Mexico Lines Up Loans as Vote Nears
Mexico said yesterday that it had lined up more than $20 billion in loans and lines of credit that it might tap in an effort to ensure economic stability during next year's presidential election.</br></br>The loans, which include some that were previously pledged and others that renew existing credit lines, come from the International Monetary Fund, the U.S. and Canadian governments, the World Bank, and the Inter-American Development Bank. The money is aimed at keeping President Ernesto Zedillo's six-year term from ending the way nearly all of his recent predecessors' terms have ended -- in a panicky flight by investors and lenders fearful that the country is on the verge of bankruptcy. In many past election years, the government has gone on spending binges aimed at winning support for the ruling Institutional Revolutionary Party, or PRI.</br></br>"This will provide us with the conditions necessary to have an orderly economic transition at the end of the six-year administration," Guillermo Ortiz, the governor of Mexico's central bank, said at a news conference in Mexico City.</br></br>The move comes amid nervousness in financial markets that next year's elections, which are expected to be hotly contested, could be afflicted by the sort of political instability, economic mismanagement and capital flight that caused the peso to plunge in 1994, weeks after Zedillo's electoral victory. The peso crisis rocked global markets and prompted the Clinton administration to lead a $50 billion bailout for Mexico that sparked criticism on Capitol Hill.</br></br>The administration, the IMF and their allies contend that this time around, Mexico is in much better economic shape and will use its international support to buttress sensible policies. The government has won praise from economists for keeping its budget and trade deficits under control, and Zedillo has sworn to keep from repeating the mistakes of his predecessors. The loans are designed to guard against a sudden loss of investor confidence by providing the government with extra resources if the need arises and by assuring markets the government is sticking to a sound policy path.