Chile’s incoming administration, led by President-elect José Antonio Kast, is signaling a sharp shift towards fiscal austerity, instructing incoming ministers to reduce departmental spending by a minimum of 15% compared to the current administration of President Gabriel Boric. The directive, outlined in a circular titled “Guidelines for the Formation of Cabinets,” aims to rationalize government structures and align them with a new constitutional framework governing public sector salaries.
The mandate, communicated this week to designated ministers and state secretaries, requires a reduction in total ministerial spending – encompassing both the minister’s office and associated undersecretariats. While precise budgetary flexibility remains unclear pending detailed transfer meetings, the 15% cut serves as a floor, with the circular explicitly encouraging even greater reductions given the country’s “tight fiscal situation.”
The initiative extends beyond broad budgetary constraints to encompass personnel costs and staffing levels. Ministers are instructed to request the resignation of current advisors as of , the date Kast assumes office. This directive is coupled with a review of existing “critical functions” – additional assignments and benefits granted to government employees deemed essential – with the potential for reassignment or elimination.
The emphasis on austerity is framed as a response to the new remuneration system established under Article 38 bis of the Constitution, which aims to standardize public sector compensation. The incoming administration intends to adapt cabinet structures to this new regulatory landscape and streamline staffing levels. Sources within Kast’s team have emphasized that frugality is a top priority, with instructions to minimize expenses across all departments.
Specific guidelines address the compensation of cabinet chiefs, stipulating that their salaries cannot exceed that of a subsecretary. The circular also establishes salary ranges for cabinet teams based on educational attainment and years of experience, providing a tiered structure for remuneration. A detailed table outlining these ranges is included in the document.
The directive requires ministers to submit a report detailing their proposed advisor teams in an Excel format before , with a follow-up report due between March and April. Any advisors deemed to be fulfilling “critical functions” will require authorization from the Directorate of the Budget (Dipres), and these assignments are subject to review and potential elimination if not deemed sufficiently justified.
The move signals a significant departure from the policies of the Boric administration and reflects Kast’s commitment to fiscal discipline. The 15% spending reduction, while a minimum target, could have a substantial impact on the scope and operations of various government ministries. The focus on advisor positions and critical function allowances suggests a particular emphasis on controlling personnel costs and eliminating perceived redundancies.
The timing of these instructions, less than a month before the change of government, underscores the urgency with which Kast’s team is approaching the task of restructuring the public sector. The upcoming transfer meetings will be crucial in quantifying the available resources and finalizing budgetary allocations. The incoming administration’s commitment to austerity is likely to shape the policy agenda and budgetary priorities for the coming years.
The circular also addresses the importance of justifying any continued assignment of critical function allowances, noting that the Dipres retains the authority to review and eliminate these payments if they are not deemed essential. This oversight mechanism reinforces the administration’s commitment to fiscal responsibility and efficient resource allocation.
