President Miguel de la Madrid signaled Friday that Mexico would take a harder line with its international creditors in upcoming debt rescheduling negotiations, but said the country would not seek confrontation with the bankers.
A new round of negotiations on this country`s nearly $100 billion debt are scheduled to begin next week in New York.
In a nationally televised address, De la Madrid said the dramatic fall in world oil prices had placed Mexico in its worst economic situation of the century, but said he would not change the fiscal policies his administration adopted three years ago.
He said Mexico could not be expected to shoulder the entire burden brought on by the oil price collapse and suggested international creditors would have to accept part of it. He also said bankers could not dictate Mexico`s economic decisions.
He added, however, that the country was not seeking a debt moratorium and wanted a negotiated solution to the problem. He said the talks ”will be in the context of dialogue and negotiation.”
”We do not want confrontation,” he said, a comment that, coupled with his pledge to continue efforts to open Mexico`s economy, should be welcomed by international bankers.
Bankers and economists have been predicting that Mexico would have to seek either large amounts of new credits or reduced interest rates in order to meet its financial obligation this year.
De la Madrid said his administration would continue its budgetary austerity and seek to make structural changes in the economy that would make it more competitive. These changes include plans for Mexico to enter the General Agreement on Tariffs and Trade (GATT) and pledges to open the country to greater foreign investment. He has also said that Mexico will work to increase its nonpetroleum exports.
He said that in response to such efforts, Mexico expected greater access to international markets for its exports.
De la Madrid`s comments were made against an economic backdrop so bleak that Mexican economists and foreign bankers had been predicting for weeks that dramatic steps had to be taken.
When the 1986 budget was drawn up late last year, the government estimated its revenue from oil exports would be about $13.1 billion. At the present average price of $15.09 a barrel, the country will earn just $6.6 billion. Oil exports account for 75 percent of Mexico`s foreign exchange earnings.
U.S. banks hold about $27 billion of the nation`s foreign debt.
On Thursday, U.S. Federal Reserve Board Chairman Paul Volcker told the Senate Banking Committee that Mexico would need less than the $9 billion in new loans frequently estimated for 1986, but said that whatever the country needed would have to be provided, ”or else we are going to have a real problem.”
