EVOLUTION OF FINANCIAL DECENTRALIZATION IN RECENT DECADES IN CHILE

Abstract

Subnational governments in Chile are comprised of 361 institutions (16 Regional Governments and 345 Municipalities). Within the last decades, important advances have been made, gradually, in terms of fiscal decentralization, standing out for Regional Governments the creation of the National Fund for Regional Development (FNDR - Fondo Nacional de Desarrollo Regional) and more recently, and possibly the most relevant, related to Nº21.073 determining the creation of a Regional Governor elected since 2021 through citizen vote. As a final point, 2022 budget law contains important changes concerning the Regional Government budgetary structure and flexibility, introducing changes in regional budgets coherent with their new context. Financial decentralization is a gradual process and, in Chilean case, advances have been made, remaining a long way to go. The next step, in the medium term, will certainly be deepening the shift of powers that has already began and regional taxes, possibly starting with green taxes. In this regard, international evidence demonstrates each country must adapt to its own history.