Zedillo Outlines Shape of a Recovery Plan : Mexico: President pledges maximum import tariffs, inflation-linked loan payments.

President Ernesto Zedillo, responding to outcries from Mexico’s business owners, on Tuesday outlined an economic recovery plan that will include lifting some import barriers and setting up a special fund for companies with credit problems.

It also proposes indexing loan payments to the inflation rate, official efforts to help Mexican banks raise capital and creation of a futures market for the peso, officials of the central bank said.

In a speech to manufacturing executives, Zedillo sought to assure them that the government is working on solutions to the credit crunch that has sent interest rates on government bonds to the highest levels in seven years, and on ways to maintain the solvency of Mexican banks.

Miguel Mancera, the governor of Mexico’s central bank, also announced details of a plan to lift a 10-year-old rule against investors trading futures and options on the Mexican peso. That would clear the way for the Chicago Mercantile Exchange to begin trading Mexican peso futures in early April.

The government’s failure to announce a new economic plan in the wake of the continuing crisis has been widely criticized by business leaders and considered an important factor in the continuing declines of the peso and the stock market here.

The Mexican currency closed down three centavos Tuesday at 6 to the dollar, near its lowest point since the Dec. 20 devaluation triggered the crisis. The Mexican Stock Exchange index rallied by 7.01%, but its 1,549.84 finish was still far below the December level.

“My government will not put off solving problems, no matter how difficult they are, because the consequences will be much worse,” Zedillo said in a thinly veiled attack on his predecessor, Carlos Salinas. “I will dedicate myself to solving problems . . . not to taking care of my personal image.”

To protect Mexican companies from unfair foreign competition, the president promised that products from countries without free trade agreements with Mexico will be assessed the highest import tariffs and stiffest quotas permitted under international commercial agreements.

The changes will not affect U.S. exporters, who are protected by the North American Free Trade Agreement.

Zedillo also said that the Treasury Ministry and Bank of Mexico are developing a fund to help heavily indebted companies, which include most industries that were forced to modernize rapidly to compete with imports. It will be similar to the fund that he, as a central bank executive, designed after the devaluation of a dozen years ago, he said.

That trust fund, better known as Ficorca, enabled hundreds of Mexican companies that had acquired large debts in dollars to meet their financial obligations on time.

The plan to index loan payments, as well as the values of the loans, to the Mexican inflation rate would let debtors pay only real interest rate--the difference between interest rates and the inflation rate--instead of current rates now running as high as 60%.

Meanwhile, the big Mexican financial institution Banacci said it will reduce its work force by 10%, or more than 3,000 workers, this year. The company said the cuts were necessary due to the financial crisis and the need to improve operating efficiency.