President José Antonio Kast won Chile's election on a promise to push growth to 4%.
His finance minister just walked that down to 2% for this year, with the Iran war and softer copper prices doing the damage. That leaves the math behind the 4% pitch a lot harder to defend.
The bill meant to close the gap is now headed to the toughest legislative test Kast has faced.
Jorge Quiroz, Kast's pick to run the Finance Ministry, told reporters this weekend that Chile's economy will likely grow just above 2% in 2026, below the 2.5% Chile posted in 2025.
The World Bank and IMF have both pegged 2.2% for this year, which lines up with Quiroz's view. The drag is coming from two places at once: higher fuel prices tied to the Middle East conflict, and US trade tensions weighing on copper exports.
Quiroz is still pointing at 4% as the longer-term goal by the end of Kast's term in 2030. The gap between 2% now and 4% later is what the government's new reform bill is supposed to close.
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Kast filed the Reconstruction and Development bill in Congress on April 22, anchoring his entire growth thesis on a sweeping tax cut.
The headline measure drops the corporate tax rate from 27% to 23% by 2029. The bill also cuts the small-business rate from 25% to 23% by 2030, opens a 12-month zero-VAT window on new home sales, and adds a payroll tax credit worth about $1.4 billion a year for the 235,000 small firms hiring low-income workers.
The government's case is that lower taxes restart private investment, which then loops back through more hiring and stronger growth. Critics, including a group of former Boric-era Treasury officials, say the numbers don't add up.
They estimate the reform would shrink state revenue by about $4.4 billion a year while widening Chile's structural deficit to roughly 4% of GDP. Kast's team says the gap will be closed by $6 billion in public spending cuts over 18 months.
Kast's center-right coalition is the largest single bloc in Congress, but it does not have the votes to pass the bill on its own.
That means Quiroz has to negotiate with centrist and moderate-left lawmakers on almost every clause, and the bundled-bill strategy is meant to make that easier. Kast's approval rating has not helped, falling to 33% in the latest Pulso Ciudadano poll from 59% at his March inauguration.
The first real test is the Chamber's Hacienda Committee vote on the corporate tax clause.
Beyond that, two numbers matter most for the bill's odds: copper prices and the next monthly growth print. If copper holds above $4.50 a pound and growth surprises to the upside, the 4% pitch keeps its legs.
If not, the 2% reality starts dictating the budget conversation instead.
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