know, chile was one of the first few countries to introduce a structural fiscal policy, which has been applied consistently over more than 15 years. as part of this policy, the government has been able to save during good times and currently has two sovereign wealth funds, totaling almost 10 % of gdp. figure 9 public sector balance ( percent of gdp ) latin america : 1995 - 2015 average ( * ) 1. 1 - 1. 5 - 2 - 0. 5 chile peru brazil colombia - 6 argentina - 3. 4 - 3. 1 mexico - 4 - 0. 9 chile - 2 0 - 4 - 3 - 3 - 6 - 6 - 6 effective 14 18 ( f ) structural ( * ) general government financial balance. ( f ) for 2017 to 2019, forecasts obtained from the 2016 public finances report. sources : moody ’ s and national budget department, ministry of finance of chile. 18. strength of our country is the fact that compared to earlier low - growth periods it has more liquid external funds available. at the same time, the financial sector is healthy and non - performing loans have diminished over time. reforms currently under discussion, particularly a new general banking law, aim to bolster resilience and improve banking capital adequacy ratios ( figure 10 ). figure 10 regulatory capital npl ( percent of risk - weighted assets ) ( percent of total loans ) latin america ( * ) chile ( * ) shows the region ’ s simple average. source : global financial stability report, imf. the medium - and long - term outlook 19. the chilean economy has endured a long period of slow growth, while its potential growth has dropped to a range between 2. 5 % and 3 %, i. e., less than estimated a decade ago ( 4 % to 5 % ). in principle, this change is explained by : ( a ) a smaller contribution of the accumulation of productive factors, inherent to a maturing economy ; ( b ) a drop in gross fixed capital formation that has lasted several years ; ( c ) reduced mining productivity ; and ( d ) a limited contribution of productivity growth in the other sectors. 20. the reduced potential growth calls for closer attention to the determinants of longerterm growth. although the incidence of monetary policy is mild, every central bank must be able to monitor the developments affecting the future path of the economy to ensure a more effective monetary policy. 21. among chile ’ s future growth possibilities is the fact that closing the

25bp, to 2. 75 %. the press release issued then stated that we will assess the need for some additional increase in the monetary impulse, which will hinge on the medium - term inflation outlook ( figure 8 ). this way, our monetary policy continues to be one of the most expansionary in a group of comparable economies. figure 8 mpr and expectations ( percent ) mpr financial asset prices, december 2016 report ( * ) financial asset prices, march report ( * ) ees financial asset prices ( 17 april ) fbs ( * ) constructed using interest rates on swap contracts up to 10 years. source : central bank of chile. 15. as usual when making forecasts, our macroeconomic scenario faces several risks. if they materialize, they may reshape the macroeconomic outlook and, therefore, may alter the course of monetary policy. we have identified two types of risks in the external front facing the chilean economy. some of them may potentially have a material impact, yet are hard to quantify ( such as political - economic uncertainty ). others risks have been mentioned for quite some time, but their likelihood have varied. regarding the latter, the expected trajectories of fiscal and monetary policy in the u. s. may potentially generate upside or downside risks. china remains a source of concern although its authorities appear to have successfully managed a gradual deceleration without a major disruption thus far. these are probably risks for most economies of the world, but particularly for a small open economy, such as chile. 16. on the domestic front, after several years of subdued growth, we cannot rule out that a more persistent phenomenon may be affecting the economy ’ s ability to grow, in which case it would be necessary to revise the public and private expenditure plans. moreover, while the labor market has gradually adjusted without generating a significant increase in unemployment, it is possible that after several years of low growth, firms require larger personnel adjustments, especially if the expected growth recovery towards the end of the year stalls. in contrast, in the context of the absence of observable macroeconomic imbalances that hinder growth, a scenario in which the global outlook improves, combined with the end of the adjustment of mining - related investment, and a rebound in sentiment, may lead to a more dynamic recovery ( figure 9 ). 17. in fact, several fundamentals of the chilean economy have remained quite solid during this weaker part of the cycle. as you might