The president is now betting on a deal with Mexico, Cuba and others to fight inflation

The government of Alberto Fernandez analyze a proposal What did the Mexican president do to him? Andres Manuel Lopez Obrador so that there is a OK between various countries in the region which allows them to fight inflation together. The initiative, in addition to including Argentina and Mexico, would also cover Brazil, Colombia and Cuba, whose leaders would meet for a summit on March 17, with no location set. Because a week later, between the 24th and the 25th, the Ibero-American Summit will be held in Santo Domingo, the capital of the Dominican Republic, to which Fernández has already confirmed his presence.

What would the anti-inflation agreement look like? It would be a kind ofproduct compensation”, which would allow the import at below-market prices in cases where, in one of the signatory countries, there are excessive increases. For example, if the price of clothing skyrockets in Argentina, it could resort to using one of its partners, such as Brazil, for a while and offset it with another product such as soybeans.

The agreement would also aim to use a lesser amount of dollars, at a time when Argentina suffers from a lack of reserves.

“López Obrador called me and offered to launch an agreement with Brazil, Colombia and Cuba, which together account for the majority of the region’s GDP, to help us solve a problem that is common to all of us, such as inflation”, confirmed the President in statements to the newspaper Ámbito Financiero. The communication between the two leaders took place on February 17 through a phone call. Then the proposal was transferred to both Lula da Silva, Gustavo Petro (Colombia) and Miguel Díaz Canel (Cuba).

“We have agreed that in the meantime, the ministers of each country will talk to each other. In my case, I gave instructions to Santiago Cafiero (Minister of Foreign Affairs) and Sergio Massa (Economy) to move forward in this line”Fernandez explained.

The countries concerned have ideological affinities beyond the fact that López Obrador and Fernández had distanced themselves during the appointment -in November 2022- of the new boss of the Inter-American Development Bank (IDB), finally falling to the Brazilian Ilan Goldfajn. In this case, Mexico and Argentina could not propose a consensus candidate for this position. Now a rapprochement has occurred again in the face of a common concern.

Due to the effects of the war that Russia and Ukraine have been waging for just over a year, inflation in all countries of the region has experienced a significant jump. Argentina was one of the hardest hit with a rate of 94.8% last year, the highest record since 1991, with a sharp increase in the food and clothing sectors and boosted by energy imports.

In Mexico, 2022 ended with an index of 7.82%, which was also the highest in the last two decades. In Brazil, a slowdown was noted compared to 2021 (it fell from 10% to 5.79%), but it exceeded the target set by the government of this country. Colombia had 13.1%, which also became one of the highest in over 20 years. Cubans had 39%.

Although in March 2022 the government of Alberto Fernández promised “a war on inflationin January there was a 6% increase according to data provided by INDEC, complicating the government’s plans in an election year. Added to this is the problem of drought which affects most of the national territory and which could considerably affect the lack of foreign currency.

Faced with these expectations, which would make it difficult to achieve the objectives of not exceeding 60% inflation in 2023, the Government is looking for alternatives. The one López Obrador approached is one of them, but the first steps are just beginning.