A two-year rebuilding project includes payments for families whose homes were damaged by the 8.8 magnitude quake and tsunamis, which killed nearly 500 people and made thousands more homeless.
With roads and towns wrecked and the forestry, fishing and fruit industries in the south of the country devastated, the total damage has been put at $30bn (£20bn). Concepcion, the second largest city in Chile, was severely damaged by the quake and hundreds of its residents are still living in tents in parks and gardens. Tens of thousands who lost their homes in the regions of Bio Bio and Maule and are still waiting for temporary housing.
Chilean President Sebastian Pinera, who took office less than two weeks after the disaster announced the funding at the weekend. He said the public sector would fund a total of around $12 billion (£8bn) for post-quake reconstruction. Speaking at a vigil at Concepcion's cathedral on Sunday to remember those who died in the quake, Mr Pinera repeated his pledge to rebuild areas hit by the quake. "We have a debt, a task to rebuild our country," he said. "As president I will lead that reconstruction process, I'll be the bricklayer, the worker, the carpenter, the engineer and also the architect, representing all Chileans and as we have already said, we will rebuild on stone and not on sand."
The leader said he also planned to extend army presence in some areas to help speed up the rebuilding process. The Chilean army has generated a lot of good will among the people since the disaster. After stores were looted, sparking fears of mob rule near the epicenter, Chileans stood and cheered when soldiers finally arrived to re-establish order. Afterwards, he spoke at a mass in the square in front of the cathedral, where thousands of people had gathered. He called on people to dry their tears and to start working "in the great task of rebuilding Chile". The government has said that it will use a mix of several sources of financing, including issuing government debt, using copper boom savings held in a sovereign wealth fund, and is planning a "moderate" tax adjustment, Reuters news service reported.
By Hayley Jarvis for SOS Children