Chile is the only investment-grade country to be upgraded by Moody’s since the financial crisis began almost two years ago. The ratings agency also boosted the foreign currency ratings of four major Chilean banks.
There are two reasons why Chile’s economy, while not exactly vibrant at the moment, has caught the eye of Moody’s and a growing throng of investors. The first is the nation’s rich copper reserves. And the second is Chilean Finance Minister Andres Velasco, who had the foresight, long before this crisis ever started, to set aside $48.6 billion – more than 30% of the nation’s gross domestic product (GDP) – that is now being used for tax cuts, subsidies and other government programs.
Velasco, who was one of the most-hated men in Chile as he squirreled away the country’s huge copper profit in the last boom cycle, is now President Michelle Bachelet’s most popular minister, Bloomberg News reported.
Chile: The One Country That Was Prepared for the Financial Crisis
It makes you sit up and take notice when you see a Latin American political leader rebuking a British one for financial irresponsibility, but in this case, Bachelet was completely justified. Great Britain, even more so than the United States, was running big budget deficits well before the crash hit.
Meanwhile, Chile prepared for a downturn far better than either Britain or the United States, and is in a correspondingly better position now.