Announcement of World Bank to Support Mexico’s Debt Reduction on January 24, 1990

HOLD FOR RELEASE t World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.* Telephone: (202) 477-1234 EMBARGO: HOLD FOR RELEASE UNTIL DELIVERY EXPECTED ON WEDNESDAY, JANUARY 24, AT 5 P.M. IN MEXICO CITY (6 P.M. IN WASHINGTON) BANK NEWS RELEASE NO. 90/S20 Contact: Ciro Gamarra (202) 473-8721 WORLD BANK TO SUPPORT MEXICO'S DEBT REDUCTION MEXICO CITY, January 24, 1990 -- The World Bank will provide $2 billion to support the reduction of Mexico's public debt to commercial banks,* President Barber B. Conable told an audience today at the Colegio de Mexico, an academic institution in Mexico City. In a speech on "Adjustment and Growth in Latin America," Mr. Conable pointed out that a "decade of some of the most far-reaching economic and political changes has just ended" and noted that Mexico "has launched one of the most ambitious, courageous and determined programs of economic reform and institutional change recently undertaken in any country, developed or developing." Praising Mexico's efforts, Mr. Conable said, it shows that "where there is leadership and consistent commitment to adjustment and economic growth, the public will accept the essential but temporary sacrifices." Mr. Conable indicated that the debt burden of Latin American countries is heavy. "We in the World Bank support the reduction of debt where governments implement coherent policies to adjust domestic economies and improve their efficiency and self-reliance. But, as we know from the experience of a country like Peru which does not service its debt, unilateral debt and debt-service reductions do not by themselves solve economic problems. The fundamental thrust of adjustment has to address domestic policy." The World Bank, Mr. Conable said, has been a partner in the development of Latin American countries for 40 years. "In the last few years a substantial proportion of our loans has been in support of programs of economic and institutional reform. Today, nearly 400 projects with total investments of more than $90 billion and World Bank financing of $34 billion are being implemented in the region." NOTE: Money figures are expressed in U.S. dollar equivalents. * In line with the debt-reduction guidelines approved by the World Bank's Board of Executive Directors in June 1989. -2- The President of the World Bank also said that experience shows that excessively centralized economic management leads to inefficiencies that ultimately halt economic development. "The enlargement of governments, particularly the central government and central-government enterprises, implies radical centralization, depriving private organizations and local governments of both responsibility and opportunity. Many decisions which should be taken on economic considerations become highly politicized," Mr. Conable said. -0-