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Subsidies Used To Tame Inflation To Cost $28 Billion

MEXICO
  • Mexico’s programs and subsidies put in place to tame inflation will cost the country approximately 575 billion pesos ($28 billion) this year.
  • Finance Minister Rogelio Ramirez de la O said on Tuesday that the broad programs used to contain price gains include gasoline and residential electricity subsidies for a total of 503 billion pesos on top of fertilizer handouts, measures to guarantee food supply and freezing highway tolls. (BBG)
  • The finance minister explained that without the governments intervention inflation in Mexico would be 2.6 percentage points higher than the current rate of about 8%.
  • “The resources that are going into this package could not have had any better use,” Ramirez de la O said, defending the measures. “When the consumption of homes falls, so does the volume of sales, the collection of the VAT tax, and all economic movement, and the Banco de Mexico has to raise interest rates.”
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