Mexico Acts to Spur Growth, Cut Inflation : Economy: The nation’s president lifted a number of government restrictions as part of a continuing pact with business, labor.

President Carlos Salinas de Gortari lifted a number of government restrictions Sunday, cut taxes and raised wages and prices in an effort to cut inflation and spur further economic growth.

The measures were part of an “economic pact” between the administration, business and labor representatives, which was renewed for another year during a ceremony at the presidential residence.

“El pacto,” as it is popularly known, was first enforced in 1987 when inflation was at a record annual rate of 160% and average growth was near zero in the preceding five years.

As the keystone of the administration’s economic policy, “el pacto” aims to keep wage and price rises to a minimum. Since then, inflation dropped to an estimated 16% this year, and the economy is expected to grow at about 4.8% in 1991.

Economic growth has been a major problem in Mexico for decades, as successive administrations struggle with huge population growth and dwindling resources and job opportunities.

Mexico’s population of about 82 million is now growing at an estimated annual rate of 1.9%, which means that every year 1 million youths start seeking their first regular job.

To push growth even further, Salinas’ office announced that starting today it would reduce the amount by which it has been devaluing the Mexican peso currency against the U.S. dollar, from 13.5% annually to about 6%.

Similarly, foreign exchange controls--by which the government forced exporters to change the dollars they earn into pesos--are abolished.

To compensate for the loss of purchasing power caused by inflation, the legal minimum wage was raised by 11% as of today.

Most unskilled workers earn slightly more and are unionized. Such contracted wages and salaries will continue to be negotiated freely between labor and management, the announcement said.

The current value added tax of 15% and 20% for luxury items was reduced to a flat 10%. Basic food items and medicines will continue to be exempt from this sales tax.

But commuter transportation, fuels and electricity will go up as part of a continuing effort to eliminate subsidies, reduce the budget deficit and fight air pollution, which is mostly caused by motor-vehicles.

Transportation as well as energy are still heavily subsidized by the government.

A ride on the Mexico City subway or on government-owned buses was raised last Friday by 25%, to the equivalent of 13 U.S. cents. New fares will be announced shortly for taxicabs and private bus lines.

But long-distance bus fares and truck-freight rates are being lowered by 2% and 2.5%, respectively.

Leaded gasolines jump today from 91 cents to $1.41 a gallon and unleaded from $1.25 to $1.60 a gallon nationwide, except for an 11-mile strip along the U.S. border where fuel prices are adjusted in relation to world prices.

Prices for non-gasoline fuels and electricity for home use will also go up.

Further measures to deregulate the economy were expected in coming months.

The Salinas administration has been selling off banks, copper mines and hundreds of other state-owned enterprises and lifting decades-old economic restrictions in an effort to modernize Mexico.