Word: portillo
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...industrial nations have managed to cobble together a package of some $1.85 billion in credits to help the Mexican government meet its obligations for the next few months, longer-term aid will likely have to come directly from the IMF. The government of President José López Portillo has asked for between $4 billion and $5 billion in three-year credits, but before granting it, the fund is expected to insist on a package of tough austerity measures that may include higher taxes and a sharp cutback in government spending...
...reaction to López Portillo's bold plan was sharply divided. Bankers and some businessmen were outraged. Said Carlos Abedrop Davila, president of the Association of Bankers of Mexico: "Nationalization of private banking will aggravate the current crisis." The government's top banker, Miguel Mancera Aguayo, director of the Bank of Mexico, promptly resigned, apparently in protest over the nationalization. Labor unions and left-wing political groups, however, praised López Portillo. "We believe that these measures will strengthen the economy," said Jose Dorantes Segovia, president of the Labor Congress...
...Portillo's drastic program is designed to help ease Mexico's severe shortage of U.S. dollars, the main currency of international trade. In recent months, Mexico has not earned enough dollars from its exports to pay for imports and keep up with interest on its foreign debt. That imbalance has helped drive down the value of the peso against the dollar. In the meantime, wealthy Mexicans, fearful that drastic moves like last week's nationalizations might soon take place, have been making the problem worse by sending money to foreign banks...
Both within and without Mexico, there is wide agreement that López Portillo is attacking the symptoms of his country's disease rather than the root causes, for which many assign him the blame. After taking office in 1976, López Portillo launched an overly ambitious industrial expansion program and lavished money on an effort to transform the country into a Third World power. He provided cheap oil and other aid to Central American neighbors. Riddled with corruption, his government has a payroll loaded with jobs that do not really exist. López Portillo...
...likely to be granted only if the country adopts new austerity measures to improve its balance of payments. Such moves might include higher taxes and a sharp cutback in government spending. While helping Mexico's credit rating, these steps would also boost unemployment. López Portillo gave no specifics of a new austerity program in his speech. Making unpleasant economic choices will soon be the job of his hand-picked successor, Miguel de la Madrid Hurtado, who will take office in December...