Mexican officials moved to reassure international bankers on Wednesday that the debt-burdened country will attempt to solve its economic and fiscal problems in cooperation with the banks holding its nearly $100 billion in foreign debt.
In talks with members of the bank advisory group for Mexico, a committee of 13 major creditor banks that serves as the principal negotiator for institutions with outstanding loans, the Mexican officials said they would be ready soon to start negotiations over the terms of a new $3.5-billion package of bank loans that Mexico wants for the the next 18 months.
In a statement issued Wednesday, William R. Rhodes of Citibank, co-chairman of the bank committee, said Director of Public Credit Angel Gurria had "confirmed" that negotiations with the banks would begin as soon as Mexico "reaches agreement (on an economic plan) with the International Monetary Fund, the World Bank and the Inter-American Development Bank."
Last weekend, Mexico and the International Monetary Fund moved close to an agreement to solve the country's debt crisis through economic growth rather than the austerity that has been the hallmark of most IMF agreements in the past. An agreement could occur as soon as next week.
Mexico has insisted that its economy be allowed to grow at 3% to 4% annually in any loan repayment agreement and that its depressed oil revenue--the source of 60% of its income--be taken into account in any repayment schedule.
Bankers familiar with the situation said that some linking of the repayment schedule to oil revenue is probably inevitable in a new agreement.
Mexico now owes about $97.6 billion to international lenders, including banks, the World Bank and the IMF. The country is seeking an additional $1.5 billion from the IMF, $3.5 billion from banks and another $1.2 billion from the World Bank and the Inter-American Development Bank, all to cover its fiscal needs for the next 18 months.
The coming negotiations will focus on the terms of the banks' new $3.5 billion in loans. Many participating bankers outside the advisory group of 13 have indicated that the new loans must be made at market rates, although interest and principal payments on Mexico's existing debt might be subject to concessions.
"It would be less difficult to think in terms of concessions on the old money than the new," one banker said.