International Agencies to Lend Mexico $3.6 Billion

Mexican Finance Minister Gustavo Petricioli signed loan agreements Tuesday worth $3.64 billion with three international finance agencies, which he said will enable his country to resume economic growth next year at an annual rate of 3% to 4%.

In the signing ceremony at the Mexican Embassy attended by representatives of the International Monetary Fund, the World Bank and the Inter-American Bank for Development, Petricioli said Mexico is unable to shoulder alone the economic setbacks of the last year.

The Mexican economy’s troubles were caused mainly by the 50% drop in oil prices, the world recession that began in the early 1980s, persistent inflation and massive interest payments on its foreign debt of more than $97 billion.

An unusual feature of the agreement with the International Monetary Fund links new loans to fluctuations in the price of oil.

The government of President Miguel de la Madrid has already undertaken reforms required by the International Monetary Fund for the loans, Petricioli said, citing the reduction of state-owned enterprises and liberalization of trade. Having agreed to these requests, Mexico will now be able to seek other loans from private bankers, with whom Petricioli will meet in New York today.

“Mexico will be able to launch a fresh stage in healthy and sustained growth for next year of 3% to 4%,” the minister said. After a period of rapid increase spurred by high world oil prices, the national growth rate had stagnated and was predicted to decline by 4% for 1986.

Jacques de Larosiere, director general of the 101-nation International Monetary Fund, which takes the lead in the extension of international credits because it establishes conditions that borrowers must meet, said the agency agreed to grant an 18-month standby arrangement under which Mexico will be given an immediate $1.6-billion line of credit.

Basis for Aid Request

“This is going to be the basis for Mexico’s request for assistance from official sources and the banking community,” De Larosiere said. “Mexico will need a lot of external financial assistance, both public and private.”

Petricioli, talking to reporters after the ceremony, declined to say what amount he will seek when he meets in New York with about 50 representatives of commercial banks from the United States, Europe and Japan.

The agreements with the three international agencies provide for $2 billion in credits from the World Bank, $1.6 billion from the International Monetary Fund and about $40 million from the Inter-American Development Bank.

Using this total of $3.64 billion as a base, Mexican officials hope to raise as much as $9 billion in new loans from commercial banks, which are Mexico’s major foreign creditors. With backing by the IMF, Mexican officials hope to get as much as $6 billion in new loans from U.S. and European commercial banks alone.

Petricioli said in a statement that the agreement “supports an economic program of revival and growth,” adding: “For the first time, the international financial organizations validate an economic program that is not recessive (but is) designed to get Mexico out of the crisis.”

Officials Pleased

In Mexico City, government officials were particularly pleased with two elements in the agreement, one linking the loans to the price of oil and the other on government spending.

Under the agreement, if oil prices fall below $9 a barrel, the International Monetary Fund will arrange for additional loans to Mexico. If the price goes above $14 a barrel, less money will be provided.

Petroleum sales account for 70% of Mexico’s export income, and the recent decline in oil prices has thrown the country into a deep recession and threatened its ability to keep payments current on the $97-billion debt.

In addition, the fund agreed to forgo its earlier demands that Mexico immediately cut government spending. Government outlays will be untouched the rest of this year, but some cuts are likely in 1987.

Spending cuts are a politically sore point in Mexico because the government is dependent on bureaucrats and workers in government-owned industries, as well as peasants on government-subsidized farms, for much of its direct support.

However, though officials in Mexico City hailed the agreement as “flexible,” they said it falls far short of terms that Mexican officials had pressed for in the last six months.

Mexico’s demands were outlined in a February speech by De la Madrid, who called for an adjustment of debt payments “according to Mexico’s ability to pay.” He asked banks to make sacrifices in recognition of their “co-responsibility” in Mexico’s debt burden.

Tuesday’s agreements apparently make no modifications in the schedule of Mexico’s debt payments to banks or in the interest rate charged on the loans. Instead, banks are merely being asked to lend more money to Mexico--at terms that will look good on bank ledger sheets while adding to Mexico’s overall debt.

The amount to be requested from U.S. commercial banks drew expressions of surprise and doubt from New York bankers, who, while asking not to be identified, said that they expected the figure to be closer to $2.5 billion or $3 billion.

“It’s just new debt to pay old debt,” economist Adolfo Aguilar said at the Center for Economic Research and Instruction in Mexico City.

Economist Jorge Castaneda added, “The deal is: ‘We’ll put you further in debt to pay off the old debt.’ There is no concession on reduced interest rates. That is the key.”

Furthermore, economists in Mexico City contend that economic growth is far from assured, despite the new loans. It is not clear, for instance, that Mexico, which is losing $8 billion in oil revenue this year alone, compared to 1985, can expect to grow even with an infusion of funds from the International Monetary Fund.

Don Shannon reported from Washington and Dan Williams from Mexico City. Times staff writer Robert A. Rosenblatt in Washington also contributed to this article.