President Miguel de la Madrid Hurtado said Mexico could go elsewhere for the estimated $6 billion to $7 billion in new loans it needs if private banks in the United States, Japan and Western Europe don`t provide the money.
However, De la Madrid told The Tribune in an interview last week at his residence here that negotiations with international banks for the new loans were going well and that he expected positive results.
Bankers and financial experts have pointed out that hundreds of small banks with loans outstanding to Mexico, which already has a $98 billion foreign debt, are balking at providing more money. If Mexico secures all the new money it says it needs in the next 18 months, its foreign debt, including interest, would rise to an estimated $110 billion.
The president spoke at length about his nation`s ailing economy, which has become one of the main factors in U.S.-Mexico relations. He also boasted about the efforts of his almost four-year-old administration in dealing with these difficulties.
He defended his country against recent criticism from the U.S. He said he hoped people in the U.S. would make a greater effort to understand Mexico and its political system, and he dismissed many of the critics as people who simply make ”prophecies of catastrophe.”
Mexico signed an agreement last month with the International Monetary Fund that entitled it to $1.6 billion in emergency financing and was expected to clear the way for private banks to negotiate additional loans.
Though the major money-center banks appear ready to grant new loans, financial sources have noted that scores of smaller banks remain reluctant to lend more money to Mexico.
Major U.S. banks, like Citicorp and BankAmerica Corp., which have loans totaling $5.5 billion to Mexico, apparently have decided their stake is so high already that they have no choice but to continue to lend in the hope the Mexican economy improves.
But that feeling does not appear to be shared by smaller creditors, who think they are throwing good money after bad.
”When you get past the first dozen or so (largest) banks, nobody wants to sign an agreement,” said a senior official of a smaller U.S. bank.
But De la Madrid did not seem bothered by such reluctance.
”The sources of Mexico`s foreign financing are very diversified and wide ranging,” he said. ”There are the international banks such as the World Bank and the Inter-American Development Bank. We also have access to financing for export from industrialized countries, and private banking and general money and capital markets.
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”I trust that these negotiations with private banks, on the basis of the new agreement with the International Monetary Fund, will make it possible for us to have the necessary amounts of resources,” he said.
He stood by Mexico`s decision not to declare a debt moratorium, saying the country would have to depend on foreign credits for ”a long time to come” and could not risk its international credit worthiness.
De la Madrid, 51, said there was a need on the part of people in the U.S. to better understand Mexico.
”It seems to me that it is positive that American public opinion should show greater interest in Mexico,” he said. ”A greater understanding of our problems is the basis for increased cooperation and for increased mutual respect.”
Since early this summer, there has been much criticism of Mexico from within the U.S. Part of this came from Senate hearings held by Sen. Jesse Helms (R., N.C.), and has centered on official corruption and allegations of election fraud in Mexico and increased illegal migration and drug trafficking to the U.S.
A picture emerged of Mexico on the brink of financial, political and moral collapse.
”My response to the prophecies of catastrophe, which in fact began when I took over the government, is the actual reality in the country,” De la Madrid said. ”In spite of the fact that it (Mexico) is a restless, effervescent country, social peace has been maintained. The institutions of the republic have acted with flexibility and efficiency as regards the crisis. ”The country is not paralyzed, the government continues to act and Mexican society is vigorous,” he said.
He said that, though his entire administration had been one of austerity, he thought Mexicans understood the problems the country faced.
He said that the adaptability of his Institutional Revolutionary Party
(PRI), which has ruled Mexico since 1929, had ensured social peace in Mexico, and that the cataclysmic changes some people have predicted would not come to pass.
Helms and other critics of Mexico have suggested that its problems are so great that the political system is under unprecedented strain and that the PRI is unable to deal with these problems as it had in the past.
De la Madrid dismissed the charge.
”I am happy that a spirit of constant renovation prevails in the PRI,”
he said. ”In the Institutional Revolutionary Party, there are no people who stay there throughout the years and who could constitute a closed power nucleus.”