Chile to spend $2.5 bln on post-quake home rebuild

06.04.2010 By: Transfer based on New York Times

Chile's government will spend over $2.5 billion to rebuild hundreds of thousands of homes destroyed or damaged by the massive earthquake on February 27, President Sebastian Pinera said on Monday. The program includes subsidies for homes totally or partially damaged by the quake and ensuing tsunamis, which killed hundreds of people, wrecked roads and towns and pummelled the forestry, fishing and fruit industries in south-central Chile. 

The quake damage is seen shaving around 1.5 percentage points off potential 2010 growth. New Finance Minister Felipe Larrain has estimated the economy will grow under 5 percent in 2010 in the wake of the disaster, but maintains his forecast for 6 percent average annual growth over President Sebastian Pinera´s term.

The government has said it will use a mix of sources of financing, including issuing government debt, using copper boom savings held in a sovereign wealth fund, and is planning a "moderate" tax adjustment. Chile is one of the emerging world's most stable economies, with an A+ credit rating, and heavy post-quake spending and expanded fiscal deficit is not seen denting its allure for investors.