Per Stratfor:
Despite Chile's vulnerability to boom-and-bust cycles, a key factor in its recent stability is its commitment to fiscal responsibility. The Chilean government's resistance to potentially destabilizing moves — particularly those prioritizing major increases in public spending — is enforced by Chilean law. This has not always been the case. As in other Latin American countries, Chile's governments in the 1960s encouraged fiscal deficits, and the efforts to finance those deficits led to high inflation. Chile's economic stability was secured by a fiscal rule instituted in 2000, and later enshrined in law, mandating that the government must attempt each year to secure a structural surplus equal to 1 percent of the gross domestic product.
That requirement significantly curtails the government's capacity to boost populist spending because it must save money in an effort to reach the target. The surplus can then be used to bolster the country's public finances during lean times. It is unlikely that future governments will undo the fiscal rule to, for example, boost public spending. Without a majority in Chile's National Congress, any political party would find changing the law a challenge.
