Chilean Senate's President Isabel Allende (L) greets new Chilean President Michelle Bachelet as outgoing President Sebastian Pinera (R) looks on, during her inauguration ceremony.
Chilean Senate's President Isabel Allende (L) greets new Chilean President Michelle Bachelet as outgoing President Sebastian Pinera (R) looks on, during her inauguration ceremony.
Chilean Senate's President Isabel Allende (L) greets new Chilean President Michelle Bachelet as outgoing President Sebastian Pinera (R) looks on, during her inauguration ceremony.
Chilean Senate’s President Isabel Allende (L) greets new Chilean President Michelle Bachelet as outgoing President Sebastian Pinera (R) looks on, during her inauguration ceremony.

Michelle Bachelet was sworn in?Tuesday?as President of Chile, three months after winning a landslide election victory on pledges to provide free education for all.

She takes over from billionaire investor Sebastian Pinera, who oversaw economic growth averaging 5.7 per cent in Latin America’s wealthiest nation. Constitutionally banned from standing for consecutive terms, Bachelet previously governed from 2006 to 2010.

The former President won December’s election with the biggest majority since the end of Augusto Pinochet’s dictatorship in 1990 and holds a majority in both chambers of Congress. With a four-year mining boom coming to an end, she takes over an economy that is growing at its slowest pace since 2010 and with consumer prices rising at the fastest pace in almost two years.

“The economy is technically slowing down and normalising from an investment boom that lasted more than expected,” said Rodrigo Wagner, professor of economics at Tufts University and Universidad de Chile. “Now everything will depend on China?s behavior, the decisions of mining multinational companies and energy costs.”

Bachelet was sworn in by Isabel Allende, the daughter of former President Salvador Allende, who died in the military coup of 1973. Isabel Allende is now President of the Senate.

Bachelet’s father was imprisoned and tortured to death by the military regime, according to a report by the state forensic medical service. She later went into exile in Australia and then East Germany.

The new President has promised 15.1 billion dollars in extra spending after three years of protests over the quality of education pushed Pinera’s popularity to a record low. The spending will be financed by an increase in the corporate tax rate to 25 per cent from 20 per cent and the abolition of a 30- year incentive to reinvest profits that she says is being used to avoid taxes.

During her first term in office, Bachelet poured money into Chile’s sovereign wealth fund and then used the money to ease the impact of the global recession in 2008. She ended the period with an approval rating of 78 per cent, the highest of any President since the return of democracy, according to Santiago- based polling company CEP. Pinera is finishing his period in office with a 50 per cent rating.

Policy makers at the central bank forecast growth of 3.75 per cent to 4.75 per cent this year, while analysts surveyed by the bank put the figure at 3.7 per cent.

The Imacec index, a proxy for gross domestic product, rose 1.4 per cent in January from the year earlier, the slowest pace since the aftermath of an earthquake that devastated the center- south of the country in February 2010. Manufacturing output has declined on an annual basis in five of the past six months.

Still, the outgoing administration has forecast growth of 4.9 per cent for this year and blames the recent slowdown, at least partially, on Bachelet’s plans to raise taxes.

Since 1983, Chile has averaged economic growth of 5.2 per cent a year, raising income per capita to about 19,100 dollars, the highest in South America, according to the International Monetary Fund.

Tuesday?s ceremony was attended by the Presidents of Brazil, Paraguay, Uruguay, Argentina, Bolivia, Colombia and Mexico, and US Vice President Biden.

SOURCE:NANA AGYEMAN BOAMPONG

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