Chile reform defeat heralds mounting challenges

Significance

The intended reset was overshadowed by the March 8 defeat in Congress of a proposed tax reform, a key plank of his left-wing reform agenda. This followed another major defeat in September when a proposed new constitution, backed by the government, was rejected in a national referendum.

Impacts

• Boric’s approval rating has essentially fallen back to his core 26% support in the first round of the 2021 presidential election.
• Boric will now be governing with a cabinet well to the centre of the coalition with which he was initially elected.
• Although critical of the tax reform, local financial analysts have warned that its defeat will prolong medium-term uncertainty.
• The government seems likely to seek agreements on reforms that voters also perceive as progress, albeit more limited than initially hoped.