal formation in Chile. Between 1942 and 1944 it accounted for 25)0 to 29% of the gross capital formation of the country. This share increased in 1945 to 43% and returned to average in 1946.. This, however, conceals the magnitude of the investments of entities such as the Chilean rail- roads, Fomento, etc., out of their own earnings. It is doubtful, however, that on the average the Government and entities account for mors than one- third of the capital formation. Foreign mines may be estimated to account for another 10f0. Chilean private e~terprise therefore invests yearly (roughly) more than one.....half of the capital required for development, and, according to our information, do so out of profits. As in the case of the Government, they could by re. . .allocation of expenses, enter into larger capital investments. but are prevented from doing so by the shortage of foreign exchange. CHILE STATISTICAL T.ABLES 1. Foreign Trade, 1927-1948 2. Exports, 1936-1948 3. Imports, 1936-1948 4. Foreign Trade: Major Commodities 5. Foreign Trade: Direction of Trade 6. Copper Prices, Production and Exports, 1840-1948 7. Nitrate Prices, Product~~on and Exports, 1927-1948 8. Balance of Payments: SUmmary an,d Exchange Reserves 9. Balance of Payments~ Receipts 10. Balance of Payments: Payments 11. Major Net Sources of Exchange 12. Disposition of Proceeds of Copper Exports 13. ioreign Debt 14. Foreign Debt Service 15. Status of U.S. Export Import Bank: Loans to Chile as of January 31, 1949 16. Total Government Revenues and Expenditures 17. National Ordinary Budgets. Chile, 1940-1949 18. Government Expenditures for Development 19. Government Debt t Internal and External 20. Total Debt Services, Peso Charges 21. Money Supply 22. Banking Changes 23. National Income and Cap! tal Formation 24. Nat ional Income 25. Capital Formation Table 1 CHILE - Foreign Trade Y (in mi2J~?s US dollars) EXPORTS UJPm.TS . Copper et Excluding Nitrate Year Total Gold Co'?per Nitrates % of Total CIF 1927 204 129 1928 239 146 1929 276 123 127 90.6 195 1930 160 169 1931 99 85 1932 35 15 7 62.9 26 1933 42 22 1934 97 38 29 69.1 50 1935 97 37 29 68.0 62 1936 116 107 44 29 62.9 72 1937 192 186 104 34 71.9 89 1938 141 131 68 29 68 .. 8 103 1939 138 128 68 26 68.1 85 1940 143 132 78 26 72.7 104 1941 161 153 97 34 81.4 108 19h2 179 174 118 23 78.8 128 1943 181 173 108 23 72.4 131 1944 197 191 116 25 71.6 Ih4 1945 210 202 103 38 67.1 156 1946 230 213 1(,4 37 61.3 197 1947 277 277 173 / 38 76.2 266 1948 32931 324V 171~ 5031 67. 268V !I Sources: Total !:~:xports and Imports 1927-35 Re~)ort for 1938. Roreign B:mdholclers Protective Council - Exoorts 1935-47 and In:)orts 1935-h7 - I::F Financial Statistics. E:::::-:!ort Co~}per Bars and Export ~\ii trates 1935-45; Chile's Program amI. Progress - Corporacion de Fomento 1946. Y On basis 9 months statistics. Ta.ble 2 CHILE ~orts1.1 (Bullion included in totals) 19~6 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948* GRAND TOTAL Thousand metric tons 3,661 4,273 4,227 4,098 3,988 3.779 2,490 1,860 1,940 3,532.6 4~279.3 )~60).9 ~~.., Million gold pesos ..,,,,,Iw. 947 682 671 696 781 869 877 959 1.022 I 11).7 1,356 ..1 t 1~112.4 Million U.S. dollars 115.8 1.95~2 140.6 138.3 143~5 161.0 179.1 180.8 1.97.5 210.7 229.6 279 .. 6 251.8 VaJ.ue per ton (u~$I";':;;'1 t) )1.6 45.6 33f12 33·7 J2·~~_ 42.6 71.9 96.3 101.8 15.0 6.5.3 102.2 VALUES (OOO,OOO's of US dollars) Copper 44.0 103.8 67.6 68.2 78 •. 4 97.4 118.2 107.9 116.0 103.1 104.6 173 .. 8 128.4 Nitrate 34.4 29.1 29.4 26.4 23.6 23~0 22C16 24.7 37.6 34.7 34.7 37.3 Iodine 2.3 1.7 2.6 1.8 1.6 3.6 1.8 0.9 2.5 2.9 1.0 Gold & silver & precious metals 6.) 8.8 9.) 6.4 2.8 3.7 2.7 6.4 8.3 6.3 3.7 Iron 2.6 2.7 2.8 3.0 2.8 0 .. 7 0·5 0.4 2.1 1.9 3.4 Sulphur 0.2 0.2 0. 8 0.6 0.8 1.3 0·3 0.2 Manganese 0.2 0.1 D.2 0·3 0.1 0.1 1.9 3·3 ·5 .2 Molybdenum 0.6 0.2 0.8 0.9 1.2 1.2 1.1 n.a. n.a. Sodium Salts 0.7 0.1 0.1 0.1 0·3 0.2 Coal 0·3 0.2 0.2 0.6 0.9 0.6 _ 2·3 0.5 .4 .1 .2 TOTAL, J..1ineral 109.4 111.5 121.6 133.8 149.2 140,8 14706 152.2 152417 222.5 182.6 Agricultural products 36.1 27.9 24.3 19.1 22.8 23.6 29.1 32.9 41.5 51.2 41.7 62.1 Textiles 0.2 0.2 0.1 0.1 0·3 0.4 1.2 1.9 1.9 3·2 1.4 ..6 Chemicals 0.3 0.4 0.4 0.6 1.0 2,0 2.0 3·3 2.8 2.4 2.2 4.5 1.8 Machines & 'lIansp:>rt Equipment 0.1 0.1 0.1 0.1 0.1 0.1 0·3 0·3 0.5 0.9 .6 .9 .6 Metallurgical Industries 0 .. 1 0.1 0.1 0.2 1.5 1418 7.2 7.6 3.0 4.8 1.2 Various manufactures 0.4 0.4 0.4 0.4 0.3 0.-5 0.8 1.4 1--5 1.6 ).5 2.8 1.3 TOTAL, o~ than Mineral 37.3 2809 2505 20.9 25 6 0 28.6 37.1 46.8 55.9 63.7 56.1 67.6 TOTAL 138.3 1~7.0 142 •.5 159.4 177.8 177.9 194.4 208.1 216.4 278.6 250.2 1/ Source: Direccion General de Estadlstica, IfEstadistica Chilena", September 1946, Sinopsis 1947, and September 1948, Santiago, Chile. !I First 9 months: 1948 Total Exports: 328~7 million dollars. Table 3 CHILE 1/ ~orts - (Bullion included in totals) 19:;6 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948* GRAND TOTAL Thousand metric tons 1,002 1.366 1.422 1,2)2 1,652 1~638 1,592 1,615 1,552 1,6)).9 1,827.8 1,954.1 1,462.7 Million gold pesos )46 429 499 410 506 525 621.5 6)7 698 757 953·9 1,307·3 957.0 Million U.S. dollars 71 88 103 85 104 108 128 131 144 156 196.6 269.5 197.3 Value per ton (US$/unit) 70.9 64.4 72.4 69 .. 0 63·0 65.9 80.4 81 . 1 96.0 95.5 107.6 137.9 1)4.5 VALUES -(OOO,OOOIS of US dollars) -Pig Iron - Tin - Zinc 0.7 1.0 1 .. 4 1.5 209 1.5 2.6 2.8 .6 .6 .6 Coal 2.4 0.8 0.) 0 .. 4 0·3 .4 .9 1.9 Petroleum 4.9 4.9 3.2 5.9 7.5 9.5 12.6 9.5 7.8 11.0 12.4 11.7 Diesel Oil 0 • .5 0.6 1 .. 0 0.8 0.8 1.1 1.5 0.9 1.5 1.4 1.9 3·2 TOTAL., Mineral 6.2 5.2 10·5 10.6 13.8 15.9 13.3 12.1 15.1 18.5 17.4 Agricultural products 16.3 16.7 15.0 17.9 17.9 30.6 )6.6 4107 54.4 66.5 75.9 50·5 Textiles 15.2 15.1 15.4 1}.6 16.8 16.6 19.9 19.6 21.3 17.7 19.3 )1.6 20.8 Chemicals 9.0 11.0 11.9 11.4 14.4 15.6 . 19.8 17.0 18,,7 19.7 22.9 29., 28.3 Machines & transpcrt ecpipnent 16.4 17.5 30.8 20.0 22.6 24.6 19.9 16.9 20 .. 4 22.9 39!'0 66.6 47.1 Metallurgical industries 9.1 12.7 11.7 10.7 12.6 11.9 11.3 10.5 12.2 1).2 16.) 2).8 19.6 Various manufactures 6.S 8.6 9.6 8.6 9.-2 10.7 12.2 14rl 15.9 15.6 17.6 19.6 11.9 TOTAL, other than Mineral 81.2 96 .. 1 79·3 93·5 97·3 113.7 113. 7 130.2 1 43.5 181.6 247.0 178.2 'rOTAL 102.~ 84!5 104.0 107.9 127.5 139. 6 14).5 '155.6 196.7 265.5 195 __6 1:./ Source: Direccion General de EstB.distica, "Estadistica Chilena", Ana XIX - No.9 - September 1946, Sinopsis 1947. and September 1948, Santiago,Chile. ~ First 9 months:: 1948 Total Imports: 267.9 million dollars. Table 4 CHILE Foreign Trade 1/ Major commodities: (a) in millions of u..S. dollars (b) in per cent of to ta,l value of trade. 1917 1238 1243 1944 124Z 1248* a b a b a b a b a b a b - EXPORTS - TOTAL 19.5.2 100.0 140.6 100.0 180.8 100.0 197.5 100 .. 0 278.7 ,100 .. 0 251.8 100.0 Copper (103.8) 53·2 (67.6) ,48.1 (107.9) 59.7 (116.0) 58.·7 173.·8 62~4 128.4 50.9 Nitrates (34.4) 17.6 (29.1~ 20.7 (22.6) 12.5 (24.7) 12.5 34.7 12.5 37·3 14.8 Precious metal (6.3 4.. 5 (3.7) 2.0 (2.7) 1.4 6.3 2·3 3.7 1.5 Agricultural products (3 6 .1) 18.5 (27.9) 19.8 (29.1) 16.1 (32.9) 16.7 41.·7 15.0 62.1 24.6 IMPORTS - TOTAL ~8.0 1pO.0 103 .. 0 100.0 131.0 100.0 144.0 100.0 265.5 100.0 196.7 100.0 Agricultural products (16.3) 18.5 (16.7) 16... 2 (36.6) 27.9 (la.7) 29.0 75·9 28.6 50.5 25.7 Textiles (15.1) 17.2 (15.4) 15.0 (19.6) 15.0 (21.3) 14.8 31.6 11.9 20.8 10.6 Chemicals (11 .. 0) 12.5 (11.9) 11.6 (17.0 ) 13.0 (18.7) 13·0 29.5 11.1 28.3 14.4 Machines & traIl sport equipment (17.5) 19.9 (30.8) 29.9 (15.9) 12.9 (20.4) 14.2 66.6 25.1 47.1 23·9 Metallurgical products (lZ.7) 14.4 (:t1.7) 11.4 (10.5) 8.0 (12.2) 8.5 23.8 9.0 19.6 1'0 .. 0 1./ Source: Direccion General de Estadist1ca, "Estadistica. Chilena", September 1946. 5ino1'8is 1947, and September 1948. Santiago, Ohi1e. !I Bullion and coins not included for first nine months of 1948. Total Trade for 1948, preliminary figures: Exports million US$ 328.7 Imports 267.9 :Balance I 60.8 (Source: Internatlona1 Fina,ncia1 News Survey, March 3, 1949) Table 5 CHILE Foreign Trade by Countries Y (in per cent of total value) 1937 1938 1946 1947 Destination of ~orts United States 23 16 37 44 Un!ted Kingdom 20 22 12 11 Germany 10 10 0 0 Source of Imports United States 29 38 40 44 Germany 26 26 0 0 Peru 8 6 16 13 Argentina 4 4 15 11 Y Source: IMB' Financial Statistics, Vol. 12" Table 6 CHILE Prices, Production ~j E:port of Copper Frices Foreign EleC::- trolytic US Production EX'Jorts cents per lb., ( 000 metric ton~ ( 000 metric tons) Year _ eIF New York 1L Total Bars Bars 1840-49 17.4 1850-59 23.0 21 18Eo-69 29.5 40 1870-79 23.0 46 1880-89 15.2 36 1890-99 12.3 23 1900-09 15.5 1910-19 20.2 1920-26 14.1 1927 12.9 243 226 1928 14.6 287 274 1929 18.1 321 302 1930 12.9 220 207 1931 8.1 223 215 1932 5.6 103 97 1933 6.7 163 157 1934 7.2 257 21+7 1935 7.5 267 259 260 1936 9.2 256 244 239 1937 13.0 !~13 394 383 1938 9.7 351 337 3L..9 1939 10.7 341 326 312 1940 10.8 363 347 357 1941 10.9 469 4S5 440 1942 11.7 484 !~77 494 19h3 11.8 497 l+88 449 1944 11.8 498 490 482 1945 11.8 L~70 462 431 1946 13.8 361 358 373 1947 21.2 427 hOB 357 1948 22.2 438Y !t20Y na 1949 23.,;/ !I 1840-1926, La Econonia de Chile y la Industria del Cobre Ignacio Aliaed Ibar Santiaco 1946, p, 198. 1927 -1932, Boletin l:~ensual P.anco Central de Chile. 1933-1945 Lstadistica Chilena; Chile Program and Progress. 2/ On basis 9 months sta.tistics. 11 March 9th. Table ? CHIIE Prices, Pro~ction and E:rports of Nitrates PI~ItjIjS IN USA ------- -----·-~Per-i'OO-~~Per 1~' PRODUCTION EXP011TS 1bs • ,Con- Ibs., Con- ( 000 ~ letric (000 metric Year ~JPer She Ton tained n tained N tons) tons) --------~----------- 1927 16.1) 161l~.1 1928 Ih.39 3164.8 1929 13.94 3233.3 1930 13.42 2h45.8 1931 12.77 1125.9 1932 10.26 693.9 1933 8.45 437.6 1934 S.S2 812.3 1935 26.0 8.1 7.97 1217.9 1260 1936 27.1 8.h 1261.6 1286 1937 28.5 8.9 1413.8 1608 1938 29.0 9.05 1398.0 1573 1939 29.0 9.05 1hho.5 1584 1940 29.1 9.1 1!~8S .0 Ih24 1941 30.9 9.65 1416.3 1270 1942 33.0 10.30 1332.7 1270 1943 33.0 10.)0 1171.1 1060 1944 33.0 10.30 990.7 1071 19L+5 33.0 10.30 1383.5 1621 1946 35,33 / 11.0 161~8 .9 1947 2 43.0 _ 13.4 1631.8 1948 49.1921 15.4 1776.0Y ~....-----.- Production volume Hitrate 1921-h7 - Estadistica Chilena ~~orts 1937-45 - Anuario Estadisfico de C0l!1ercio~~:t8rior International :r..e,'erence Serv-ice p,34. VallI, Nov. 1945, No. 37. Prices USA 1935-L6 - Price Y!holesale Nitrate of Soda - crude - f .o.b., cars, -port, warehouses - US>'; ~0er short ton -see 19h 7 statistical sW'ToleIaent to the Survey of curr€nt Business US DC. 1927-35 - Prices: C;he111ical Nitrogen - US Tariff Ccnnission ReDort No. lILt - second series Prices in USfi?er 100 Ibs of contained nitrogen in New York - spot 100 Ib bars. 1/ On basis a months statistics. ~/ 2.152 = 1947 average crude i.o.b., cars, 90rt warehouses dollars per 100 lbs. Source: Survey of 0.urrent Business, February, 1948 p, S24. 3/ h9.19 = 19!+8 average, 11 months Sodium Natrate Cru(~e f.o.b., cars, dollars Der short ton port warehouses. Source: Survey Current Business, January, 1949, p,s-24 Table 8 CHILE l3al.ance of P~ents and Foreign Exchange Beserves 1 (in million US$) 1939 1944 1945 1946 1947 1948 BALAHClil OF PAYIv~S Receipts n.a. 246.3 263.7 275.8 368.9 n.a. Payments n.a. 220.6 251.4 321.0 392.1 n,a. :Balance n.a. f25.7 112.3 -45.2 -23.2 n.a. FOREIGN EXCRAUGE AND GOLD" Central Bank 33.3 105.0 110.0 69.1 55.8 53.S Amortization FUnd 10.3 4.1 5. 4 6.5 4.6 6.0 Total 43.6 109.1 115. 4 75.6 60.4 59.8 i FLUCTUATION OF BESERV'J!1 u.a. n.a., /- 6.3 -39.S -15.2 - 0.6 :J As of December for each year. Table 9 CHILE Balance of paymeqts Receipts y (in million US$) 1944 1945 1~46 1~41 Copper (Gross e~orts) 108.7 107.9 110.6 172.4 Iron (Gross exports) 0.5 0.5 3.1 4.5 Nitrates (Gross e~orts) 26.5 38.5 41.1 58.3 Small mining l6,0 13.2 13.0 10.8 Other exports 52.0 62.6 63. 4 60.6 Sub-total exports 203.9 I 222.7 238.0 306.5 Transports 16.5 14.4 14.0 12.5 Insurance 0.7 1.~ 0.4 - Diplomats and others 3. 4 3. ~.l 6.9 Private transactions 8.2 8.6 .5 8.7 Sub-total invisible trade 28.8 27.8 28.1 28 . 2 Loans Long term 5.7 6~1 9.7 10.9 Short term - 2l.~ 1. Other capital 7·9 7·1 Sub-total c~ital receipts 13.6 13.2 9·7 34.2 Grand total receipts 246.3 263.7 275.8 368.9 11 Source: Banco Central de Chile. flBalanza de Pagos", various years. Table 10 CHILE Balance of Payments P~ents jJ (in mdl1ion US$) 1944 1945 1946 1941 Imports 149.4 174.0 230.2 283.3 Total trade 149.4 174.0 230.2 283.3 Transport s and insurance ~.4 9.3 l·9 10.5 Government .2 3.1 .. 1 6.2 Private s.6 b.l 8.4 7.8 Administrative expenses of mines 2.7 5.. 2 10.5 11.3 Total invisible trade 24.9 23.7 32.9 35.9 Debt of Fomento/Ra1lroads (total service) 3. 4 5.1 4.7 6.0 Consolidated public debt (Short and long) (total service) 6.1 5.2 1l.2 5.4 Profits and reserves copper/nitrates 28.3 30.2 31.6 46.7 Various 8.5 13.1 10.4 14.8 Total capi tal 46.3 53.7 57.9 72.9 Grand total 220.6 251,4 321.0 392.1 Y Source: Banco Central de Chile, tJBalanza de Pagostl, various years. Table 11 CHILE ~...!~9hange Revenues ~Net. Accruals) of payments:1/(a) in millions of U.S. dollars (b) in percentage 1945 1246 1947 a b a b a b -- <, -'''\.1 79.1 36.0 73.5 31.0 120.1 44.0 31.8 14.0 44.2 19.0 46~3 16.0 '".: J tJ•. 41·5 19.0 48.0 20.0 41.7 15.0 :. . ., ~::f.~. 28.5 13.0 31 .. 7 13.0 )4.1 12.0 6.1 ].0 9.7 4.0 10.9 4.0 , !:"' 34.9 16.0 28.1 12.0 29.6 10.0 ... _--- 221.9 100.0 235.2 100.0 282.7 100.0 :ividends, profits, administrative expenses abroad. Table 12 CHILE 1/ Disposition of Proceed.s from ~iZ:ports of Co::rper- __________. __Jin mi11~ons of US dollars) ____________1_9_44 ___1,745 ___ ____ 1_94_6 19_4_1__ ____ _ _ _ _ _ _ }2_~~l __._ E:i_CP_O_'R_TS _107 "2~ __ ~~ llC?. 6 .~_172 .L- a) nLe,~-:al Cost of Pro- duction" 43.1 b) Imports with ovm exchange 15.6 13.2 12.0 20 .. 4 c) Taxes and Duties 22.8 22.8 19.1 49.9 d) Profits 17.4 11 .. 4 21.6 36.0 e) Reserves 7.9 14.9 5.6 f) Expenditures Abroad 2.5 10.1 10.7 g) "Net Exchange Proceeds to Chile" (a I-c) 67.5 65.9 61.5 99.8 h) Total Available to Chilean Economy (aj.bj.c) .1 79.1 73.5 120.1 i) Proceeds Unavailable to Chilean Economy (df3~f) 25.6 28.8 37.1 52.3 Y Source: Banco Central G.e Chile, tt~a.lanza de PatOS", - 1947 Table 13 CHILE Foreign Debt 1/ December Changes in December Changes in December Changes in December 1944 1945 1945 1946 1946 1947 1947 Currency In Various In Various In Various In Various In Various In Various In Various Units/ Currencies In US$ Currencies Currencies In US$ Currencies CUrrencies In uS$ Currencies Currencies In US$ millions Government US$ 91.2 91.2 - 4.65 86.5 86.5 - 6.7 79.8 79.8 - 4.26 75.5 75.5 DeDt I, 27 .. 2 108.8 - 0.224 27.0 108.0 ... 2.7 24.3 97.2 - 0.817 23·5 94.0 Lung Term Sw.francs 79·3 18.5 79·3 18.5 79-} 18.5 - 0.808 78.5 18.2 Shcr, Term .Advances and f, 2.3 9.2 - 0.05 2.25 9.0 - 0.)2 1.93 7.7 - 0.07 1.86 7.4 Eank Credit US$ 3·4 3·4 - 0.1 3·3 3·3 ..... 0.4 2.9 2·9 - 0.1 2.8 2.8 Port Works Loans ~ 0.477 1.9 - 0.016 0.461 1.8 - 0.309 0.152 6.0 - 0.00.5 0.147 5.9 Pagares us$ 2.6 2.6 - 0.1 2·5 2.5 - 0.3 2 .. 2 202 - 0.1 2.1 2.1 ~ 0.11 0.4 ..... 0.01 {l.1 0.4 0.1 0.4 0.1 0.4 Government US$ 78.5 78 •.5 ..... 2.3 76.2 76.2 - 5.1 71.4 71.4 - 3.1 68.7 68.7 Guaranteed "L 0.493 2.0 - 0.004 0.489 1.9 ~ 0.02 0.467 1.9 ~ 0.003 0.464 1.8 Debt Sw.francs 29.3 6.8 o 24.3 6~8 29.4 6.8 - 0.1 29.2 6.8 of which Eximbank 12.7 12.7 - 0.4 12.3 12,3 f 0.3 12.6 12.6 I 0.5 13.1 13.1 Total, converted in US$ 323·3 314.9 294.8 283.6 of which, US$ debt in US$ 175.7 168.5 156.3 149.1 il sterling debt in US$ 122·3 121.1 113.2 109.5 Sw.franc debt in US$ 25.3 25.• 3~. . ~~.3. 25.0 Total in $ converted in pesos at current exchange rate 10,022,.1 9,761.9 9.118.8 8.791.6 11 Source: Memoria de la Contraloria General. ~ converted at $4 per~. Sw.franc converted at 4.3 Sw.franc per U5$. Table JlJ. CHILE Se:vvice of the_ Foreign Debt !l (in millions of US Dollars) ConsoliC1ated Public Debt &:. non-guaranteed Nitrate EXTI1 BANK Year Bonds IBRD Total Disbursed: UndIsbursed:.. .............. ;p.; ~ ~> ~ ', ~ SWiss Fcs r'r~) 1949 7.0 4.4 1.1 8.1 0.7 21.3 1950 5.0 2.9 0.7 6.) 5.8 0.9 21.1 1951 5.4 3.2 0.8 4.3 6.7 1.2 21.7 1952 5.3 3.2 0.8 2.9 '-t.8 1.2 18.1 1953 5.2 3.1 0.8 1.9 4.6 1.5 17.1 1954 5.3 3.2 0.8 1.5 h.4 1.8 17.1 1955 5.3 3.2 0.8 I.) 3.3 1.5 15.5 1956 5.3 ).2 0.8 1.3 3.2 1.2 15.2 1957 5.3 3.2 0.8 1.3 3.1 1.2 15.0 1958 5.3 3.2 0.8 1.2 2.8 1.2 14.5 1959 5.3 3.2 0.8 1.0 2.7 1.2 1h.) 1960 5.3 3.2 0.8 1.0 2.h 1.2 14.0 1961 5.3 3.2 0.8 1.0 2.3 1.2 13.9 1962 5.3 3.2 0.8 1.0 2.3 1.2 13.8 1963 5.3 3.2 0.8 1.0 2.2 1.2 13.8 1964 5.3 3.2 0.8 1.0 2.1 1.2 13.7 1965 5.3 3.2 0.8 1.0 2.1 1.2 13.6 1966 5.3 3.2 0.8 1.0 2.0 1.2 13.5 1967 5.3 3.2 0,8 1.0 1.9 1.1 13.4 1968 5.3 3.2 0.8 1.0 1.9 1.1 13.4 1969 h.O 2.9 0.8 1.8 9.5 1970 4.0 2.9 0.8 0.9 8.6 1971 4.0 2.9 0.8 7.1 1912 l~.o 2.9 0.8 7.1 1973 0.7 0.5 0.1 1.4 1974 1975 Y Source: External Debt of Chile - Economic Departuent Table 15 OHILE Status of U.s. Export-Import Bank Loa,ne to Chile! as of Januarl }11 1242 Gross Net Amount Amount Obligor. Number Purpose Authorized Cancellations Authorized Repaid Outstanding Undisbursed 1/31 / 49 1/31/49 Oorporacion de Fomento 245A Electrical power. agricultural $14,539,260 $14 ..539,260 $11,050,760 $ 3.488,500 de la Produce ion machinery, copper wire, (Republic of Ohile) petroleum, buses, copper do. 245A tube, tires, chemicals and 1,212,000 1,212,000 471,000 741,000 do. 2450 various other purposes 6,200,000' 6,200,000 3,900,000 2,300,000 do. 2450 6,800,000 6,800,000 1,100,000 3,700,000 $ 2,000,000 Ohi1ean state Railways 313- Railway eqUipment 5,000,000 5,000,000 2,157,276 2,842~724 Ingenieria Electriea, 3SS Dollar exchange 250,000 250,000 50,000 200,000 S.A.C. (Corp. de Fomento de 1a Produce ion) Ohilean state Railways 372 Locomotives--Baldwin Locomotive 1,200,000 $ 302,750 897,250 269,190 628,.110 Works do. 373 Electrical equipment--Electrical 2t800~OOO 2,800,000 181.921 2,618,079 Export Corporation Oorporacion de Fomento 374 steel mill eqUipment 48,000,000 48,000,000 17,000.000 31,000.000 de la Froduccion (Republic of Chile) ChUean state Railways 410 Railway eqUipment 5,.000,000 5,000,000 150 ,000 1,.150,000 3,700,000 (Republic of Chile) Corporacion de Fomento 411 Power program, agricultural ,,350,000 5,350,000 300,000 2,700,000 2,350,000 de la Produceion machinery. copper wire plant, (Republic of Chile) cement plant, etc. Fabrica Victoria de 449 Construction of rayon staple 1,200,000 1,200,000 1,200,000 Puerto Alto, S.A. fiber and spinning plant Manufacturera de Metales,. 4,50 Machine tools, cranes and 375,000 375,000 375,000 B.A. foundry eqUipment Total $97,926 y 260 $ 302,750 $97,623,510 $19,6)0,147 $34 ,750,334 $4),2 43,079 Table 16 CHILE Total Revenues and Expenditures 1/ 1939 1942 1943 1944 1945 1946 1947 1948 1949 REVENUES (a) Taxes in Ordinary Budget 1,807 2,954 3.738 4,089 ;,531 6,197 9,578 12,)28 13,207 Revenue from Government Properties and Services (b) Taxes Outside Budget gJ 477 873 1,013 1,031 1,449 1,760 nea. n.a. n.a. --- 2,284 ),827 4.751 5,120 6,980 7.957 EXPENDITURES (c) Ordinary Budget 1,777 ),052 3,960 4,472 5,741 6,726 9,979 1),328 12,437 (d) Autonomous Agencies, out 477 3./ 865 9)0 1,128 1,208 1,410 n.a. n.a. n.a. of Taxes Outside Budget (e) Leyes Especiales 62 17 426 208 772 725 ;02 n.a. n.a. (f) Special Amortization 6 63 2,322 3,997 ;,)16 ;,808 7,721 8,861 DEJrrCI!r - 38 ~ 170 - 565 - 688 - 741 ...- 904 _ 903 4/ n.a. n.a. ]J Source: Chilea.n Budget Practice in recent years.e Economic Department and subsequent tables. £! Excluding amount earmarked for ordinary budget. J./ Actual drawings not available. Assumed to be equal to taxes outside budget. 4/ Ordinary budget and Leyea Especiales qn1y. Table 17 a ~ (I) Ct-t CHILE ..p 0 1/ ., Q) N~tiona1 Ordinary Budgets of Chile, 1940-~ ~ ~ (OOO,OOOfS of pesos) ~ - a 0 Item 1940 % 1941 1942 1943 1944 1945 1946 1947 " % 19 48?J 194931 % ~ 2 '0 41 Q) 14 'rota1 ordinary revenue 2,052 IOC.O 2,496 2,954 3,738 4,089 5,531 6.197 9.57ff-!-' 99 .. 5 9,618 11,257 1j ~ ..., Pt National properties 29 1.0 28 36 40 51 50 64 71 1.0 60 73 ~ g. National services 160 8 .. 0 1'19 207 222 276 293 351 389 4.0 489 490 ~ s:l,:! Taxes 1,597 I; -:. 1,929 2.GB;' 2 .. J)6 2,872 1,527 4.250 $,471_ 8,,116 9,588 g 0;:::_ Import duties 602 30 .0 595 507 448 475 - 631 820 958 10.0 rd '«1 e Income taxes 245 12.0 300 Q46 619 682 831 927 1,221 13.0 ~ ::; Pi Real estate taxes 83 4.0 14S 117 130 170 216 238 252 2.5.. w g~ Special import taxes 226 11.0 317 513 544 824 976 1,213 1,585 16.0 n.a. n.a. ~ t ~ To bacco and liqu-or tax 133 .6.0 196 241 274 332 371 449 721 ?5 .,.. ct-4.C1 Other tax~s 308 15.0 376 259 321 ~89 :fj~02::=- .§0~~4",~=~ g ~~ Earmarked funds_.~ rom ~952 ~1,106 14 (I) 14 specific laws2J 266 13·0 196 218 952 518 1.192 924 1,7.52 18.0 ~ ..... ~C) c:t .J:l Other revenue 164 410 188 372 469 608 1,895 20.0 rd Jl~ . CD 0" Total ordinary expenditure 2,202 . 2,761 3,052 3,960 4,472 5,741 6, 726 ... 9,6C~i 10,452 11,25 6 92.0 rd p . Hrd J:i1'S:: rl .Q$ . t) •. National defense 5S6 25.0 676 758 1.221 1,308 1,650 1,770 2,200 22.0 2,135 2 t 347 21.0 ~ t~ Interior 398 18.0 457 518 574 703 807 984 I t 382 14.0 1,508 1,539 14.0 ..;PtH Education. 300 14.0 517 511 657 760 969 1,163 1,415 14.0 1,566 1.671 15.0 ~~ 8~ Public 'vorks Finances 238 345 11.0 16.0 258 411 272 473 281 550 342 634 582 841 576 1~082 845 2,483 9.0 24.0 2,256 877 368 2,868 3.0 26.0 i.s C4 grd 0 Public health 16,5 7.0 202 257 323 339 406 487 542 6.0 820 393 3 .. 0 p ~ ell ~ Justice 76 3.0 84 91 11.6 133 17'7 217 286 3.0 307 305 3·0 §11 !:.S Labor 39 2.0 43 49 61 74 94 90 95 1.0 201 197 2.0 ..... ~ cg1:; Foreign relations 31 1.0 33 36 41 37 45 110 119 1.0 73 69 .5::t ~ ar6 Colonization 9 2J 16 16 16 19 23 33 34 34 •5 11 0 0 Agriculture 21 1.0 22 32 33 37 39 74 53 129 186 2.0 0 (.) ~~ Economy and commerce 43 41 40 41 59 437 151 1.0 g ~ ~al. vCllue of production m1~s :fuel, energs. explosives, ,', ~\lb,ric~ts, depI"ec~ationt ~s, patents, insurance, interests $ild '~ o~ '''gastos. generales~.. .. ' . 1940 ~ Net Product I 426.1 1n mill~O:Q :pe~~. Pl'9.ject,ion: '. 1943f1e;ures ~tip11ed by index of daily wages in 'selected, ;iIidu.strie&,.. :, . : ' " . • • .t ~ " ,. 1944 ~. ~ ~ 715.0 9.30 . . 0 1420 .. 0 II. Foreign. To,tal of sslar~~s, wages,. social laws and taxes.• Net Product -:- Foreign, Mining (million pesos) Wages' Salaries Social LaVIS TaXes' Total Net Income 1176.9 .1291Q 5 1613 ...4 2102.7 2222.0 2402.-5 2432.5 3841 .• 0', AmortiZation' ,', and Rep91rs 204Q5 202.9 201.9 r74q2 Total .. ' . 'Gross Income 1388,,3 1494~4 l8l5.3 2276(>9 Sources: . 1940/43',' nRent'~N.·ac:i;o~"! .·.. trageS s~aries 1944/47 = 1943 :f~~es. "freighted by increase Inm:uung salanes s ' Social taws offlC.lal ilia figure~. Taxes:- see Table of Taxes on Copper Nitrates and ;ron~ . ... J faxesln 1943 seem· to have been underest;'mated1n "Ranta Naclonal". J ~" . Table 24 III. Independent Mines. Estimated income. Projection as for I. Net Pm duct (million pesos) ~ 1941 1942 1943 19li4 1945 1946 1947 100.0 120.0 120.0 150.0 177.0 212.0 243.0 321.0 IV. Total, all mines, 1944 ~ 1946 19 47 I. 775 1420 II. 2222 2~ ~ej~ 3841 III. ITT 212 243 321 3174 3544 3745 5582 D. Industries: Global value of production minus raW materials, fuels, energy, depreciation end amortiZation, taxes, insurance, interests for industries reporting to D1rector of Statistics, plus total of salaries t wages, profits and social laws pay- ments for others. Projection: 1943 product weighted by total wage bill index. E. Construction: Value reported in 13 Chilean municipalities plus 25% - is considered gross value of production. 55% of this total is net product. Projection: 1943 net product multiplied by value index of construction in 13 most important municipalities, F. Transport: Total wages, salaries, profits, Projection: 1943 net product weighted by index of total wages and salaries bills in railroads. The total (A) to (F) represented 53.5% of the national income in 19+2 and 1943. It will be tentatively assumed that this proportion was maintained in the later years. A rough estimate of national income after 1943 could thus be: (1) Total (A) to (F) 1944 -- 1945 1946 1947 18,164 20.567 24,980 ~2.474 (2) Total National Income :;4,000 .38. 480 46,700 0,700 estimated above (3) Compared to Figures Cited by IMF 31,706 ,34,070 41,998 54,100 Overvaluation of the national income under (2) may have resulted from the unprecedented expanSion of mining income, which may now play a larger role in the national income than in 1943. - Table 25 OHILE Capital Formation in million Ohilean pesos at 31.00 per US$ 1940 - 1941 1942 1943 1944 1945 1946 1947 Imports of Mechanical Equipment 11. .. 1/ 851 865 739 790 939 1,039 i~629 2.Zl0 National Productionof.,aChines and Vehicles - 131 188 305 346 41.7 496 628 833 lhlilding Oo:ns!7uction 1 448 545 563 863 1~46~ 1',..268 2~.JO,9 l~.m ~:plic \~orks 1 if 219 247 248 319 366 582 552 105 Ih~estmentB of Railroads - l! 84 ' 33 40 48 91 10:9 100 100 Improvements to Agriculture 1 100 135 185 200 210 220 240 25h Gross C'apitalFormation-- 1 / .......---- 1',833 2,013 2',080 2',566· ),284 },714 5',45'0 :$,870 Depreciation of ~riCul1re £I 266 276 286 296 ~l1ning2 y .7 1() 10 11 Industry 1/ 154- 182 ?34 261 Ra~lroa~s ...... '. . y 75 62 160 160 141 155 Merchant. Marine 2J 20 25 45 50 Publio Utill.-ties 2. IS :20 35 40 UTllan propertlYS £I 220 240 260 290 Public \vorks 20 25 45 50 Total Depreciation §? 759 777 841 840 1,079 1,075 1',167 1,1.58 1~564 l' 1',272 1,460 1;$94 Net Oapital Formation 1~O56 1,173 1,005 1.408 2~O89 2.442 3,989 3'~976 Sources; 1/ As given by Fomento to members of first IBRD tnissit;m to Chile (December 1947 - January 1948). .?J As given. if? "Renta. l>Taciona.l". Corp,ora-cion de ;Fomento', 1945. iI Re'Vised, t~tals :... priVE,lte source. ~lvi.F.RD 797,~ ~ Equals totals marked 1/ minus totals marked jJ.