S&P Affirms Chile’s ‘A’ Rating, Projects Mining and Energy to Drive 2027 Recovery Amid Slower Fiscal Repair

S&P Global Ratings reaffirmed Chile’s sovereign credit rating at ‘A’ with a stable outlook on September 25, 2026, maintaining the highest grade the agency assigns to any Latin American nation. The decision keeps Chile’s foreign-currency debt at ‘A’ and local-currency obligations at ‘A+’, both with stable perspectives. The rating follows a similar affirmation from Fitch Ratings the previous week, which held Chile at ‘A-‘ with a stable outlook, providing consistent signals on the country’s creditworthiness to international investors.

The agency projects Chile’s fiscal deficit will decline from 2.6% of GDP in 2025 to 1.4% in 2029, supported by the government’s consolidation process, anticipated economic growth in 2027, and favorable copper prices. However, S&P revised its debt trajectory upward, now forecasting net government debt will climb to 41% of GDP by 2029 from 36% in 2025, compared with 15% before the pandemic. Interest payments will represent 5.5% of government revenues during the 2026-2029 period. The agency attributed the slower-than-expected fiscal repair to revenue shortfalls and below-line items including housing sector loans and capitalization of state enterprises.

S&P highlighted the approval of Chile’s National Reconstruction Law as a positive development for investment climate. The legislation, passed despite the government lacking a congressional majority, accelerates environmental permits for major projects and reduces corporate tax rates gradually from 27% to 23%. The agency noted consensus around the need to streamline project approvals, particularly relevant for capital-intensive sectors where permitting delays affect investment timelines and costs.

Economic growth projections show Chile expanding 0.7% in 2026, affected by supply disruptions in mining, agriculture and fishing sectors linked to climate events and weak domestic demand. Growth is forecast to rebound to 2.9% in 2027 and average 2.5% between 2028 and 2029. The recovery will be underpinned by major mining and energy projects currently in development pipelines. S&P emphasized favorable long-term prospects for copper prices, driven by demand from renewable energy expansion, electric vehicle production, grid modernization and data center infrastructure for artificial intelligence applications.

The agency projects Chile’s current account deficit at 0.7% of GDP in 2026, widening to 2.0% by 2029 as imports rise with project execution. Foreign direct investment is expected to fully finance current account deficits, reducing net external debt to 76% of GDP in 2029 from 86% in 2025. Inflation is projected to converge to the central bank’s 3% target only in 2028, from 4.1% in August 2026.