EXPLAINED | Migration, Inflation and Mining: Chile’s New President Boric Faces Full In-tray

New Chilean President Gabriel Boric, a 36-year-old from outside the political mainstream, has pledged to shake up the Andean country’s social fabric and its market-led economic model, although there are signs he has moderated since winning election last year.

The former student protest leader and lawmaker takes office on Friday with a majority female Cabinet. A mix of progressives and technocrat among his ministers has soothed some market fears about his presidency, but he faces real challenges ahead.

BALANCING THE ECONOMY

Boric will be under pressure to keep Chile’s economy, one the most stable in the region, humming even as he pushes ambitious tax reforms to finance his campaign pledges, including salary adjustments, pension overhaul and health system reform.

Having once promised to “bury” the country’s market-orientated model, his tax reforms aim to raise collection by five points of GDP in four years, with increases for companies and mining, fewer tax breaks, ‘green’ taxes and wealth levies.

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The former president of the Central Bank, Mario Marcel, the new finance minister, will lead the economic portfolio, something markets and investors have so far cheered.

It is a sign Boric will “balance both progressive and centrist policies, while also focusing on maintaining macroeconomic stability,” Moody’s said in a client note.

The government wants to raise the minimum wage to 500,000 pesos ($621), though Boric will have to “deal with an economy that will show signs of deceleration and high inflation” Scotiabank Chile chief economist Jorge Selaive told Reuters.

MINING AND ENVIRONMENT

Boric has pledged strong environmental regulations in the world’s largest copper producer and second largest lithium producer, in addition to hiking taxes and royalties, all plans likely to face strong push-back by the powerful industry.

Areas of focus will include water rights, a glacier law that could hit some mines, and climate change targets.

The president has also talked up plans to create a state lithium firm to break the monopoly of private companies such as SQM and Albemarle on production of the ultra-light “white gold” metal, a key component of electric vehicle batteries.

A DIVIDED CONGRESS

Boric will contend with a fragmented Congress, where his coalition lacks a majority in the lower Chamber of Deputies, and with the Senate split between right-left blocs.

The leftist president has sealed alliances with some center-left parties to broaden his support base needed to pass laws, but will faces a juggling act to hold together his broad coalition, which includes the country’s Communist Party.

IMMIGRATION, CRIME AND PROTEST

Boric’s interior minister, 36-year-old Izkia Siches, faces issues with immigration and crime, major voter concerns in the election that bolstered ultra-conservative candidate Jose Antonio Kast, eventually beaten in a run-off vote.

Anti-immigration protests have hit northern regions bordering Peru and Bolivia, while violence has broken out in recent years in the south between Mapuche indigenous groups and authorities over land claims.

NEW CONSTITUTION

Boric’s administration will oversee the country during the key final stages of an elected assembly drafting a new Constitution to replace the contentious market-led text dating back to the dictatorship of Augusto Pinochet.

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The draft text could include controversial proposals on private property, the nationalization of mining firms and doing away with the bicameral Congress.

The final text will face a nationwide referendum, likely in September, to approve or reject the new Constitution.

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