Former Central Bank chief warns of "absurd things" in Chile's new constitution

The former president of Chile’s Central Bank, José de Gregorio, warned on Monday that “absurd things” are being considered by the Andean nation’s Constitutional Convention and urged the body to improve its “connection to the citizenry.”  

In an interview with El Diario de Cooperativa, the Massachusetts Institute of Technology trained economist noted,“if there is one thing that’s failing in the Convention, it’s the body’s connection to the citizenry,” adding that there is no transparency and that “fake news” is rampant.

“Often the absurd things we hear about do not have two thirds support. I am concerned that such things are being proposed, because I believe it means we are not allocating are time well and actually discussing viable measures,” he added.

De Gregorio asserted that he supports constitutional reform project as he believes “in a new Constitution for all,” but warned that it should be a “good Constitution.”

Elections for the members of the Constitutional Convention were held in Chile between May 15 and 16, 2021 after 78% of voters decided that the country needed a new Constitution during the 2020 national plebiscite.

Markets have since reacted to the danger of a constitutional assembly that is dominated by leftist and independent representatives who have pledged to erase all remaining vestiges of Chile’s free-market economic model, which was introduced during the military government of General Augusto Pinochet, Reuters reported. 

The model, designed by University of Chicago trained economists, was once lauded for its rapid growth rate and the speedy eradication of poverty and is widely considered to have brought about Chile’s “economic miracle.”

Chile’s left-wing president-elect, Gabriel Boric, however, has promised to enact further reforms — saying he will focus on strengthening environmental protections and indigenous rights. He has also promised to dismantle Chile's prolific private pension system. 

"While Boric has taken pains to stress that his economic model will not be a radical one, it's clear that the market-friendly policies are likely a thing of the past,” Win Thin, global head of currency strategy at Brown Brothers Harriman in New York, told Reuters.

"Along with the planned re-writing of its Constitution, Chile is moving on to a new path with an unknown destination. The wide margin of victory may give Boric more confidence to push a more left-wing agenda but only time will tell. Markets hate uncertainty and Chile is offering years of it," he added.