Chile careens toward polarised Kast-Boric presidential run-off

Conservative Chilean presidential candidate José Antonio Kast and leftist rival Gabriel Boric appear set to square off in a run-off next month, setting the stage for a hyper-polarised vote. 

With 30 percent of ballots counted, Kast had 29.1 percent of the vote followed by Boric with 23.8 percent, according to data from electoral body Servel. Chileans would return to the polls on December 19 for the second round.

At stake is the future of Chile’s investor-friendly economic model that has sustained rapid growth, but left many people behind.

Kast, 55, pledges lower corporate taxes, the preservation of pro-market rules and campaigned on a law and order, family values platform. Boric, a 35-year-old former student leader, wants to raise levies for companies, overhaul the pension system and boost social welfare benefits. 

The outcome of the third, fourth and fifth place candidates may hold keys to how a run-off would play out. Franco Parisi of the People’s Party has 13.7 percent, Yasna Provoste of the centre-left has 12.8 percent while Sebastián Sichel of the centre-right has 11.8 percent.

Parisi, a celebrity economist living in Alabama who hasn’t campaigned in Chile, could play the role of kingmaker. 

Chile, which has long been among the most prosperous and predictable democracies in Latin America, has been rocked by social and political volatility since violent street protests broke out in October 2019. The unrest led the government to approve a referendum to rewrite the constitution which passed by a wide margin. The text will be drafted and put to a vote next year.

Markets have also been whiplashed with investors worried about the future of economic policies and the new charter. Chileans have pulled US$49 billion out of private pensions in the past two years to soften the blow of the pandemic, putting pressure on local capital markets. The peso has lost 14 percent of its value this year, the worst currency in emerging markets after Turkey and Argentina.

The country still holds an investment grade rating and has among the lowest borrowing costs in the region.