Chile’s economic woes have led to a sharp drop in tourists in the last three months, leaving many locals without work and leading to the country’s biggest protest in years.
The protest comes amid an economic downturn and the collapse of a government-backed currency, the peso, that has left millions struggling to pay their rent and buy food.
A government official says Chile’s economy is not recovering, but economists say the country will not be able to meet its current needs for the foreseeable future.
“We don’t have enough money to keep going, even though we have a budget surplus of 2 percent of GDP, and we don’t want to pay a price to do so,” the official said, according to the AP news agency.
The official said the government has had to raise taxes to pay for food, and is spending up to $200 billion a year on salaries and benefits, which has left the country at a severe economic disadvantage.
Chile’s official currency, which it uses for foreign purchases, fell to 1.5 percent on Friday.
Last week, the central bank raised interest rates to 3 percent, making it the first country in Latin America to do that.
But the currency also lost more than 1 percent on Wednesday, after the government cut subsidies to pay companies to increase their production.
At the same time, the government said it would allow companies to raise wages, and cut their subsidies, and increase taxes.
Meanwhile, President Michelle Bachelet has announced a plan to make Chile a free-market economy by creating a national bank and a national savings account, and the government says it will increase the national income tax rate from 6 percent to 8 percent.
Bachelet’s government has said that if Chile’s recovery is to continue, its growth must be sustained, not slowed by government policies.
On Thursday, the president told the country that she will not allow inflation to go up and that Chile will stay within the euro zone.
Critics say the government’s economic policies are too slow and its policies are insufficient to help Chile’s citizens.
Inflation is now above 20 percent, and unemployment is high.
Analysts say the economy has been suffering from a lack of investment and investment has stopped.
President Michelle Bochelet, who came to power in 2009, said in a televised speech last month that Chile needed to create more jobs and raise wages.
But many economists say that hasn’t happened.
According to the official Central Bank of Chile, the economy contracted by 2.1 percent in the first quarter of 2018, compared with a year earlier.
By contrast, Chile’s government says that it has a surplus of $10.9 billion, or 1.9 percent of its GDP, which means it is in a better position than other Latin American countries to continue its economic recovery.