Chilean Congress Rejects Majority of 2026 Budget Proposal, Sparking Uncertainty

Congressional Committee Delivers Major Setback to Boric Administration

Santiago, Chile – The Chilean government's proposed 2026 national budget has faced a significant hurdle, with the joint special budget committee of the Senate and Chamber rejecting nearly all of its allocations. The committee, dominated by right-wing opposition, voted down approximately 90% of the budget items, a move described by government officials as 'serious' and unprecedented in recent history. This rejection occurred around October 29-30, 2025, following just two working sessions.

Reasons for Rejection and Government Response

The opposition cited a lack of consensus with the government, concerns over the transparency of fiscal figures, and insufficient information as primary reasons for their vote. Some parliamentarians also pushed for significant cuts to social spending. Minister of Finance Nicolás Grau expressed his disappointment, stating, 'It's not that they approved what they liked and rejected the rest: they simply rejected everything.' He called the outcome a 'bad result for the country' but affirmed the government's commitment to reaching an agreement. Government spokesperson Camila Vallejo echoed these sentiments, noting that the rejection 'generates tremendous uncertainty' regarding future public spending.

Budget Priorities and Next Steps

The 2026 budget, the last of President Gabriel Boric's administration, proposed a 1.7% annual increase in spending. Key areas of focus included:

• An increase of 900 billion pesos (approximately $936 million USD) for the health sector.
• Boosting the minimum monthly pension (Pensión Garantizada Universal - PGU) to 250,000 pesos for individuals over 75.
• Increased allocations for housing, caregiving, education, and public security.

The government emphasized its commitment to fiscal responsibility, aiming to eliminate the structural deficit by 2029. Following the committee's rejection, the budget initiative will now move to the Chamber of Deputies for debate, scheduled to begin on November 17, after the upcoming elections. It will then proceed to the Senate, with a maximum deadline of November 29 for Congress to finalize the project.

Calls for Dialogue Amidst Political Tensions

Despite the initial rejection, Minister Grau has indicated the government's willingness to engage in further technical discussions with the opposition to find common ground. The situation highlights ongoing political tensions as the country approaches a presidential election in November, with the budget debate becoming a focal point for differing fiscal approaches.