Since President Boric tapped him to be Finance Minister in January, Mario Marcel has already faced numerous challenges, from the economic turmoil caused by the Russian invasion of Ukraine to rising inflation. He will also have to find viable ways to uphold Boric’s campaign trail promises to reform Chile’s market-led economic model. Unlike some on Boric’s team, he is highly trusted by investors and experts and has demonstrated a pragmatic and fiscally responsible approach throughout his career.
Mario Marcel, President Gabriel Boric’s pick for Finance Minister, has had an extensive career in financial governance before joining the government. He was Executive Director for Chile and Ecuador of the Inter-American Development Bank (IDB) in the late 1990s, before becoming Director of the Budget Directorate of the Chilean Finance Ministry, then returning to the IDB as Manager of Institutional Capacity and Finance Sector a few years later. He was chosen as Deputy Director for Governance and Territorial Development of the OECD in 2011, where he worked for three years before becoming Senior Director of Governance Global Practice of the World Bank.
He was also part of the Presidential Advisory Committee on Pension Reform during the first Bachelet administration, which contributed to the creation of the solidarity pillar for those without savings or only minimal pensions.
During his mandate as director of Good Governance Global Practice from 2014 to 2016 and then Head of Chile’s Central bank between 2016 and 2022, Marcel worked to rebuild investors’ trust throughout the 2019-2020 social crisis, as the Chilean peso came under severe pressure on foreign exchange markets. He also dealt with the economic challenges posed by the pandemic by unveiling two asset purchase programs totalling US$16 billion, which helped mitigate banks’ exposure to these new risks. He was part of the process of modernization of the Bank, bringing it into a new era where issues such as the environment and gender equity are now key considerations in formulating financial policies.
President Boric then selected him as Finance Minister on Jan. 21, 2022, a choice that many hailed as wise, given Marcel’s reputation for fiscal responsibility. The fact that he is not afraid to go against the majority in instances such as the last pension withdrawal, where he denounced its adverse financial effects in Congress, is also appreciated.
A trusted figure in Chilean finance
Marcel has already earned the confidence of most of the Chilean economic world, as well as that of international investors. This was proven when markets reacted positively to the announcement of his nomination, as the peso rose to just under 800 per US dollar for the first time since November 2021. Many investors believe that Marcel will not be one to act in any rash or unsustainable ways and that he will remain pragmatic throughout instances of turbulence. “It’s all linked to a much more centrist, more pragmatic shift in terms of what Boric wants to do in his government,” Miguel Angel Lopez, a public affairs professor at the University of Chile told Reuters.
His nomination shows a clear intention on the part of Boric to construct a pluralistic cabinet of individuals who may sometimes challenge his ideas and not just blindly agree with everything he says. Marcel’s many years of experience are also said to bring stability to a government which is largely composed of young people, some of whom have very little political experience thus far.
The interaction between the Finance Ministry and other offices in La Moneda will also be one to watch. The most left-leaning part of the government has already made it clear that it intends to push for social change and more government spending, which could put certain financial concerns on the back-burner. Marcel’s challenge will therefore be to make sure the government’s promises to the people are fulfilled, while also ensuring that the Chilean economy remains healthy and stable after a tumultuous couple of years.
Marcel’s main objectives
Marcel’s main priorities during his current mandate are maintaining a stable fiscal policy with an estimated expansion of between 1.5 and 2.5 percent of GDP in the next year and a potential decline in consumption and investment compared to 2021. He will also be facing growing inflation, as well as erratic gas prices caused by Russia’s invasion of Ukraine.
The goal will be to reduce existing imbalances and inequalities without disrupting an already overheated economy. The aim to reduce the structural deficit of 3.9 percent of GDP projected for 2022 will also imply adjusting to the 2022 Budget accordingly.
He will also have to make economically feasible some of Boric’s campaign promises such as eliminating the Credit with State Guarantee (CAE), reducing the work week to 40 hours, and raising the minimum wage.
The government has also recently unveiled its new Chile Apoya economic support plan to help Chileans face the economic hardships as a result of the pandemic. A budget of US$1.34 billion was allocated for the plan and will be split somewhat evenly between three pillars: contributions to households, support to small businesses, and measures supporting job creation and lagging sectors. Marcel’s Ministry will have to ensure that the plan is implemented reasonably and efficiently in order to reach all levels of Chilean society, especially the most disadvantaged.
Stephanie Iancu just graduated with a bachelor’s degree in International Relations and she is aiming to go on and earn a postgraduate degree in Journalism. Her main areas of interest are politics, women’s rights, human rights and culture. She is currently taking a gap year and staying in New York while interning at Chile Today.