Newspaper article The Christian Science Monitor

Mexico Emerges from Crisis but Path Is Uncertain

Newspaper article The Christian Science Monitor

Mexico Emerges from Crisis but Path Is Uncertain

Article excerpt

THAT giant sigh Americans hear is coming from Mexico.

After twisting in the winds of cantankerous United States Congressional hearings on a proposed $40 billion loan-guarantee package, Mexico breathed a sigh of relief Wednesday over President Clinton's new plan offering Mexico a $20 billion line of credit by executive order.

Both Mexican government leaders and private analysts were quick to praise Mr. Clinton's action, which sidesteps the need for US congressional approval.

Yet, while Clinton's plan was well-received here, it does not mean that the country's financial nightmare and economic troubles are over. Comparing Mexico to a family suffocating under a pile of debt payable in three months, Finance Secretary Guillermo Ortiz says the new $51 billion international package, anchored by the $20 billion from the US, was like helping that family convert to longer-term and cheaper debt.

But "the package does not constitute the push needed to get growth going again," Mr. Ortiz says. "The basis for economic growth rests with the government and the Mexican people."

At the same time, while Clinton's plan is not expected to include harsh political conditions that some members of Congress were seeking to impose on Mexico, it comes too late to spare the country what many Mexicans considered the "humiliation" of seeing their economic future debated in Washington.

Combined with other stepped-up international assistance from the International Monetary Fund (IMF) and the Bank of International Settlements (BIS), the new financial assistance surpasses the ill-fated loan guarantee package. And it begins what that earlier proposal was designed to accomplish: to restore confidence in Mexico's badly shaken financial markets.

The new package includes an increase in IMF funding from an earlier committed $7.8 billion to $17.8 billion, a doubling of credit from the BIS - a consortium of central banks from major industrial nations - to $10 billion, and $3 billion from commercial banks. …

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