Chilean president-elect Michelle Bachelet promised major tax and education reforms to help ease the nation’s social divisions after she swept back to power with a huge majority in elections on Sunday.
Bachelet won with about 62 percent support, the highest share of votes for any presidential candidate since the country returned to holding democratic elections in 1989. The landslide victory against Evelyn Matthei, the conservative candidate of the Alianza coalition, puts Bachelet back in the Moneda presidential palace after a four-year gap and gives her a mandate to push for an education overhaul and the fiscal reforms to help pay for it.
“Chile has looked at itself, has looked at its path, its recent history, its wounds, its feats, its unfinished business, and this Chile has decided it is the time to start deep transformations,” Bachelet told a jubilant crowd of supporters on Sunday night as confetti rained down. “There is no question about it: Profits can’t be the motor behind education because education isn’t merchandise and because dreams aren’t a consumer good.”
In Chile, high-quality schooling is generally only available to those who can pay, and massive student protests — which sometimes turned violent — hurt the popularity of outgoing conservative President Sebastian Pinera. Bachelet ran on a platform of social policies to address a deep divide between rich and poor.
Chile, the world’s top copper exporter, is ranked the most unequal country in the 34-member Organisation for Economic Co-operation and Development.
“She will govern a country with profound demands for change,” Chilean Senator Ricardo Lagos Weber of Bachelet’s New Majority coalition said. “The country isn’t flat on its back, it is healthy, organized, growing economically, creating jobs and improving salaries, but it is also deeply unequal.”
However, slower growth may make increased public spending tricky, while the opposition could block reforms in a divided Congress. And if Bachelet waters down her promises, she may face more protests.
“Bachelet has promised a lot and expectations are high, while the [economic] situation isn’t as favorable as it was in recent years,” said Patricio Navia, a political scientist and professor at New York University.
After expanding 5.6 percent last year, Chile’s economy is seen ending the year with 4.2 percent growth and hitting between 3.75 percent and 4.75 percent next year.
Shortly after Bachelet’s victory on Sunday, hackers posted a message on the education ministry’s Web site, saying: “Mrs. President, we will take it upon ourselves to make things difficult for you. Next year will be a time of protests.”
Bachelet plans to reduce the effective fiscal deficit from roughly 1 percent of GDP to zero by 2018. A slowdown may make that target tough to hit. Moreover, the US Federal Reserve is expected to announce a pullback of its bond-buying program sometime soon, with some investors betting this could happen as early as this week. The program has supported riskier assets such as commodities and equities.
A tapering of the rate of purchases may heighten global volatility and borrowing costs for Chile and other Latin American states.