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Chile’s Boric unveils moderate first Cabinet, markets rally

Chilean presidential candidate Gabriel Boric speaks during his closing campaign rally in Santiago, Chile, December 16, 2021. REUTERS/Rodrigo Garrido/File Photo

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SANTIAGO, Jan 21 (Reuters) – Chile’sleftist President-elect Gabriel Boric’s unveiled his first cabinet on Friday, throwing markets and investors a bone with a moderate pick of current central bank head Mario Marcel for the Andean country’s important finance ministry role.

The make-up of the new government is being closely watched as a key signal about how 35-year-old lawmaker and former student protest leaderBoric may steer the world’s top copper producing nation after a thumping election win late last year.

Boric also named Izkia Siches, a prominent doctor and part of his campaign team, as future interior minister and deputy, as well as lawmaker Marcela Hernando in the key role of mining minister, where copper and lithium development will be in focus.

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The cabinet was made up from members of parties across the political spectrum, reflecting a fragmented and diverse Congress, while women will lead over half of the ministries.

Boric has pledged during the election campaign to enact major reforms to Chile’s market-led economic model, which had rattled investors, though he has moderated his tone since, boosting Chile’s markets and currency.

The peso currency strengthened early on Friday to under 800 per dollar for the first time since November.

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“A part of the political risk hindering the Chilean peso since October 2019 has receded,” said Jorge Selaive, chief economist at Scotiabank Chile, adding the market had expected a moderate candidate to lead the economic portfolio.

Chile, a global frontrunner in vaccine roll-out, ended last year as the world’s best-performing economy, buoyed by large state spending and several rounds of private pensions withdrawals to ease the impact of the COVID-19 pandemic.

Boric, who comes into office on March 11, will however have to content with signs of an overheating economy and inflation.

“One of Boric’s biggest challenges will be cooling down the economy and retaining popular support,” Oxford Economics said in a report, adding the young leader would face pressure to increase social spending while meeting tighter budget targets.

During the campaign, Boric pledge to “bury” Chile’s market-orientated model, which has driven growth in the South American country in recent decades but has also deepened inequality, triggering months of social protests at the end of 2019.

He has promised to reform the private pension and health systems and raise taxes to finance greater social spending.

Boric, however, faces a fragmented Congress, which analysts say will force him to moderate the adjustments he makes and seek consensus with more centrist sectors.

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Reporting by Fabián Andrés Cambero; Editing by Sandra Maler and Chizu Nomiyama

Our Standards: The Thomson Reuters Trust Principles.


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