The former president of Mexico and current Yale academic, Ernesto Zedillo, visited Buenos Aires to participate in a new meeting organized by REF and OutObox AG Ltd. There, he spoke with members and representatives of the public, union, social and business sectors about inflation, the economy and democracy in Latin America.
During his exhibition, the academic referred to the scenario facing Latin America on its way to convergence and affirmed that what unites Latin Americans is “faced with highly complex international circumstances, which will make the road very difficult for countries to resume development.”
In this sense, Zedillo referred to the existing economic-social gap in Latin America and argued that the region has not reached convergence due to the internal processes that have been experienced in the countries of the “old and new populists” and by the ” high degrees of polarization” that do not allow to resume and complete the reforms that were made in the 90s: “The same are now attacked as the culprits of all evils, which is an absolute fallacy”he stressed.
During the meeting, the former Mexican president also analyzed the existing economic situation in Argentina and stated that inflation “is not something that is simply going to be resolved or cured over time”: “If it is not attacked and controlled, the task will be it keeps getting harder and harder,” he said.
In this regard, Zedillo stressed that the world is already triumphing over inflation: “Inflation rates have been improving as a result of monetary policies that have been appropriate.”. In relation to inflation in our country, he maintained that “it will not be solved with artifice” and stated: “Hiding the figures is not a solution, people live with inflation. The existence of multiple exchange rates creates other problems. Some of the actions that seem logical in the short term end up making the problem more serious”.
Zedillo stated that “Success lies in other actions in the fiscal and monetary field”: “Put the house in order. The rest will not be easy, but it can work. Exercise discipline and any exchange system will work”.
In addition, the academic asserted that to combat this scourge, Argentina must resume strategies that it has already tried, but not stay halfway and carry out the pending reforms. In this sense, he highlighted the importance of “holding reserves in an independent Central Bank and eliminating the fiscal deficit in a credible and sustainable manner.”
Finally, Zedillo warned about the costs of an eventual dollarization and expressed skepticism in relation to a potential measure of this nature; especially if it is not preceded by fundamental reforms: “We have had snake charmers in the past. Are we going to have the capacity and the stomach to do the other things that need to be done to validate a fixed exchange rate system like dollarizing?”
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