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Chile’s Congress Rejects Rival Duelling Pension Withdrawal Bills

 In a marathon voting session to restructure Chile's political system, the lower house rejected two proposals for the early withdrawal of pension funds. President Gabriel Boric is juggling between inflation and populist demands.

Chile’s Congress blocked the rival bill as it did not receive the simple majority needed to continue in a late-night vote on Monday. Lawmakers were due to debate rival legislation that would allow another round of early pension withdrawals. However, Congress thinks the bill could threaten to stoke inflation, which is already running at the fastest pace in 14 years. 

While the rejection of the bill prevented another blow to the country’s private pension system, it is likely to hit the government’s popularity. The government has repeatedly said it opposes the bill because of the impact on inflation. Finance Minister Mario Marcel also said the bill would worsen spiraling inflation. Chile reported its highest monthly inflation rate in March, 1.9 percent since 1993. 

Reportedly, three prior rounds of withdrawals injected a whopping $50 billion into the economy, causing the propel inflation to the highest since 2008. Chile’s government has used early pension withdrawals to help citizens deal with the economic fallout of the Covid-19 pandemic. The government approved three withdrawals of 10 percent since June 2020 and rejected a fourth in December.

Boric’s approval ratings have slumped because of surging inflation and the process of drafting a new constitution. The assembly has been working on a new draft constitution that will go to a referendum on September 4. Chile’s constituent assembly has begun debating motions for a new constitution in February. The new constitution will replace the dictatorship of Augusto Pinochet. 

After winning the election in December, Boric promised to end the private pension system of the country. During last December’s presidential election in Chile, Boric won at the polls with historic popular support.

Chile’s Congress Rejects Rival Duelling Pension Withdrawal Bills


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