SANTIAGO, (Reuters) – The Chilean government sent a bill to Congress yesterday to double the size of a fund that helps cushion fuel price spikes to $1.5 billion, after oil prices rose sharply due to the Russian invasion of Ukraine.
Finance Minister Mario Marcel said the proposal was submitted to be discussed immediately in Chile’s lower chamber of deputies.
The South American nation produces very little oil, which leaves it highly exposed to international price fluctuations.
Marcel said that the Fuel Price Stabilization Mechanism (MEPCO), which limits weekly price increases despite movements in international fuel prices, was running low on funds.
“If these resources are not expanded, fuel prices would have to rise significantly in the coming weeks,” Marcel told reporters.
“This is going to allow this stabilization mechanism to continue operating throughout the rest of the year.”
Marcel, who became finance minister on March 11, is also hoping to push through a tax reform bill in the first half of this year.
The new government, led by leftist Gabriel Boric, has promised to expand social programs but is dealing with a struggling economy, rising inflation and has pledged to balance reforms with fiscal caution.
