SANTIAGO: Chile’s government moved to head off a controversial pension bill that threatens to stoke inflation already running at the fastest pace in almost 14 years, presenting its own withdrawal proposals that would limit the impact on consumer spending.

       Finance Minister Mario Marcel said the government would submit a bill that would allow a withdrawal from pension savings for specific purposes, such as paying utility bills, alimonies, past-due mortgages and for a first home.

       The limited drawdown would prompt pension funds to sell assets for around US$3bil (RM13bil), about one fifth of those liquidated in previous withdrawals, Marcel said before the lower house.

       “This allows us to ensure that it won’t affect all Chileans by having an effect on inflation,” Marcel said in a conference in Santiago.

       He went on to recognise that “debts are a complicated issue in Chile and cause a lot of family distress.”

       Lawmakers were due to debate a rival legislation that would allow another round of early pension withdrawals, without any conditions on what people could spend the money on.

       The government has repeatedly said it opposes the bill because of the impact on inflation and that it plans to present a broader pension reform. The latest proposal is a recognition of the political cost of opposing drawdowns to a government that has been in office for just one month.

       Chile’s benchmark S&P IPSA stock index dropped 0.45% following the announcement, after rising as much as 0.4% earlier in the session. — Bloomberg