Deputies Tomás Kast (Evópoli), Paz Charpentier (Republican Party) and Erich Grohs (PNL) criticized the proposal by the parliamentary caucus of the People's Party (PDG) to review contracts denominated in the inflation-indexed unit of account and move toward charges in pesos, according to BioBioChile.
The inflation-indexed unit of account, or UF, is adjusted according to inflation. In Chile, it is used for mortgage payments, rents, tuition fees and other long-term contracts. When prices rise, so does what families pay.
The PDG initiative emerged after September's CPI (Consumer Price Index) was released. According to its proponents, it seeks to give families greater certainty about adjustments to mortgage payments, rents and other obligations. The source does not provide the figure for that CPI.
Tomás Kast, a member of the Economy Committee, was the harshest critic. "You cannot eliminate UF by decree," he said. He described the idea as a populist promise that, in his view, could harm the poorest through higher interest rates, higher prices and reduced access to housing.
Paz Charpentier, of the Housing and Urban Development Committee, focused on the practical effect. She argued that replacing UF with pesos does not lower bills, but merely changes how the charge is expressed. Presenting it as relief, she said, amounts to "creating a false expectation".
Erich Grohs, of the Labor Committee, said he understood the concern, but warned that replacing an indexed unit with pesos does not eliminate inflation. If everything must be set in pesos, he explained, banks, landlords and service providers could factor that inflation in ahead of time through prices, interest rates and stricter terms.
The debate has other fronts. While PDG proposes reviewing which contracts justify retaining UF and allowing alternatives in pesos, other bills in Congress seek to limit its use in short-term contracts, rents and education fees. Those initiatives explicitly exclude mortgage loans.
The Central Bank has already stated its position. In previous presentations to Congress, it warned that restricting adjustment mechanisms could change financing terms and shift some inflation risk into initial prices or interest rates.
Who gains and who loses depends on the design. A debtor with a contract in fixed pesos is protected against future inflation, but could pay more from the outset. For now, the source provides no detailed legal text for the PDG proposal, and the bills limiting UF remain under consideration in Congress.
