Mexico Set to Begin Debt Talks With U.S.

Mexico’s Finance Minister Pedro Aspe flew to Washington on Monday for talks on renegotiating the country’s $100-billion foreign debt.

Aspe will seek a few basic goals at the talks: reduction of net transfers and debt, a multiannual renegotiation and lowering Mexico’s proportion of debt to gross domestic product, a ministry statement said. Aspe is accompanied by Banco de Mexico director-general Miguel Mancera and finance ministry undersecretaries Guillermo Ortiz and Angel Gurria.

The talks will be Mexico’s fourth debt renegotiation since it halted principal payments in August, 1982--setting off the Latin American debt crisis that has lasted ever since. Mexican officials say they seek an accord that will last the country several years and allow it to restore growth and improve its standard of living.

The last debt agreement, signed in March, 1987, included a 20-year rescheduling of $43.7 billion in commercial bank debt with interest of 0.8125% over London interbank offered rates--the best terms a debtor had achieved so far.

But when new President Carlos Salinas de Gortari took office Dec. 1, he promised a lasting debt accord and said Mexico could no longer sacrifice growth to service its debt.

According to the state news agency Notimex, Aspe will seek a cut in annual interest payments to $4 billion from about $7.5 billion. He will also try to reduce overall debt service to 2% of gross domestic product from 5% at present.

To Meet With Brady

Aspe hopes to achieve $7 billion in additional funds every year until 1994 and to postpone annual principal payments of about $3 billion, the agency said. The minister will also seek a seven-year grace period on maturities of forthcoming principal payments. A finance ministry spokesman said he could not confirm these details.

Aspe will meet in Washington with Treasury Secretary Nicholas F. Brady, World Bank President Barber B. Conable Jr. and other international financial community leaders.

Over the weekend, the finance ministry announced that it was not accepting a $3.5-billion “bridge loan” from Washington as the funds were no longer needed. The Reagan Administration said last October that it would lend Mexico the money to compensate for balance of payments pressure from falling oil prices while its government negotiated World Bank loans.

But Mexico’s foreign reserves stopped falling in December, the ministry said, and Mexico City agreed with Washington to let the offer lapse. Reserves had plunged to around $8 billion from a peak of more than $16 billion last May.

Mexico is negotiating for World Bank loans of $1.5 billion to $2 billion and has indicated that it might seek a compensatory financing facility loan of about $600 million from the International Monetary Fund, monetary sources in Washington said. The government has not confirmed that it will seek IMF loans, although some bankers say Mexico will have to agree to a standby IMF program if it wants bank loans.