Chile Credit Rating Stays at A as S&P Warns Budget Repair Will Take Longer

CHILE · ECONOMY

S&P Global Ratings has kept the Chile credit rating at A, Chile’s Finance Ministry said on Friday 25 September. It is the highest grade the agency gives any Latin American country, but it came with a warning about the budget.

S&P, one of three big agencies that grade government debt, now expects Chile’s budget repair to take longer. Net public debt reaches 41% of annual economic output (GDP) by 2029 in its forecast, not the 37% plateau expected last year.

Central Santiago at dusk, with apartment blocks, a church bell tower and the Andes foothills behind. Chile’s capital is home to the Finance Ministry, which announced the S&P decision. (Photo: Álvaro Orozco, CC BY 3.0 via Wikimedia Commons)

What S&P decided

S&P affirmed Chile’s long-term foreign-currency rating at A and its local-currency rating at A+. The outlook on both stays stable, meaning the agency does not expect to change them soon.

The foreign-currency grade covers debt Chile owes in dollars and other currencies. Agencies often rate local-currency debt higher, because a government repays it in a currency it issues itself.

The Finance Ministry, led by Jorge Quiroz under President José Antonio Kast since March, announced the decision on Friday morning. Its statement stressed S&P’s view that the authorities have shown commitment to fiscal restraint.

S&P also cited the National Reconstruction Law, which the government passed without a majority in Congress, the ministry said. The law speeds up environmental approvals for large projects and cuts corporate tax gradually from 27% to 23%.

Quiroz had signalled good news was coming. On Monday he told coalition lawmakers that positive news from the agencies could arrive within weeks, the business daily Diario Financiero reported.

Why the repair is taking longer

S&P’s central point is that commitment has outrun results. Authorities have shown commitment to restraint, it said, but revenue has fallen short of forecasts and weak consolidation has added to debt.

The shift is clearest in S&P’s own forecasts. In October 2025 it expected net government debt to stabilise at about 37% of GDP between 2025 and 2028.

Now it sees net debt rising from 36% of GDP in 2025 to 41% in 2029, the Santiago daily La Tercera reported. Before the pandemic the figure was 15%.

Net debt is what the government owes minus the cash and financial assets it holds. It also rises when a government spends down savings, and Moody’s has said rebuilding Chile’s once-large reserves could support its rating.

S&P expects the general government deficit to narrow from 2.6% of GDP in 2025 to 1.4% in 2029. Interest payments will take about 5.5% of government revenue on average from 2026 to 2029, La Tercera reported.

The agency named two drags on that path: interest costs and the gradual cut in corporate tax. It expects growth, copper and spending adjustments to soften them, and called rebuilding buffers against future shocks important.

The government’s own June decree already accepted a slower path, as reported in Chile Drops Its Balanced-Budget Pledge in New Fiscal Decree.

It targets a structural deficit of 2.6% of GDP this year, falling to 1.5% in 2030. That measure strips out swings in the economy and in copper prices.

Copper and growth carry the case

Copper is Chile’s largest export, and S&P leans on it heavily. The agency expects favourable prices, citing demand from renewable energy, electric vehicles and the data centres behind artificial intelligence.

S&P expects only a gradual rise in copper output, limited by falling ore grades and recent disruptions. It said permit delays have also held back projects in recent years.

For growth, S&P forecasts just 0.7% this year and 2.9% in 2027, as this year’s disruptions fade. It sees unemployment at 9% this year and 8.7% next year.

Record copper prices have already shaped the government’s spending plans, as covered in Record Copper Prices Reshape Chile’s 2027 Budget. S&P’s forecast relies on prices staying favourable.

How the three agencies line up

S&P’s decision came a week after Fitch Ratings affirmed Chile at A-, also stable, on Friday 18 September. Details are in Chile Keeps Its A- Rating From Fitch as Growth Forecast Falls to 0.7%.

Fitch cut its 2026 growth forecast to 0.7% from 1.6%. It also measures debt differently, counting gross general government debt.

Fitch sees that figure rising to 42.8% of GDP in 2026 and settling near 43%. The median for A-rated countries is 59%.

Chile’s own fiscal rule uses a third measure, gross central government debt, with a prudent ceiling of 45% of GDP. The three numbers are not interchangeable, but all point the same way: debt still edging up.

Moody’s Ratings rates Chile A2 with a stable outlook, the same level as S&P’s A. Its most recent periodic review, completed in October 2025, left the rating unchanged.

In April, Moody’s lead analyst for Chile, Kathrin Muehlbronner, said she saw no immediate change in the rating. She also said the corporate tax cut would need other savings or revenue to pay for it.

What an A grade means for a foreign reader

A sovereign rating is an opinion on how likely a government is to repay its debts in full and on time. Investors use it to decide how much interest to demand.

S&P’s scale runs from AAA at the top down to D for default. A is the sixth-highest grade, four steps above BBB-, the last grade before debt is classed as speculative, or junk.

Many pension funds and insurers may only hold investment-grade bonds. Staying well above that line keeps Chile’s pool of buyers wide and its borrowing costs lower than its neighbours’.

For scale, S&P rates the United States AA+ and Britain AA, four and three steps above the Chile credit rating. Lithuania and Latvia share Chile’s A grade.

In Latin America, Uruguay is next at BBB+, two steps lower. Mexico is BBB, Peru BBB-, and Brazil and Colombia sit in junk territory.

Chile has been higher. S&P rated it AA- from 2013 to 2017, S&P director Constanza Pérez Aquino has said, before rising debt contributed to downgrades.

What comes next

The next test for the Chile credit rating is the 2027 budget bill, due in Congress by Wednesday 30 September. Pérez Aquino said this month S&P would watch where it sets the bar on spending.

That is a live tension. Quiroz said this month that public finances were more under control and the government may use spending to revive a stalled economy.

The decision does not mean Chile’s finances are fixed, and it is not an upgrade. S&P’s own forecast has debt rising for four more years, and growth this year below 1%.

Nor is it a warning of a downgrade. A stable outlook means S&P sees a rating change as unlikely over the next year or two.

Frequently Asked Questions

What is the Chile credit rating now?

S&P Global Ratings rates Chile A for foreign-currency debt and A+ for local-currency debt, both with a stable outlook. Moody’s rates it A2, the equivalent of A, and Fitch rates it one step lower at A-, also stable.

Why does S&P say Chile’s budget repair will take longer?

Tax revenue has come in below forecast for several years and deficits have added to debt. S&P now expects net government debt to reach 41% of GDP by 2029, against about 37% in last year’s forecast.

Does the decision change what Chile pays to borrow?

Not immediately, because an unchanged rating mostly confirms what bond investors already expected. It keeps Chile four steps above junk, supporting demand for its bonds and lower borrowing costs than most of the region.

How does Chile’s rating compare with the US and UK?

S&P rates the United States AA+ and Britain AA, four and three steps above Chile’s A. Within Latin America, Chile has S&P’s highest grade, two steps above Uruguay at BBB+.

Sources: S&P Global Ratings, research update on Chile, as published by Chile’s Finance Ministry and reported by La Tercera and Emol, 25 September 2026; S&P and Moody’s reviews of Chile, Finance Ministry, October 2025; Fitch Ratings, affirmation of Chile, 18 September 2026; Moody’s Ratings, remarks by Kathrin Muehlbronner, Diario Financiero, April 2026; Diario Financiero, 15 and 23 September 2026; Chile Decree of Fiscal Policy, June 2026; Central Bank of Chile and S&P sovereign rating tables.

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