Programme and performance budgeting in Chile

2. Budgeting in Chile: Strengths and challenges

Chile has developed a robust budgeting system that has been instrumental in maintaining fiscal sustainability and supporting economic growth, as has been well-noted in previous OECD work with Chile (Vammalle and Ruiz Rivadeneira, 2017[8]; Hawkesworth, Huerta Melchor and Robinson, 2013[9]; Beazley and Ruiz Rivadeneira, 2021[10]). The budgeting process is clearly defined in key legal documents, with well-established roles for various stakeholders. Recent improvements have enhanced the presentation and communication of the budget to both the public and Congress, increasing transparency and visibility.

However, despite these strengths, the budget process faces persistent challenges. It remains highly technical and detailed, with numerous annotations (hereafter glosas) and a complex structure that makes it difficult to clearly link expenditures to performance indicators.

2.1. Budgetary framework and process

Chile’s budget process is well-structured and follows a strong top-down approach, which ensures clear delineation of roles among stakeholders and facilitates overall quality control of the budget proposal. At the centre of this process is the Directorate of Budgets (DIPRES), which plays a pivotal role in public financial management. DIPRES is responsible for overseeing the allocation of state financial resources, regulating and guiding the formulation of the national budget, preparing expenditure ceilings and draft proposals, and monitoring and evaluating budget execution.

The Chilean budget process is grounded in high-level legal frameworks. The fundamental principles of the process are enshrined in the Political Constitution of Chile, which establishes approval deadlines and defines the powers of Congress in the budgetary process. According to Article 67, the President retains control over the budget.

Congress is restricted from increasing or reducing government’s revenue estimate. It cannot increase expenditure, but it can reduce expenditures levels in certain budgetary programmes. Additional provisions are detailed in Decree Law 1263 of 1975, which outlines the roles and functions of key actors, particularly DIPRES. The law also regulates approval procedures, establishes guiding principles for all institutions, and mandates mechanisms to control and evaluate the budget through the development of an information system and standardised reporting rules.

The budget timeline is structured into four main phases: exploration (March to April), formulation (May to September), legislative discussion and approval (October to November), execution (calendar year), and evaluation (February to March) (see Table 1).

Table 1. Budget cycle in Chile

Month	Action
February-March	Evaluation phase
March-April	Formulation phase	Budget preparation phase and Exploratory Budget
May		Formulation instructions and budgetary framework are sent to the services. Services prepare proposals.
June		Discussion of budget proposals by technical committees.
July		Review of priorities. Considering of performance information (monitoring and programme evaluation). Formulation of the draft budget proposal and financial programme.
August-September		DIPRES prepares the final budget proposal. Review of glosas.
September		Analysis of the final proposal with the President of the Republic and delivery of the draft Budget Bill to line ministries (second and third week of the month). Closure and final adjustments of the budget (last week of the month). Submission of the Budget Bill to the National Congress no later than the 30th
October - November	Legislative discussion

Source: DIPRES

The process begins with DIPRES reviewing the performance and evaluations of the previous year’s budget, updating baselines, and setting new ceilings and allocations. The formulation phase also involves consultations with line ministries, during which past performance and proposed allocations are discussed. Once these adjustments are finalised, the budget bill is submitted to Congress by 30 September.

Once the budget bill reaches Congress, its ability to modify the bill is highly restricted. While Congress can reduce expenditures, it cannot propose specific adjustments to programmes or items. Instead, Congress may add glosas - annotations requesting additional information and evaluations related to specific spending areas.

Congressional oversight is primarily exercised through budget annotations rather than substantive modifications. This contrasts with practices in many OECD countries, where legislative bodies play a more significant role in shaping the budgetary process.

2.2. Current budget structure in Chile

The budget law in Chile is structured into spending entities, chapters, and programmes. For example, the 2024 budget law was divided into 32 portfolios or spending entities (partidas), 244 chapters (capítulos), and 398 programmes (programas). The number of chapters and programmes has remained relatively stable over time. Each programme includes sections for revenues and expenditures, with detailed line items specifying the type of revenue or expenditure, resulting in a highly detailed budget.

The Chilean budget is quite granular, containing over 4 000 line-item appropriations. It also includes a substantial number of glosas for programmes and sometimes specific budget lines. For the 2024 budget bill alone, there were 2 736 glosas (Officina de Información, Análisis y Asesoría Presupuestaria Senado de Chile, 2024[11]).

Box 5. Glosas in Chile

In Chile, glosas presupuestarias (glosas) are not explicitly defined in the core financial legislation, despite their widespread use in the budgeting process. Instead, their interpretation and legal standing have been shaped by other institutions:

• The Constitutional Court defines glosas as the most detailed expression of legislative intent in the Budget Law, offering clarifications, directives, or limits on approved spending. They are legally binding and subject to constitutional review.

• The Comptroller General of the Republic (external audit body) confirms that glosas, by virtue of their inclusion in the Budget Law, have the force of law during its validity.

• The Ministerial Advisory Commission on Public Expenditure, created by the Ministry of Finance to provide expert advice on public spending, further describes glosas as clauses regulating or detailing the scope of specific budget expenditures.

Source: (Officina de Información, Análisis y Asesoría Presupuestaria Senado de Chile, 2024[11]; OECD, 2025[12])

While glosas have a clear legal status and serve the main purpose of limiting and specifying expenses, they have posed certain challenges for budget execution over time. These annotations have led to execution inconsistencies, many of which are identified retrospectively by the Comptroller General of the Republic of Chile. Currently, they lack a clear definition or purpose, serving mainly to cap specific expenditures and provide information. Additionally, Congress often uses them as vehicles to pass legislation that is not directly related to the budget.

Despite some improvements in a few agencies, budget programmes in Chile are generally not structured around clear objectives, which makes it difficult to link funding to specific outcomes. Objectives are developed at the ministry and agency level through specific templates. While the budget is presented in programmes, these are primarily organised based on organisational criteria rather than expenditure objectives. Each ministry is represented as a partida composed of various chapters (capítulos), which correspond to the agencies within the ministry. Individual agencies manage their own programmes, which are largely based on historical arrangements that are hard to revise. Moreover, these programmes are not accompanied by statements outlining their objectives or intended outcomes, making it nearly impossible to understand the specific goals of individual budget programmes.

Efforts to create programmes with clearer objectives have started for certain expenditure areas. For example, in 2022, certain institutions restructured their budgetary programmes to better reflect direct and indirect costs (see Box 6). However, these restructuring efforts were modest and not systematic.

Box 6. Programme re-structuring in FOSIS, CORFO and the Ministry of Environment

Solidarity and Social Investment Fund - FOSIS

The Solidarity and Social Investment Fund (FOSIS) is a Chilean government agency tasked with addressing poverty and social vulnerability. It pursues this mission through strategies that promote social cohesion and build the skills and capacities of individuals, families, and communities, guided by a territorial and gender-sensitive approach.

In the 2021 National Budget, FOSIS operated under a single budgetary programme encompassing all expenditures, including personnel costs and transfers for specific initiatives such as the Entrepreneurship and Microfinance Programme, the Social Development Programme, the Employability Programme, and the Financial Education Programme.

In 2022, the FOSIS budget was restructured to more accurately reflect the organisation’s diverse activities and objectives. The revised structure comprises three separate programmes: one dedicated to administrative expenditures, and two aligned with strategic goals.

• Budgetary Programme 03 focuses on supporting self-employment through public programmes targeted at beneficiaries.

• Budgetary Programme 04 aims to strengthen social capital within communities by fostering local networks and collaboration.

Chilean Economic Development Agency - CORFO

The Chilean Economic Development Agency (CORFO) is a government entity dedicated to enhancing national competitiveness and promoting productive diversification through investment, innovation, and entrepreneurship. In 2023, to better reflect its growing emphasis on sustainable economic development, CORFO's budget was restructured into three distinct programmes. This included the creation of a new programme specifically focused on sustainability, consolidating resources allocated to this objective.

In a similar move, the Ministry of the Environment undertook a budgetary reform in 2025 to more clearly reflect the government’s actions on sustainable development. A new budgetary programme was established within the Vice Secretariat for the Environment, consolidating all current transfers related to sustainable development initiatives. These resources were previously distributed under the agency’s general operational programme, and their consolidation aims to improve transparency and alignment with policy priorities.

Source: Budget law 2021, Budget law 2022, Budget Law 2023, Budget law 2024, Budget law 2025, additional background interviews

2.3. Budget presentation and communication

The budget bill is a highly technical and complex document, containing numerous budget lines and detailed annotations. To support transparency and improve public understanding, the Budget Directorate (DIPRES) regularly produces a range of complementary materials. In addition to the full budget bill, available on the DIPRES website, users can access comprehensive background analyses used to estimate total revenues and expenditures, monthly budget execution reports (presented at various levels of aggregation), and performance-related data. To further enhance accessibility and improve the user experience, DIPRES has also developed shorter, more intuitive reports tailored to both Congress and the public (Box 7).

Box 7. Additional supporting documents to the budget

Together with the Budget Bill and the Instructions of the Budget, DIPRES provides several additional information to foster understanding from citizens and the Congress.

Prioridades Presupuestarias 2024 - un Chile que avanza

In 2023, DIPRES developed a brochure presenting the key objectives of the 2024 budget. The brochure summarises in 29 pages key data presenting how the budget has changed with respect to the previous year, highlighting some of the main regional investment projects and providing also synthetic information on how the budget process works more broadly. The document uses simple language and several graphics to facilitate understanding.

Variación de las asignaciones presupuestarias en 2024

Starting in 2023, DIPRES began producing a dedicated report explaining the main changes in budget allocations between the 2023 and 2024 budgets. This document provides insights into the reasons for these changes, linking them to findings from the Monitoring and Evaluation System. However, these variations are presented at the public programme level, rather than by budget programme, which can make it more difficult for users to trace changes directly within the budget structure.

Source: (Dirección de Presupuestos (DIPRES), 2023[13]; Dirección de Presupuestos (DIPRES), 2023[14])

DIPRES produces a range of key documents to promote transparency and improve communication around the budget. These efforts are essential for fostering a transparent budgetary process and encouraging informed citizen engagement. While recent improvements, such as simplified reports and visual summaries, have made the budget more accessible, the overall volume and technical nature of the information can still be overwhelming. As a result, it remains difficult for users to clearly understand the connection between budget allocations and supplementary performance data. Furthermore, the absence of a centralised dashboard or user-friendly digital platform - where indicators, funding levels, and programme outcomes can be easily explored - continues to pose a challenge for those seeking to navigate the information effectively.