President of the BC faced questions from senators De Urresti (PS) and Huenchumilla (DC), but defended his role: “We refer only to economic issues, we are not political actors.”
One of the most extensive expositions before Congress to explain the scope of the AFP withdrawals – this time of the fourth – was made yesterday by the president of the Central Bank, Mario Marcel. For more than two hours, he warned before the Senate Constitution commission about its negative effects and assured that the measures deployed by the issuing entity to mitigate its impacts will not have the effectiveness of the first three.
The economist pointed out to the parliamentarians that the “benefits” of a new retirement are being reduced, insofar as they are concentrated in affiliates with higher balances, which increasingly correspond to the 20% with the highest income. Thus, he specified, the Treasury will lose US $ 700 million in collection due to the tax exemption that the project currently considers.
In parallel, financial costs rise and this puts pressure on inflation and “increases the risk of disruptions in the financial market.”
In Marcel’s opinion, “the economic cost of withdrawals is no longer a hypothesis or warning, to have a concrete effect” that can already be observed in variables such as the CPI, interest rates and the exchange rate, which As a whole, it will affect the evolution of the economy and the well-being of the population in the coming years.
Impact on a dividend
The president of the BC illustrated the impact of the withdrawals with an example. Thus, he pointed out that the rise in interest rates and higher inflation will lead to the dividend of a mortgage loan of UF 2000 increasing from $ 380,400 to $ 470,767. That is, he explained, “it becomes more expensive in three years by 24% due to an increase of two points in inflation. The higher interests are equivalent to about $ 12 million, which translates into 19% more to be paid for the total. of credit “.
Marcel mentioned that a year ago there has also been a greater outflow of capital from companies, households and people who have been opening accounts in dollars, in addition to an international deterioration of financial conditions in Chile since the third retirement of pension savings.
But Marcel’s alerts did not penetrate the opposition senators and, after his presentation, he faced criticism of the role of the Central in the midst of the withdrawals by Alfonso de Urresti (PS) and Francisco Huenchumilla (DC).
The first pointed out that he exposed only the negative effects: “His is a technical vision, but I legislate for the citizens who are on the street. You do not consider the reality of specific people,” he said, and he was confronted with the profits and the dividend distribution observed among large companies.
In turn, Huenchumilla reminded him that he was also Director of Budgets in past governments: “You, the economists of the former Concertation, adored the virgin with the clenched fist, not spending, and now you are tearing clothes because we are putting money into the GDP. ¿ They see that money could be put into the economy and the country did not collapse? “.
Marcel replied that the withdrawal of funds “is not the only source of all the evils that affect the country, but they invited us to talk about the fourth withdrawal, not the evils that afflict the country or the role of the Concertación.” .
He added that as the Central Bank “we refer to economic issues, we are not political actors” and, incidentally, he urged them to take into account that – if the norm prospers – rates and inflation will increase for 18 million people and retirement it is for six million.
That is the question that must be answered, “that is the part of people’s reality, not only those who are going to withdraw, but also those who are not,” said Marcel.
Before the senators’ consultation, he reported that he has not made any withdrawals and does not plan to do so, because – he said – he believes in the social security system, regardless of the model: “For me, it is the essence of social security to quote in my active life for my passive life, regardless of whether there is AFP or not “.
“He had the right”
In turn, the Minister of Finance, Rodrigo Cerda, reiterated that he made his first withdrawal effective “because he had the right to do so.”
On the point, he added that today he is against a fourth withdrawal because the economic conditions of the country are different from what was the first.