AMLO’s strategy to control inflation will cause greater pressure on public finances: Banco BASE

The President Andrés Manuel López Obrador’s (AMLO) plan to combat inflation presented this morning will put greater pressure on public financesthis was warned by the Director of Economic Analysis at Grupo Financiero BASE, Gabriela Siller.

The also professor of economics at the Tecnológico de Monterrey, highlighted through her account Twitter the announcement of the federal president.

“In Mexico the president announced the plan to fight inflation. So far he has not talked about price control. Nevertheless, subsidies imply pressure on public finances, since they were not budgeted. This runs the risk that temporarily…”

“…a greater sub-exercise is generated in spending on physical investment, in order to keep public finances balanced. With this the government would further slow down the economy, since spending on physical investment has the potential to generate a multiplier effect on the economy” (sic) he wrote.

Through a comment, Gabriella Siller highlighted that the measures of the federal government “involve greater public spending and although the president mentioned that the resources will come from the oil surpluses, it is unlikely that these surpluses will cover all the proposed stimuliincluding those related to the price of gasoline,” he warned.

He even anticipated that, in order to keep public finances balanced, there is a risk that the government will generate a higher under-exercise in spending on physical investmentso that economic growth will slow down instead of pushing it.

This Wednesday morning, President Andrés Manuel López Obrador presented his plan to control inflation in the country, which has reached historical maximums in the last dates, since in the past month of April, it was located in 7.72%.

With this strategy, we seek to achieve a maximum price for 24 products of the basic basket such as corn, beans, rice and milk, among others.

“This is not about price control, it is an alliance to guarantee that the basic food basket has a fair price”López Obrador clarified during his traditional morning conference held in the Treasury Hall of the National Palace.

“The decision was made to act in what has to do with food, convincing and calling on distributors, merchants, to do it jointly without coercive measures; it is not about price control but about an agreement, an alliance, to guarantee that the basic basket has a fair price”, he stressed.

The 24 products of the basic basket that will have a maximum price are:

-Canola or corn oil

-Rice grain

-Canned tuna

-brown sugar

-Steak you’re welcome

-Onion

-Jalapeno pepper

-Bean grain

-White chicken egg

Toilet soap

-Tomato saladet

-Milk

-Lemon

-Apple

-Orange

-Box bread (680 g package)

-Potato

-Toilet paper (package of 4 rolls)

-Pasta for soup

-Whole chicken

-Canned sardines

-Corn tortilla

-Carrot

The Program to Fight Inflation and Scarcity was presented by the Secretary of Finance and Public Credit, Rogelio Ramírez de la O at the National Palace and among the businessmen who were present were: Francisco Cervantes, president of the Business Coordinating Council (CCE) ;Jose Medina Mora from Coparmex; Vicente Yáñez, president of the National Association of Self-Service and Department Stores (ANTAD); Juan Cortina Gallardo, from the National Agricultural Council; Mauricio M. García Muñoz, from ConMéxico; Héctor Tejada, from Canaco and Antonio Del Valle, president of the Mexican Business Council (CMN).

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