Announcement of World Bank has Assisted Mexico’s Development Efforts Since 1949 on January 24, 1990

FOR IMMEDIATE RELEASE iWorld Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. * Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 90/S21 Contact: Ciro Gamarra (202) 473-8721 WORLD BANK HAS ASSISTED MEXICO'S DEVELOPMENT EFFORTS SINCE 1949 WASHINGTON, January 24, 1990 -- Since January 1949, the World Bank has assisted Mexico's development efforts with 119 loans totaling $15.3 billion. The loans have supported the country's recent economic-reform programs and development projects in a variety of sectors. Mexico is the third largest recipient of World Bank assistance. During the World Bank's fiscal year 1989, which ended June 30, 1989, the Bank approved six loans totaling a record $2.23 billion for Mexico. The Bank had approved a total of $2.03 billion in loans to the country during the previous fiscal year. The fiscal 1989 lending program for Mexico included three $500 million loans for reforms in the financial, industrial and public- enterprise sectors; $460 million for a hydroelectric power project; $250 million for an industrial-restructuring project; and $20 million for a project designed to improve water supplies and increase the role of women in the country's development efforts. Disbursements to Mexico increased substantially over the past three years, reaching a record $1.26 billion in fiscal year 1989. During the first half of fiscal 1990, which began July 1, 1989, the World Bank approved loans totaling $495.5 million for Mexico: $350 million to build low-income housing, $100 million to improve agricultural marketing, and $45.5 million for forestry development. By December 31, 1989, more than $10 billion of total World Bank commitments to Mexico since 1949 had been disbursed. Mexico has already repaid about $3.45 billion. Mexico is currently implementing about 40 operations with support from the World Bank. About 27 percent of World Bank lending to Mexico has been earmarked for agriculture and rural development; 28 percent for industry; 22 percent for transportation, power and water supply; and 12 percent for trade. The remaining 11 percent has been allocated for tourism, urban development, housing, and vocational training. NOTE: Money figures are expressed in U.S. dollar equivalents. -2- World Bank assistance to Mexico is supporting Mexico's major reform initiatives through an expanded policy dialogue and a substantial volume of lending. It aims at contributing to the consolidation of an outward-oriented development model and serving as a catalyst for mobilizing external finance in the required amounts to help restore economic growth. The World Bank has transferred increasing amounts of resources to Mexico through policy-based and sector adjustment loans in the context of an adjustment-oriented framework that was supported by a 1986-87 commercial-financing package. Since then, the Bank has become Mexico's largest single source of new money. Six World Bank loans in trade, exports, agriculture, and industry were linked to that multi-facility financing scheme, providing drawdown conditions for the parallel money and growth facilities which had both been disbursed fully by March 1988. The Bank also provided guarantees of $750 million and facilitated Mexico's efforts to issue securitized bonds for retiring old debt in January 1988. To lend effective support to the initiatives of the current government, the Bank's overall assistance focuses on the promotion of adjustment with recovery of growth, strengthening incentives to increase efficiency, alleviating poverty and protecting the environment. The World Bank has reviewed Mexico's adjustment and structural- reform priorities and, jointly with the government, defined a broad program of support through the three adjustment operations approved in June 1989, which provided the central element of the Bank's support for Mexico last year. These loans included a set-aside portion of $375 million for debt- reduction purposes. The World Bank is currently preparing an operation to provide resources for Mexico's debt-reduction program. Together with set-aside portions in several adjustment operations, the Bank's support for debt reduction would amount to an estimated $2 billion. As lending for adjustment is expected to decline in the future, support for the recovery of growth, poverty alleviation and social-sector programs, and enviromental protection, will increase. Growth-oriented lending would concentrate on infrastructure, urban development and agriculture, including technology, research and extension services. Investment programs would be supported in irrigation, power, urban transport and urban development. The World Bank is assisting the government in redesigning public health, education, and human resource programs to make them more cost effective and targetted at the poor. The Bank is also assisting in the preparation of an air pollution control operation in the Federal District. -0- S