stem from concerns over the results of the imminent u. s. presidential election and its possible impact on its southern neighbor. a third probable factor may be perception of mexico ’ s fiscal fragility, including weak financial conditions at state ‐ owned oil company pemex. two notable statistics on public finances put analysts and market participants on alert. one is the rising trend observed since 2009 in the historic balance of public ‐ sector borrowing requirements relative to gdp. although this ratio continues to be inferior to frequent values encountered in the developed world, it does not compare favorably with those of many emerging economies. a second statistic has to do with see the jp morgan index of emerging ‐ market currencies, which includes brazil, chile, mexico, hungary, south africa, turkey, russia, china, india and singapore. mexico ’ s sovereign risk premium, which has risen above those of other countries with equivalent credit ratings. 5 in this scenario, mexico needs to buttress its fiscal stance without delay. deep adjustments to public finances are necessary given at least three significant restrictions : reduced oil prices and production, limits to ongoing investment expenditure cuts, and inertia in long ‐ standing growth in current public expenditures. markets should be convinced that authorities will do what it takes to stabilize the ratio of public debt to gdp. these actions cannot be postponed for public finances to become sustainable. monetary policy challenges since last year, inflation has remained benign, for several months below the 3 percent target established by the bank of mexico since 2003. obtaining inflation this low and close to the target is an unprecedented achievement which took a long time and must be preserved. the debt ‐ to ‐ gdp ratio rose from 36. 2 percent in 2009 to an estimated 50. 5 percent in 2016. see shcp ( 2016 ). criterios generales de politica economica 2017. for sovereign risk premium developments, see, for instance, the 5 ‐ year credit default swaps for countries with a bbb + rating from standard & poor ’ s, which are mexico, poland, spain, peru, and thailand. one important consideration is that recent contained inflation has been supported by unusually low noncore price increases. this phenomenon may prove to be transitory. core inflation, on the other hand, has been rising in 2016, basically pulled by the impact of peso depreciation on tradable goods prices, as illustrated by the behavior of merchandise inflation, which lately reached almost 4 percent. it is worth noting, however, that

javier guzman calafell : level and volatility of food prices : challenges and prospects remarks by mr javier guzman calafell, deputy governor of the bank of mexico, at the panel on “ level and volatility of food prices : challenges and prospects ” at the “ food security in a context of high food price volatility and low productivity in latin america and the caribbean : challenges and opportunities ” international seminar, guadalajara, 27 march 2014. * * * first of all i would like to thank our three speakers, for having accepted the invitation to share with us their perspectives on the key aspects related to the high level and volatility shown by food prices in the last years. given the importance of the topic, not only to mexico but at the global level, and the quality and experience of our speakers, i have no doubt that this session will be of great interest to all of us. after having shown a pronounced decline for several decades, international food prices started to increase at the beginning of this century, abruptly spiking in 2007 – 2008. prices for these products fell at the end of 2008 within the context of the global economic crisis, but rose again to hit levels in 2011 that were even higher than those posted before the crisis. although in the wake of this spike food prices have diminished, they still remain at very high levels. in addition, forecasts for the next few years suggest a complex scenario. for example, the oecd and the fao estimate that food prices for the period 2013 – 2022 will be above, in real terms, those seen on average in 2003 – 2012. 1 the increase in food prices in the last few years has been accompanied by great volatility. according to calculations of international monetary fund staff, long - term volatility of food prices reached in 2009 its highest level in almost 30 years. 2 naturally, price fluctuations for these products heighten challenges for economic policy and complicate significantly consumption and investment decisions by families and businesses. some analysts have even emphasized that, viewed from a very long - term perspective, challenges stemming from the volatility of food prices could be more acute than those related to their level. 3 the level as much as the volatility of food prices have significant repercussions for all economies, advanced or not, by affecting economic growth, inflation, public finances, the balance of payments, income distribution, poverty, and in some cases even political stability. however, the magnitude of