Third Irrigation Project Mexico

RESTRICTED Report No. p- 47 8 FILE COPY This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO NACIONAL FINANCIERA, S.A. OF MEXICO FOR THE THIRD IRRIGATION PROJECT April 21, 1966  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO NACIONAL FINANCIERA, S.A., OF MEXICO FOR THE THIRD IRRIGATION PROJECT 1. I submit the following report and recommendation on a proposed loan in the amount in various currencies equivalent to US$19 million to Nacional Financiera, S.A. PART I: HISTORICAL BACKGROUND 2. Two of the seventeen loans made to date to Mexico were for ir- rigation. They were Loan 275-ME of 1961 for $15 million, and Loan 336-ME of 1963 for $12.5 million. Construction work under both of these loans is progressing satisfactorily. 3. The project for the proposed loan was appraised by a Bank mission in August 1965. Negotiations were held from March 23 to 29, 1966. Negotia- tors were Lic. Victor Navarrete, Subdirector of the Nacional Financiera, S.A., and Subsecretary of Hydraulic Resources, Ing. Salvador Aguilar Chavez; they were assisted by five members of the staffs of their organizations. 4. The proposed loan would increase the Bankts lending to Mexico to $625.3 million (net of cancellations). Mexico has received no IDA credits. The following is a summary of Bank loans to Mexico as at March 31, 1966:  -2- Year Borrower Purpose Amount Undisbursed ($ million) 1949-1962 Loans fully disbursed 316.3 1960 Nacional Financiera Roads 25.0 1.7 1961 Nacional Financiera Irrigation 15.0 1.2 1962 Caminos y Puentes Federales de Ingresos and Nacional Financiera Toll Transport 30.5 .7 1963 Nacional Financiera Irrigation 12.5 9.2 1963 Nacional Financiera Roads 40.0 21.7 1965 Caminos y Puentes Federales de Ingresos and Nacional Financiera Toll Transport 32.0 31.7 1965 Nacional Financiera Agricultural Credit 25.0 25.0 1965 Comision Federal de Electricidad and Nacional Financiera Power 110.0 86.o Total (less cancellations) 606.3 Of which has been repaid 83.8 Total now outstanding 522.5 Amount sold 143.0 Of which has been repaid 27.8 15.2 Total now held by Bank 507.3 Total undisbursed 177.2  - 3 - 5. Construction and procurement have been generally proceeding according to schedule with the exception of the 1960, 1962 and 1963 highway loans, where delays were caused by very heavy rains, difficulties in obtaining the right- of-way, limited budgetary allocations and the necessity to relocate some sections of the highways; remedial actions are being taken. 6. There are no other M4exican projects which are expected to be ready for presentation within the next few months, although several are being pre- pared by the Government for the Bank's consideration. PART II: DESCRIPTION OF THE PROPOSED LOAN 7. The main features of the proposed loan would be as follows: BORROWER: Nacional Financiera, S.A., a financial agency of the Mexican Goveriment which, under the existing lexican legislation, has to be the borrower or co-borrowier of Bank loans. GUARANTOR: United Mexican States. AMOUITT: The equivalent in various currencies of $19 million. PURPOSE: To assist in the rehabilitation of the Region 1agunera and San Juan del Rio Irrigation Dis- tricts0 AMORTIZATION: 20 years, with no repayments during the first 6 years; semi-annual installments beginning March 1, 1972, to retire the loan on March 1, 1986. INTEREST RATE: 6 percent per annum COI0IT EUT CHARGE: 3/8 of 1 percent PART III: THE PROJECT 8. An appraisal report entitled "Rehabilitation and Expansion of the Region Lagunera and San Juan del Rio Irrigation Districts Mexico"(TO-520 c) is attached. 9. Agriculture is Mexico's principal occupation from which one-half of the population derives its livelihood. Because of arid or semi-arid climatic conditions and a large proportion of mountainous terrain, the  - 4 - cultivable area is limited to about 30 million hectares or less than one hectare per inhabitant. A continued increase in production requires a more intensive use of available land which frequently calls for putting more land under irrigation. In fact, the sustained increase of agricul- tural production during the last decade has been caused in large measure by new irrigation works. Between 1950 and 1962 the crop area under irriga- tion doubled and now amounts to over 4 million hectares. In recent years, rehabilitation and expansion of some of the existing districts have been found to yield more rapid and higher economic returns than the irrigation of new areas and have, therefore, been emphasized. 10. Major irrigation works are planned, executed and operated by the Secretaria de Recursos Hidraulicos (SRH). This Ministry, existing since 1947, has a well qualified and experienced staff, both at headquarters and in the field, and maintains adequate laboratories for studies in hydraulic and soil mechanics. Considering that SRH has successfully carried out other much larger projects, the proposed project should be well within its capa- bilities. 11. The project would increase the quantity of water for irrigation in two irrigation districts through the construction of additional dams and reconstruction of the canal systems. In the Region Lagunera District the irrigated area would be expanded from 52,660 hectares to approximately 85,000; in the San Juan del Rio District the increase would be from 5,400 hectares to approximately 10,000. In addition, the project would regulate the water supply and reduce damage from floods; it would also reduce the construction or rehabilitation of 620 km. of roads in the project areas. Adequate agricultural extension services, including demonstration programs and long, medium and short-term credit to farmers would be assured by the Government. 12. The total cost of the project is estimated at the equivalent of about $65 million, of which the proposed 'oan would cover $19 million: the balance would be financed from the Federal Budget. The proposed loan would .nainly cover payments relating to civil works awarded under international competition with M"exican contractors participating without preference. With- drawals in respect of civil works will be at uniform percentage, which has presently been established at 27.5 percent to cover eauipment and materials which in the past generally have been imported into Mexico. The proposed loan would also cover the cost of machinery and spare parts on the basis of international competitive bidding in which qualified Mexican suppliers might be given preference, provided their offers do not exceed by more than 15 percent the offer of the lowest qualified foreign bidder. This preference margin is in lieu of customs or other import duties. Preferences in the procurement of equipment of 10 percent were allowed in one of the highway loans (3514-HE) and of 15 percent in the last two power loans (316-ME and 436-ME) in Mexico. i3. The only exception from international competitive bidding would be in case of emergency construction and small items of construction work which may be carried out better by government forces or local contractors.  - 5 - The total of these exceptions would not exceed 20 percent of all the construc- tion work. This maximum was 30 percent in the two previous irrigation loans to Mexico. 1I. The benefits of the proposed rehabilitation would justify the cost. Annual economic benefits arising from the increased net value of agricultural production are estimated at $9.6 million for the Region Lagunera District and $1.5 million for the San Juan del Rio District. The respective rates of in- ternal return would be about 11 percent and 16 percent. This calculation does not include some additional economic benefits, which cannot easily be measured, such as increased trade and employment in the area. 15. Water users would pay water charges sufficient to cover all operating and maintenance costs and make some contribution to repayment of capital. PART IV: LEGAL INSTRUNENTS AID AUTHORITY 16. The Draft Loan Agreement between the Bank and the Nacional Financiera, S.A., the Draft Guarantee Agreement between the United Mexican States and the Bank and the Report of the Committee provided for in Art. III, Section 4 (iii) of the Articles of Agreement are being distributed to the Executive Directors separately. 17. The provisions of the Loan and Guarantee Agreements are similar to those contained in loan documents for the previous Mexican irrigation proj- ects and for other projects of this kind. Special features are: (a) According to Section 7.01(b) of the Loan Agreement an effectiveness condition is that the Government takes action initially satisfying the requirements of Section 3.11 of the Guarantee Agreement concerning the establish- ment of water charges. (b) According to Section 3.12 of the Guarantee Agreement the Government will make available credit on reasonable terms to farmers in the project areas to enable them to carry out the necessary on-farm works and make full use of the proj- ect facilities. (c) According to Section 3.13 of the Guarantee Agreement, the Governm3nt will improve and expand agricultural extension services (including demonstration farms) in the project areas.  - 6 - PART V: THE ECONOMY 18. In April 1965 a Memorandum on Recent Economic Developments was submitted to the Executive Directors (R 65-59). iore recent information - given in an attachment - indicates that the Government continues to move cautiously in matters of public investment and foreign borrowing0 Fol- lowing a 6 percent annual growth rate of the economy over the last 15 years, substantial further growth is within the capacity of the Mexican economy, provided that additional savings are made in the public sector, that measures are taken to prevent a deterioration of the balance of payments and that private investment continues at a high level. The demonstrated ability of the Government to stimulate development is a favorable factor in assessing future performance. PART VI: COMPLIANCE WITH THE ARTICLES OF AGREEMENT 19. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank. PART VII: RECOMvENDATION 20. I recommend that the Executive Directors adopt the following re- solution. RESOLUTION NO. Approval of Loan to Nacional Financiera, S.A. in the amount of the equivalent of US$19,000,000 to be guaranteed by the United Mexican States. RESOLVED: THAT the Bank shall grant a loan to Nacional Financiera, S.A. to be guaranteed by the United Mexican States in an amount in various currencies equivalent to nineteen million United States dollars (US$19,000,000), to mature on or prior to March 1, 1986 to bear interest at the rate of six per- cent (6%) per annum, and to be upon such other terms and conditions as shall be substantially in accordance with the terms and conditions set forth in the form of Loan Agreement (Third Irrigation Project) between the Bank and Nacional Financiera, S.A. and the form of Guarantee Agreement (Third Irrigation Project) between the United M4exican States and the Bank, which have been presented to this meeting. George D. Woods President Attachments Washington, D.C. April 21, 1966  ViORANDUM ON RECENT ECONOMIC DEVELOPMENJTS AND PROSPECTS IN MEXICO Introduction 1. On November 26, 1965, on occasion of the presentation to the Execi'i1 ve Directors of the US$110 million loan for electric power, they were informed that the Government that had taken office in late 1964 was in the process of formulating an expenditure and financing program for the years covering its constitutional period of office, i.e, ending in 1970. The formulation of this program has not yet been completed; nevertheless, a Bank mission has recently visited Mexico as part of the first phase of an assessment of cur- rent prospects and problems in the next few years, and it is intended to re- view its preliminary conclusion with the Mexican authorities by mid-year, at which time the Government expects to be in a position to discuss its invest- ment and financing plans with more precision. The present memorandum is, therefore, still of an interim nature; while it incorporates the material obtained by the mission that visited Mexico in February and M4arch of this year, it cannot yet report on detailed forecasts agreed upon between Bank staff and the Government of Mexico. Output and Employment 2. Between 1950 and 1965 the Mexican economy experienced substantial growth and significant structural transformations. GNP, on the average, grew by about six percent annually; since population growth was approximately 3.5 percent per year, income per head rose by some 2.5 percent yearly or 45 percent in 15 years. Provided that no insuperable bottlenecka develop in the balance of payments, i.e., that foreign markets and long-term capital inflows develop favorably, a continuation of this growth rate would be within the capacity of the Mexican economy since the factors making for productivity increases in the past - a vigorous and growing entrepreneurial class and an agricultural sector which in part is geared toward modern technology - can be expected to continue to operate. It is possible, however, that some de- celeration of the growth rate may be imposed on the economy in the next few years if the prospect of rather less favorable conditions in the foreign sector than have obtained in the past materializes (see below). Another crucial determinant of the growth rate in the next few years will be the investment decisions of the private sector; stimulated by confidence in the long-term prospects of the economy and in the prudence and responsibility of the authorities, as well as by rising Government expenditures, this sector has recently been one of the most dynamic elements in Mexico's growth. 3. Mexico's urban population at present constitutes roughly one-half of the total. This proportion has been rising steadily and at present rates may be close to two-thirds by 1975. Both lower mortality rates in the cities and internal migrations have contributed to this result, with the latter factor probably being the preponderant one. Nevertheless, pressure on the available supply of agricultural land, especially in the densely settled central states, is one of the major continuing problems facing Mexico. N4hile  - 2 - considerable new acreage has been brought under irrigation - through large scale government outlays - in the sparsely settled northwesterm areas, the subdivision of land in the center has reached a degree that must be con- sidered excessive by any standard. Monetary and Fiscal Trends 4. After the effects of the 1954 devaluation were absorbed by the domestic cost and price structure, Mexico has, in the more recent past, managed to combine economic growth with a reasonable degree of price stability. This occurred in spite of very considerable expansions in the money supply, as the following figures indicate: 1955-1960 1960-1965 Percentage change in money supply 61 55 Percentage change in wholesale prices 20 11 Among the causes that account for this unusual performance are the gradual monetization of the subsistence sector, the high marginal savings coefficient of the private sector and a combination of government policies which included moral suasion to maintain prices stable, administered imports and some direct price controls. While no reliable data on wage rates in secondary and ter- tiary industries are available, their annual rate of increase in the 'sixties seems to have been of the order of 5-6 percent and may thus have been some- what in excess of productivity changes. 5. To attend the multiple needs of a developing economy, public sector investment during the last ten years has been expanding at a pace somewhat greater than total output, constituting about 5.9 percent of GNP in 1963-65, as against some 4.5 percent in 1955-57. Besides satisfying the growing re- quirements for economic and social infrastructure, in the early 'sixties, when private investment was lagging, public sector investments were also used in a counter-cyclical manner to prop up aggregate demand. In 1964 - the last year of the outgoing administration - they rose from M$13 to about M$16 billion, and in 1965 financial considerations imposed a retrenchment to approximately M$10 billion. It is not yet possible to be precise about the public investment necessary in the next few years; it would seem likely, however, that a sustained annual growth of six percent in GNP would require steadily rising public investment, possibly to M$18-19 billion by 1970. 6. In the light of the presently available information, which, as already pointed out, is still incomplete and tentative, it seems probable that the financing of investment of this order of magnitude will require some additional savings in the public sector. Although the Central Govern- ment's revenue system relies on some taxes whose yield tends to rise with GNP, the revenue system as a whole is only moderately elastic; and the appreciable past revenue increases (77 percent between 1960 and 1965) were in part the consequence of periodic changes in the rate structure as well  - 3 - as of administrative improvements and of price rises. Moreover, in recent years current expenditures have tended to rise faster than revenues (118 percent during 1960-65). Prime causes for the increases in current expendi- tures have been the growing deficit of the publicly owned railroads, the rising cost of agricultural subsidies, the increase in the Government's con- tribution to the social secarity system and the rapidly rising interest on the public debt, which in 1960 amounted to little more than M$0.5 billion while in 1965 it was almost M$2.3 billion and by 1970 could exceed M$4 billion. 7. The Government has already taken some measures to reverse the decline in public savings. Thus, beginning in 1966, private employers will absorb about half of the Government's contribution for private employees to the social security system which works on a tripartite (employer-employee-government) basis. The Government has also expressed its intention to curtail agricultural subsidies and has already reduced the support price for wheat, so as to shift to the producers the losses previously borne on account of wheat exports. Administrative changes introduced in 1965, which in effect make the Treasury the cashier of the decentralized public sector agencies and enterprises, are also expected to yield tighter controls over their expenditures. Furthermore, the Government is considering other organizational and policy changes in some of these agencies and enterprises and has expressed the intention to improve their financial performance. Some tax measures, mostly of an ad- ministrative nature, are also under consideration. 8. It is the present opinion of the Government that these various policies will suffice to raise public savings to a level at which, in con- junction with acceptable levels of domestic and external borrowing, re- sources will suffice to cover the public investment. However, until more details on the timing and magnitude of the intended measures become available, it is not possible to concur with or dissent from it. As decisions are reached on the public investment programs for the next few years, the Government may well conclude that still further measures are necessary to make complete the public sector's financing plans. The Mexican authorities have shown skill in managing Mexico's economic affairs and, in 1965, demonstrated that retrench- ment in expenditures will be made if circumstances so require. The External Sector 9. It seems unlikely that Mexico's growth during the past decade and a half would have been possible without very favorable foreign exchange earnings, which rose at an average annual rate of about 5.5 percent. How- ever, a perceptible slowing down occurred both in conmodity exports and in earnings on service account during the second half of the period; and, at least as concerns commodities, a further deceleration seems likely in the next few years. One reason for this is the change in agricultural price support policy referred to above; in recent years the largest additions to export receipts originated in subsidized wheat and corn exports. The de- cision to reduce or eliminate these subsidies will most probably induce a decline in the exports of these cereals. Combined with the prospect of some declines in cotton prices - Mexico's most important export comnodity - this implies that even if the exports of manufactures continue to grow at  - 4 - the dynamic pace of recent years, total export receipts will probably expand at no more than some two percent per annum. Services, on the other hand, show no indication of lagging; receipts from tourism and border trade - 39 percent of total current account receipts in 1965 - have been growing at an average annual rate of 8.5 percent during the past five years, and may well continue to do so. 10. One of the sources of strength of Mexico's foreign sector is its diversification. Its three most important exports, cotton, coffee and sugar, account for only about one-third of total commodity exports. In the past price fluctuations have, to a degree, been mutually offsetting. Besides, special factors, such as the cereal situation referred to above and the access to the United States sugar market made possible by the absence of Cuba from this market, have contributed to the growqth of exports. At present, however, no new elements of strength of comparable magnitude are foreseeable. Mexican authorities are, therefore, becoming increasingly conscious of the need to reduce costs in a wide range of industries so as to make them com- petitive gradually in international markets and have recently to this effect announced a broad reorientation of their industrial protection and develop- ment policies. While the effects of the new policies on exports cannot be expected to be noticeable on the short run, their longer term implications may be substantial. 11. Confidence in the growth and stability of the economy, as well as the stimulus provided by particular industrial protection policies, have in recent years produced a rapid rise in direct foreign investments (US$1145 million annually in 1963-65 against an annual average of US$54 mil'lion in 1959-61). In recent years the automobile industry - affected by the Govern- ment-imposed requirement that at least 60 percent of each new car be produced domirestically - has been a major recipient of these funds. Since the basic investments in this industry are now largely completed, and since no single industry of cormparable magnitude appears likely to take its place as an object for foreign investment, direct capital inflows are likely to level off even if confidence remains as high as is generally expected. 12. An inflow of official capital has been, in recent years, important in sustaining the balance of payments. The very high public investments of 1964 were in large part financed by foreign borrowing on relatively short terms, so that the debt service ratio rose from 16 percent in 1960 to about 22 percont in 1965. Preoccupation with this rising trend was one of the 2'Uctors that induced the Mexican authorities in 1965 to retrench drastically in public investments and to exercise extreme caution in their new foreign borrowing. They have expressed their intention to do everything possible to maintain the absolute level of foreign debt service obligations (interest and amortization) during the next few years at or belcw the level of about Us$1450 million at which they stood in 1965. 13. The amounts and terms of foreign official borrowing will be ex- tremely important in Mexico's economic management in the next few years.  Mexico needs to move expeditiously in arranging and utilizing external loans on a project basis if the momentum of the development effort is to be main- tained. The Government has expressed its intention of continuing to utilize Mexico's excellent credit standing in the international capital markets by making bond issues, as was so successfully done in 1963-65 when US$128 mil- lion were placed with European and North American investors. Moreover, the Government has stated that the controls established in 1965 over the foreign borrowing of the decentralized public sector will be utilized energetically both in limiting new debts to high priority projects and to obtaining the best possible terms regarding grace periods and maturities. Furthermore, the Mexican authorities have also expressed their intention to continue to make efforts to stretch out the maturity of the existing official debt; the recent placement in Europe of a US$20 million bond issue without Govermnent guarantee by the state-owned power sector (Comision Federal de Electricidad) to refinance its short-term obligations is part of these efforts. The present prospects of Mexico's balance of payments make all these policies and measures particularly important; the past record of the Mexican economy and the MvIexican Government makes the assumption reasonable that both will rise to this chal- lenge. Wlestern Hemisphere Department April 21, 1966  MLXICO BASIC DATA Area: 760,ooo Population (mid-1965): 42.5 million Rate of growth 3.6% Population density per square mile 55.9 Gross National Product 1965 242.4 billion pesos Rate of growth in real terms 1950-1965 6.0% 1960-1963 3.6% 1963-1965 7.5% Per capita 1965, US$ 473 dollars Origins of Gross Domestic Product (est. at 1960 prices) 1950 1965_ Agriculture, livestock, forestry and fishing 22.5% 17.1% Manufacturing and electricity 21.4% 26.8% Mining and petroleum 5.8% 4.9% Others 50.3% 51.2% Percent of GNP at Market Prices 1962 1963 1964 1965LJ Gross fixed investment (est.) 16.8 17.5 19.6 18.8 Gross national savings (est.) 16.1 16.6 18.1 17.6 Deficit of the balance of payments on current account 0.7 0.9 1.5 1.2 Interest and profits of private foreign capital 0.4 0,4 0.3 0.4 Federal Government current revenues 7.2 7.5 8.7 8.0 States and municipalities (incl.Fed. District) current revenues 2.6 2.6 2.4 n.a. Resource Gap as Percent of Investment 4.2 4.9 7.4 6.3 Annual 31 December 31 Decemb,r Rate of Change Money and Credit (Mex$ billion) 1964 1965E1 1960-1965 Total money supply 27.6 29.6 11 6% Time and savings deposits 8.7 n.a. 15.3 Commercial bank credit to private sector 11.9 14.5 15.7% Wholesale prices (1958=&100) 114.3 116.5 1.9% Cost of living (1958=100) 114.6 n.a. 1-37W  -2- Federal Government Ooerations 1962 1963 1964 19651/ (Mex$ billion) Current revenues 12.8 14.5 17.2 19.3 Current expenditures 10.6 11.7 13.5 16.7 Surplus on current account 2.2 2.8 3.7 2.6 Revenues on capital account - - 0.1 n.a. Direct investments 2.8 2.8 3.7 n.a. Indirect investment 0.8 1.4 1.3 n.a. Overall deficit -1.6 -1.7 -1.5 n.a. Consolidated Public Sector Operations 1962 1963 1964 1965 (est.) (Mex$ billion) Public Sector Fixed Investments lQ.4 12.4 16.2 9.9 Public sector savings 8.2 9.0 9.1 7.8 Domestic borrowing from banks (net) 2.9 1.8 4.4 3.3 Gross foreign borrowing 4.9 5.1 8.7 4.8 Amortization of external debt -3.2 -2.8 -3.9 -4.e5 Financial investment and statistical discrepancies -2.4 -0.7 -2.1 -1.5 External Public Debt (US$ million) 1962 1963 1964 1965 Total debt end of period (incl. 1 undisbursed) 1908.0 Total annual debt service 345.7 314.0 I79.32Y 452.9 Debt service ratio 21.8 18.3,, 26.1%f 22.8% Balance of Payments 1960 1961 1962 1963 1964 1965L/ (US$ million) a'ports of Goods and Services 1371.8 1463.4 1586.8 1709.3 1835.5 1984.1 Commodity exports 738.7 803.5 899.5 935.9 1022.4 1110.7 Tourism and border trade 521.3 556.7 585.3 656.5 703.9 782.1 Others 111.8 103.2 102.0 116.9 109.2 91.3 Imports of Goods and Services 1682.9 1683.9 1743.2 1915.3 2242.7 2343.8 Commodity imports 1186.4 1138.6 1143.0 1239.7 1493.0 1560.2 Tourism and border trade 261.5 287.5 310.1 349,5 376.8 413.6 Interest and profits of private foreign capital 141.6 148.1 159.3 185.6 236.1 225.9 Others 93.4 109.7 130.8 140.5 136.8 144.1  BLaanea .e of Pavments 1960 1961 1962 1963 1961, (US$ million) (Cont.) Balance on Current Account -311.1 -220 564 -206.0 -4072 -359.6 Errors and omissions (net) 108.1 - 88.9 9.0 72.0 -137.8 140.8 Long-term capital 120.1 285.5 26o.9 301.4 513.8 190.6 Direct private investment - 38.0 119.3 126.5 117.4 161.9 155.7 Official capital (net) 163.5 173.6 133.0 190.0 360.4 20.7 Other - 5.4 - 7.4 1.4 - 6.0 - 8.5 14.2 Short-term capital 74.3 2.4 -96.6 - 57.7 62.8 7.3 Changes in Central Bank reserves - 8.6 - 21.5 16.9 109.7 31.6 - 20.9 Commodit.v Concentration of Exports 1961 1962 1963 196h 1965L/ Cotton 19.9 24.2 20.9 16.7 19.1 Coffee 8.9 7.8 5.3 9.3 6.5 Sugar and molasses 9.1 5.1 7.4 8.8 6.6 Non-ferrous metals 9.6 8.o 7.8 7.1 6.5 Shrimp 5.4 5.1 5.5 5.3 3.9 Beef cattle and fresh and frozen meat 7.1 8.2 6.8 4.2 4.7 Sulphur 3.6 3.4 3.7 3.7 3.0 Tomatoes 1.8 2.2 2.6 3.3 3.2 Wheat - - 0.5 3.5 3,7 Corn - - 1.6 6.9 Total, ten largest items in 1965 65.4 64.0 60.5 63.5 64.1 Foreign reserves. December 31. 1965 (US$ million) 575.2 Equivalent to 4.4 months of estimated 1966 commodity imports. W Preliminary. 2 1960-1964. 2/ As of June 30, 1965. 3/ Includes prepayment of debt to Export-Import Bank, WVestern Hemisphere Department April 15, 1966  - 4 - Table 1: MEXICO-EXTERNAL MEDIUM- AND LONG-TERM 1/ PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF JUNE 30, 1965 WITH MAJOR REPORTED ADDITIONS JULY 1, 1965 - APRIL 15, 1966 Debt Repayable in Foreign Currency (In thousands of U.S. Dollar equivalents) Debt outstanding Major reported June 30, 1965 additions I t e m Net of Un- Including July 1, 1965- disbursed Undisbursed April 15, 1966 TOTAL EXTERNAL PUBLIC DEBT 1,657,451 1,907,574 269,690 Publicly-issued bonds 113,035 113,035 47,500 Privately-placed debt 898,209 900,325 - Suppliers' credits 302,2 7 304,323 Other 595,942 596,002 - IBRD loans 307,380 399,939 135,000 IDB loans 19,596 72,392 44,500 U.S. Government loans 174,407 246,451 42,690 Export-Import Bank 133,868 186,912 2/ 21,190 AID, ICA, Lend-lease 40,539 59,539 21,500 Loans from other governments 97 990 128,598 _ Canada 2,750 France 36,146 66,754 3/ - Germany 19,688 19,688 Italy 39,406 39,406 3/ - Nationalized properties 46,834 46,834 - 1/ Debt with an original or extended maturity of one year or more. 2/ Does not include $90,000,000 authorized by Export-Import Bank. 3/ Does not include undisbursed portion of the following lines of credit: $150,000,000 Trend credit ($105,305,263). $ 75,000,000 from Instituto Mobiliare Italiano ($29,521,026). $ 10,000,000 from Banque Nationale pour de Commerce et 1' Industrie ($ 9,771,485). Statistics Division IBRD-Economics Department  Table 2: MEXICO- ESTIMATED CONTRACTUAL SERVICE PAYMENTS ON EXTERNAL MEDIUM- AND LONG-TERM PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF JUNE 30, 1965 WITH MAJOR REPORTED ADDITIONS JULY 1, 1965-APRIL 15, 1966a/ Debt Repayable in Foreign Currency (In thousands of U.S. Dollar equivalents) CRAND TOTAL Debt Outstanding Payments During Period Year (Beginning of Period) Amortization Interest Total Including Undisbursed 1965 I.869,605 b/ 371,522 81,372 452,894 1966 1,867,296 327,020 86,oo6 413,026 1967 1,651,354 247,652 79,207 326,859 1968 1,h40,502 209,039 71,284 280,323 1969 1,195,944 170,521 61,380 231,901 1970 1,025,930 121,785 54,215 176,001 1971 904,781 111,129 47,818 158,947 1972 794,067 94,497 41,809 136,307 1973 699,985 84,023 36,540 120,563 1974 615,996 75,986 31,943 107,929 1975 540,O1o 66,412 27,615 -.94,027 1976 473,598 57,010 24,115 81,124 1977 534,723 53,578 20,954 74,532 1978 363,011 51,669 18,032 69,701 1979 311,343 50,198 15,110 65,308 a/ Includes service on all debt listed in Table 1 prepared April 18, 1966 except for the following items for which repayment terms are not available: Privately-placed debt $ 4,129,000 Inter-American Development Bank 3,000,000 U.S.Government Lend-Lease 6,750,000 Loans from other governments L,090,000 $17,969,000 b/ Amount outstanding for 1965 is as of June 30; service payments are for the entire year 1965. Source: IBRD-Statistics Division