(Adds details of the debate and quotes from legislators)
SANTIAGO, April 18 (Reuters) - Chile's lower house rejected two pension withdrawal bills late on Monday night, rebuking a proposal by legislators and another limited bill proposed by President Gabriel Boric.
Chile's government has been allowing citizens to withdraw funds from their pensions to help with economic fallout of the COVID-19 pandemic, approving three withdrawals of 10% since June 2020 and rejecting a fourth in December.
Legislators proposed a new 10% withdrawal of pension funds which Boric's government opposed, saying it would exacerbate already spiking inflation. In March, Chile posted a monthly inflation rate of 1.9%, it's highest since 1993.
Boric's government proposed a limited bill that would only allow withdrawals to pay for alimony, mortgages and other debts. The proposal faced push back from legislators who said the government shouldn't limit how voters spend their pensions.
Boric's proposal failed with 68 votes in favor, 83 against and one abstaining. The withdrawal proposed by legislators got 70 votes in favor, 70 against and 12 abstaining.
Speaking to reporters after the vote, Finance Minister Mario Marcel said he was glad legislators voted against a large withdrawal.
"It was understood that this is clearly a different scenario than the first and previous withdrawals," Marcel said. "And the damage it would've caused citizens would've been much greater than any benefit to certain people and groups."
When it came to the president's more limited proposal, Marcel said "it's hard to understand the reasons why they voted that way."
Marcel said the government would see if there was room to progress certain aspects of its proposal, and focus on structural reforms to address economic uncertainty including raising the minimum wage. (Reporting by Alexander Villegas; Additional reporting by Carolina Pulice; Editing by Christian Schmollinger)