Is the debt of State-Owned Enterprises (SOEs) guaranteed by the State?
The State can only be the guarantor of SOEs within the margins established by Law N° 19,847, which empowers the President of the Republic to do so, setting a maximum amount for such guarantee, which amount is established annually in the Budget Law. In addition, Article 2 of the aforementioned law provides that in order to obtain such guarantee, the companies must previously enter into a programming agreement with the SEP.
This power granted to the President of the Republic originates in 2002, according to Law N° 19,874 which empowered the President of the Republic to grant state guarantee for a specific amount. Then, since 2011, the legislative practice has been to grant such authorization in the Budget Law of each year.