Report on Mexico's creditworthiness

 ----"~~----~---------------------------------------..... No. E.88 CONFIDENTIAL ~ ~:' ...- ........." ~'.~:...,:~ - II . "" . / i ~ & '~~~~~~~~~----:-:------:-----:i J c" . .-, ·( Th s report is restricted to those members of - - -.. _ . - -. ----. Lth~lstaff to whose work it directly relates. 66996 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT ON MEXICO'S CREDITWORTHINESS May 22, 1950 Economic Department Prepared by: G. de Fleurieu P. Pajunen  TABLE OF CONTENTS I. POLITICAL STABILITY AND ECONOMIC GRc\VTH 1 1) Political Stability 1 - 4 2) Economic Growth 4 .... 7 II. SUCCESS OF THE STABILIZATION POLICY 8 - 10 III • BALANCE OF PAYMENTS PROSPECTS AND EXTERNAL DEBT 10 1) Balance of Payments 10 - 12 2) External Debt 12 - 1:3 CONCLUSIONS 14 TABLES TABLE I Balance of Payments of Mexico TABLE II External Debt of Mexico TABLE III Estimated Interest and Amortization Requirements on the External Debt of Mexico TABLE IV Export-Import Bank Loans to Mexico  ~mXICOIS CREDITIVORTHINESS This paper is intended to present tentative conclusions on Mexico's credit- worthiness, based on opinions arrived at by the Bank's mission in April, 1950. Since the fundamentals of the economic situation in Mexico are already fa.miliar to the Bank, detailed and descriptive economic information has been largely dis- pensed vdth. It has been retained only insofar as it could illustrate neW or particularly notable aspects in the Mexican overall picture as it appears after ten months of stabilization. The mission has been impressed by many favorable developments which oc- curred inside Mexico or by Mexican initiative. The political atmosphere, the productive capacity of the country, the recent internal and external financial situation all show improvements which do not eliminate risks, but certainly tend to reduce their weight in each of these fields. On the other hand, Mexican poli- eies do not alone determine balance of payments prospects. Recent achievements in this regard may be more precarious. However, under certain not unrealistic as- sumptions, there is reason to believe that equilibrium can be maintained, and that debt obligations at their present level can be successfully met. 1. POLITICAL STABILITY AND ECONmr:IC GRClVTH 1) Political Stability The great revolutionary period which followed the fall of Diaz in 1910 seems to have resulted in some kind of social equilibrium. The pure white (now only two million out of a population of some twenty-five million) have granted equality to the Mestizos who constitute the bulk of the population. Together, they recognize the political, economic, and educational rights of the pure Indians; the latter representing only one-third of the population. Racial differences, a1- though not erased since a large fraction of the Indians actually lives outside the money economy, are abolished in prinCiple, and the breaking up of large estates, jas well as the slow but continuous rise in industrial wages, make new social uprisings appear unlikely. Although extreme contrasts of wealth and poverty are still a characteristic of Mexican society, it has become more democratic j.n the sense that a strong middle-class is growing, and that the movement from one economic or sccial class to another is probably easier in present day Mexico than in any other Latin American country. So far, the civilian government enjoys support from, and authority over the army. It devotes a large part of its efforts in developing education, roads, and new lands for cultivation, while encouraging industrial pro- duction, partly by official means. It stands midway between the industrialists and bankers whose initiative is co~~ended and often supported, and the labor forces which are split among a number of unions. The government plays the role of an um- pire, and no grave discontent appears to threaten the balance of power in the cities. In the country, serious discontent seems also to be lacking as the more enterprising peasants do not lack possibilities to look for a better lot else- where, while those who stay will either enjoy some education and some opportunities for advancement, or are Indians, too remote from civilization to constitute a threat. Nationalist aspirations which, quite strikingly in the revolutionary past, played as important a role as social discontent, also seem to have passed the ag- gressive stage. The wave of nationalization which accompanied the Cardenas regime (1934-40) was an expression of both the nationalistic and socialistic ideologies against foreign capitalist interests. Since then, the two presidents who followed Cardenas, Camacho and Aleman, have progressively encouraged investment, foreign and domestic, while preserving the main results of the Cardenas policy. This whole process of stabilization may be illustrated by the very name of the all-important quasi-official party "Partido Revolucionario Institucionnal ll • The revolutionary spirit is n~l embodied in permanent institutions and is safe- guarded by the government. The people and labor unions are conscious of this.  -3- In practice, even the wealthier classes of industrialists and bankers now cooper- ate vvith the government whose prestige, incidentally, has been increased by the success of the stabilization. There is a large measure of agreement on the con- crete policies followed in public works, education, etc. Thus, the strong presi- dentia~ p~~ers and the practically one-party political system are not widely resented. Since the days of Calles, there has been no civil strife, and the three last presidents, Cardenas, Camacho, and Aleman, were elected peacefully. There appears to be no great proba.bility that the next Mexican government will face serious disturbances or fundamentally alter the line of policy followed at present. "Institutionalismll now means that future reforms should take place through legis- lation and not through violence. This does not mean that political risks are non-existent. The present regime comes to an end in 1952. !IJIili tary men might conceivably seek a return to military rule. Most observers consider this unlikely, however, after the success- ful civilian e;~eriment of the last few years, even if the next president were again a general. A return to more leftist tendencies after 1952 is also conceiv- able, though unlikely. Cne more unfavorable indication might be worth mentioning, however. The possibility of a re-election of ~resident Aleman, has been discussed openly, probably with the latter's tacit consent. 1,.'hile this may be no more than a trial balloon, and while most observers do not take the matter seriously, it is clear that attempts by the president to be re-elected would endanger civil peace, as they could be construed as violating a cherished revolutionary and constitu- tional principle. The president would be open to the accusation of seeking per- sonal pov'"ers. These uncertainties, on the whole, do not appear to alter f~~damentally  -4- the general picture of stability that has been presented. They might, however, justify caution in new loan co~mitments to Mexico so that available credit would be spread over a period including both the present regime and its successor. 2) Economic Growth The impression given by present-day Mexico is one of intense and contj.nu- ously increasing activity, both in the agricultural and in the industrial fields (outside of mining). a) Agricult~ Due to permanent handicaps originating from a mountainous soil and arid climate, most Mexican authorities agree that future agricultural developments in Mexico will necessarily be limited in the long run to a small fraction of the COtllltry1s area.!! Despite these h8.ndicaps, much has already been done, and large agricul- tural possibilities still exist. During the post-war years, Mexico greatly in- creased her food and feed crops, and her agricultural exports have expanded. The country has become more or less self-sufficient in its basic food, corn. Yields have also improved in most crops due to efforts in the fields of genetics, pest prevention, fertilizers, etc. Since the beginning cf 1946, <:n'"er 1,200,000 acres of land have benefited from new or improved irrigation. Cotton production, in 19w.9, more than doubled since 1944, (ind the value of cotton sold abroad surpassed that of lead for the first time. Sugar, which was an import item prior to 1947, was exported for a total value of ~ll million in 1949. Meat-packing earned :;P18 million in 1914-9, a higher sum than was ever earned by exports of cattle on hoof. Processing of shrimp has also greatly increased the dollar-earning capacity of the Mexican fisheries. These achievements represent only one step in the agri- cultural progress of Mexico. The extension of irrigation is continuing, and it 1/ Only 12% of the country's area is cultivable; only 5% is irrigated or irrigable. - This, of course, does not include pasture land and forests.  -5- can be estimated that, at the present rate, Mexico may, by 1955, have doubled her present productive c~pacity for growing crops on irrigated land. After that, ac- cording to conservative estimates, there will remain available an area of irrig- able land still larger than the existing irrigated area. Thus, even vvith the present rapid rate of population increase, it appears that Mexico can expand her food production at a more than corresponding rate, at least over the period of one generation. Indeed, the newly irrigated regions are an impressive example of integrated development. In many regions of the republic, Matamoros, the Yaqui Valley, Mexicali, Sinaloa, the Laguna region, and soon in the basins of rivers Papaloapan and Tepalcatepec, the face of the land is being literally changed as large dams and irrigation ditches are completed. A good example of the cumula- tive increase in wealth to be expected from irrigation can be found, among many others, in the district of Culiacan in the State of Sinaloa, which was visited by members of the mission. Between 1940 and 1949, 11) million pesos were invested in the irrigation of this district. The value of crops in this area is now about 100 million pesos annually. Approximately 140 million pesos have been invested in sugar mills and other industries by private initiative. The value of land has also increased by 160 million pesos.!! The population of the to¥m of Culiacan has increased three-fold since 1940, and an entirely new town is growing around a sugar mill recently completed. The development of agriculture and irrigation in Mexico appears, on the whole, to be conducted in an efficient manner, and most observers agree that it is technically adequate. The risk of some waste in expenditures cannot be entirely discounted, but there is no indication that it has occurred on any substantial scale. Thanks to this effort, prospects for agricultural production appear rela- tively encouraging for many years despite the basically unfavorable natural con- ditions which will ultimately result in fixing a limit to agricultural expansion and do warrant the development of other activities. Y SOQ'ce: Ministry of lWdraulic Resources.  -6- b) Industry Import prohibitions, imposed in 1947 and further aggravated in 1949, gave an additional stimulus to manufacturing industry which, already during the war and i~mediately after, had advanced rapidly, as was described in the first IBRD report on Mexico. Higher prices of imported goods as a result of devaluation also helped to increase the manl~acture of goods which were previously imported from the United States. Of the new industries fostered by these restrictions, the most typical ones are auto assembly plants, radio and refrigerator factories, all of which assemble parts imported from the United States. These industries, hmvever, partly avie their existence to these very restrictions and have limited markets and high overhead costs. Other industries which have greatly increased their production since 1948, due to added capacity, include food processing (sugar and meat-packing), cement, and paper. The increase of the entire manufacturing industry in 1949 amounted to some 10% over the 191.).8 volume. An equal increase took place also in petroleum refining and electric power. The mining industry, however, remained stagnant or about 30% below the 1929 peak. Nacional Financiera has been increasingly instrumental in Mexico's indus- trial development since 1948. In addition to expanding its industrial investments (bonds and shares) by the equivalent of ~lO million in 1949, Nacional Financiera has developed its promotion activities and its standby operations to support pri- vate bond issues. Enterprises enjoying Financiera1s assistance in 19h9 include the large Altos Hornos Steelworks, Chapala Electric Co., a paper mill, a large new fertilizer plant, Industria Electrica, two sugar mills, two textile mills, and a cement plant. To sum up, it can be said that Mexico had definitely passed the initial stage of industrialization and is now advancing towards greater industrial  -7- self-sufficiency by using available domestic and foreign financial resources bene- fiting from extensive Federal public works (new roads and electricity). The present tendency is towards reliance on local raw materials (chemicals, wood and metal processing, food processing), and the modernization of existing plants (textiles, iron and steel), as well as the increase of local technical know-how and experience. Risks involved in Industrial Expansio~ A large part of the Mexican manufacturing industry is less than ten years old and still in a period of financial adjustment. Besides a shortage of invest- ment capital, there is a shortage of working capital too, and some new industrial enterprises, especially in the unprotected fields, are facing financial diffi- culties. Thus, although the present. government is follovling rigid credit policies, there exists a latent pressure from a rapidly gr~ling industry (but not from the banking community) to loosen present restrictions. Although this risk is not very great at the moment, and as long as balance of payment surplus mitigates the effect of these restrictions, it might become serious again and add to other causes of monetary expansion. In addition to greater reliance on local raw materials, there is a ten- dJncy towards the establishment of new industries largely dependent on import prohibitions and high tariffs (assembly plants, artificial silk, phQxmaceuticals). If exaggerated protectionist policies are to be follovfed by the Mexican Government, c:apital, both domestic and foreign, may be drawn into channels v;hich, in the long run, would prove less profitable than industries based on local raV'! materials. Any further steps which may tend to make Mexico a high-cost country would detract frcm her export and tourist income prospects.  -8- II. SUCCESS OF THE STABILIZATION POLICY The policy publicly announced by the Minister of Finance in October, 1943, the last step of which was the fixation of the new par value of the peso at 8.65 to the dollar on June 17, 1949, has since then worked successfully, both in the internal and external fields. Internally, for the first time in ten years, Mexico has had a budgetary cash surplus in the magnitude of 120 million pesos. Actual federal revenue, ac- cording to unofficial Treasury estimates, w'ere 2,891 million pesos, or around 500 million pesos more than budgeted - an achievement brought about by a better tax administration, fight against tax evasi.on, and also by a slight r~_se in prices. Actual federal expenditt~es were tentatively put at 2,765 million pesos, only 200 million pesos over estimates. A strict budgetary control of expenditure has been established. Efforts have been made to curtail unproductive expenditure. For instance, in the 1950 budget, appropriations for national defense amount to less than 10% of total budgeted expenditure and are the only important item which has not been increased over 1949~ Credit expansion has been kept in check. Total money supply has increased, according to latest figures quoted by I~. Beteta on April 27 last, by 580 million pesos since stabilization, i.e., less than the value in pesos of gains of gold and dollar reserves of the Bank of Mexico. Prices and wages internally have remained relatively stable, with recently a slight tendency to increase which is unavoid- able as the effects of devaluation are being progressively felt. Internal financial stability may be endangered by failure to maintain either the budget in balance, or the credit restrictions. The approaching election campaign of 1952 might cause some increased expenditure for salaries, or public works of political interest. Concerning credit controls, further price increases are expected this year, and demands for commercial and investment credit will tend to rise. It is by no means certain that capital imports and repatriation will  - 9 - fill the needs, especially this summer. Pressure to release credit restrictions might be exerted on the Central Bank, particularly during the summer, a period when receipts of exporters are seasonally lm~. The situation of decentralized government enterprises does not appear to be a major oause for concern from a financial point of view. ¥Jhile the rail- ways are still in bad shape, both operationally and financially, some improvements are being made, and deficits have so far been absorbed by the general budget. Sub- sta.ntial rate increases have been recently decided upon to help correct the situa- tion. Pemex is said to be in a sufficiently sound financial position to obtain credits from foreign banks or enterprises without a government guarantee. However, a detailed accounting study of Pemex's finances would be necessary to determine the situation .vith greater certainty. The internal financial difficulties of the Mexican Government cannot be denied, but in comparison vdth other difficulties the government had to overcome in 1948, they appear almost routine. The authori- ties are probably too conscious of the dangers faced in the past to give up their present reasonable policy before a long time. ~rnallY, the success of the official stabilization policies was clearly shovm in the 1949 balance of payments which developed favorably during the latter part of the year. In the current account there was only a slight deficit, and the overall balance showed a surplus of $46 million against a deficit of ';70 mil- lion the year before, according to tentative Mexican figures. (For details see Te.ble I). The improvement was largely due to lower imports which declined ~~78 lul... lion from their 1948 value, mainly as a result of the imposition of further import restrictions during the summer. Tourist receipts are another large element which developed favorably, increasing from ~l04 million in 1948 to ~l34 million (net). On the other hand, exports were slightly lower than in 1948, due to a sizeable decrease in the value of mei-al exports. This drop was, however" partly compensated by increased  ... 10 - agricultural exports, especially cotton. Strengthened by a surplus in the capital account, these largely favorable developments are reflected in the movements of gold and foreign exchange reserves of the Bank of Mexico, which increased from .;;64 million in June, 1949 to 0126 mil- lion at the end of 1949, and were still $119 million on April 10, 1950, although $22 millton had been repaid to the U.S. Treasury.!! The reserves have thus been rather well maintained during the early months of 1950 despite relatively high trade deficits in January and February. This summer will be a test period. Vlhether this favorable situation can be durably maintained depends upon the future trends in the balance of payments - on '/;hich some tentative views are submitted below. III. BALANCE OF PAYL'lEN':::S PROSPECTS AND EXTERNAL DEBT 1) Balan~ of Payments Relative stability in the balance of payments is to be expected this year. Increased earnings are in prospect from agricultural exports (cotton, coffee), and tourism. Metal exports may, h01r,rever, decrease in value due to lower prices in ,yorld markets. The net result will probably not be far above or below the 1949 level (assuming no important changes in the capital account). Durir~g the next five years a few structural changes, especially in the Gur:cent account, are foreseeable, which will either increase or decrease the total net earnings of foreign exchange. The ~ab~~le!Jlents in the l\~exican balance of payments can be expected to be: a) agricultill~al exports; b) tourism; c) oil balance; d) imports of manu. factured goods and foodstuffs; and, e) debt service. Agr~2!tl..lral exports are apparently the most expansionary element in Mexi- can exports. E..'q)ort crops (cotton, tomatoes, rice, sugar) grovm on irrigated areas (about 2 million acres), now earn about ~90-100 million annually. At the  - 11 - present rate of irrigation, another 2 million acres are likely to be added by 1955. In terms of new potential foreign income, this would mean that an increase in export capacity of some ~50 million, or about ~10 million annually, (at present prices), would be created between 1951 and 1955, assuming that only 50% of the new lands are devoted to export crops and the other half to domestic crops which are partly import saving (wheat). Tourism is certainly one item from which IVIexico can expect enlarged re... ceipts - thanks to new improved roads and hotel facilities. It probably would not be too optimistic to assume a gross increase of some 'i~Jo-50 million during the next few years provided, of course, that no significant decline takes place in the U.S. income level. The oil trade balance which, during the last few years, has shovm a sur- plus of about 'i~5 million, can be expected to increase to around ';10 million during the next few years as a result of the extension of refining capacity and better distribution through the construction of pipelines. The decline in the imports of foodstuffs will undoubtedly contj.nuc as long as there is suitable land available for irrigation. The expansion of domestic industrial production will replace other imports. This does not, of course, neeessarily mean a gradual decline in imports. It will rather provide a larger share for the imports of capital goods. Mexico is now approaching a period when her external debt service will start to decline from the present level of 041 million. More details are given in the follovung section. The only foreseeable income decreasing element in the long-term outlook is in metal exports. Mining experts estimate that the annual level of production tn 1951-55 yull average some 10% below the 1948-49 level. Prices are also likely to stay lower than in 1948-49. Thus, a more or less permanent decline of around 020 million is in prospect.  - 12 - Conclusion: The Mexican balance of payments prospects do not appear un- favorable. The external position, however, still has to be judged as precarious since equilibriUlll can be maintained only through import restrictions and strict internal monetary policies. ---. Risks involved in present situation. --~ It seems likely that the U.S.- Me::dcan Trade Agreement of 1942 will be denounced this year, especially sir.ce both the Mexican authorities, supported by industrialists, and the U.S. Government are increasingly aware of its inadequacy. Denunciation would apparently result in further restrictions on imports from the United States. On the other hand, it might seriously threaten Mexico's exports of lead, oil and tomatoes (altogether, $100 million) to the United States. At the moment, it is, hawe~ler, impossible to forecast the outcome of the present negotiations. Secondly" impending price and wage rises might wipe out some of the bene",:, ficial results of the devaluation, increasing imports and curtailing tourist and export earnings. Thirdly, an improvement in Mexico's reserve position depends mainly on her trade and service relations 'with the United states. If a recession should take place in the United States, the most likely consequence would be that monetary expansion would be resumed in Hexico and that new devaluation would occur. 2) External Debt The composition of h~exicots external debt on December 31, 1949 is de- scribed in Table II, and its most striking features are: a) that it is all due in U.S. dollars; b) that, of a total of ~282,000,000, some ~80,OOO,000 arise from pre-l914 debts, some ~lOl,OOO,OOO arise from settlement of property claims (mainly oil), and less than ;';>100,000,000 from development or equipment credits; c) that, at some lmdetermined date, Mexico will have to repay another ;:~15, 000, 000 to the U.S. Treasury and, as its exchange reserve improves, part at least of the 1~22.5 million purchased from the 1MF.  - 13 - As to service payments, details are given in Table III. Even taking into account the Bank of America credits due before 1953, and assuming all avail- able credits are used in 1950, the total debt sernce of Mexico is around ~h1-42 million in 1950 and 1951 and declines slightly during the two following years. A substantial decrease sets in from 1954 on, and 1955 service charges are $10 million (25%) belmf present ones. In the peak year of 1951 the debt service represents about 6% of 1949 current exchange receipts if u.s. Treasury and Il~ are not included. T~is percentage appears reasonable and the Central Bank had no difficulty in providing the necessary funds in the recent past. nhile the new credits obtained by Mexico since January, 1949 until now (May, 1950) amount to j80 million~the pace of disbursements on new and old com- mitments has, however, been much slmier and Mexico still has around,,;70,OOO,OOO undisbursed credits available. Nevertheless, Mexico is at present negotiating for: 042 million vdth the Eximbank for irrigation and power (presumably long-term); $15 million with the Bank of America (2 years); $2.2 mil Ii on with the Chemical Bank and/or Valley Bank of Phoenix, Arizona (2 years). Assuming that these new credits are granted, there seems to be little cause for concern on the present ability of Mexico to service rBrill1s loans, but it would not be vnse for the Mexican Government to continue its policy of heavy borrowings abroad to the point where service payments would materially exceed their present level. In other words, it is rather the terms under 'which the loans are obtained thal' their amount which should be considered. Mexico has evidenced a tendency to accumulate mediun:t-.term maturities for 1952. 'While the amounts involved at present cannot be considered alarming, substantial use of this device might make for difficulties when refunding becomes necessary_ As far as long- term conunitments are concerned, it appears advisable for Mexico not to increase her foreign debt service much beyond its present level, in view of the fact that the present equilibrium in the balance of payments is still precarious. y ri:-:luding IBRD, 050.1 million; tximhank, ~~23.3 million, and Bank of America, the balance.  SERVICE OF EXTERNAL DEBT OF MEXICO (MILLIONS OF U.S. DOLLARS) 501 1 1 I I I I I I I I I I I I I 150 40 I "",--- ------1140 301------ .------. I , I 30 20 ---------1120 10 I I . \.~. ~. I ... ,... I 10 01 I I I 10 1950 1955 1960 1965 1970 I.B.R.D. - Economic Dept. No. 476  ... 14- CONCLUSIONS The foregoing analysis has outlined the greater financial stability attained by }jerico, confirming its present foreign exchange earning capacity, but not allowing for over-optimistic prospects of great improvements in the bal- ance of pa;Y1llents, even on the two basic assumptions, that no recession takes place in the U.S.A. and that financial policies now followed in ~exico are con- tinued. The conclusion, that L;exico should not materially increase her present annual debt burden, does not mean, however, that I~exico cannot at present in- crease her external debt, in principal. The debt service payments will decrease substantially from 1954 on. Since service at the present high level is now manageable and should continue to be so, Mexico could, it seems, safely incur an additional debt in the magnitude of, say, :SlOO million, p:rtovided that interest and amortization payments merely maintain the aggregate service burden at or around the present figure. This debt could take the form of annual borrowings at the rate of, say, .;:;20 million a year for a period of five years. Taking ac- cotUlt of the time lag necessa~y for disbursement, the chances are that no bulge vmuld occur in the service schedule.  TABLE I BALANCE OF PAYMENTS OF MEXICO (In Million Dollars) GOODS AND SERVICES Exports (Including non-monetary gold)(f.o.b.) 481 .. 8 1947 - 194ali 1949 471.9 - 441.12/ Imports (c.i.f .. ) -719 .. 2 -;;97.,4 ... 5190,..... Trade Balance -237.4 -12;;.5 - 78.4 Foreign travel, net 82.9 104.1 133.7 Investment income, net - 57.8 -62.;; -66.9 Other services 4,,1 -1 .. 1 -2.0 Total -208.2 -85.0 -13.6 OTHER NON-COMPENSATORY TRANSACTIONS Private donations 22.3 21.6 17.6 Direct investments by U.S. 18.7 -20,,4 6.1 Other private capital 7.3 -4.2 -32.5 Official amortization -32.5 -23.6 -23.9 Gold subscriptions, nIF, IBRD -22.5 UNRRA contributions - 1.2 Official loans 25.6 1807 31.2 Grants from U.S. 31.8 8,,5 24 .. 4 49.;; 0.6 22.9 ERRORS AND OMISSIONS: 13.4 14.7 36 .. 4 Surplus (t) or deficit (... ) -145 .. 3 -69.7 t42:J. '" COMPENSATORY OFFICIAL FINANCING HlP' Res ources 22.5 U.S. Stabilization Fund loan 20.0) ) Foreign exchange reserves 22.9) 10.6) -35.4 J.!.lonetary gold 19.9 59.1 -10 .. 3 Total 145.3 69.1 -45.7 "'Jf;i;7===;;;;;r 1/ The 1948 figures do not tally with those given in "International Financial Stat. - tics" because of revisions made later by the Banco de Mexico. Y It has been assumed that non-monetary gold exports in 1949 were the same as in 1948, which were $10.8 million. Source: 1947 figures, "International Financial Statistics 1l ; 1948 and 1949 figures, Banco de iv!exico ..  TABLE II EXT:I:;RNllL DEBT OF MEXICO (In Thous.inds of U. s .. Dollars) Totals of Ori- Totals of Ori- Total U.S. Dollar ginal Issues ginal Issues Equivalent under Outstand- in Original Converted into 1942 and 1946-50 ing Currencies U.. S. Dollars Debt . Adj. Pl~nsll - Dec.31, '49 -~.-- Goverruncnt Bonds Issues in U.S. dollars 58,915 58,915 Issues in ~ Sterling 30,094 142,935 / Issues in Pesos 139,594 28,7825 Total Principal 230,63221 37,938!±/ 36,234.2/ Interest 1914-22 Period 93,868 Interest 1923-}~2 Period 185,01~6~________~~~ Total Interest ~84 1,350 Total Principal and Interest )09,516 ---~9,288 36,234 Railway Debt Principal Outstanding 233,112 43,258 l~2, 777§/ Interest 1914-22 ?eriod 92,582 114 Interest 1923-45 Period 2)1,910 2,087 Total Interest 324,4n-- 2,201 . Total Principal and Interest 557 , 604 -----'4'),E9:&.&~7----""'4=2,"""'7;;::;7""7 . other Debts IBRD Loans Outstanding 6,8861/ Export-Import Bank Outstanding 77,721 Bank of hIDer-ica - Trans-Isthmian Road and.Alem&.n Pam, Southeastern Ry. 6,016 Westinghouse Electric Int. Co. 3,915 International General Electric 1,917 Aluminum Import Corp_ 106 Oil, agrarian and other settlements for claims to: United States Mexico Eastern Oil Co. 800 Mexican-American Claims 14,000 Other Countries Building in Buenos .hires 51 i"illglo-:Jutch Se~tlement 92,41g81 282,83P Available Credits IBRn old loans -undisbursed (April, 1950) 22,897 II new commitments (April, 1950) 16,000 Export-Import Bank old loans undisbursed (April, 1950) 27,300 It Il 11 new commitments (April, 1950) 1,250 Bank of America (Dec. 31, 1949) 1,484 68,931 (contin~ed on next p~ge) TABLE If (Cont'd) !I At the rate fixed in debt settlement agreement with the International Com- mittee of Bankers in Mexico. 2/ About 13% of this is enemy-owned and will not be recognized. 3/ About $47 million of this is enemy-owned and will not be recognized. 4/ E;{cludes enemy-owned bonds. ~/ Excludes enemy-ovr.ned bonds. Total outstanding is ~45,491,000. ~ Excludes enemy-mvned bonds. Total outstanding is $48,064,000. 7/ In computing service charges, the total amount of $50,100,000 was taken into - account. 8/ Excludes purchase of dollars from IMF of $22.5 million and U.S. Stabilization - Fund loan of $15 million.  TABLE III ~ATION REQ:tJltl1!]I'4ENTS ON THE EXTERNAL DEBT OF MEXICO Thousands of U.S. Dollars) Mexican Mexican- Oil Set- Westinghouse Inttl. Aluminum .~ !. )0 Eastern American tlement Elee. Int.l. Gen t 1 •. Import Eank of , r:. I .~ -:.~~ Oil Co.. Claims tEl Aguila) Co. 4 Corp. America!:tl Total-'.J ~ 210 2500 8700 527 676 108 3964 lHJ15 216 2500 8700 514 657 3630 42111 ,\,' . 222 2500 8700 502 638 519 39707 :'> 2500 38619 ,.'i ." 228 8700 489 50 2500 8700 477 342 90 1500 8700 465 31833 8700 452 28531 8700 440 24851 , ; 8700 42:8 23055 :'" \ . I 8700 209 21937 8700 20549 8700 18498 ,;' r 8700 18289 , 9197 1: , ..:c. ~. n082 ."".,,.. ~ 10985 10886 .', , 10641 ,. ~ - 10176 6360 ': ~:', . ;" r· ' 6269 6257 6240 6225 4583 3646 a683 disbursed (12/31/49). '. > back interest plus payments for 1946, 1947.- 1948. 1949 over the four years 1950-53_ $16,137 was outstanding on l2/31/1J.9. It ,,,as assumed that the remainder 1I'1ould be drm\ll1 down in .\ • ou obligation described as "Euilding in ~uenos Aires" • ~.  TABLE I.¥_ EXPORT-D.~PORT BANK LOANS TO HEXICO (thousand dollars) Credits Authorized Cancel- April 30,1950 PURPOSE Date Amount lations Undisbursed Outst~nding Railroads Equipment 3-21-45 19,000 13,700 DOe 12-3-47 7,000 5,939 Do. 8-3-49 12,900 12,900 Pacific Railw<!lY 8-3-49 5,000 5,000 43,900 Highways Construction, equipment 8-21-41 30,714 4,000 11,245 Do. 8-21-41 9,285 1,103 39,999 Electricity Equipment 3-21-45- 20,000 1,000 17,400 Chapala Co. 10-1-47 3,500 360 3,140 23,5'06 Heavy Industry steel Mill, Al tOB Hornos 4-10-42 8,000 500 4,714 Equipment,Fundidora 5-16-45 800 200 438 Raw materials, Consol- idada 9-15-49 1,500 1,500 Gasoline refinery, equipment 1-31-44 740 130 Do. 1-31-44 9,260 50 870 Coal mine development 4-5-50 2,740 2,740 Chemical & Fertilizer 2-11-48 6,000 1,900 4,100 29,040 Agriculture, & Processing , Agricultural equipment 11-12-47 5,000 4,399 Deef canning plant 12-3-47 1,000 Two sugar mills 12-3-47 5,000 4,01+4 Shrimp vessels 4-19-50 1,250 1,250 12,250 ¥is.,?o xJachinery and Equipment aft Hand~",cr 5-18-42 983 65 10 75 Equipment 2-13-46 3,000 1·S00 1,500 Do.:. 4-30-47 341 341 Wate:..· works 2-2-49 1,519 56 1,463 5,843 Total 154,533 6,115 27,257 74,320 Past operations 2,433 1,383 Grand Total 156,966 7,498 27,257 74,320 Source: aTld Authorized