Chile has trouble with a lot of money

TEXT OF STORY

Scott Jagow: The South American nation of Chile has a problem most countries would envy: It’s swimming in cash.

Chile is the world’s biggest copper supplier. Copper prices are skyrocketing, thanks to Chinese demand. Chile’s government has decided to sock that money away. But the country’s people aren’t too sure about that idea. From our America’s Desk at WLRN, Dan Grech reports.

Dan Grech: At its current rate, Chile will save $20 billion this year — a whopping 13 percent of GDP.

Dan Griswold: It’s a huge amount. It’s equivalent to $1.8 trillion here in the United States.

That’s Dan Griswold with the Cato Institute. He says Chile stands in stark contrast to Venezuela and its oil-fueled spending binge — and even to the U.S., which has a $9 trillion deficit.

Dan Griswold: This is an important test, I think, of Chile’s left of center government. That they can say no when so many Latin American countries have opened the spigots.

Chile’s frugal ways are meeting with heavy protests. Demonstrators demand more government spending to fix crumbling schools and to help the poor.

That’s helped drive President Michele Bachelet’s popularity down 25 percent. She’s responded by loosening the purse strings. The proposed 2008 budget ups spending on education, health and housing by 11 percent.

I’m Dan Grech for Marketplace.