Report No. 4996-ME

Mex'icoRecent Economic Developments and Prospects

May 7,1984

Country Programs Department ILatin America and the Caribbean Regional Office

FOR OFFICIAL USE ONLY

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Document of the World Bank

This document has a restricted distribuition and may be used by recipientsonly in the performance of their official duties. Its contents may not otherwisebe disclosed without World Bank authorization.

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Currency Unit - Peso (Mex $)

On April 30, 1984, the exchange rate in the controlled marketwas US$1 = Mex$159.58; the freemarket exchange rate stood atUS$1 = Mex$177.70. Both exchange rates are currently sliding at arate of Mex$0.13 per day against :he US dollar.

FOR OFICIAL USE ONLY

MEXICO: RECENT ECOMOMIC DEVELOPMENTS AND PROSPECTS

PREFACE

This report focuses on recent macroeconomic developmentsand examines the prospects of Mexico's economic recovery and growthover the coming years. The report does not address sectoral devel-opment issues in any detail, as these are being addressed in thecontext of a number of ongoing sector studies. A draft of thisreport was discussed with the Government of Mexico in April 1984.

The report was prepared by Irfan ul Haque in collabora-tion with Jorge Garcia-Mujica who devloped the model used in themacro-economic projections. Nadereh Chamlou prepared the Statisti-cal Appendix. Michael Klein (Public Investment), James Hanson(Trade Policy), Darrel Fallen-Bailey (Oil Sector), and Peter Gregory(Employment) also contributed to the report. The report is based onthe findings of an economic mission, led by Afredo Pastor, thatvisited Mexico in February 1983, and a subsequent updating economicmission in January, 1984.

IThis domnt ha a restcddi tribution and may be used by ipients only in the peronrmance ofthr offidd duts Its cotents may not othewse be discosed without Wod Bank auration.

Abbreviations and Acronyms

AEMSA Altos Hornos de Mexico, S.A.CFE Comision Federal de ElectricidadCLFC Comision de Luz y Fuerza del CentroCONASUPO Compania Nacional de Subsistencias PopularesFERTIMEX Fertilizantes Mexicanos, S.A.FICORCA Fideicomiso para la Cobertura de Riesgos CambiariosFMSA Fundidora de Monterrey, S.A.FOMEX Fondo para el Fomento de las Exportaciones de Productos

ManufacturadosIDCE Instituto Mexicano de Comercio ExteriorIMP International Monetary FundLIBOR London Inter-bank Offer RatePEMEX Petroleos MexicanosSECOFIN Secretaria de Comercio y Fomento IndustrialSHCP Secretaria de Hacienda y Credito PublicoSPP Secretaria de Programmacion y Presupuesto

MEXICO

RECENT ECONOMIC DEVELOPMENTS AND PROSPECTS

TABLE OF CONTENTS

Page No.

COUNTRY DATA

MAP..... .......... B ... IRD No. 15553

SUMMARY AND CONCLUSIONS. . . . . . . . . . . . . . . . . . . . . i-xiii

PART I. RECENT DEVELOPMENTS: AN INTERPRETATION . . . . . . . 1AND AN ASSESSMENT

A. Structural Changes in the Mexican Economy . . . . 1B. Origins of the i982 Crisis . . .. . . .. ... aa 3C. Conclusions on the Origin of the Crisis . . . . . 13D. The Aftermath of the Crisis . . . . . . . . . . . 16

PART II. PROSPECTS FOR LONG TERM GROWTHI. . . . . . . . . . . . 21

A. Imperatives for Future Growth . . . . . . . . . . 21B. Key Assumptions Underlying the Projections. . . . 31C. Prospects for Stable Growth . . . . . . . . . . . 33D. Conclusions for Stable Growth . . . . . . . . . . 43

PART III. POLICIES FOR STABLE GROWTH. . . . . . . . . . . . . . 46

A. Resource Mobilization . . . . . . . . . . . . . . 47B. Promotion of Non-oil Exports & Trade Policy . . . 52C. Pricing and Subsidy Issues...... . . . . . . 57D. Public Sector Investments . . . . . . . . . . . . 59

STATISTICAL ANNX..*... 66

-2-

TEXT TABLES Page No.Part I

A. Table 1: Selected Economic Indicatorso...o.......o......... 2B. Table 2: Changes in Public Sector Revenues and Expenditures. 4

Table 3: Summary Balance of Payment.0........................ 7Table 4: Summary Balance of Payments: Public and Private

Sector Accountso....eo..o....................... 10Table 5: Factors Affecting Money Supply ...................... . 11Table 6: Net Domestic Credit Creation ...................... 12

C. Table 7: Public Sector Imports and Foreign Borrowing........ 15D. Table 8: Selected Economic Indicators 1982 and 1983 ......... 17

Table 9: Public Sector Receipts and Expenditures............ 19

Part II

A. Table 10: External Debt Outstanding and Disbursed............ 23Table 11: Projected Service on External Debt Outstanding and

Disbursed, December 31, 1982 .................... 26Table 12: Labor Force Estimates. .... o.o.oo.o.o.o.o......... 29

B. Table 13: Macroeconomic Projections: Scenario I .............. 33C. Table 14: External Debt Projectionoo..p.o................... 35

Table 15: Private Sector Savings and Investment........... 37Table 16: Macroeconomic Projections: Scenario II......I..... 40Table 17: Macroeconomic Projections: Sensitivity to

Foreign Financinga.......00n............ .. ..... 42D. Table 18: Macroeconomic Projections: Sensitivity to

Interest Rats..... tes...... o . oo 44

Part III

A. Table 19: Tax Buoyancies 1964-1982o.o.o.......... O........ 48Table 20: Nominal and Real Deposit Rates - 1979-1983...-... 51

B. Table 21: Exports of Goods and NonrFactor Services.. ........ 54C. Table 22: Federal Government Transfer Payments ......... o...... 58D. Table 23: Public Sector Investment ........................... 61

T A B L E 3A Page 1 of 5HEXICO - SOCIAL INDICATORS DATA SHEETHEXICO REFEREUCE GROUPS (WEIGITEO AVERAGES) 1-

HOST (5MT ) EWT STIK&TE) /b

Sb zb RS~CENT, RlUOLb IN= tIlXLS 1'XI,60/b 1 9 7 0 k'. ESTINATdLb LAT. IRLCA I CAlI StUHELO

aM cwuIIDIASD SQ. a)TOTAL 1972.5 1972.5 1972.5AGRICULTURAL 1000.0 976.4 978.3

mW En CAWI (US$) 370.0 740.0 2250.0 2068.Z 2453.6

mr mon vsanC(KILOGRAmS OF COAL EIMVALENT) 786.0 1145.0 1684.0 1407.6 lSbO.8

JOA X AM LrL SUAnCSPOPULATION.MID-YEAR (THOUSANDS) 37073.0 51176.0 71215.0URBAN POPULATION (Z OF TOTAL) 50.8 59.0 67.3 65.9 47.8

POPULATION PROJECTIONSPOPJLATION IN EMAR 2000 (MILL) 115.0STATIONAR POPULATION (HILL) 215.0YElA STATIONAXY Po. REACHED 105

POPULATION DNSI7YPER Sq. 13. 18.8 25.9 35.2 35.6 82.UPEA SQ. IN. AGRI. LAND 37.1 52.4 7U.9 93.2 157.2

POPULATION ASE STRUCTURE (A)0-14 YRS 45.6 4b.5 44.7 40.1 31.9

15-64 YS 51.0 50.0 51.d 55.8 W.965 AND ABOVE 3.4 3.5 3.4 4.1 7.2

POPULATION RWOm AM (1)TOTAL 3.0 3.2 3.0 2.3 1.6URAiN 4.8 4.7 4.2 3.7 3.4

CRUDE BIRTH RATE (PEA THOUS) 45.4 43.4 36.0 31.5 25.0Cain DEATd RATE (PER THoUS) 12.2 9.7 7.0 8.1 9.1GROSS REPRODUCrION RATE 3.3 3.2 2.4 2.0 1.7

FAMILY PLANNINGACCEPTIRS. AWNUAE. (THOUS) . 25.1 1145.0USERS ( OF HARED WOHEfl) .. .. 38.0

FM -ND mr

INDEX OF FOOD PROD. PEA CAPITA(1969-71-100) 97.0 100.0 109.0 113.0 108.4

PER CAPITA SUPPLY OFCAIORIES (Z OF REQUIAENTS) 117.0 111.0 121.0 111.3 129.6PROTI (CRAM PER DAY) 69.0 65.0 74.0 67.9 92.3

OF IBIICH ANIMAL AND PULSE 29.0 27.0 27.0c 34.1 34.6

CXID (ACES 1-4) DEATH RATE 10.1 6.5 3.5 5.3 10.4

sYIILIFE EXPECT. AT BlRTl (YEARS) 57.0 61.3 65.6 64.6 o7.2[MEANr MORT. M.ATE (PEt THOU1S) 91.1 73.6 54.4 62.6 71.4

ACCESS TO SAFE WATEA (ZPOP)TOTAL 23.5 49.0/d 58.0/d 64.8URBN .. 6B.5/d 61.4/d 77.6RUlAL 21.07oT 51.o7; 44.3

ACCESS TO EICRETA DISPOSAL(Z OF POPULATION)

TOTAL 37.0/d 36.0/d 54.6URBAN .. 60.0Wd 50.s1d 69.8RURAL .. 4.0oT 13.u7Td 29.8

POPULATION PEA PHYSICIAN 183'Xu 1510.0 1260.0/e 1776.0 1094.8POP. PER NURSING PERSON 3650.o 1640.0 1420.0oe 1012.2 762.5POP. PER HOSPITAL BED

TOTAL 590.0 970.0 870.0/e 477.0 334.0URIAN 570.0/f 1170.0 ioo.oTe 667.5 216.0RURAL .. 1370.0 LZO.077 1921..

ADMISSIONS PER HOSPITAL BED .. .. .. 27.2 2U.U

AVERAGE SIE OF aOUSEIIOLbTOTAL 5.4 5.7URBAN 5.7 5.7RURAL 5.2 5.8

AVERAGE MD. OF PERSONS/M3ONTOTAL 2.9 2.5URBAN 2.6 2.2RURAL 3.4 3.2

ACS5 TO ELECT. (Z OF llELLINS)TOTAL 58.9URBAN .. 80.7RURAL .. 27.8

BEST COPY Aall arlr

TARLI UA Page 2 of 5HEXTCU - SOCIAL INDICATORS DATA SHEETMEXCO REFERENCE QUPS (WEICTED AVERAGES)

1 IIST (MOST RECENT ESTDNATr) /b1960b b RECENT A MIDDLE INCOGE MIDDLE I[MCCI

96- 1 ESTI[ATb LAT. AMERICA £ CARIB EUROPE

IIIAIIADJUSTED ENROLLMENr RATIOS

PRIKARY: TOTAL 80.0 104.0 120.0 105.0 102.2sAE 82.0 106.0 123.0 106.3 107.2FENAL? 77.0 102.0 116.0 103.6 97.9

SECOIkARY: TOTAL 11.0 22.0 37.0 40.0 56.5HALE. 14.0 26.0 39.0 38.6 63.4FL!ALE 8.0 17.0 34.0 41.2 48.9

VOCATIONAL (Z OF SECONDARY) 23.6 26.7 10.4 34.0 22.4

PUPIL-TEACHER RATIOPRIMAR 44.0 46.0 39.0 30.7 24.7SECONDAR 13.0 14.0 17.0 16.7 22.1

ADULT LMRACT RATE (2) 65.4 74.2 82.7 79.5 69.7

ma_.rPASSENGER CARS/THOUSAND POP 12.9 24.1 46.1/c 45.6 52.9RADIO RECEIVERS/TOISSAND POP 89.0 273.7 295.4 228.2 165.5TV RECEIVERSITNOUSAND POP 17.5 58.5 108.1 108.3 124.2NEWSPAPER (DALY GENERAL

INTEREST-) CIRCULATIONPER THOUSAND POPULATIOg 73.3 .. 64 64.1 96.3

CINRlA ANNUAL ATIENDANCE/CAPITA 9.8 4.9 4.4 2.9 2.9

TOTAL LABOR rORCE (THOU) 11191.0 14722.0 20819.0UI-ALE (PERCENT) 15.2 17.4 19.8 24.8 34.5

AGRICULTURE (PERCENT) 55.1 45.2 35.6 31.3 40.7iNUSTRY (PERCENT) 19.5 22.9 25.8 23.9 23.4

PARTICIPATION RATE (PERCENT)TOTAL 30.2 28.8 29.2 31.3 42.0HALE 51.1 47.4 46.7 49.8 55.2FMIALE 9.2 10.1 11.6 14.8 29.1

ECONWEIC DEPENDENY RATIO 1.6 1.7 1.6 1.4 0.9

X3NN13 DISIRTIONPERCENT OF PRIVATE INCQIERECEEM BY

sIHEST 52 OF HOUSEHLDS ..

SICKEST 28Z O HOUSElUDS 61.1/h 60.7 57.7/cLOWIEST 202 oP HOUSEHOLDS 3.401 3.3 2.97..LOGEST 40S OF WOUSEHW.DS 9.87F 9.9 9.97.

IOwanT TARCr mtornESTIMATED ABSOLUTE POVETY IINCOELEVEL (US$ PER CAPITA)

URBAN .. .. .. 289.8RURAL .. .. .. 184.5

ESTIMATED RELATIVE POVERTY INCMLEVEL (USS PER CAPITA)

URBAN .. .. 4n.0 519.8RURAL .. .. 471.0 372.1 409.0

ESTIMATED POP. BELOW ABSOLUTEPOVERTY INCOME LEVEL (C)

URBtAN ........

RURAL . .. ..

IOT AVAII.ALElOT APPLICABLE

N O T E S

/a The group everages for each indieator are populattoneighted eritheete means. Coverwge of entries aota theindicttore depends on awailabiity of deta and is not aifore.

lb Unlen otherwise noted. 'Data for 1960' refer to any yar between 1959 and 1961 'Date for 1970' between 1969 and1971; and dota for 'Moat Recent Estitte between 1979 and 1981.

/c 1977; Id Served fros witer supply and ewerage; ae 1974; lf 1962; /a 1976; lb 1963.

Mey 1983

-~ 0~1 ;f..t~j.f mrt.l.C ed~la. t .kesld ala benetS thet ow at Page i of 5theAlbobU dt5 ar0 IT gmmucsamtyidw h uwhrftv S".IItS OalmFbeOcOd

thetChyMy h- e Stotr-IFanal cop `abo ea.. of tim lack .1 staWdrdlond infiition and cac.pc weds by~ difrnceaai olcig h ae h nooe stbnbne. useful to doocuibo ordare at gsnpntnie. tomatt, Ltress. nod cbmnrateria mortalsmic ij IIoenocea hetnoas constra..TMe refrrac. srwoop Me CL) the eM country stoop af the abjMct ceunty NW £23 a tontry stoop with soeue kaior amre. naoem tim the country trooof the ifbject cmaory Caonet for '3uS Imnca 011 Eaports rtsooP chore Niddls lacoe Worth Afric and Hull. ten"' i. ckoeo hcena of *amgsrsniaceltorlntl ofijlnitd). In tn ol roae avop at. th e avrmess mt pogmeatten wilcoud arihtinti aeon for eah Indicator OS nkan only anenjority of the ConnetrdINa is grsp he. into tnt that Ladicato. Sim. the onsageri of c.Otriae -o the unilctor. dopneda -e the avalLability of dataand ts sot safer., action -t he smarcci.d la roUlntingrga wi...o - ilicmto to menther. thaen eearngns, e only aeloingt conpgrlog the vale. ofone Iodicaotr at a tim A."s the country OSd rfornnco graiw.M~ fribs--d eq.bo.) !eiJ nitlld-toa.ohn OS rerl - popuantion Ctotal.isa - Toavl aortae arme csoprlolcg land arvea end inland an.tr 1919 dat. acaC1iiitiFildlbyter renpaLlws member of henpitl bad.Aaerile.turn - lecutmmlo ofarsriaitmral ares Mad r0owororily or petasotly avnilable lo pfhir OS priwnt. jeenrol asd anyo-mlia heepital OS ro-for cepj.. pneturns. meant OSd kitchen gardem or to lie fal1owl 1979 data. hAbIlltotLA centeta. Noapitala at. Iontiib.mnhote perennently soailedby a ico lan. MePbynicia. SOAtnbiheneltn preoidleg pWriCIpally cuoto-MPzMgastgtsa - GiO per Capita saLiat.es t cuVrren arhot PCic.,n col- dial core era at inludod. Rm Ini eeitalo. , k r. lalsod healtban"Cate by eo. coneesrolo aths Wonrid SooL ALIn (1975460 basic9) 1900. and nodiLCaL ctton cot poreaoootiyl staffs by am phroictn (boar by nmaw0. mad ine into. adlcal aenistent. netms.. id If..ot.) 'ticS otter tn-patient accmne-doLIio aid provide a lingLad room of adlca facijitlos. Pot static-my cusNlmMC M CAITA - danool ceap-tia of coemrciai emrgy (coal tical purpoena urban hopitals locInd. NNGs prloimepallsamrol oaptalo.OS1lgoit. PolCOlei. noturnL psn aid bydre-. mclonr OS gaotherwai sin- OS rual heapitale. local or Crerl eapiltlOS moditall OSd motewuitytr.iity) is kilograms of ceal oqoiwlant per copito1 IM0. 1970. and 1979 centrs. IpoStelnd boapitla.I se itldedo only sotd totol.doto.

Nopta a - Total Mahaor of misdedsotow WOr dilch.rsafraMWaiiilSoadlvidoby tha cfoat of Leda.tgM. M WE~LeoM-r thooood -a ANOf July 1i 1100. 1910. OS 1960 2919616data. i~~~~~~~~~~~~~~~~~vren as. noedtaen osasd oa.obn Srrdilaotdlniios of 2 ah are. ony affetg cowarabi1lty of ota mod their osl Main. £ hoarder er iadner -y or eny nt he ioclodsd Loea Vostrisal 1960. 1970. end. LOG data, tCe heosohbld for aLteiintira uronsa.POMIteflti PrOIortlo..

Atoreo silr of. or orno co a oa,ubn d -rure -se ofen,Pomnoclenin L. a S-IlO0 - Corset papulatin projortions are ea-d on1960 he fponn ptco In ll tbn. OS erl slIe condotIOla.ltotal popuatin by ass ad nom OS their nortality OS fertility rate. denllng. vonpsctilyI. Ousilnen-L oias an-person:os atructure OSdprojection poretor fomrnetality colon cooprla of emo boml aone, masccnpts poets.log lit. anpatonc at birch Iocreasaing with comatry"a par owit. ioon Als±!otlf4f.cs of loo ins L ota.obs OS nr.rl -leesl. OS =el life eapatoscyc atabllaing at 77.5 yanro. The pam- Cvnteldu lse.4t elcriiy nhle oatr as parcawtaasetnro tsr faIrtility roac Ilo h."o chine Soong. aasunln docll Le i of gteto. orio. and froal dulino esetivoy.fertility according to I1"cam bootanod poat t.Iniy pisonio perforoosce.ach country a. then nonignod one of thoe a.inm cabl.isItoa OF martality tSiTlUfnOS fertility trondo for pojortion porpose. AI= dM F tMISt Macr IcsttIeu. - l5a LtotionrY PePootien thence L. Me ronth slots _farc Mlt0 7o! and tennis - Cross totai. ale and tonalotebrth at in oqeL to the doath roce. OSd olo the ago straeiif ro- onrolimest Off all.owe 0 th prIry bann an percontaena of reopttiaains omasts. hli. is achiovod niy eftr fwttlity rota. -incin to Primary ched-ass papelacienl nornlip iaciude chIldrse pad h-ilthe rolacenea low! of nit not reProdetiManrte. ten saCk generation yeairn hot adjetel for dif I rect lesgthe of primary ainctioo forof wa ropiacomm itself anartly. TkM statioery popuwlato cia. wanm CoitrIan e ach oniersll WOCatLn manroinont ay aMCOWIS0 ISO prCOns1atiae on the hana. of the prejotod chemroctorintIto of the popelotana slmco sam ppAIl are bole or aokoe the oficil. school ago.in the pear V06. OS the rats of detlie of fertility rate, to replace- '"a'm On-tse.al Sfte - CompetIsnd Ihw oocadodrpBant eIt. odctopooton en eor far of approo . priary itrotticejtest etclat s loation Ia reachsel - the year nbar, otatieary popalatioe provides sonro, * wcationol. or teacher traimiog lastractioeM for poplieniJa n h race. nelly of 12 to 17 pmoem of owlI Corresp-daece conree are gpenorallyrovelotles D-'" ~~~~~~~~~~~~~exclud".K147ii -year pnpoattone per ngnae Liketar (1010 hretree) of Voctisoi oneilm""t srcot Of aandwore) - Vec"acleal ionic sane.iiiiUire7 194. 910 OS 1979 data. inido tachoico. Sad-ntriali * oroher Progres flick opert. esIsened-Pot; a.. 0. aari0nlcural Lad - Coopstd - flow for oprlcultura1 lO ntyora doprtnnet of seceedory iSmtitielna. tda Taal.onlyL 1900. 1910 OS flip data. Pse~~~~~ii-tea rrtio - erncy OS -"sdc - oalssst nolsi'Iolt",s AM Strntn (secomnt - ChLidrn- (e-1s p-r.). corbIns-oge (1- p Mer OS osedayprUlM ilaMy nr ttacesa hmparo OS.I incied . ya dt OSsot an parettgatan of aid-ysor Pope- trreospodieg ILewi.Ittiac 1960. 1m70. snd 1950 dots. etltrr as(serteot - Literore salts (able to woSd and wit.)fooslation Gotito(act) - tottal - Ana-I ir-oth -ta of totai Sdd- a.aC.cnsg f Ioa SnIct Poulation aged 15 Vants moS aver.fer Papointias for illO- o.19-7. OSd 194..

revelotion Grer inoAerote-oe m-jnal, *raonb rms of worn pope-, DwmntimrLotgoee foft5.0 iOi. S1ii1 anenr Care too thoean oce.iation) - Pa-n.onsr corn caprben eaterCredo Sirr Eats (por th-endO) - Amnal lie. birth. per thaeosad of ai-ontea tare Motiog lon. the voit rerne malsctndos mndolsotes. hanoroo OSdSpopeitioea i9. i910. ai 190daa ilitry vehils..Credo Sackl Eatstso tho Cod - AsnaI d-eam per thousad of old-peer hello Eateb1oor (se theonad- pultion) - A1L1 typeo racelwrmore OSa.Jpoeletioni mIND. 1910. mOS IgS dato.broan teaolp k pe the-no of popelttio marsLedes -C-asMovdoclemat.- hesrase noSe of mdoogtot a nsa ill hear lo li&cesad roesoird is CMnInes aid Is pare Itihs regitrottn of raIl.her no l period It n ameperleosma proea ane-specIifc lot- nto non a. 55 tact! data 1 fr-mo potsets noy not he cosprabloeslatetilty rtetan nasally fIw-yoor a-Orongs OSig in 1940. 1970. OSd 1960. ant rsutcrion, ebo1ihad Alcensing.holly Fiansion-accm oo Anneal (theunends) - Aseali ooSer of accoptors 1 reee(ottnoieslaIa - TV roceivsea for bredcat toof Lbirh-ontolV doiceo OSr nsplca OF notional fanl ipponcin Program. euomlpni prthns Epu Antot eocludoo noliceneo TV roelvtoreM iyPina-Unter. (sorram of arrlad wme) - Pst-ctaep of vorrind it contri os toS inWyearn le re3sierstion .f TV set -r Io effort.ooc Cchidkorigas(1-6 ynt) ma brlecotrl L.ce t sosoecCicustontnichsoS anlnio)- Sse heont r-tnal nrind se nnao ro.cueino 1.dolimmy-;h tson otr, o.pp defa in -a a perriodicAlpeb2itatios dee-tI priarlp to ret Inga asnors mew. It iA Consideredte ho ndnylf if it opp-efa at lana feet timse a catk.lsdaefPoldrederlonM Cos.itaC1h9lll) - loden or per capita. nmovl Clue ADaIl Attoednetep C It.jyrjyyr - Unse - the a.fler ofpodZtoM oA W1fe W~tis Prdcto nocLudos sand goSfod and tirhet-a nl dona Vke yearTinc iiZda'Zodtamiaco to drio-i.crises.is an calender year bsage. Coand11leo cswr primary sods logZ. angacesan OSd nil. alto..btantod of sapgr) flck are snible OS oestain natriant ( e.g. tefte OSdtea are ancoded). Aggreeysce predoti of cab coetcry ie kaend onMinmatinl ewrMe aa prdun price nLgtaLs 1961-45. 1670. OSd 1960 data.ToalbrPrt(tecs)-ooiciyrtnp a.nl tePer Coasito epl of saunarl (scet of roomonnts) - Copapoid Iron rdfrn Snnipdhtacldn onwo tdsa t.ergeqi,W n at n., feed noeis; awallobla c cntry per coptta corlg popu.laion of all SMo. Osti19altac S" wrban ceatrion arepar day. Available mappIla. coanrlae domolict proeductlI-. lop.".a lean. cot Cspmorblel 1960. 19170 OS 19n data.* apttn. ond caogoo Ln stock. Pot nopyies etlodo alnia I OS. ooods. 7 3 pree)-PLe labor forts s parcontaso of total labor force.qettieom mod in food procoo-ing. ond leoom la. diatrikucio. oquire- M =!i ;ijJcypoo Lake fSrc in farming. forestry. heotIno andamate note anelontd by no0 boOse a phpoielagiral Modo for coral all- ftiekiiisiront-t; of total Iokor forcol. ISO. 1970 OS 1930 dat.wiry Od health comeldoriog catromanetal. sRatoorstr. bedy noighta., ag Indoetr( orst) - labo forts in alisle. remotrection. ensfocturiotOS iotribotien of pepalation. OS all1sIog 10 pearcet fnr -L ote aOSecticity, star OS ta s perceontoes of total lobar forcsheun-kold 1-.1; 1901.45. 1970 OSd 1977 data. M4. 1970 and 1960 data.Far capita copyofwti (tao2 nerdo - Protel. conteot of par capIta PrtLiclPatl.n Mta (Pnotnnt - rto .ate ed feeal - Participatlno oso apl oYtn a a.Ntnpi of fOS La defined ao showe. Ao- act.ivty rates are teputd ottal, Mle. aod tale labor forts anqoiate for oll coustra.e esntablished by CM3 prooidn for asian parrotee of total. aele aod tale popolatian of all sasrcapniwcalpaallesnc of 00 41-e of total Protein per day ned 20 gram of aial- OSd 1am. 1970. OS 1960 dots. Theme nra ban en lILAn participation rePelee prele.. or flich 10 graonbooseld ho aninl proteis. lbhena.tand- reflecting aon-en stretnre of the popuitla. OS Idan tim irsed. AIord ame lan then the- of 71 grme of total proroln NW 23 gma of tow, Iotlosta aV resIo notional oercan.nine!m protola n anM -ros far the arId. Propooed by PAD in the ThIrd ic d Nti MCI atino population mini 15 OSd 05OSowWoldho Sawya; J94141. 1970 OS 1977 data. iieiiietIrtoper rcite "rutei ncyIrnoin ndam - Protein oopply of fend in-riwd ftam "Lloola O pbo n grer patyap 1914$~. 1970 OS 1977 dnto. lTUC OiWlflChil.d (sn1) ahSta(IC hnad Anmal deathe pot themnnoS a. WkJi t na.(aht an i ld - IncatO by richest030 gw 14 are, o chidren n thi ago cop. for mant doawlplng can- S porcont. richest J!, pret. paret 70 , mot.ad Poorest '.0 P.rcecri- ec.ot decreed fren liga tablan: 1900. 1970 man 1930 date of Imonhelde.

LieEaoctner or 5rbyon - Seeroge -oSor .1 7sar of life reining The fo12led.n Izasteta ms, w oy apreoamm ta oo--rn Of pavrcy tamwla.at irtha 19SM. i90 n 16ic. OS Weold ho interpreted with ceoniertbbe contton.Intentitrtolty 5ee (on ho AOS -vIl dathWof et fnt mintr san peat isatdSoicPvc lace owa 15$ pa capita - urban mod rural -c9 ago perthnan Mo bCRtM=s 1930,1 1970 aid 1960 data. aolepwtyionlw sihttuseWi holee flick o nOLOIMAcres. Cc lafe ibta (serac f onoAti --tco. wmom. OS reavl - Pin- mctrcmlanally 'oeaiveto dInt pId.s santil momoead rsqoreats" a. ootbe 1popedcl satins, a royal) wth resoasble accoss to saf 1ffordbie.mini nVITpl (oclse"' trcetd nevrfaco sntore or Manatease hut nsomiatd Sotbataetd Multtw Pavorty lore Lewi (lE-er oiltsl - aba mod turdl -scat cab an thot ti petotnti herehelac. marn"g. OS nontacy sun) an Eat "oltiwn P-owt Acplas lw icatIrdS of ceis pet owtapercentage sf their reopetiw popolacloes. h.o an rio eawa a pobISxesoa lesome of the Co-UTr. Urine bowl. i dactL Iram the natalfetain- torn past lacaced Mt Mne tham 200 ales Jra a kane my he la.. nIck1 Iaodjaisnt for bisot coet at livieg in skn arew.c.-adsred an bole witbie ramesasble e a of Chat home. ho rats! oexae ateatietd Pemletman bole Abhanlo.ra Pvrty nocom e, l (prcn) 1m.teao bnie accoma OI wold ly Chat the ksselte Mor ero of tim henonheld OSdcarol - etati of populatiCon tries OSd tel) S ant absletin enat MMc to opod a Iapoarlno port of Oke day Is fetchlag thetinily"s scotnnn£ccrae C toarota Cipoo tooeret Of see tlari) - total. nba. OS vea! o orpeOple CtIe. sWo. M Ca rote) aewod by aextreta dIspeel anporCeetaess oltst car oopactie w wppuatn. Roweca disposal say ulad.cho cola-ctianO mdipe. with or oltar ttragen. of bm sceomu,OS sWte.notet by snct-hates syate at the sma of pit privi-oa Onini-

plonal,ine M fgo- Polelnaties dividod by MWet sf pinntglee ph7si- Eccoeic OSd Social Doto OiwieloeClene qenlf 1 Ira. dlOsi ca!nt l at aiwmoroily j-avl. tnEnC-I Aneysir OS PTejsCtLMOn cpertaaCPowlalencots PvIn Prars - Paoplatian diwlded by .eih of prciisNW 1952W."e OS Isl iedt nero... Ansiacont onanc,s practical moresoandOcorsieg MaIllaIrlon.

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VAI SIllS?. EfS . 34.40 3314 PL4 39.3 123.0TIfl . .24 4.3 La! 622 0.25RLIC KIT . 34.43 137.07 2".4 94I 17.10aMIm S . IS.J .34 012.00 8800.25 3S24gnu I 7L.9 14 257.31 251.21 7.725l3 . 341.99 I84 L63 S237.D2332.5 86.

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ACTUL PRDETIN

1970 1375 I0 1911 IM2 1931 3 4 195 1990

SUNP ESINE F PAlEITS

EXPDTS (INCLUIES FS) 3117 A9 236 29079 272251 42 31200 354 66776IIJITS I3NCLUDINF WS) 32 9910 26206 34364 21120 12673 22000 275 60442RES IIRtELN -765 -3117 -2600 -55 5436 14169 92 7m 63NET FCTM IC -47 -149 -41n -e4 -10s1 -63 -9473 -9170 -10533(PULIC SEnTE INTIESR P4STSI -290 -3032 -39 -5476 940 -7346 -6 -10032 -11546IENT W ERS, NET 56 133 275 23 265 351 ... ... ...

CURIEIT ACCOUT fUINCE -llVD -4443 -7223 -12544 -4S79 5545 727 -3l,l -4253PRIVWTE DIREC? I1NVESENT ls 204 1254 133 709 371 6 660 1063PRLIC Ne. O UIIM TERN LES, NET 262 335 4059 857 O6 3465 43 330 5239

DSIR#EIJITS 12I 4422 M7 1 14250 O35 645Z 1164 22763REPRYIIEIS 567 831 3712 531 SE3 4u40 2449 307W4 37524

OIf (NT) - -- -12 -IC 221 130 1200 120 -u00WIlER CAPTSTA 344 321 31319 3M -009 -7571 -1000 0 0

AIlE 1 ESEVE E-.I1ERESE1 -302 -165 -1L51 -1012 3105 -3106 -30 -109 -1448

SIIR ALUCATIEN 45 - 74 70 -- --

MIIT IIII LDRMI 11TRIIT5

RELIC NED. ND LT. LONS

ID1R 14L30 310.00 625.00 1021.00 55.70IHa ... .. .. . .

DTIEtR ILTIULTEUAL I3.41 321.30 ss.359 293.5 l063.30sEVUNT 79.90 265.30 793.20 640.9 639.00

SPPLIERS 70.00 167.00 10.30 240.30 43.00- ED FINAIAL INSTITUTIG 370.40 3513.36 5179.00 106".9 9592.4

DENT ED DEBT SERVICES

RLIC DENT ITSTINS AE DISUD 3206.30 s 1137.40 3393LO 43447. 50910.00 ETERNL DENT EJTEN REBTIEE lF PERI---

IUIEIEST U1 PILIC - 216.40 131.30 3841.90 4702.70 519.30 OUTSEDi D DISAM EDIEPAINENITS UI PILIE DEBT 475.60 7.10 4026.40 3173.0 3072.10PLIC DENT SERVICES (ETI 692.00 1592.90 7B8.30 1438.70 1964.40 eR oE. 31, 1932

MUEn EXPORT EMIE OF RELIC It LI.PULIC DET SERVICES mi 22.20 23.45 33.33 29.16 32.39 1 9 S1I3IES P*CEIT

11D 269 5.30AVISE TEMI F PUILIC IN E111EITIENTS OTIER OfF. SRC 4404 6.5

INTEREST A52 DF PRIDE TES 7.40 9.0 13.0 I.11 13.56 STID PRINATE 4360 17.65L.L 1D L SMCES

t. AVERE UATURITY OF EN -- ." 9.40 7.30 &.10(tEUR) TOTAL 97U 100.00

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6. IE KENT SERVICES S I F 7.0B 7.29 3.24 L35 L35PEIC DENT SERVICE

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BEST COPY AVAILARIE

SUMMARY AND CONCLUSIONS

1. Since the Bank's last economic report on Mexico (Mexico: Develop-ment Strategy - Prospects and Problems, Report No. 3605-ME, August 31, 1981),the country has passed through a traumatic time. After a few years of rapidgrowth, the state of public finances and balance of payments deteriorated pre-cipitously in 1981, and all indicators of economic health started pointingtowards a grave economic and financial crisis. What happened in 1982 - whenthe crisis came to a head -- was primarily a consequence of the economicstrategy and policies that were followed in the preceding years; but theinternational economic environment (high real interest rates and slack oilmarket) contributed to the intensity of the crisis. This report assesses thedevelopments during the last sexenio, 1977-82 (the six-year period coveringthe last administration), attempts to draw a few lessons from that experience,examines the prospects and conditions for economic recovery, and discussesthe options in some key policy areas.

ii. The prospects for Mexico's economic recovery and regaining a path ofstable and sustainable growth within the next few years appear good. Thestate of the economy has shown significant improvement over the past oneyear, but the Government needs to continue with the stabilization measures itIntroduced in 1983 until the fiscal deficit and the current account of thebalance of payments have regained sustainable levels. Specifically thisrequires action on several fronts: fiscal policy, nonroil exports and tradepolicy, pricing and subsidy policy, and, not least, a careful evaluation ofpublic investments. In aU these areas, the Government has already takenmajor steps, and has declared its commitment to further strengthening ofpollcy measures. However, the domestic policy effort could be frustrated Ifthe world economy grows only at a modest rate and the protectionist pressuresin the developed countries lntensify. In order to pay interest on Itsexternal debt, Mexico will have to run substantial trade surpluses - anaverage of 3 percent of GDP over the next several years -- a transfer ofresources which will put a great burden on the natlon. Foreign finance willbe a critical factor In Mexico's success in regaining economic stability andembarking on sustained growth: its availability on reasonable terms will bothdetermine and be determined by the success of the stabilization program.

Developments during 1977-82

ili. The state of the economy In 1982, the last year of President LopezPortillo's administration, was strikingly similar to the state six years ear-lier when that administration came Into office. At that time, the publlcdeficit had reached 8 percent of GDP, the balance of payments was stralned,the outflow of capital had reached unprecedented sagnitude, inflatlon soared(22 percent), and the debt-service ratio (close to 50 percent) was consideredto have reached an unsustainable level. The new governaent's first task wasthen to set the house in order: an agreement on economic stabilization withthe IN was quickly reached, the peso was devalued by almost 100 percent, andthe government committed Itself not to repeat past mlstakes. The economyresponded quickly to the stabilizatlon measures: the fiscal deflilt wasreduced to 6 percent of GDP, inflation after initlal acceleration decllned,and the balance of payments lmproved.

iv. The economic stabilization phase was not yet completed when thediscovery of the nation's large oil reserves was annouced. In the meantie,

-iii -

the economic stabilization measures had taken their toll: for the first timein about three decades, GDP per capita failed to increase in 1977, andunemployment rose. Thus pressures started to build up to soften stabilizationmeasures, and stimulate growth by increasing public sector expenditures. Thesubsequent shift in policy was facilitated more by the prospect than by thereality of the oil revenue: the exploitation of the oil resources requiredlarge investment and time. Thus, after the first two years of restraint,public expenditures were allowed to rise faster than the revenue. The publicdeficits began to mount: in fact, the increase in the ratio of the deficit toGDP each year was higher than the preceding, until the deficit reached 18percent of GDP in 1982. The expenditure increase during the first few yearsof the sexenio was concentrated on public investment, but during the last two,when the fiscal situation became unsustainable, the increase was spread alsoover current expenditures, concentrated on interest payments that hadmultiplied on account of the accumulated large increase in the national debt(a consequence of past deficits) and the rise in domestic and foreign interestrates. The government made an attempt to curb expenditures in 1982, andsucceeded in scaling down public investment by about 2 percentage points ofGDF. But the overali deficit still increased, almost entirely on account ofthe additional interest payments (3.5 percent of GDP) and the losses arisingfrom the peso's depreciation and the application of a dual exchange ratesystem whereby domestic Mexdollar liabilities were converted into pesos at thelower rate while Mexdollar deposits were converted at the higher rate (4.6percent of GDP).

V. The private sector responded well to the previous government'saccelerated growth strategy: the growth of private investment until 1981paralleled that of public investment. Credit policy remained expansionary forboth public and private sectors. However, the situation changed in 1982, whenthe government attempted to bring the fiscal situation under control byexpenditure cuts and restrictive monetary measures. In circumstances wherethe public deficit remained large and the external finance (in net terms)declined, the brunt of the credit restriction was borne by the privatesector. Private sector debt in terms of effective flows (i.e. not revaluingthe dollar liabilities for the depreciated peso) actually declined in 1982.

vi. The balance of payments followed closely the fiscal situation.Despite the rapidly rising oil export earnings, the merchandise trade balanceworsened progressively until 1981. Imports rose sharply while nonr-oil exportearnings stagnated. The current account deficit reached 5.2 percent of GDP in1981 compared to 1.9 percent in 1977. However, there was a sharp turnaroundin 1982, when the trade balance showed a surplus of US$7 billion (compared toa US$4.5 billion deficit in the preceding year), and the current accountdeficit fell to only 1.6 percent of GDP. This was a direct consequence of theacute foreign exchange shortage, rather than of some fundamental improvementin the balance of payments. The public expenditure cuts (that generatedrecessionary conditions), the imposition of import controls and largesuccessive devaluations and consequent import substitution, all contributed tothe decline in imports.

vii. The deterioration in the balaace of payments during the boom yearscan be seen as the consequence of the rapid rise in domestic public

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expenditures, and the way they were financed, primarily foreign exchangeearnings from oil and external borrowing. The available foreign exchangecould be absorbed into the Mexican economy only with a commensurate increasein imports or a reduction in non-oil exports. In the context of thegovernment's adopted policy, therefore, trade liberalization (which had beenstarted along with the stabilization program) and the real appreciation of thepeso became subservient and complementary policies.

viii. But the weaknesses of the strategy became evident in 1981, when thedomestic expansion had gained high momentum, but the oil market was in a stateof glut, foreign interest rates had risen to unprecedented high levels, andthe foreign lenders-realizing Mexico's economic and financial fragility -became cautious in providing new money or rolling over the short-term debts asthey had done in the past. These signals were read by the domestic privatesector also, which lost confidence in the authorities' ability to maintain thevalue of the peso. This led to a massive flight of capital out of Mexico,which greatly strained the balance of payments, necessitating large foreignborrowing, mostly short-term with rising interest rate spreads, by thegovernment.

ix. In brief, the root of the 1982 crisis appears to lie in thegovernment's adopted strategy of accelerated economic growth and reliance, atleast initially, on public expenditures to realize that objective. This wascombined with a policy that allowed the exchange rate to appreciate in realterms, thus eroding the competitiveness of domestic tradeable sectors. Thisstrategy was based on rather favorable assumptions concerning resourceavailability, which would have been in any case untenable in the longer run,but the slack oil market and high international interest rates combined withthe progressively worsening domestic imbalances, made it all but impossiblefor the expansion to continue. In other words, the high growth strategy madeMexico increasingly vulnerable to international developments, and it requiredlittle to trigger the crisis. A few lessons for economic policy can be drawnfrom the experience of the last sexenio.

Reliance on oil: The economy's dependence on oil had risen notsimply in terms of its share in GDP, but in a more vital sense thatthe future economic growth became increasingly sensitive to the risein oil income: the public sector investment program, availabilityof foreign finance, and the ability to service the mounting externaldebt, all depended on the growth in oil earnings. Although the oilmarket had shown considerable instability in the 1970's, no allow-ance appears to have been made for unforeseen contingencies. With-out a shift in the basic strategy itself, the real appreciation ofthe peso was inevitable in view of the easily available foreign ex-change. Thus relative prices moved in favor of foreign producersand domestic non-tradeable sectors, and against the domestic trade-able sectors. The consequence of this was that non-oil exportsstagnated and the growth in manufacturing during the sexenlo re-mained modest. The lesson for the future is that while oil willcontinue to provide substantial resources for investment and con-sumption for many years to come, policies must be directed

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towards reducing the economy's dependence on oil. This means thatthe exploitation of oil resources must not be allowed to erode thecompetitiveness, and thereby slow the development, of domesticnonroil tradeable sectors.

Reliance on foreign borrowing: The rapidly accumulating foreigndebt increased the vulnerability of the economy to outside factorsin another way: the country came to rely increasingly on therefinancing of foreign loans, which itself was highly sensitive tothe state of the Mexican economy in general, and the prospects forexport earnings in particular. Mexico's debt service burden wasalready high in the mid-1970s, but the prospective oil earnings wereseen to have radically improved its credit standing. Foreigncommercial lenders were also eager to lend in circumstances of highliquidity and restrictive monetary policies in the industrializedeconomies. Apart from the large magnitude of the foreign borrowing,the debt service burden rose because the bulk of it was contractedon variable interest rates with maturities that came nowhere closeto the payoff periods of the investment so financed. In fact, inthe last two years increasing amounts were borrowed short-term tosupport the deteriorating balance of payments. For the future,because of Mexico's large external debt and generally cautiouspolicies expected of foreign commercial banks foreign finance is notlikely to be as easily available as in the past. Whilst astrengthening of domestic policies - resource mobilization, exportpromotion, etc. - is needed to lessen the dependence on foreignfinance, there is no doubt that a stretching of maturities forexisting non-restructured and new commercial debt would be asignificant factor in improving Mexico's recovery and subsequentdevelopment prospects.

Lack of adequate foreign exchange reserves: The lack of adequateforeign exchange reserves to cope with the ups and downs of theinternational economy severely limited the government's options. Tosome extent, the Mexdollar accounts served as a cushion: assetholders could move in and out of U.S. dollars without capitalnecessarily leaving the country. This system worked basically ontrust and confidence. While in 1982 no reasonable level of foreignexchange reserves alone would have restored the badly erodedconfidence, the fact that foreign exchange reserves were not builtwas itself symptomatic of the over-optimism about the oil market andMexico's ability to borrow abroad. The present administration iscommitted to retaining a system where trade and capital movementsare unencumbered by exchange controls. Apart from pursuing economicstabilization policies, maintaining an adequate reserve level todeal with transitory swings in the world economy or domesticdevelopments will be extremely important for preserving confidencein the future.

Lack of a comprehensive stabilization program: Although theauthorities tried during 1981 and 1982 different remedies to bring

the situation under control-large devaluations, import controls,public expenditure cuts, tightening of monetary policy, exchangecontrols, and the nationalization of the domestic commercialbanks--success in bringing the crisis under control and regainingthe confidence of the domestic private sector and the internationalfinancial community continued to elude them. The problem with themeasures was not so much that they were wrong or ill-conceived, asthat they were basically piecemeal responses to events rather thanforming part of a comprehensive program for economic stabilization.It was essentially the comprehensiveness that distinguished theeconomic stabilization program, which the government adopted withthe support of the IMF towards the end of 1982. Thus an importantconsideration for the future is that public policy should be seen asa package: it should be internally consistent and the elementsshould be mutually supporting.

The Aftermath of the Crisis

x. The stabilization program was directed towards regaining fiscalstability, reducing the need for foreign finance, easing the inflationarypressures, improving the balance of payments, and creating conditions for theprivate sector to recover. The key element in the program was to reduce theoverall fiscal deficit to 8.5 percent in 1983, 5.5 percent in 1984, and 3.5percent in 1985, but it also aimed at Improving the balance of payments andbuilding up foreign exchange reserves that had been exhausted during thecrisis.

Xi. The administration of President de la Madrid, which came to officeon December 1, 1982, promptly set out to implement policies to achieve theaims of the stabilization program. It introduced several measures to improvetax collection, drastically cut public expenditures, and implementedfar-reaching policies to rationalize foreign exchange and trade policy. Thevalue-added tax was raised to 15 percent from 10 percent, and capitalexpenditures were reduced to 7.8 percent of GDP from 11.7 percent in 1982.Although a system of dual exchange rate was maintained as an interim device,the controlled sliding rate and free rate were set at realistic levels so thatthe peso regained stability in the exchange markets. The exchange controlswere by and large dismantled, and various measures were taken to liberalizeimports. The government also entered into negotiations with foreign creditorsto refinance the public external debt falling due in the period August 22,1982 - December 31, 1984.

xii. Within the first six months of 1983, the economy started to emergefrom the crisis, and there was a significant improvement in some keyindicators of economic health; i.e. the inflation rate started to decline, thepeso's value remained relatively stable in the exchange markets, and capitalflight virtually disappeared. The fiscal deficit was kept within the ceiling,and the year ended with a strong balance of payments with a rise in foreignexchange reserves of US$5.5 billion. Although inflation did not decline tothe extent foreseen in the program, it averaged 65 percent (annualized basis)in the last six months of 1983, or about half the rate prevailing in thecomparable period in 1982.

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xiii. But the economic and social costs of the crisis were high. GDP de-clined by 0.5 percent in 1982 and a further 4.7 percent in 1983. Themanufacturing activity and construction were the two hardest hit, where theoutput fell by 7 percent and 14 percent in 1983. Although the trade balancewas strongly in Mexico's favor, it reflected the drastic reduction in importsrather than an increase in exports. The costs of failure of the acceleratedgrowth strategy in human terms are difficult to measure, but there is noquestion that they have been heavy. Although there is no satisfactory recentestimate of unemployment, the indications are that the overall employmentlevel was just maintained over the last two years, implying that unemploymentrose to the extent the labor force increased, or roughly an increase of 8percentage points. The minimum wage, which is only a crude indicator of wagesettlements, experienced a decline of about 20 percent in real terms during1983. The Government is very concerned about these trends, and is giving highpriority to maintaining and creating employment, and has adopted severalspecial programs towards this end.

Prospects for Stable Growth

xiv. Although considerable progress has been made over the past yeartowards regaining economic stability, much remains to be done. The fiscalsituation will remain tight, and the deficit needs to be reduced further.Export earnings must rise to keep Mexico creditworthy and to allow a rise inimports as the economic recovery gets underway. Notwithstanding theuncertainties and difficulties of making projections in the present unsettleddomestic and international environment, we have attempted to develop forMexico a plausible macroeconomic scenario of stable and sustainable economicgrowth over the next decade or so. The purpose is to identify the necessaryconditions for realizing that growth path, and examine whether thoseconditions can realistically be met. Achievement of a relatively stablegrowth is an important objective because it is evident that the costs of agrowth strategy that causes wide swings in the economic activity can be high.

xv. The National Development Plan 1983-88, which was issued in 1983,provides the policy framework for economic recovery and structural economicadjustments needed to sustain future economic development. Mexico's abilityto return to stable growth and the feasibility of adhering to that path onceit has been reached depend on the success of the stabilization program, stepstaken to cope with the heavy external debt service burden, policies thatstimulate agriculture and manufacturing as the principal sources of economicgrowth instead of public expenditures, and on creating employmentopportunities to absorb the rising labor force. The achievement ofsustainable growth will not be possible until the macroeconomic variables havebeen brought back to a stable relationship: i.e. the fiscal deficit must bereduced to a level that can be sustained without creating high inflationarypressures or squeezing the private sector, and the current account of thebalance of payments can be financed by a level of capital inflows that keepsthe debt service burden manageable. Certainly, the country today does nothave the means that enabled the previous administration to give up economicstabilization prematurely, i.e., the prospect of rising oil income and theleverage this offered in contracting new foreign loans. With the resourcesremaining tight, relaxation of fiscal discipline would at best mean a

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short-liveed recovery, to be soon followed by inflation and stagnation. Thepresent Government is fully aware of this, and remains totally committed tothe stabilization program.

xvi. The successful restructuring of public external debt serviceobligations for 1982-84 has caused the debt service burden to be shifted fromthe early to the late 1980s. There is no guarantee that external financewould be available in the amounts likely to be required by Mexico over thecoming years. A key consideration in its availability would be theperformance of the economy, viz the speed and stability of economic recoveryand the growth of export earnings. Mexico needs to boost its export earnings(specifically nonr-oil exports) both to reduce dependence on foreign sources offinance and to improve the country's credit standing.

xvii. The expenditure-led growth, that characterized the last sexenio, wasseen to have definite limits. Steady and sustainable growth of the economy inthe future requires that the commodity producing sectors, viz., agricultureand manufacturing, provide the principal sources of growth. This does notmean that the potential of some service sectors, notably tourism, should notalso be exploited. Oil output can be expected to continue rising over thenext decade to keep up with the projected internal demand and exports, but itis bounded by technical and physical limits. With appropriate pricingpolicies and investments, agricultural growth could be sustained at 3-4percent a year over the coming years. It is, however, the manufacturingsector that can be seen as leading future growth. To realize its potential,the Government will need to pay close attention to the incentives system, inparticular trade policy and the system of protection. Because the privatesector dominates in agriculture and manufacturing, the shift in the source ofgrowth also implies that the private sector will p-'y a greater role inMexico's recovery and long-term growth.

xviii. Finally, the future pattern and rate of economic growth must be suchthat the employment situation improves. Not only is there a need forabsorbing the additions to the labor force but also reducing the present highunemployment. Although, the past public investment was concentrated inrelatively capital-intensive activities, the fast growth of government andother services helped to expand employment considerably during the lastsexenio. There has been some decline in the growth of population in the lastdecade, but the labor force is expected to increase at close to 4 percent ayear. With the present relatively high unemployment, absorbing the new laborforce will remain a challenge. The orientation of public expenditures andfactor pricing policies (interest rates and wages policy) will be importantdeterminants of labor absorption.

dix. The projections are based on certain key assumptions relating to theproductivity of investment, public finance, export earnings, foreign finance,etc. The productivity of investment (as reflected in the incremental capital-output ratio) plays a particularly important role in the projections: it de-termines the GDP growth given the investment level for any year. During theearly stabilization phase economic expansion is likely to be constrained bythe influence of demand, and the ICOR may be exceptionally high. However,

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over the longer term, a significant improvement in the productivity ofinvestment should be seen as an important goal to be reached. The projectionsof inflation are linked closely to the size of the fiscal deficit. With thesuccessful implementation of the economic stabilization program, the fiscaldeficit declines to about 3 percent of GDP. Oil exports are not expected torise above the current level of about 1.5 million barrels a day (mbd), but theoil price is expected to rise after 1985 at 3.5 percent a year in real termsor 9.5 percent in current prices. Non-oil export earnings, which will becritical to improving Mexico's balance of payments and creditworthiness, areprojected first to regain the ground lost during the decline in the last fewyears, and grow in real terms at 10 percent a year until 1990; thereafter therate of expansion gradually decelerates.

xx. Given the above assumptions, and provided the internationalenvironment remains reasonably favorable (specifically, the growth in the OECDeconomies stays above 3 percent a year), the prospects of Mexico's economicrecovery and reaching a path of stable and sustainable growth appear good.GDP growth recovers to 6 percent a year towards the late 1980s and inflationdeclines gradually to the projected international levels. This suggests thatthe National Development Plan's goal of realizing a GDP growth rate of 5 to 6percent a year in the latter half of the present sexenio is feasible. Thecurrent account deficit in the balance of payments stabilizes at a little overone percent of GDP. This entails only a modest increase in the exposure ofcommercial banks; about 5 percent a year in nominal terms. With continuinggood economic management and a steady economic recovery, this level ofexternal lending to Mexico does not appear to be unrealistic. The debtservice burden, especially during the late 1980s, remains the main area ofconcern. The debt service ratio rises to the peak of over 60 percent in 1987,as the repayment on the restructured debts starts, but declines quite rapidlythereafter, to about 40 percent in 1990, and under 30 percent in 1995. Theother creditworthiness indicators show a greater improvement: the ratio ofinterest payments to exports declines from 30 percent in 1984 to 17 percent in1990, and only 12 percent in 1995, while the debt to exports ratio declinesfrom 3.0 to 1.3 over the same period.

xxi. An encouraging outcome in this scenario is that the correction ofthe macroeconomic disequilibria does not imply continuing hardship for theprivate sector. The economic stabilization has entailed belt-tightening byall groups in Mexico, but as the economic recovery starts, the private incomeand consumption rise in step. In particular, the government's revenue raisingefforts in the somewhat longer term do not imply a net loss for the privatesector; to a considerable extent it simply entails substitution of explicitrevenue collection for the involuntary inflation tax that the private sectorwas made to pay in the past.

xxii. The sensitivity of the above scenario was examined with respect tothe assumptions concerning the international economic environment, theavailability of foreign finance, and the projected level of interest rates.The consequences of poor domestic economic policies need not be explored inany depth because it is readily apparent that this is a route the country canill-afford to follow.

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xxiii. The more unfavorable economic environment is held to be associatedwith a world economy that grows more slowly, which gets reflected in a moremodest growth of Mexico's exports and a smaller amount of foreign financeavailable to Mexico. But the slower growth of the world economy is assumed toaccompany lower world inflation, which reduces the cost of imports and nominalinterest rates. Although the authorities, in this scenario, are assumed tocontinue pursuing stabilization, they are less successful in bringing down thefiscal deficit mainly because of the weaker economic recovery. The balance ofpayments adjusts to the reduced exports and foreign finance through cuts inimports, but the slower rise in import prices and lower nominal foreigninterest rates moderate the decline. This also means that the ICOR in thisscenario is only a little higher than in the base scenario, and consequently,GDP growth is only a little slower, about 4.5 percent. But the debt serviceratio, despite the lower debt and interest payments, is much higher throughoutthe projected period because of the lower level of exports.

xxiv. The consequences of a lower availability of foreign finance are veryserious in the early years of projections, although the international economicenvironment is otherwise assumed to be favorable. Various consequences followif the commercial lenders decide to reduce their exposure over the comingyears (the projections assume a reduction of 2 percent a year). With foreignexchange scarcer, the government is likely to be compelled to use some systemof foreign exchange rationing. The consequent shifts in policy would almostcertainly leca to non-oil exports performing much worse, and result in higherbudget deficits, higher inflation, and a higher ICOR. Even though the author-ities are assumed to remain committed to the stabilization program, they arenot successful, mainly because the GDP growth remains low. The criticalperiod is 1985-88, and the question arises whether the economy couldreasonably cope with the situation. Once this extremely difficult period ispast, the external resource constraint begins to ease because of the loweraccumulated debt.

xxv. The principal consequence of the higher interest rate is that thecurrent account deficit remains considerably higher than in the base scenario,around 2.5 percent of GDP. Since this means larger borrowing the credit-worthiness indicators are once again much worse than those in the base scen-ario. Because foreign finance is assumed to be available as required, GDP andconsumption growth are not significantly affected.

xxvi. In short, the economic recovery and stability of the growth path de-pend critically on (i) success of the government's resource mobilizationefforts, in particular, reducing, and then maintaining, the fiscal deficit ata low level; (ii) a fairly prompt response of the private sector to thegradual restoration of economic stability; (iii) growth of non-oil exports;and (iv) the productivity of investment. In all the scenarios, theavailability of foreign finance is seen to be of critical importance. Theservice on the external debt requires that Mexico over the next many yearsspend considerably less than what it earns. The projections show that theresource surplus would average 3 percent of GDP in the late 1980s, which is anenormous economic burden for a developing country to carry. The refinancingof past external debt and terms of the new finance will determine whether thisburden declines over time and can be borne without jeopardizing economicdevelopment.

Policies for Stable Growth

xxvii. The realization of a stable and sustainable growth is contingent onreaching certain approximate quantitative targets brought out by theprojections. These relate to reaching a fiscal deficit that stays around 3percent of GDP, which is seen to be consistent with attaining and preservingeconomic stability. Mexico's creditworthiness depends on a rapid growth ofexport earnings. Since oil exports (with respect to both price and volume)cannot be appreciably affected through domestic policy action, the promotionof non-oil exports assumes special importance. Our projections indicate thata growdh rate of 10 percent a year for these exports over the next few yearsensures adequate availability of foreign exchange and helps to keep Mexicocreditworthy. Given the acute scarcity of resources, the productivity ofinvestment in the public and private sectors will remain critical to sustair-ing economic growth. The Government already has taken several major stepstowards the realization of these goals. The National Development Planunderscores the need for correcting sectoral imbalances, raising domesticsavings (in particular, public savings), earning foreign exchange, andimproving income distribution and employment creation.

xxviii. Fiscal Policy. The fiscal deficit will have to be reduced through acombination of restraints on expenditures and revenue raising measures. Thebrunt of the fiscal adjustment during 1983 was borne by the public invest-ment. The collection of nonr-oil taxes during the last sexenio was modest bycomparison either to the earlier experience or to the need for financing therising expenditures. The Government has taken various measures to raisepublic revenue. Apart from the increase in the VAT, these included a surtaxof 10 percent for upper-income groups and removal of special concessionsenjoyed by gas stations, transporters, and wood industries. Although therevenue performance in 1983 did not live up to the budget estimates (mainlybecause of the decline in GDP), these measures can be expected to show resultsas the recovery starts. Our projections entail an increase of 2 percentagepoints in the ratio of taxes to GDP between 1983 and 1985, which implies abuoyancy rate of about 1.22, which judged from Mexico's performance in thepast seems feasible.

xxix. A major cause for the deterioration in public sector finances wasthe rise in the deficits of public enterprises, which necessitated largefederal transfers and subsidies. Deficits of the public entities rose becauseof the sharp rise in investments, a decline in the operating surpluses due tothe public pricing policy (discussed below), and inefficiencies at enterpriselevel which probably rose in proportion to the rise in expenditures. TheGovernment is giving high priority to improvements in this area: investmentsare being re-examined, public prices are being raised, and thought is beinggiven to ways of making the enterprise sector more efficient.

mXX. Resource mobilization through the banking system will be essentialto achieving economic stability, and the interest rate policy will play a de-cisive role. As the public deficits rose during the past decade, the govern-ment absorbed a rising proportion of domestic credit. The governmentmaintained generally low interest rates and imposed high reserve requirements

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and mandatory credit allocation schemes. Deposit rates in real terms remainednegative most of the time, but became strongly negative in 1982 when inflationsurged. A related consequence of the interest rate policy was that whilelending rates in the preferred sectors were kept below the cost of funds, theunregulated sectors carried very high interest rates to offset the cost of thebanks' carrying low interest yielding assets. As part of the stabilizationprogram the Government reversed the earlier policy. Deposit rates have beenkept generally positive in real terms throughout 1983, and savings in thebanking system have risen considerably. Although several lending rates(particularly in agriculture and housing) are still well below the cost offunds, the Government's policy aims at reducing the spread between interestrates. An important step towards that objective is to make explicit the costof the system of preferential credit with subsidized interest rates. There isalso a need for simplifying and streamlining the development finance system,which at present includes numerous development banks and trust funds.

xxxi. Non-oil Exports and Trade Policy. As the oil exports rose, non-oilexports tended to stagnate, with their share in GDP declining from 4 percentin 1977 to 2.5 percent in 1981. Mexico has a diversified manufacturing base,and there is no reason why Mexican exports should not have grown at rates com-parable to those of other newly industrialising countries. The Government isaware of the importance of generating export earnings, and has already intro-duced several measures, of particular importance are a favorable exchange rateand a commitment to a trade policy that does not discriminate against exports.

xxxii. The sharp devaluation of 1982 gave Mexico a considerable competitiveedge over foreign producers, and the non-oil exports have already started togrow. Because of the persisting high inflation there was a loss of about 15percent in the competitiveness of the peso during 1983, but if the inflationrate declines to the officially projected rate of about 40 percent in 1984,there would not be a further erosion provided the present rate of slide (about30 percent on a yearly basis) is maintained. The authorities view theexchange rate as a critically important policy instrument, and intend to useit flexibly in the context of other economic stabilization policies, inparticular, interest rates. Over the longer-term, the authorities intend tomaintain the peso at a competitive level in order to foster export growth andefficient import substitution, and keeping inflation under control will be akey element in this policy.

xxxiii. In order to ensure that the Mexican exports are internationallycompetitive and that export activity is at least as attractive as sales to thedomestic market, it is necessary that exporters are not made to pay prices forinputs higher than what their foreign competitors pay. Towards this end,various measures have been introduced recently in Mexico to establish a 'freetrade' system for exporters, i.e., elimination of controls on temporaryimports, easy access to foreign exchange at the controlled rate, and provisionof inbond activities. More generally, the Governmer- remains committed toliberalize restrictions on imports, and has already moved in that direction ona selective basis. Given the present attractive value of the peso, theauthorities might consider lowering tariffs and further liberalizing importsas a means for containing inflation in the short term, and encouraging

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productive efficiency in the long term. It is also desirable from theviewpoint of directing investment that the authorities announce in the nearfuture a program for trade liberalization.

xxxiv. Pricing and Subsidy Issues. There are a number of prices that thegovernment establishes directly; these include prices in the public enterprisesector and some essential items, produced in the private sector, such as foodproducts. The Government over the past year has moved resolutely to raise awide range of public prices (in particular the prices of oil products andelectricity tariffs), despite considerable domestic opposition. This isalready reflected in the significant improvement in the public enterprisecontribution to the budget. The Government has also established a Commissionfor Public Sector Prices and Tariffs to formulate a public pricing policy.

xxxv. Transfers and subsidies are a major item of the federal budget; theyaccounted for 8 percent of GDP in 1982. Well over half of the amount goesdirectly or indirectly to the private sector through the government's variousprograms and schemes in agriculture, education, and health. Of the publicenterprise sector, electricity and CONASUPO (the national company fordistribution of basic products) together account for almost two-thirds of thetransfers. But transfers to railroads, FERTIMEX (the national fertilizercompany), and social security have also been large and rising.

xxxvi. The main problem with the electricity sector is that although realoperating costs have declined over the past two decades, the tariff onelectricity in real terms declined even further, so that operating deficitsemerged by the mid-1970s. Since August 1982 the electricity prices have beenraised monthly, but so far costs have risen even faster because of theaccelerating inflation and fuel cost adjustments. Apart from rationalizingthe energy costs, there is a need for improving the efficiency in theut,lities (e.g. through better maintenance and reduction of labor costs).Raising the energy prices, as an alternative to raising indirect taxes, islikely to be more favorable for equity.

xxxvii. CONASUPO's operations are wide-ranging, and the operating deficitsin recent yeaTs hlave been only partly due to the price support to the basicgrairn. While taere is a case for adjusting agriculture prices--as thegovernment is already doing--there is a need for examining whether incomedistributional and output objectives would not be better served by restrictingCONASUPO to a few selected commodities and restricting the subsidy to only thepoor and deserving. Savings in the subsidy could be substantial and gains inincome distribution considerable, if the subsidies were to be limited only tostaple food (bread, tortillas, perhaps powdered milk) for the very poor.

xxxviii. There are several other sectors where the pricing policy will becritical to the financial autonomy of the enterprises, most notable arerailroads, Mexico City Metro, and FERTENEX. However, pricing policy mustaccompany improvements in overall efficiency. While rapid expansion ofinvestment and the pricing policy itself may have contributed to inefficiencyin recent years, there remain difficult and politically sensitive areas ofmanagement practices, such as hiring and dismissal of personnel and staffincentive schemes, that affect efficiency and require attention.

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xxxix. Public Sector Investments. The dramatic growth in public invest-ments during 1977-81 was the principal means to implement the acceleratedgrowth strategy. With the severe contraction in the available publicresources in the last two years, public investment bore the brunt ofexpenditure cuts. The Government has taken various steps to improve andstreamline the administrative procedures for the conception, approval, andmonitoring of public sector investments, and is aware of the need forcontinuing restraint in undertaking new investments.

xl. Although a review of public sector investment in the major sectorssince 1977 has shown that resources were generally concentrated in prioritysectors, there is little doubt that many projects and programs wvre expensivein terms of costs per unit of output. Major efforts are underway to improvethe cost effectiveness of public investment. Given the scarc.'ty of resources,we estimate that some 70 percent of public sector investment daring the nextfew years (1984-86) will be devoted to the completion of ongoing r,ojects andthose which are at an advanced stage of preparation. Hence there will berelatively little room for new investment iniatives, but flexibility mayimprove as a result of a careful reassessment of sectoral investment plans andpriorities. In this process, which is now well underway, the Government willinevitably be confronted with very difficult choices. Although one ofMexico's main objectives must be to reduce dependence on oil, the investmentrequirements of the oil sector will be very heavy in the years ahead but thescope for reducing unit cost is believed to be significant. Similarly, thepossibilities for cost-saving in the power sector need to be explored. Thereis also a need for examining the options on steel capacity expansion at LasTruchas. Mexico City metro offers a large potential area for saving, and thecosts and benefits of the available external financing arrangements and themerits of the project itself need careful re-evaluation. There appears to beconsiderable room for improving the productive efficiency of FERTIMEX. Therecently established central projects unit in the Ministry of Programming andBudgeting is expected to fulfill a useful role by serving as a focal pointwhere individual sectoral investment plans can be integrated and evaluated ona continuing basis.

PART I

RECENT DEVELOPMENTS:

AN INTERPRETATION AND AN ASSESSNENT

1. Over the past one year, the Mexican economy has emerged out of theeconomic and financial crisis of 1982. Whether measured in terms of thestrain in the foreign exchange market, inflation rate, or the estimatedmagnitude of capital flight, this was the most serious economic crisis anddisruption that Mexico had experienced in recent history. In this section,rather than giving the chronology of the events leading up to the crisis, weexamine the recent developments with a view to drawing lessons for futureeconomic policy. This review also provides the necesssary historicalperspective to the nature and magnitude of the adjustments which we believeare essential if the Mexican economy is to revert to a path of more stablegrowth. What we find from the recent experience is that from the viewpointof consolidating and spreading widely the gains from economic growth, it ispreferable to follow policies that support steady and stable growth, ratherthan ones which are associated with wide swings in economic activity, i.e.,bursts of expansion followed by sharp declines and stagnation of the economy.

A. Structural Changes in the Mexican Economy

2. As any fast growing economy, Mexico has undergone major structuralchanges over time. While the agriculture sector has maintained over the pastthree decades an impressive rate of expansion - close to 4 percent a year -

it was the rapid industrialization that provided the impetus to economicgrowth, which averaged 6 percent a year. Between 1950 and 1980, the share ofindustry in GDP rose from 26 percent to 40 percent. This was accompanied byrapid urbanization, and concentration of population in a few cities. Theurban areas today account for two-thirds of the population, compared to only30 percent in 1950. The indicators of the quality of life, such as spread ofeducation, fall in illiteracy, fall in mortality and fertility rates, alsoimproved appreciably.

3. Inevitably, the far reaching social and economic changes haveaffected different groups differently. The urban infrastructure has notimproved alongside rapid urbanization. The relatively high growth inagriculture has benefitted regions and social groups to widely varyingdegrees. There are also evident conspicuous examples of considerableinequality of income and opportunity. A rapid growth of population (around 3percent a year) and an even more rapid growth in the labor force have putpressure on the government to find ways to stimulate growth and employmentcreation. The social and political pressures, which erupted into seriousviolence in 1968, are held by many as the proximate cause for the rapidexpansion of the public sector in the 1970s and the consequent high rates ofinflation and the swings in the economy. On the whole, however, theoccasions when domestic tensions posed a significant threat to the otherwisestable political structure have been few and far between in recent tines.

4. A comparison of some key economLc Lndicators (Table 1) over thepast two decades suggests basically three trends: (L) a sllght declle Inthe average GDP growth; (ii) a sharp lncr-eae in the fiscal deficLt, and(iii) an acceleration of inflation.

Table 1: SELECTED ECONOMIC INDICATORS(PerLod Averages)

1960-70 1970-76 1976-82

GDP Growth Rate (Z) 7.22 6.52 6.31

Elastlcity of Growth:Agriculture 0.54 .40 .57Manufacturing 1.33 1.04 0.88Government Services 1.21 1.31 1.21Other Services 0.99 1.01 0.79

IWport as Z of GDP 10.51 9.52 11.98

Export as Z of GDP 9.34 7.98 12.31

Gross Domestic Investment(GDI) as Z of GDP 17.84 19.76 22.71Public 7.11 7.18 10.01Private 10.73 12.62 12.71

Gross Natlonal Savings(Z of GDP) 16.03 16.81 19.54

Gross Foreign Borrowing(Z of GDI) 18.52 23.52 32.17

Net Foreign Borrowing(Z of GDI) 8.35 16.93 19.36

Public Sector Deficlt(2 of GDP) -2.01 -6.90 -10.17

Inflation Rate 3.50 13.59 30.01

Source: Back Staff Estimates based on official national accounts and otherdata.

5. EconomLc fluctuations are part of the development process, and theNexican economy has been no exception. The standard statistical measures ofdispersion (such as the range and variance) Indicate that the economic growthduring the 1970-82 period was sllghtly more varlable than in the 1960 .1/

1/ The highest and lowest growth rates during 1960-70 were 13.4 percent(1970) and 4.7 percent (1962), compared to 9.2 percent (1979) and -0.5percent (1982), during 1970-1982. The standard error of estimate ws0.37 during 1960-70 and 0.47 during 1971-82 (or only 0.31, if 1982 isexcluded).

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It was mainly because the slack periods in recent years have been moresevere: during the economic downturn of 1977, GDP growth failed to riseabove the population growth rate for the first time in three decades, and theactual decline in GDP during 1982 was the first in the past four.

6. Table 1 also gives trends in some other indicators of the structu-ral transformation. While the growth of the manufacturing sector has beendeclining relative to GDP growth in the 1970s, other sectors of the economydisplay a fairly stable relationship. The expansion in government servicescontinued to be rapid, and to exceed GDP growth by a significant margin; thesector's share in GDP rose from 5 percent in the early 1960s to 12 percent inthe late 1970s. With the increasing weight of the manufacturing sector inGDP (at present 22 percent), some decline in its relative growth wasinevitable. However, it had the potential of considerably faster expansionin the last sexenio considering the enormous rise in the manufacturedimports. Since demand does not appear to have been a constraint, thequestion arises whether the slowdown in the industrial growth was caused by adefective policy environment. This issue is discussed later.

7- Other structural changes that occurred were the slight increase inforeign trade relative to GDP in the latter half of the 1970s, mainly becauseof the rise of the oil sector. At the same time, there was a sharp increasein the investment rate (from about 18 to 22.7 percent of GDP), primarily dueto the increase in public investment. This increase in investment wasassociated with an increasing recourse to foreign borrowing, which in grossterms rose as a proportion of fixed investment from 18.5 percent in the 1960sto 32 percent during the last sexenio (net of amortization, the externalborrowing as a ratio of fixed investment rose from 8 percent to 19 percent).However, national savings rate also rose substantially, by about 4 percentagepoints to 20 percent of GDP.

8. The foregoing review suggests that GDP growth in recent yearsresulted primarily from the expansion of public expenditures, viz. governmentservices and public investment. This was associated with the anticipated andrealized rapid growth in oil earnings, which accrue directly to the publicsector. The shift in sources and financing of the economic growth hadsignificant implications for macroeconomic variables, stability of the growthpath, and the balance between public and private sectors. In the followingsections, macroeconomic developments during the last sexenio are traced togain an understanding of origins of the 1982 crisis.

B. Origins of the 1982 Crisis

9. Although fiscal, balance of payments, and financial developmentsare discussed here separately, the objective is to idenfity and describe thecommon factors that explain the progressive worsening of the macroeconomicdisequilibria over the sexenio.

Fiscal Developments 1977-82

10. Table 2 gives the ratios of the principal budgetary items to GDP,which helps to show how the fiscal situation evolved during 1982. The risein oil income was responsible for the biggest increase in public revenue.

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Table 2: CHANGES IN PUBLIC SECTOR REVENUES AND EXPENDITURES(Percentage of GDP)

1977 1978 1979 1980 1981 1982

Total revenue 24.20 25.50 26.30 27.80 27.70 30.10Petroleum 3.70 4.50 5.60 7.60 7.60 10.90Fed. Gov. non-petr. revenue 11.50 11.80 12.00 12.10 12.20 11.70(Income tax) 5.10 5.90 5.60 5.80 5.80 ( 4.90(Indirect taxes) 3.70 3.70 3.90 3.90 4.00 4.20(Import duty) 0.60 0.60 0.90 1.00 1.10 0.90

Revenue of enterprises 8.40 8.70 8.40 7.90 7.60 .7.50Federal District 0.50 0.50 0.40 0.40 0.30 0.30

Total Expenditure 31.10 31.70 33.10 35.50 42.50 48.40

Current Expenditure 21.80 21.70 22.00 24.10 26.70 30.20Wages and salaries 8.10 7.90 7.70 7.20 7.60 8.30Interest payments 3.10 3.10 3.40 3.70 5.20 9.10(Foreign) 1.90 2.00 2.20 2.20 2.30 4.90(Domestic) 1.20 ( 1.10 1.20 1.50 2.90 4.20

Current transfers 3.30 3.40 3.80 5.90 4.90 4.40Other operating expenditures 7.30 7.30 7.10 7.30 9.10 8.40

Capital Expenditures 7.40 8.40 10.00 9.90 14.00 11.60Real investment 5.90 7.00 7.30 8.00 9.30 7.90Financial investment 1.50 1.40 2.70 1.90 4.70 3.70

Miscellaneous expenditures 1/ 1.90 0.60 1.10 1.50 2.10 6.60

Overall deficit 6.90 5.70 6.80 7.70 14.80 18.30Net foreign financing 3.60 2.50 2.40 2.50 7.50 4.70Net domestic financing 3.30 3.20 4.40 5.20 7.30 13.60

Deficit by public entityFederal Government 3.35 2.87 3.29 3.13 6.81 9.89PEMEX 0.92 1.41 1.24 1.38 3.83 2.10State enterprises 1.14 1.20 0.98 1.54 2.13 1.21Federal District 0.05 0.13 0.29 0.33 0.54 0.37Other 21 1.51 0.13 1.04 1.36 1.55 4.73

1/ Including exchange losses in 1982, amounting to 4.6 percent of GDP.21 Includes financial intermediation by the public sector and net financial

requirements of the rest of the public sector. For 1982, it alsoincludes the estimated exchange losses.

Source: Bank staff estimates based on S.H.C.P. data.

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Between 1977 and 1982, total revenue rose from 24 percent to 30 percent ofGDP, while petroleum revenues rose from 4 percent to 11 percent. The verysubstantial increase in oil revenue in 1982--when the world oil market wasslack and the Mexican price had to be reduced-was the result of the largedepreciation of the peso and a substantial increase in domestic prices of oilproducts in that year. Since a major part of the oil income In the budgetrepresents foreign exchange earnings, an exchange rate change leads to arenomination of the oil income in pesos.

11. Non-petroleum revenues rose only modestly. Collection of incometax, domestic indirect taxes, and Import duties, all showed just a slightgain in relation to GDP until 1981, and appreciable deterioration in 1982.Income tax alone declined by one percent of GDP in 1982. Over the sexenio,revenues of public enterprises (other than the national oil company, PENEX)and the Federal District also declined relative to GDP.

12. The rise in public expenditure, on the other hand, was continuousand more rapid. Until 1980, the expenditure increase was relativelymoderate, rising only a little faster than revenue, with the result thatthe overall public sector deficit as a proportion of GDP rose only slightly.In fact, the deficit began to rise only after 1979. With the exception of-wages and salaries", al1 major categories of expenditures rose relatively toGDP. However, if the sharp increase in expenditures during the last twoyears is examined in relation to 1980 - when the fiscal deficit still wasunder 8 percent of GDP - the increase was concentrated on interest payments(1.5 percentage points in 1981 and 5.4 percentage points in 1982) and capitalexpenditures (4 and 2 percentage points). Interest payments rose because ofthe mounting public debt, sharp rise in the domestic and internationalinterest rates, and, in 1982, the devaluation of the peso. The largeincrease in current transfers in 1980, and in subsequent years, was caused bythe revised revenue sharing scheme that increased the share of states andmunicipalities, higher subsidies to state enterprises to meet their risinglosses (mostly electricity, the national company for distribution of basicproducts, CONASUPO, and the railways), and transfers to the private sector inagriculture under SAM (the Mexican Food System). In 1982, there was anappreciable increase in wages and salaries in relation to GDP. In addition,there were large increases in miscellaneous expenditures, most notably thelosses that resulted from the peso's depreciation and the system of dualexchange rate during 1982, which represented 4.6 percent of GDP.2/

13. In brief, the increase in expenditures during the early years ofthe sexenio 1977-82 was concentrated on capital expenditures, but during thelast two years, when the fiscal situation deteriorated progressively, theincrease was spread also over current expenditures, particularly interestpayments on the rapidly accumulating internal and external public debt. Thisresulted in the emergence of deficits even in the current budget. The risein interest payments by itself had the potential of making the fiscalsituation unmanageable as interest rates rose with the acceleratinginflation, thereby making reduction of the public deficit progressively more

21 These losses arose mostly from the onlending of foreign loans by publicsector financial intermediaries in terms of pesos and the applicationof an exchange rate of M$70 to Mexdollar deposits, and M$50 to therepayment of Mexdollar loans during the last few months of 1982.

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difficult. Although in 1982 the revenues were considerably larger than in1981 and most expenditures had been curbed considerably, the interestpayments and foreign exchange losses together added 8.5 percent of GDP to thepublic deficit. Thus the restoration of a sustainable fiscal balance requiresnot only a restraint on capital expenditures but also reducing currentexpenditures. Apart from interest payments, some current expendituresresulted from the build-up of the inflationary situation itself and thegovernment's attempt to curb it through controls on public sector prices,notably urban transport and food items under CONASUPO. The selective controlof prices seems to have simply contributed, through widening the fiscaldeficit, to a generalized increase in the price level.

14. Closely related to the above is the question of the institutionalsource of the public deficit (Table 2). Although the Federal Governmentappears to be by far the largest contributor to the deficit, this is somewhatmisleading because of the substantial transfers and subsidies to the publicenterprises to help them cover their losses. Thus, the restoration of fiscalstability requires apart from restraints in expenditure, both better taxcollection and a substantial improvement in the operations of publicenterprises.

Balance of Payments

15. The deterioration of the balance of payments during the sexenioparalleled the fiscal situation. The trade balance, despite themultiplication of the oil earnings, progressively worsened during the firstfive years (Table 3). The current account deficit rose from 2 percent of GDPin 1977 to 5.2 percent in 1981. While imports rose at a high rate, non-oilexports stayed virtually unchanged in current prices and declined in volumeterms. The share of imports in GDP rose from 10.5 percent in 1977 to 14percent in 1981 in current prices, or from 8 percent to 15 percent inconstant prices. The balance of payments, however, underwent a sharpturnaround in 1982, when the trade account registered a surplus of $6.8billion and the deficit in the current account declined to 3 percent of GDP.But this did not reflect some fundamental improvement in the balance ofpayments, since it was entirely due to the sharp decline in imports, a resultof the acute foreign exchange shortage.

16. There has been some question as to the principal factors thatdetermined the balance of payments during the last sexenio. Theadministration of President Lopez-Portillo had committed itself to a programof trade liberalization early during its tenure, and had started to dismantleimport controls. This phase was to be completed by 1980, and was to befollowed by a gradual lowering of import tariffs. However, the process oftrade liberalization was never completed; on the contrary, as the balance ofpayments worsened in 1981, controls on an increasing number of imports werereinstituted. At the same time, the nominal peso/U.S. dollar exchange ratehad been kept virtually unchanged during 1977-81 in the face of a domesticinflation rate that considerably exceeded the rate in the U.S., Mexico's maintrading partner. Some have blamed the policy of trade liberalization for thespeed with which imports rose, while others hold the appreciation of the realexchange rate responsible for the decline in competitiveness of domestic

TABLE 3 : SUMMARY BALANCE OF PAY"ENTS

I MILLIONS OF US s

1977 1978 1979 19B0 1981 1992 1993

TOTAL EXPORTS 8753 11025 15312 23606 29079 27258 26843PETROLEUM 988 1774 3765 9449 13305 15623 14793NON-PETROLEUM 3662 1290 5052 5685 6114 5607 6606NON-FACTOR SERVICES 4103 4961 6495 8472 9659 6028 5444

TOTAL IMPORTS 8587 11531 17035 26206 34364 21820 12673MERCHANDISE(F.O.B.) 5705 7918 11980 IB832 23930 14437 7721NON-FACTOR SERVICES 2892 3614 5056 7373 10434 7383 4952

RESOURCE BALANCE 166 -507 -1723 -2600 -5285 5438 14170

FACTOR INCMIE ( NET -l933 -2383 -3371 -4299 -7548 -10581 -8980RE"ITTED PROFITS -189 -214 -357 -444 -551 -642 -184PUBLIC SECTOR INTEREST PAYMENTS -1542 -2023 -2988 -3958 -5476 -8400 -7346OTHER -202 -146 -126 -47 -1521 -1539 -1450

BALANCE OF GOODS AND SERVICES -1767 -2809 -5095 -7498 -12833 -5143 5190TRANSFERS ' NET 1 170 196 224 275 299 265 356CURRENT BALANCE

-1596 -2693 -4871 -7223 -12544 -4878 5546:PITOAL AiCCOUNT

2276 3254 4533 11948 21860 8632 -954DIRECT FOREIEN INVESTMENT 327 385 782 1254 1189 709 374LONG TERM CAPITAL ( NET 1 3q44 4304 380q 5591 10508 9660 3812PUBLIC I NET ) 3872 4063 3147 405q 8657 8963 3464DISBURSMENTS

6232 9343 10415 7771 13923 14250 8305AORTIZATION -2360 -4280 -726B -3713 -5166 -5397 -4841PRIVA7TE (NET'

72 241 662 1523 1851 797 349SHORT TERM CAPITAL NET 1 -1995 -1435 -58 5113 10163 -1737 -5040CREDIT FROM IMF ... 70 74 70 ... ...ERROPRS ANI OS!IISSI£SI

-23 -127 756 -3574 -9303 -6939 -1596CHANGE IN RESERVES -657 -434 -419 -1151 -1012 3185 -3106(-INCREASE)

RESERVE LEVEL I/ 1649 2083 2502 3653 4665 1480 4596SOURCE : BANK OF MEXICO

BEST COPY AVAILABLE

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tradeable sectors (particularly non-oil exports) vis-a-vis foreignproducers. While these viewpoints have an empirical basis, it appears thatthe balance of payments developments reflected essentially the policy anddecisions with respect to public expenditures.

17. After the initial success of the Lopez-Portillo administration inreducing the budget deficit and bringing down inflation, and in anticipationof the windfall of resources from the discovery of vast oil reserves, a cons-cious decision was made around 1978 to change gears and push for a more rapideconomic growth. The consequence, as seen earlier, was a sharp rise ofpublic expenditures. Although the government's initial inclination was touse the oil income to reduce the external debt burden, which was alreadyquite high in the mid-1970s, this policy was not pursued for any significantlength of time. Indeed, oil served as a lever for enlarged borrowing to payfor the expanding public investment and other expenditures. The governmentalso encouraged private firms to seek foreign credits. Evidently, this stra-tegy appealed to foreign commercial banks, which, following successive in-creases in the oil price during 1979 and 1980, were aflush with liquidity.With the persisting recessionary conditions in the U.S. and other industria-lized countries, which were pursuing generally restrictive monetary policies,there were not many 'creditworthy' borrowers. The rise in Mexico's currentaccount deficit, at least during 1979 and 1980, was therefore in part aresponse to the availability of foreign capital. Relatively little thoughtseems to have been given at that time to building up foreign exchangereserves.

18. The response of the Mexican economy to the expansionary policy wasprompt; the growth rate picked up, the labor market tightened, purchasingpower rose, and profitable avenues for private investment opened up. In thiscontext, both import liberalization and the appreciation of the real exchangerate can be seen to have complemented each other in supporting thegovernment's strategy of rapid growth. The import liberalization, to theextent that it mattered3/, helped the absorption of the available foreignexchange (the oil earnings and the external borrowing) through imports. Inthis context, the appreciation of the real exchange rate, through cheapeningimports in pesos and discouraging non-oil exports, also served as a sort ofequilibrating mechanism between the supply of and demand for foreignexchange. Indeed, with the foreign exchange as the principal source offinancing the expansion of public expenditures, the real exchange rate wasbound to appreciate through the inflationary effects. An attempt atdevaluation, without a significant shift in the government's demandmanagement policies, would simply have further fuelled inflation.

3/ There is some question on the true significance of the import liberali-zation policy. In terms of the number of import categories, the pro-portion of the cortrolled imports declined from 80 perceat in 1977 to24 percent in 1979, but, in terms of value, import liberalization af-fected no more than 40 percent of imports. There are some indicationsthat the import controls, though maintained, were greatly relaxed intheir actual application. For example, the controlled private sectorimports rose faster than the non-controlled. Cf. B. Balassa 'TradePolicy in Mexico", World Development, Vol. II, No. 9 (1983).

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19. A better understanding of balance of payment developments is gainedby examining the behavior of public and private sector accounts. The data inTable 4 show that while public sector trade balance improved over the sexeniodue to the oil earnings, the private sector's large surplus of 1977 turnedinto a deficit in 1978, and deteriorated sharply in the following years.There was substantial private sector borrowing during 1978-80 ($6.6 billionnet). During the first two years of the sexenio, the private sector ran anoverall surplus in foreign exchange availability, which was used ("sold") tooffset the balance of payments deficit of the public sector. The situationbegan to change rapidly thereafter, as private sector trade deficits mounted,and the public sector carried large trade surpluses. In 1981 and 1982, theprivate current deficit was combined with very large capital outflows, makingthe public sector provide the required foreign exchange. Since public sectorcurrent account had only a relatively small surplus in those two years, largeforeign borrowing ($27 billion net), much of it short-term, had to beincurred by the government to finance the private sector needs. Unlike thepreceding years, the bulk of external borrowing during these two years wasundertaken to support the balance of payments. This also suggests that insome ways private sector balance of payments deficit served to moderate theinflationary consequences of the large fiscal deficit. The public deficit interms of domestic resources in fact was even larger than the nominal amount:the difference being due to the public sector surplus in terms of foreignexchange. Thus in the absence of large private sector needs for foreignexchange, the government would have had to resort to even greater domesticinflationary financing.

20. Thus it is seen that Nexicots oil-based growth strategy of the late1970s contained seeds of its destruction: it could be successful only solong as the oil price kept rising, which ceased to be the case after 1980,when output also levelled off. The rising trade deficit was accompanied byrapidly rising interest payments on the accumulated external debt, the bulkof which had been contracted commercially and on variable interest rateterms. For 1982, the average interest rate on the foreign debt is estimatedat about 14 percent. At some point, the autonomous capital inflows werebound to become insufficient to finance this rapidly deteriorating currentaccount. This happened in 1981. Signs of the impending crisis startedappearing early in the year, as the current account deficit mounted and largeamortization payments came due. The crisis came to a head when people withcapital, seeing and anticipating the strains in the balance of payments, lostconfidence in the peso and started to export capital out of the country.This did not simply reflect a fear of devaluation--for in that caseconversion into Mexdollars4/ would have provided an adequate cover--but aloss of confidence in the future of the Mexican financial system.

4/ Until late 1982, the residents and non-residents could maintain USdollar denominated accounts in Mexico.

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Table 4: SUMMARY BALANCE OF PAMENTS:PUBLIC AND PRIVATE SECTOR ACCOUNTS

(Million of US$)

1977 1978 1979 1980 1981 1982Trade gap 166 -507 -1723 -2600 -5285 5438

Public - 41 - 312 1157 4431 7025 12389Private 1007 -195 -2880 -7031 -12310 -6951

Factor payments -1763 -2187 -31U -4623 -7259 -10316Public -15I2 -2023 -2888 -3958 -5476 -8400Privatel/ -221 -164 -259 -665 -1783 -1916

Current account balance -1597 -2694 -4870 -7223 -12544 -4878Public -23B -=2 -1 -7 15 9W zMPrivate 786 -359 -3139 -7696 -14093 -8867

Capital Inflows (net) 1597 2694 4870 7223 12544 4878Public0Z 2267 2141 3003 3048 16980 10222Private -670 553 1867 4175 -4436 -5344

Memo:"Sale' of foreign ex-change to privatesector -116 -194 1272 3521 18529 14211

11 Inclusive of net foreign transfers.2, Inclusive of net changes in foreign reserves.

Source: Bank of Mexico and World Bank staff estiastes.

21. The country's financial situation on the eve of 1982 Was precariousindeed. The exchange markets were unstable and the official foreign exchangereserves were negligible. International interest rates had reached an alltime high, and the oil market faced a glut. Commercial bankers as well asasset-holders could see clearly the vulnerability of the Nexican financialsystem. Thus the short-term loans stopped being rolled over and capitalflight reached dizzying dimensions in the first few weeks of 1982, when theauthorities no longer could support the peso and the first major devaluationof the peso in six years occurred. Throughout the year the economic andfinancial situation remained virtually out of control, with the govermeatappearing always to be responding to, rather than guiding, the events.Various attempts were made to rectify the situation, and different measures(trade restrictions, public expenditure cuts, devaluation, exchange controls,and eventually nationalization of the domestic comercial banks) were tried,but they either proved to be insufficient or came too late.

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Monetary Developments

22. Monetary policy during the last sexenio remained basicallyexpansionary (see Table 5). Both money and quasi-money creation acceleratedover the period: each year the percentage change in money supply was higher

TABLE 5 : FACTORS AFFECTING NONEY SUPPLY - ANNUAL CHANGES

N1N BILLIONS OF SIEX )

1977 1978 1979 190 1981 1982

NET FOREIGN ASSETS 22.90 14.70 27.30 37.80 35.80 -254.20

NET DOMESTIC CREDIT 186.38 210.40 310.80 463.10 1027.30 3931.90

NET CREDIT TO THE PUBLIC SECTOR 143.51 75.40 159.60 210.30 664.20 3342.50FEDERAL 6OYERNNENT 64.10 47.50 109.20 132.00 491.60 2415.50OTHER GOVERNMENT 79.41 27.90 50.40 79.30 172.60 927.00

nET CREDIT TO TPE PRIVATE SECTOR 50.10 I2-.20 !5!.?0 25'.0 .co 1.0 3jO.50MISCELLANEDUS CAPITAL -7.23 5.80 -7.70 -0.20 31.30 219.90

SOR ALLOCATION 0.50 0.30 1.70 1.60 1.90 21.90

NLT FOREIGN LIABILITIES 72.30 26.10 64.10 106.50 336.40 2221.50

LIABILITIES TO NON-BANK FINAN-

CIAL PUBLIC SECTOR 3.60 15.00 15.50 19.10 56.30 65.20

MONEY AND OUASI-MONEY 128.31 19O.50 249.30 363.20 654.10 1354.90

HONEY 8.B0 26.20 34.80 45.10 B7.L0 222.00QUASI-HONEY 119.51 154.30 213.50 319.10 567.00 1132L90

CAPITAL AND SURPLUS 4.57 3.20 9.50 11.50 14.40 14.20

HEMM ITENCHANGE IN CPI (1) 29.23 17.46 18.17 26.36 27.92 59.50HONEY SUPPLY1GDP(Z) 29.09 29.94 30.91 30.67 33.46 35.26

SOURCE: BANK OF NEUCM BEST COPY AVAIUBLE

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than the year before. Until 1980, deposit rates had remained generallynegative with respect to inflation; the real rates became strongly positiveonly in 1981. The rate of inflation (as measured by the CPI) declined from29 percent in 1977 to under 20 percent in the following two years, butthereafter it began once again to accelerate. The GDP deflator (with oilexcluded) followed a roughly similar pattern of change.

23. The principal factor in the increase in money supply was theexplosive rise in the credit to the public sector. Apart from the rapidaccumulation of medium and long-term foreign liabilities (i.e. externalborrowing), the scale and pace of domestic credit creation was extremely highand continuously accelerating. Up to 1982, credit to the private sectorremained easy, and rose roughly in line with the growth in GDP, as can beseen from the data in Table 6. In the early years of the boom both publicand private sector's spending rose rapidly, and there is no evidence for thephenomenon of "crowding out" of the private sector, partly because of theprivate sector's external borrowing. This is also supported by the speedwith which private sector imports rose.

Table 6: NET DOMESTIC CREDIT CREATIONI (Billion pesos)

1978 1979 1980 1981 1982Total credit 210 308 452 934 1014

(9.0%) (10.0X) (10.6%) (15.9%) (11.0%)Private sector credit 129 159 251 310 -210

(5.5%) 5.2%) (5.9%) 5.3Z) (-1.3Z)

Source: Bank of Mexico

1/ The data in parentheses give the ratio to GDP.

24. The situation, however, began to change in 1981 as the demand forfinancing the public deficit mounted. Net credit creation in favor of theprivate sector in 1982 remained in nominal terms roughly at the same level asin 1981. However, in terms of effective flows (i.e. excluding exchange ratevaluation adjustments in the foreign currency denominated accounts), creditto the private sector declined. The principal reason was that, with thedecline in foreign sources of finance in 1982, more of the very large publicdeficit had to be financed through domestic credit creation. Since domesticresources of the financial system (i.e., quasi-money supply) fell in realterms, fulfilling the public sector credit demand meant a decline in thecredit to private sector. There was, however, as noted above, very

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substantial capital flight out of the country, which in the domestic bankingsystem showed up as a decline in the liabilities to the private sector.5/

C. Conclusions on the Origin of the Crisis

25. The foregoing discussion, although segmented, has been aimed atthrowing light on the key macroeconomic inter-relationships and the differentfacets of the economic and financial developments. Whilst there were nodoubt several forces at work (both internal and external), the emergence ofthe unsustainably large fiscal deficits, and the way they were financed, canbe seen as the principal cause of the crisis. This entailed both a change inthe traditional institutional balance between the public and private sectorsand distortion of price signals in the economy. Althouth the internationaleconomic environment (the high interest rates and the slack oil market)intensified the crisis of 1982, some important lessons for macroeconomicpolicy can be drawn from the experience of the last sexenio.

26. There is first the question of the origins of the oil-based growthstrategy itself. Mexico is an advanced developing and pluralistic society.The ruling party, PRI, has now been in power for a half century, and containsa wide spectrum of economic opinion. History shows that the administration'spolicies can undergo significant shifts with autonomous external or internalevents. The Lopez-Portillo administration started with a rigorous economicstabilization program accompanied by a substantial devaluation that gave conr-siderable competitive edge to domestic tradeable sectors. The governmentproposed the stabilization phase to be followed by periods first of consoli-dation and then of growth. However, pressures against the pursuit of econo-mic stabilization started soon to build up: on the one hand, the costs ofeconomic stabilization in terms of income growth and employment were provingto be high; on the other, the prospects of large oil income suggested reliefof the resource constraint. Thus the proponents of the "big push- strategyin the administration gained. The idea was to accelerate economic growththrough public sector expenditures, to be financed primarily by the oil sec-tor. 6 / Some see in this a continuation of a longer term trend of expanding

5/ There are no satisfactory estimates of the capital flight during 1981and 1982, but it is generally believed to have amounted to severalbillions of dollars. One common way is to attribute to it the item"errors and omissions" in the balance of payments. According to this,the capital flight in the official accounts was $8.4 billion in 1981,and $6.6 billion in 1982. IMF staff estimates show the item "error andomission" at $7.7 billion and $11 billion, respectively. Lance Taylorbas suggested another method, whereby private savings are split intodomestic private investment, institutional savings, and the balance asan estimate of the capital flight. By this method, the capital flightis estimated at about $11 billion for the two years. Cf Lance Taylor:'The Crisis and Thereafter: Macroeconomic Policy Problems in Mexico."Miuseo. October 1983.

6/ There was some sympathy to this viewpoint in the internationalfinancial community. See e.g. the World Bank Report, 'Special Study ofthe Mexican Economy: Major Policy Issues and Prospects," Report No.2307-ME, May 30, 1979, pp. viii-ix.

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public sector in the economy. Several hypotheses are offered to explain thistrend, ranging from real or perceived social pressures seeking redressal ofthe income inequality to the notion that public expenditures rose to stimu-late growth in an environment of heavy trade protection where import-substi-tution possibilities had been virtually exhausted. This report has notattempted to explore the longer term or structural causes (if there are any)for the macroeconomic disequilibria.

27. The critical miscalculation Mexico made - along with other oilproducers - was to base its develoment strategy and investment plans ona highly optimistic view of the oil market and to begin relying heavily onoil, both directly as a source of public revenue and foreign exchange, andindirectly as a lever for enlarged foreign borrowing. In fact, the sharpdownturn in the oil market in 1975 had already shown that it behaved verymuch like other primary commodity market, where price was sensitive to thestate of the world economy, specifically that of the developed economies.Commercial lenders also misjudged the situation in being persuaded that oilhad somehow removed all limits to Mexico's ability to service external debt.

28. The expansionary public policies were adopted in anticipation ofthe oil income; the exploitation and development of the discovered oilreserves required both large investment and time. Thus, after a relativelysbort period of uncertainty and internal debate, large foreign borrowing wasundertaken both by the government and the private sector. In the meantime,the oil exports began to rise rapidly, reaching close to $10 billion in1980. Spending the oil money, along with the large amounts of foreign loans,created conditions that made the 1982 crisis almost inevitable. The publicsector programs and projects had a high domestic resource content, which wasnot matched by the provision of domestic funding. Many of these programs badworthy objectives - stimulate agricultural development, improve Incomedistribution - but their funding through the available foreign exchangetended to accentuate the domestic resource deficit. 7 ! Thus the licrease indomestic absorption, financed by foreign exchange, was bound to appreciatethe peso in real terms and move relative prices in favor of the non-tradeablesectors. 8 / But such price signals were unfavorable to the growth ofdomestic7cocmodity producing sectors (particularly manufacturing), thusjeopardizing the longer term growth prospects. The economy's dependence onoil, therefore, increased not simply in arithmetical terms, but in a morevital sense that Mexico's growth could be sustained only by a rapidly growingoil sector.

29. The increased resort to external borrowing followed from theabove. Mexico's debt service burden was already high in the mid-1970s (the

7/ The quality of public sector investments during the last sexenio isexamined in Part III.

8/ The sectoral deflators in the national accounts, however, show amovement in relative prices only modestly unfavorable to agricultureand manufacturing. This is probably due to the high degree ofaggregation in the national accounts and the relatively small share offoreign trade in the Mexican economy.

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debt service ratio In 1977 was only just under 50 percent). Once thegovernment had opted for a high growth strategy, it soon discovered both theneed for external finance and the relative ease with which It could beobtained. But the term structure of the debt, especially after 1981, dld notcome close to corresponding to the payoff periods of the investments sofinanced. The average maturity of Mexico's new medium and long-term publicborrowing remained around seven years, but In the last two years of thesexenio a much higher proportion was borrowed on short-term. Before thecrisis erupted, neither the government nor the lenders appear to have made aserious long-term analysis of the external debt burden. If the foreign loansthat were contracted could be shown to be matched by productive assets, theexternal debt problem could be interpreted as a liquidity problem. While anexercise of this sort has not been attempted, it seems unlikely that therewas in fact a close correspondence between the additional foreign liabilitiesand income generating assets. The data in Table 7 show that capital goodsimports were only a small proportion of public foreign borrowing, thussuggesting a large part of the borrowing was not directly related toinvestment. More significantly, foreign borrowing exceeded by a considerablemargin total public sector Imports. In any case, the great bulk of theshort-term borrowing during 1981 and 1982 was dictated by the capital flight,suggesting that public sector foreign liabilities are matched to some extentby private sector foreign assets.

Table 7: PUBLIC SECTOR DMPORTS AND FOREIGN BORROWING

1977 1978 1979 1980 1981 1982

(In uillion of US$)

Total imports 2099 2916 3994 7106 8822 5401Capital imports 561 631 1219 1553 2283 1543Gross M1LT Capital inflows 6232 8343 10415 7771 13823 14250Ratios to grossborrowing (Z)Total imports 33.7 35.0 38.4 91.5 63.8 37.9Capital imports 9.0 7.6 11.7 20.0 16.5 10.8

Source: Bank of Mexico

30. Mexico, by the standards of developing countries, is a largeeconomy (fifteenth in the world). The commercial banks had allowed theirexposure in Mexico to rise rapidly. A situation was being created wherecommercila lending had to keep increasing in order to service the past debt,since the export earnings were failing to rise commensurately, at leastpartly because the easy availability of foreign finance itself had helped tosupport an appreciated peso. Thus a fundamentally untenable situation wasarising when the external borrowing requirements were increasing as thecountry's creditworthiness was deteriorating.

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31. Historically, Mexico has been an open economy. Although importcontrols have been applied, capital movement Into and out of Mexico untll1982 had been virtually unrestrieted. It was also possible for residents asveal as non-residents to maintain US dollir denominated accounts with theMexican banks (the so-called Mexdollar accounts), which In turn were free tomake US dollar denominated loans The Mexdollar deposits, by making theactual movement of capital out of Mexico unnecessary, offered considerableflezibility to the authorities in their macroeconomlc policy. Althoughwithin the financial system as a whole the foreign denominated assets mora orless matched the liabillties, the system worked basically on trust andconfldence because there was no requirement for saintaining a speclfiedforeign exchaage reserve cover. The free movement of capital necessitatedthat the authorities had to align the monetary policy close to the world'sleadlag flnancial conters. The Interest rates on Mexdollar accounts - andthrough them on peso denominated accounts - had to remain linked to theinternational rates somewhat Independently of the domestlc Inflation. Butgiven the institutional background and govermnent policy, the fact that solittle attention was paid to preserving a credible reserve cover againstcontingencies was itself symptomatic of the over-optimism on the prospects ofoil and Mexico's ability to borrow abroad.

32. Finally, perhaps the most important lesson from the experience ofthe last sexenio ls that once the crisis conditlons had been created therewas no viable or credible substitute to a comprehensive stabllizationprogram for bringing the situation under control. During 1982, and before,the government had triad all kinds of policies, but they turned out to beeither inadequate or essentially late responses to events already passed.The measures were introduced In succession, and were found often to conflictwith each other (e.g. the advantage gained by the devaluation of February1982 was eroded by a large wage award to public servants one month later).Furthermore, such measures generally lacked the support of the Internatlonalfinancial community, whlch was vital given Mexlco's resource needs. It wasnot until late 1982 that a comprehensive program for bringing about * .bilityboth to the fiscal and balance of payments accounts was put in place, andwhich had the support of the financial community.

D. The Aftermath of the Crisis

33. The economic ad socLal costs of the disruptlon caused by thefinancial crisis of 1982 are enormous and, though difficult to measure, willbe felt for many years to come. CDP declined by 0.5 percent in 1982, and4.7 percent in 1983 (see Table 8). Manufacturing activity and constructionwere the two hardest hit sectors. where the output fell by 7 percent and 14percent In 1983. EstLiates of unemployment are not reliable, but there Is aconsensus that thanks partly to the decline in real wages, total employmentwas maintained and that unemployment rose to the extent that the labor forceIncreased in the two years; i.e. about 8 percentage points. The expansionarystrategy also caused the accumulatlon of a very large external debt. Theservice on this debt will iupose very heavy demands on the natlon's resourcesover the coming years. These are some of the costs of the strategy that havelonger term implications, and are discussed in greater detail in Part II ofthe report in the context of Mexlco's future prospects.

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Table 8: SELECTED ECONOMIC lNDICATORS 1982 AND 1983

1982 1983(estimates)

GDP growth (Z) -0.5 -4.7Manufacturing -2.9 -7.3Construction -5.0 -14.3

Gross domestic investment growth (Z) -16.4 -25.3

GDI (Z of GDP) 22.3 15.5Public sector 9.9 6.6Private sector 12.4 8.9

Budget deficit 2 GDP -18.3 -8.6

Current account Z of GDP -3.0 3.8

Change in foreign exchange reserves

(Billion US dollars) -3.2 +5.5

Inflation (!;PI)December - December 98.9 81.8Average 59.5 101.5

34. The extent of Mexico's economic and financial deterioration in 1982was such that only drastic measures could restore conditions of stability.The main goals of the economic stabilization program, which was agreed towith the IMF, were to reduce the need for foreign finances, ease theinflationary pressures, improve the balance of payments, and createconditions favorable to private sector recovery. The key element o1 theprogram was a drastic reduction in the public sector deficit: from over 18percent of GDP in 1982 to 8.5 percent in 1983, 5.5 percent in 1984, and 3.5percent in 1985. The program also provided for measures to improve the tradesurplus and accumulation of foreign exchange reserves at the rate ofUS$2 billion a year. The reduction of the fiscal deficit and generaladherence to the stipulated monetary targets were initially projected tobring down inflation to 55 percent in 1983, and further substantial declinein the later years. The stabilization program foresaw no decline in GDPduring 1983 and a fairly robust recovery in the following two years.

35. The administration of President Miguel de la Madrid, which cameinto office on December 1, 1982, lost no time in putting into effect policiesto achieve the goals of the stabilization program. Several measures wereintroduced to improve tax revenues. The general rate of the value-added tax(VAT) was raised to 15 percent from 10 percent (the tax on luxury items wasset at 20 percent). Tax exemptions that had been given to gas-stations,transporters, and wood industries were withdrawn. An additional surtax of 10percent was levied on all tax-payers whose annual income was over five-timesthe national minimum wage. Starting with an increase of about 100 percent inDecember 1982, prices of gasoline and other oil products and of public

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utilities were raised over the year to bring them closer to their opportunitycost. A comitnt was made to reduce budgetary subsidies over tine. The1983 budget also provided for very substantial cuts in current and capitalexpenditures: current expenditures from 30 percent of GDP in 1982 to 27percent, and capital expenditures from nearly 12 percent to 8 percent. Thepolicy of low interest rates was reversed to encourage mobilization ofdomestic resources and discourage capital flight.

36. Several bold initiatives were taken with respect to foreignexchange and trade system. Although a system of dual exchange rate wasretained, the controlled rate was set initially at 95 pesos to USdollar-representing a real depreciation of about 35 percent over theprevious ordinary rate-with a daily slide rate of 13 centavos, yielding adepreciation of about 50 percent for the year as a whole. The controlledrate applied to transactions involving export earnings and most imports,payment of external debt obligations, and some other official or essentialtransactions. The free rate was established close to the then prevailingmarket rate at M$150, and the expectation was that it would stabilize aroundthat level, so that within a foreseeable future the controlled and free rateswould meet. The foreign exchange controls were greatly relaxed, and acommitment as made to review commercial policy with a view to achievinggreater productive efficiency.

37. At the same time the Government entered into negotiations withforeign creditors to refinance the public external debt falling due in theperiod August 23, 1982 to December 31, 1984 in order to ease the burden ofrepayments during the economic stabilization phase. A scheme vas introducedto cover the foreign exchange risk on the private sector debt (FICORCA), andfacilitate its restructuring. These measures are discussed in more detail inPart II of this report.

38. After the first few mouths of continuing uncertainty (which atleast partly arose from the delays in completing negotiations with theforeign creditors and uncertainty in the international oil price), theMexican economy began to emerge out of the crisis. Some Important indicatorsof economic health - viz., the inflation rate, the value of the peso in thefree market, the virtual elimination of capital flight - started to show asignificant improvement. The fiscal deficit remained consistently below thequarterly ceilings, and the balance of trade remained strongly in Mexico'sfavor. Although the year ended with a public deficit in nominal terms almostexactly equal to the amount in the budget, the individual revenue andexpenditure items turned out to be rather different, not surprisingly giventhe generally fluid state of the economy (see Table 9). The projectedincrease in non-oil tax receipts failed to materialize, mainly because of thepersisting depressed state of the economy and the virtual halving ofimports. However, the decline in non-oil receipts was more than offset bythe increase in petroleum revenue on account of the December 1982 devaluation(which came after the budget had been introduced in parliament) and the muchhigher internal petroleum product prices. The better than expectedperformance of public enterprises was an encouraging development.

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Table 9: PUBLIC SECTOR RECEIPTS AND EXPENDITURES(Percent of GDP)

1982 1983 1984Prelim. Budget Estimate Budget

Total receipts 30.1 30.4 32.4 32.5Petroleum revenue 10.9 10.7 14.2 TMTOTax receipts (non-oil) 11.7 12.9 10.7 11.0Public enterprise revenue 7.5 6.8 7.6 7.5

Total expenditures 48.4 38.9 41.0 38.0Current expenditures 30.2 26.7 31.2 28.8(Current expend. excl. interest) (21.1) (17.4) (20.0) (18.6)Exchange losses 4.6 - 0.4 0.2Capital expenditures 11.7 8.4 7.8 8.2

Overall public deficit -18.3 -8.5 -8.6 5.5

Source: SHCP

39. The expenditure cuts were concentrated on capital outlays whichdeclined from 11.7 percent of GDP in 1982 to 7.8 percent, going beyond thecute envisaged in the program. Apart from the direct measures to scale downpublic investment more or less across the board, the lower expenditures alsoreflected the delays in the approval and implementation of sectoralbudgets. Current expenditures, on the other hand, proved more difficult toreduce. Virtually all categories turned out to be higher, particularlyinterest payments which had been seriously underestimated in the budget.Because of the relatively stable exchange markets, the losses on account ofexchange rate fluctuations, which had weighed heavily in 1982, were virtuallyeliminated.

40. The year ended with an increase of US$5.5 billion in foreignexchange reserves. The trade surplus reached the unprecedented level of $14billion, and the current account showed a positive balance of about US$5.5billion. 'hile the substantial depreciation of the peso arrested the declinein the non-oil exports, and yielded a considerable increase in volume terms,the improvement in the trade balance was basically a result of the severecontraction of imports, which declined from $14.4 billion to $7.7 billion.The sharp decline In imports reflected the rigorous application of importlicensing, the depressed state of the economy, and import substitutionstimulated by the devalued peso. To the extent it was the system of importlicenses that was responsible for the decline, an Important policy issue iswhether inflation could not be fought more effectively with a more liberalimport policy. In January 1984, the government removed import controls on anumber of essential products, and moved all imports to the lower controlledrate.

41. Although inflation did not decline to the extent foreseen in thestabilization program, there was a definite improvement over the year. This

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can be seen in the annualized quarterly rates of inflation during 1982 and1983 given below:9/

821 821I 82III 821V 83I 8311 83III 83IV% change in CPI 64.8 85.1 130.2 124.4 125.2 75.4 59.4 69.5

The reversal of the declining trend in inflation during the last quarter of1983 was due to the adjustment of several public sector prices and seasonalfactors. Tighter demand management policies of the government certainlyhelped to reduce the monetary expansion, but another major factor in thecontrol of inflation was that the labor unions accepted wage increases thatwere considerably smaller than the rise in the cost of living. The increasein the minimum wage, which is seen in Mexico as an approximate norm forgeneral wage adjustment, was less than 45 percent over the year, while thecost of living index rose by more than twice as much (December-Decemberbasis). Taking into account the timing of the wage settlements, the realwages declined by about 20 percent.

42. Despite the initial success of Mexico's stabilization policies, thestruggle for restoring economic stability is not yet over. Economicrecovery, which depends critically on the recovery of the private sector, andthe decline in inflation are in the present circumstances somewhatinter-related. With the existing high unemployment and excess capacity thecost-push factors are likely to be weak in the immediate future. A strongeconomic recovery would make reduction of the fiscal deficit easier, and witha larger output, may help to reduce inflationary pressures further.

9/ In a high inflation situation, the measure of inflation is quitesensitive to whether the comparison is made between the year-endindices or between the average indices of two periods. When inflationis declining, the end period comparison yields a lower estimate,depending on how quickly inflation is coming down.

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PART II

PROSPECTS FOR LONG-TERM GROWTH

43. In an environment of rapid inflation and unsettled internationaleconomic environment, it is impossible to give a reliable forecast of keyeconomic variables. Mexico is going through a transition period, and whilemuch progress has been made towards restoring economic stability and confi-dence, the situation can be still described only as fluid. The inflationrate is declining, but still remains high. The decline in GDP in 1983 andrising unemployment pose threat to the success of the stabilization program.Also, while the United States and other developed economies are showingeconomic recovery, there is no consensus on how long it will last and howstrong it will be.

44. This part of the report presents a plausible macroeconomic scenariofor stable and sustalnable path of economic growth for Mexico. The purposeis to highlight the necessary conditions for securing that path, i.e. thedomestic goals and policies and the contribution of the international finarr-cial community. There cannot be any guarantee that the path will actually besecured - i.e. the necessary conditions may not be sufficient - but notpursuing them would inevitably mean continuing economic and financial insta-bility which may put unbearable strain on the fabric of society.

A. Imperatives for Future Growth

45. The review of recent developments in Part I suggests that a programfor Mexico's recovery to a path of long-term sustainable economic growth mwstcontain a number of essential elements, viz. achieving economic stability bybringing the fiscal and balance of payments current account deficits back tosustainable levels; an export growth and external borrowing strategy thatkeeps Mexico creditworthy; a shift away from expenditure-led growth to 8timurlate the growth of commodity production; and a rate and pattern of economicgrowth that reduces pressure of unemployment. These considerations haveinfluenced the assumptions made in the model used here to make theprojections.

Economic Stabilization

46. The Government remains firmly committed to restoring economicstability, even though the sharp decline in GDP and continuing high inflationduring 1983 have led some to question the success of the stabilizationprogram. A very important lesson from the experience of the past sexenio isthat abandoning the stabilization program prematurely would be short-sighted. The Government's determination not to slacken the current stabili-zation efforts is reinforced by its awareness of the following two factors:

(i) The large oil resources, which some six years ago radically alteredthe outlook for the Mexican economy and resulted in the revision ofthe government's economic strategy, have been developed, and onlyrelatively small further increases in output are at present envi-saged. In fact, the output from existing fields in operation is

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already on decline, and substantial investment will be required tobring in new fields under production. The world oil market hasbeen slack in the last two years, and the Mexican oil price hasremained below the 1981 peak. As has happened in the past, adramatic turnaround in the world oil market consequent to someinternational or localized event cannot be ruled out, and the oilprice say experience a sudden sharp increase. However, as we haveargued elsewhere, oil should be seen as any other primary commodityfacing unstable market conditions, and the swings in the marketmust not be allowed to influence the longer-ternm goals and economicpolicies of a major producer like Mexico.

(ii) Because of the present very heavy burden of LDCs externaldebt, which is concentrated in a few countries, and the tighterinternational liquidity, commercial lenders are 3ikely to be lesseager to increase their exposure in LDCs at rates anywhereapproaching those of the late 1970s. Public opinion in thedeveloped countries, especially in the U.S., is also in favor ofmore caution on the part of commercial banks in their lendingoperations. Thus, it seems likely that for the foreseeable futurethis source of finance will remain relatively scarce and will (innet terms) make only a minimal addition to Mexico's resourceavailability. This does not mean, however, that this contributionwill not be critical to the country's future growth.

47. In short, the fiscal and balance of payments position is expectedto remain tight in Mexico. In these-circumstances, relaxation of thestabilization program would simply mean larger public sector deficits,financed mostly from domestic credit creation, which would lead toaccelerating inflation and squeezing of the private sector. While increasedpublic expenditures may stimulate growth in the short run, this policy wouldsooner or later alversely affect savings and investment in the privatesector. While it is difficult to predict the social pressures that may buildup as the nation continues to tighten its belt, and how these pressures wouldbe resolved, the projected path of the economy in the scenarios describedhere follows closely, unless otherwise specified, the path laid out in thestabilization program. We also assume that the program will be successful inits objectives of reducing inflation and creating conditions favorable forsteady growth. Of particular importance is the outcome of 1984 for itdepends to a considerable extent oh the recovery of the private sector.

The Implications of Mexico's External Debt

48. For an understanding of the conditions that would permit resumptionof rapid growth following the economic stabilization phase, it is necessaryto analyse the implications for Mexico's resource prospects of the huge ex-ternal debt that was accumulated in the last few years of the Lopez Portilloadministration. Table 10 describes the evolution of Mexico's external debtsince 1977 by borrower and lender. By the end of 1982, the increase in thetotal external debt amounted to US$55.1 billion, of this the public sectoraccounted for two-thirds and the private sector 22.5 percent. The balancewas due to the borrowing by the Mexican commercial banks that were

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Table 10: EXTERNAL DEBT OUTSTANDING AND DISBURSED(Billion US Dollars, end year)

1977 1978 1979 1980 1981 1982 1983

Public Sector 22.9 26.7 29.7 33.8 53.0 58.8 60.9Hedium and long-term 20.2 25.5 28.3 32.3 42.2 49.5 51.2

Source:FiLnancial institutions (14.4) (18.1) (21.4) (24.7) (31.8) (36.1) (38.8)International organiz. (2.8) (2-8) (2.8) (3.3) (4.0) (4.3) (4.4)Bilateral (0-8) (0-9) (0.8) (1.2) (2.3) (2.9 (4.1)

Short-term 2.7 1.2 1.4 1.5 10.8 9.31/ 9.71/

Nationalized Banks 1.8 2.0 2.6 5.1 7.0 8.0 8.0Medium and long-term .. 0.7 T 1.3 f 0.5 75 0Short-term .. 1.3 1.9 3.8 5.1 7.3 7.3

Private Sector 5.0 5.2 7.9 11.8 14.9 18.0 18.0Medium and long-term .. 3.1 4.8 6.0 8.3 9.5 9.5Short-term .. 2.1 3.1 5.8 6.6 8.5 8.5

Total Debt 29.7 33.9 40.2 50.7 74.9 84.8 86.9Mediumd long-term .. 2 . 33.9 592 .93.Y0 62 .4

Short-term .. 4.6 6.3 11.1 22.5 25.8 24.5

Memorandum itemDebt to Banks 22.6 25.3 33.3 43.1 64.5 71.2 74.4Public sector 17.1 19.6 22.8 26.2 42.6 45.4 48.5Private sector 5.5 5.9 10.5 16.9 21.9 25.8 25.9

1/ Includes debt being restructured.

Source: SHCP and ITM.

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nationalized in late 1982. Some 90 percent of the increase in the externaldebt was from foreign commercial banks. The short-term debt rose to almostone-third of the total debt outstanding at the end of 1982. In fact during1981 and 1982, the short-term borrowing (in net term) was of about the samemagnitude as the medium and long-term borrowing.

49. The debt service projections on Mexico's existing debt face afew uncertainties. First, there are certain short and long-term foreignliabilities, Which are strictly not viewed as foreign debt, as for example,Central Bank swap arrangements, letters of credit, and short-term supplierscredits. According to the most recent official information, Mexico'soutstanding external public debt at the end of 1982 stood at US$58.8 billion(not including the Bank of Mexico's liabilities of US$2.2 billion and someother contractual liabilities). The Mexican commercial banks (nownationalized) had outstanding US$8 billion in external obligations. Ofthese, about US$5.5 billion took the form of interbank deposits of foreignbanks with agencies of Mexican banks abroad. The private sector short andmedium-term external debt is estimated at US$18 billion (including theestimated US$4 billion in suppliers' credits).

50. Second, the great bulk of the external borrowing contracted inrecent years carries variable interest rates (linked either to LIBOR or tothe U.S. prime rate). The proportion of the Mexican debt so contracted inthe total rose from just over half in 1977 to well over three-quarters in1982. The international interest rates have fluctuated widely in the recentpast. The future level of interest rates is impossible to predict, given thecomplex interaction of economic growth, inflation, exchange rate changes, andexpectations. In our projections, the LIBOR is asssumed to be 9 percent, andthe margin for M4exico is assumed to vary from 1.75 percent to 2.25 percentdepending on the type of loan. The sensitivity of the projections to thisassumption is examined.

51. Some US$19 billion of the public sector debt was restructuredduring 1983. This consisted of US$7.6 billion corresponding to short andmedium-term debt payments that fell due in the period August 23 to December31, 1982 (the initial requested period of suspension of repayments), US$7.5billion due in 1983, and about US$4 billion due in 1984. All theseobligations have been restructured over an eight year period, startingJanuary 1983, with a maximum grace period of four years and at an interestrate of 1-7/8 percent over LIBOR or 1-3/4 percent over the U.S. prime rate.

52. Although considerable progress has been made, the precise terms forthe private debts to be restructured have not yet been finalized. Theauthorities have reached agreement on the restructuring of Mexican privatesector obligations guaranteed by official credit agencies abroad. During1983 most of the outstanding interest arrears were settled, and the Govern-ment established a new facility (FICORCA) in the Bank of Mexico to help theprivate sector deal with payment arrears to foreign suppliers, and to provide

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a framework for the refinancing of private sector debt and insuring thedebtors against the risk of exchange rate changes. Of the US$500 million insuppliers' credit arrears identified,some US$200 million was settled in 1983,and the balance is scheduled for payment in 1984. To encourage restructuringof the private debt, the Mexican debtors, which had debts outstanding onDecember 20, 1982, were given the option of obtaining cover for the exchangeri3k for either principal or both principal and interest provided the debtwas restructured at minimum specified terms. The debtor was obligated todeposit with FICORCA the total peso equivalent of the obligation due at thecontrolled rate or at a discounted rate depending on the coverage it hadobtained and the maturity of the restructured loan. If the debtor did nothave the peso equivalent it could borrow from FICORCA to constitute thedeposit. By the time the FICORCA scheme was closed on November 5, 1983, someUS$11.6 billion of private external obligations had been registered under thevarious options available. Negotiations are continuing with commercial banksand other private foreign creditors to restructure the private debtregistered with FICORCA at maturities that vary between 6 and 12 years with 3or 4 years of grace. More recently, FICORCA has extended its forwardcoverage scheme for loans contracted after December 20, 1982 so long as theyhave maturities of eight years with four years grace. For the purpose ofderiving estimates of future debt service on the private debt, it has beenassumed that in general the private debt would be restructured, with averageterms of six years of maturity and three years of grace.

53. In spite of the uncertainties and information gaps noted above, thedebt service projections, as broad orders of magnitude, do provide a reliableindication of Mexico's resource requirements over the coming years. The debtservice profile on the existing debt should be seen as the starting point forworking out a future borrowing strategy for Mexico. Table 11 gives theprojected debt service on Mexico's external debt as of December 31, 1982. Inaddition, the government borrowed US$5 billion from commercial banks in 1983,on terms of six-year maturity and three year grace period, at an interestrate 2-1/4 percent over LIBOR or 2-1/8 percent over U.S. prime rate. Theimplications of the recent debt restructuring are evident in that the debtrepayments will peak in 1987 and 1988, thereafter the debt service declinesprecipitously. The 'bump' in the debt service in the late 1980s hasimportant implications for Mexico's future financial needs and debt strategy,which become evident in the macroeconomic projections developed here. Whilstextreme care in external borrowing will be needed in the years abead underany conceivable scenario, there is no doubt that a stretching of maturitiesfor existing nonrrestructured and new commercial debt would be a significantfactor in improving Mexico's recovery and subsequent development prospects.

Restructuring the Pattern of Economic Growth

54. We saw in Part I of the report that the expenditure-led growthduring 1977-1982 had its limits. Far from removing the Imbalances in thepublic accounts and the balance of payments, it made them in the end worse.In general, growth during the past few years of the previous sexenio wasconcentrated on the construction and service sectors which benefited mostfrom the expansion of public expenditures. Over a longer term, a sustainablegrowth path for Mexico requires a satisfactory growth of commodity produc-tion, notwithstanding the enormous potential of growth in such service sec-tors as tourism. The National Development Plan 1983-88 underscores theimportance of structural reforms for stimulating economic recovery and growth

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Table 11: MEXICO - PROJECTED SERVICE ON EXTERNAL DEBT OUTSTANDING ANDDISBURSED, DECEMBER 31, 1982

(Billion US Dollars)

PUBLIC PRIVATE TOTAL

Interest Amorti- Debt Interest Amorti- Debt Interest Amorti- DebtPayments zation Service Payments zation Service Payments zation Service

1983* 7.30 1.50 (9.0) 8.80 3.10 1.00 4.10 10.40 2.50 12.901984 6.80 1.30 (5.4) 8.10 2.90 1.00 3.90 9.70 2.30 12.001985 6.10 9.70 (9.7) 15.80 2.60 1.00 3.60 8.70 10.70 19.401986 5.20 5.15 (5.1) 12.00 2.60 2.00 4.60 7.80 7.15 14.951987 4.10 12.30 (7.5) 18.10 2.40 4.00 6.40 6.50 16.30 22.801988 2.70 9.45 (4.7) 13.80 1.80 4.00 5.80 4.50 13.45 17.951989 1.60 8.30 (3.5) 9.90 1.20 4.00 5.20 2.80 12.30 15.101990 0.90 5.90 (1.1) 6.80 0.60 5.00 5.60 1.50 10.90 12.401991 0.40 2.40 2.80 -- -- -- 0.40 2.40 2.801992 0.20 1.20 1.40 - - - 0.20 1.20 1.401993 0.11 0.60 0.71 -- -- -- 0.11 0.60 0.711994 0.10 0.30 0.40 - - _- 0.10 0.30 0.401995 -- 0.20 0.20 -- -- -- - 0.20 0.20

* Actual estimate.

Note: The data in parentheses refer to the amortization payments before the debtrestructuring.

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over the coming years. While oil will continue to provide resources forconsumption and investment for many years to come, it is an exhaustibleresource and its output is not expected to rise appreciably. The oil sector,therefore, cannot be seen as the leading sector in future growth of theMexican economy. Thus, future economic growth will depend on the performanceof agriculture and manufacturing, which also means that recovery and growthof the private sector, since it dominates in these sectors, will play agreater role.

55. Although agriculture's share in GDP has declined to under 10 per-cent, it provides livelihood to about 25 percent of population, and continuesto make significant contribution to the balance of payments. The rapidgrowth in output during 1940-70 was the combined result of new land beingbrought under cultivation, a rise in yields, and a change in crop compo-sition. During the 1970s, the land expansion dropped almost to zero, butyields maintaiaed their historic growth rate of almobt 2 percent a year whilethe change in crop composition in favor of high-valued crops contributed onepercent. In recent years there has been growing concern that agriculturaloutput growth in Mexico is slowing down. Since there is not much scope formore land being brought under cultivation, the issue of adequate incentiveshas become increasingly important. In order just to maintain the historicaverage growth rate of 3-4 percent a year, the government needs to ensurethat agricultural orices remain attractive and investments are undertaken toraise productivity and bring in new land under cultivation where possible.

56. The decisive factor in sustaining economic growth will be manufact-uring, where opportunities for expansion from both demand and supply side atMexico's present stage of development are virtually limitless. The patternand pace of industrialization will be crucial in employment expansion, thesaving and earning of foreign exchange, and the regional spread of growth.Because of the generally higher income elasticity of demand for manufacturedgoods than of food and other agricultural goods, and no evident capacityconstraints, manufacturing in Mexico can be expected to grow fast. Althoughmanufactured exports do not amount to a large share of production at present,they could help in the realization of significant economies of scale, therebyreducing costs and increasing employment. More generally, a healthy andgrowing manufactur%ag sector can be expected to contribute to technologicalchange and productivity gains through improving the quality of employment.To a considerable extent, the potential in this sector depends on tradepolicy, including selective use of protection to foster nascent industry.

Population and Employment

57. The socially necessary pattern and rate of economic growth in tbelong term is conditioned by the twin objectives of raising the livingstandards and creating employment to absorb the rising labor force. Thus,for the longer term macroeconomic projections, it is important to examinepopulation and labor force trends.

58. Mexico's population has risen at an average rate of 3 percent overthe past three decades, and is estimated at 73 million (mid-1982). Duringthe 1950s and the better part of the 1960s, population growth rate tended toaccelerate, as the mortality rate declined without an appreciable change infertility. Over the past decade, however, the fertility rate has begun todecline. Between 1965 and 1978, fertility declined from 6.55 to 5.13, a fallof 22 percent, as a result of public sector supported family planning

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programs as well as spread of education among women and their entry into thelabor force. The decelerating trend in fertility is expected to continue,but the population growth will remain high, with the consequent worsening ofthe pressure on agricultural land and urban congestion. At the same time,the rising demand for public services, notably health and education, will bedifficult to meet given the public sector's scarce financial resources. Forall thcse reasons, a vigorous family planning program will continue to benecessary.

59. The growth in labor force is expected to remain close to4 percent during the 1980s, reflecting the combined effect of the past highbirth rate and the rising labor force participation rate. Among men, mostof the changes in participation rates are likely to occur among those at theextremes of the age distribution. Teenagers will remain in school longerthan in the past and thus to postpone entry to the labor force. At the otherextreme, older men probably will retire from the labor force as greaternumbers become eligible for retirement benefits. Also as life expectancyrises, the weight of the older people in population will rise. These changesmay more or less offset the underlying trend of rising participation rates.

60. It is more difficult to estimate the trends in female partLcipationrates, but they can be expected to rise for most age groups. Among theyoungest women, two conflicting tendencies are likely to be operative.Increasing school enrollment will tend to delay entry into the labor force,especially in 12-14 years age group. On the other hand, the rising level ofschooling will encourage entry of the older group, particularly among womenbetween the ages of 20 and 24. The participation rate among other ages isalso likely to rise. Falling fertility rates will enable women to remain inthe labor force or to re-enter for longer periods. The increasing weight ofurban population should reinforce this tendency. Finally, one can observegreater tolerance towards female participation.

61. Table 12 provides estimates of labor force based on theseconsiderations. While the male labor force is expected to rise during the1980s at a rate only slightly higher than the recent past, there is asignificant slowdown in the rate of increase in the female labor force. Inaggregate the labor force is projected to increase at 3.9 percent a year in1980-85, and 3.7 percent during 1985-90. These projections do not take intoaccount that, as a result of the sharp decline in real wages in the recentyears, labor force participation rates are believed to have increasedtemporarily. Tnis means that in the early phase of economic recovery, totalemployment and unemployment may increase simultaneously.

62. On the whole, employment had expanded satisfactorily during the1970s. Until 1979, just around the time when economic growth accelerated, itis estimated to have risen at a rate just under 4 percent a year. This rateexceeded slightly the growth in the population of labor force age and laggedslightly behind the growth in the labor force. The government's decision toaccelerate economic growth had an immediate Impact on employment. Employmentis estimated to have increased by almost 5 percent in 1979, and this wasfollowed by expansion rates of 6.3 and 5.4 percent in the two subsequentyears. It appears that the government had overestimated the size ofunemployed or underemployed labor, since signs of labor shortages, even ofunskilled labor, began to appear early in 1980. A year later reports ofshortages were quite general. The construction industry found it difficultto recruit men in sufficient numbers, and increasingly turned to employwomen. The ratio of job applicants to advertised job openings in smallerestablishments in several cities also declined.

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Table 12: LABOR FORCE ESTIN&TES

(Population million)

1970 1980 1985 199 0 1970-80 1980-85 1990-95- annual change

malePopulation 12 yrs. 14.6 21.4 25.6 30.0 3.7 3.6 3.3

and olderLabor force 10.7 15.3 18.3 21.7 3.5 3.7 3.5Participation rate 73.0 71.3 71.7 72.4

FemalePopulation 12 yrs. 15.1 22.2 26.4 31.0 3.8 3.5 3.2and older

Labor force 2.7 4.8 5.9 7.3 5.7 4.2 4.3Participation rate 17.6 21.5 22.2 23.5

TotalPopulation 12 yrs. 29.7 43.6 52.0 61.0 3.7 3.6 3.2and older

Labor force 13.3 20.0 24.2 29.0 4.0 3.9 3.7Participation rate 44.9 45.9 46.5 47.6

Note: Totals may not add because of rounding.

Source: Consejo Nacionale de Poblacion, Secretaria de Programacion yPresupuesto, and Centro Latinoamericano de Demografia, and WorldBank Staff estimates.

63. The information on the movement of real wages is partial and showsconflicting trends. The deflated series of the minimum wage rate and thewages and salaries In the manufacturing sector show elther a slight declineor relative constancy over the last sexenio. The wage rate for unskilledworkers in the construction sector, on the other hand, was reported to havesubstantially exceeded the minimum wage rate. There is also an evidence ofrising real wages elsewhere in the economy, e.g. for domestic servants inMexico City.

64. There is no firm estimate for the present unemployment rate, andthe overall employment picture is mixed. As a result of the pesodepreciation, exporting activities, particulrly around Mexico-U.S. borderareas, and tourism industry are experiencing a boom. There have even beenoccasional reports of labor shortages. But in industrial areas-Monterrey,Guadalajara, and Mexico City-the unemployment situation is consideredserious. Unemployment is particularly high in Monterrey (according to oneestimate 12.5 percent), where heavy industry and firms with large externaldebt are concentrated, typically the worst hit by the crisis of 1982. It isprobable that over the past two years as a whole employment level did not

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decline. One indlcator supporting this view is that the number enrolled inthe social security program (which covers only the modern sector) did notdecllne; towards the end of 1983 thero was in fact a slight increase.

65. The Government is concerned about unemployment, fot among otherconsiderations the success of the stabilization program rests on labor'ssupport. A special program to create 500 to 700 thousand new jobs In lowcost construction, malntenance and repair activities was started in 1983.Several major areas for action were identified. The highest priority forspecial government sponsored employment programs was assigned to the areaswhich suffered from droughts and frosts in 1982. Then came those urban areaswhere pockets of unemloyment arose as a result of the decline in economicactivity. Programs are also being devised to help young graduates andblue-collar workers in the industrial areas to find jobs. Anotherinnovation, which may also help regional development, is the program of lowcost construction work undertaken by local bodies and flnanced by the federalgovernment. It is too early to determine the effectiveness of these programs,but there is little doubt that these have helped in mitigating to some extentthe unemployment problem. Also, the fact that real wages declinedsubstantially during 1983 must have played a role in maintaining employment.

66. For the period 1970-81, the employment elasticity (i.e. the ratioof percentage change in employment and percentage change in CDP) is estimatedat 0.6. During the last sexenio, when rapid growth of the economy wasassoclated with a tightening of the labor market, two conflicting tendencieswere observed. On the one hand, public lnvestment was concentrated incapital-intensive sectors like petroleum, power, and heavy industry. But theeconomic growth was led by the sharp rise in expenditures on governmentservices and construction, which are typically labor-intensive. TI pasttrends persist and there is no significant shift in the pattern of futuregrowth, an average annual growth of around 6 percent in GDP - the historicaverage - if maintained steady over a period of time, may help create enoughnew jobs to absorb new entrants in the labor force. But there remains theproblem of the existing unemployed and the unemployment that may arise as aresult of the expected slow growth of the economy over the next few years.The Government, as noted, attaches great importance to preventingunemployment from rising. Apart from the specific programs for creating ormaintaining employment, the Government's priorities in investments and theircapital intensity, as Indeed its pricing policies, will play an importantrole in the evolution of the employment situation. If policies aimed atstructural reform, as outlined in the National Development Plan 1983-88, aresuccessfully implemented, labor absorption rates can be expected to improve,and a lower GDP growth in the years ahead may be associated with adequateemployment growth.

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B. Key Assumptions Underlying the Projections

67. The purpose of the various alternative macroeconomic projectionspresented here is to show the feasibility of a stable growth path for theMexican economy uwder different conditions, and the implications for economicgrowth, balance of payments, debt service burden, inflation, and publicsector:private sector relationship. The model used in the projections doesnot provide a forecast of future events but rather traces the consequences ofcertain explicit macroeconomic assumptions.

68. Although the model is fairly disaggregated, and has separate publicand oil sectors, its structure is quite simple. Its principal driving forceis the investment-savings balance. A given year's investment level isdirectly related to that year's GDP. Public investment and investment in oilare specified exogenously. An exogenously specified ICOR (the incrementalcapital-output ratio) determines the change in GDP for the next year. Domes-tic savings (split between public and private sectors) are also dependent onGDP. The investment-savings gap determines the magnitude of liquidity crea-ted, which, to the extent it exceeds the demand for real money balances,translates itself into a rise in the price level. Components of the balanceof payments and fiscal accounts are either exogenously specified (e.g. exter-nal borrowing and exports in the balance of payments or public investment inthe fiscal account) or through their dependence, direct or indirect, onGDP.10/

69. Thus, assumptions concerning the productivity of investment, publicfinance polUcies, savings propensity, export earnings, and the availabilityof foreign finance are held in the model to be crucial to the evolution ofthe Mexican economy over the coming years. We have developed basically twoscenarios both of which assume continuing commitment on the part of theMexican authorities to the economic stabilization program and other measures(to be discussed in Part III) to achieve sustained economic growth, butdiffer in terms of the international environment, as reflected in the growthin Mexico's export earnings and availability of foreign finance.

70. Productivity of Investment. GDP has been split between oil andnon-oil. The oil sector growth is dependent on the rise in domestic demandfor oil products (linked to GDP) and the level of exports, held constant at1.5 mbd (million barrels a day) during the projection period. The investmentrequirements for the oil sector for 1984 and 1985 were estimatedindependently, taking into account the production profiles of the existingwells and the cost of development in Mexico. Thereafter, the investment isallowed to rise at 12 percent a year in real terms, because of theprogressively increasing real cost of oil resource development in Mexico.

71. The change in non-oil GDP is dependent on non-oil investment and onthe ICOR, the value of which should be seen as a policy variable. After the

10/ External finance strictly speaking is not exogenous, since it fills thegap between imports and exogenously given exports and other autonomouscapital inflows and outflows. But the external finance is "fine-tuned"along with exports to keep it at realistic levels.

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negative values in 1982 and 1983 (since the GDP declined), the ICOR isexpected to be rather high during 1984 and 1985 because of the influence ofdemand on economic growth during the stabilization phase. The ICOR isprojected to decline to 3.2 when the stabilization phase ends. Theoperational significance of the ICOR is that the Government must aim atrealizing an average productivity of domestic investment such that theavailable investable resources help to absorb the rising labor force andmaintain a satisfactory GDP growth.

72. Public Finance Policies. As discussed earlier, major cuts inpublic expenditures were made in 1983, When their share in GDP declined by 9percentage points compared to 1982. The reduction was split roughly equallybetween the cuts in public investment and the virtual elimination of theforeign exchange losses. The projections assume that public expenditureswill more or less maintain their share in GDP over the coming years, and thatfurther reductions in the public sector deficit in 1984 and thereafter willcome mainly from an improvement in domestic revenue raising effort. Directtax collection had suffered considerably during 1982 and 1983. Theassumption here is that these will recover to about 6 percent of GDP (i.e.,the rate prior to the crisis); the expected resumption of economic growthwill improve the collection of VAT. Considerable improvement in import taxesis also projected, as imports recover and the Government carries out itsstated policy of phasing out import controls and relying more on tariffs.Taken together, public revenues as a proportion of GDP are projected to riseby about 4 percentage points during 1984 and 1985; thereafter the revenuesrise roughly in line with GDP growth. The public sector deficit, as aresult, declines roughly in line with the stabilization program-5.5 percentin 1984 and 3.5 percent in 1985-before settling down at about 3 percent.

73. Savings Propensity. Public sector savings as seen above are apolicy variable. Private savings are determined by the specification of amarginal savings rate which, on the basis of the historical trend, is held atabout 18 percent of the private income. Implicitly, this assumes thatdeposit interest rates will be kept sufficiently high so that the specifiedsavings rate actually materializes.

74. Export Earnings. Oil exports in terms of volume, as noted, areprojected to stay at 1.5 nbd, in line with Mexico's stated official policy.The oil price is difficult to predict. Given the present market conditions,no appreciable change in the real price is assumed to occur during 1984 and1985, but thereafter it is projected to rise at 3.5 percent a year (or 9.5percent in current terms), along the lines of The World Bank CommodityDivision's assessment.

75. Non-oil export earnings will be critical in improving Mexico's ba-lance of payments and creditworthiness. Although the deterioration in thebalance of payments in recent years is attributed mainly to the rapid rise inimports, the decline in the non-oil exports was also of considerable conse-quence. The projections here presuppose that public policy will be directedtowards first regaining the lost ground, and then gradually expanding thenon-oil exports, consisting mostly of manufactured goods. Non-oil exportsare projected to rise at 10 percent a year in terms of volume until 1990,after which the growth rate gradually comes down to 8 percent in 1995.

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TABLE 13: MACRO-ECONOMIC PROJECTION, SCENARIO I

19B2 1983 1984 19B5 1986 1987 1998 1990 1995

GDP growth rate lXchange) -0.50 -4.70 1.45 3.31 5.29 6.09 6.25 6.27 6.31

Private Consumption per capita -10.40 -6.60 1.91 -0.85 2.32 3.23 3.80 3.71 3.61llchange)

Investment (I of 6DP) 21.60 16.95 18.02 20.00 21.03 21.56 21.66 21.91 22.18

In Current Prices (I of GDP)

Exports of 66UFS 17.69 19.66 19.07 19.52 19.73 19.81 19.90 20.09 20.27oil 9.99 10.76 9.49 9.35 9.15 8.99 8.61 6.10 7.23tn-oil 7.90 8.90 9.60 10.17 10.58 10.93 11.29 11.99 13.03

Imports of GUlFS 13.36 9.90 13.45 15.14 16.34 16.99 17.41 18.23 19.56Resource Balance 4.54 9.76 5.62 4.39 3.38 2.82 2.49 1.66 0.71Current Account Balance -1.60 3.52 0.44 -0.65 -1.15 -1.30 -1.29 -1.36 -1.58

As I Df GDY

Public Revenue 22.40 25.10 26.69 29.74 28.81 26.91 26.77 28.69 28.56Public Current Expenditure 28.27 26.32 24.42 24.36 24.01 23.75 23.56 23.26 23.01Public Investment 11.81 6.97 7.89 7.79 7.8B 8.02 8.15 8.42 8.52Public deficit -17.68 -8.18 -5.64 -3.41 -3.08 -2.97 -2.94 -2.99 -2.97

Debt Service Ratio 47.34 42.60 s5.27 56.54 39.80 63.61 53.71 42.74 28.18Debt as I of Exports 172.75 295.60 295.09 259.85 236.89 217.49 200.42 171.54 123.94Interest Payments as 36.92 34.80 30.67 29.19 24.87 22.55 20.60 17.45 12.12

1 of Exports

Inflation Rate '1 65.80 102.60 51.10 20.00 15.00 13.40 10.80 9.30 6.40

*1 Change in G0Y deflator.Note: Per capita private consumption growth in 1994 and 1985 is biased by the specially high inventory accumulation

expected to take place in 1984. This high accumlation is the consequence of very low inventory stocks in 1983and of the expected recovery in GDP and imports in 1984. If half of the increase in imparts in 1984 goes tobuild up inventories, the increase in private per capita consumption in 1984 and 85 net of this effect wouldbe .1 and 1.0% respectively.

SDURCE: StatisticaI Appendix

BEST COPY AVAIUBLE

- 34 -

76. Foreign Finance. Our base scenario assumes that the commerciallenders will not only refinance past loans, but also let their exposure inMexico rise at a modest rate in nominal terms. There are, however, severaluncertainties, and the sensitivity of the growth path to this variable needsto be examined. The volume and terms of external finance are sensitive bothto the developments in the world economy and to the perceived performance ofthe Mexican economy. If the international financial community continues tobe satisfied with Mexico's economic management, Mexico would remain aprofitable area for lending operations. But if confidence in the economicmanagement is shaken, there is a danger that commercial lenders, by far thebiggest suppliers of finance to Mexico, may attempt to withhold credit.There is also some question about the behavior and policy of the relativelysma11 foreign banks in the future. Over the past year, smaller banks haveshown reluctance to enter into longer term commitment of funds to countriessuch as Mexico.

C. Prospects for Stable Growth

Sound Management, Favorable International Environment - Scenario I

77. Under assumptions of moderately favorable international economicenvironment and continuing prudent economic management, the prospects of theMexican economy reverting to a path of sustainable and stable growth in thenext few years appear good. The key exogenous assumptions are:

1985-90 1990-95Z p.a. Z p.a.

Growth of OECD economies 3.4 3.2Growth of Mexican

non-oil exports 10.0 8.5Increase in commercial bankexposure 3.3 6.2

World inflation 6.0 6.0

78. As noted earlier, GDP declined in the past two years, and there wasa substantial rise in unemployment. It is not unrealistic to expect modestrecovery to start in 1984. Indeed, it seems likely that if in the first partof 1984 signs of Improvement appear -- i.e. there is a significant Improve-ment in private sector confidence, fixed investment rises, and inventoriesbegin to be built up, while the inflation continues to decline -- success islikely to feed on itself, and the belt tightening that the stabilizationprogram requires would become less painful. Because expectations play animportant role in private sector decision-making, the Government has not onlyto pursue measures to achieve economic stabilization, but also mustdemonstrate that it is succeeding. One indicator by which the general publicis likely to judge the Government's success is the behavior of inflation.

79. Under this scenario (Table 13), the growth of GDP would recover to6 percent a year towards the late 1980s. The path of economic recovery andgrowth is very similar to the one implicit in Mexico's National DevelopmentPlan 1983-88. In the meantime there would be a sharp reduction in inflation,which by the 1990s comes down close to the projected international levels.

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Table 14: EXTERNAL DEBT PROJECTION(Billions of US dollars)

1984 1985 1986 1987 1988 1989 1990 199 5

Total DOD 92.07 92.47 95.39 99.23 103.72 108.78 114.24 152.85Official DOD 6.52 7.17 7.84 8.52 9.20 9.84 10.38 11.91Commercial DOD 85.55 85.30 87.55 90.71 94.52 98.94 103.86 140.94Disbursements fLT 6.46 5.90 9.29 23.37 22.33 22.73 23.01 31.00Amortization MLT 1.43 10.9 6.01 18.74 17.13 16.91 16.84 19.80Interest Pymts. NILT 9. 57 10.03 10.02 10.29 10.66 11.11 11.62 14.95Debt Service 11.00 20.12 16.03 29.02 27.79 28.01 28.46 34.75Net Transfers -4.55 -14.22 -6.74 -5.65 -5.46 -5.29 -5.45 -3.75Debt Serv. Ratio (%) 35.27 56.54 39.80 63.61 53.71 47.68 42.74 28.18Interest/Exports (%) 30.67 28.19 24.87 22.55 20.60 18.90 17.45 12.12DOD/Exports 29 5.a3 259.85 236.88 217.49 200.42 185.13 171.54 123.94

Memo Item:Exports 31.20 35.58 40.27 45.62 51.75 58.76 66.60 123.33

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The balance of payments and fiscal situation also become sustainable. Thecurrent account deficit in the balance of payments stabilizes at just alittle over one percent of GDP, and the positive resource balance declinesfrom the high of about 10 percent in 1983 and 6 percent in 1984, to about 2percent of GDP. This means that the excess of domestic savings required overinvestment declines, which translates itself into higher domestic investmentand consumption.

80. Apart from sound fiscal policies, the stability of the longer-termgrowth path rests on how successful Mexico is in expanding its export earn-ings (from the viewpoint both of reducing the need for external finance andof creditworthiness) and on the productivity of investment. Although withrespect to neither of these two parameters the assumptions in the scenarioare unrealistic, they do require a conscious effort and appropriate policiesto reverse past trends and to realize the levels postulated in theprojections.

81. The debt service burden, particularly during the late 1980s,remains a principal area of concern (see Table 14). As the repayment of therestructured loans starts in 1987, the debt service ratio shoots up to 63percent and exceeds 40 percent in 1990. But the debt service ratio declinesappreciably in the 1990s, reaching 28 percent in 1995. The two other import-ant indicators of creditworthiness -- interest payments and debt outstandingand disbursed as ratios of exports - show a greater and consistent improve-ment. Interest payments as a proportion of export earnings decline from 30percent in 1984 to 17 percent in 1990, and 12 percent in 1995. Total debt asa proportion of exports declines from almost 3 to 1.7 by 1990, and only 1.2by 1995. Provided the overall economic management remains sound and success-ful, and there are no significant domestic or international unfavorableevents, commercial lenders may find this degree of improvement in thecreditworthiness indicators as adequate. They could, therefore, be expectedto refinance Mexico's amortization payments and to increase their exposureslightly in nominal terms. But this is not something that can be taken forgranted, and requires some understanding being reached with the commerciallenders on the terms and magnitude of refinancing well before the graceperiods under the restructured loans end.

82. Whilst the base growth scenario at the macro level appears to beviable and plausible, it is important to ascertain that the aggregates do nothide serious disequilibria at a lower level. In particular we need toexamine that the stable scenario does not imply undue hardship or otherunfavorable conditions for the private sector, which has been treated in thismodel on a residual basis. We have seen that the restoration of stablegrowth requires, on the one hand, raising revenues and curbing expendituresto regain fiscal stability, and, on the other, stimulating growth of nonroilexports to maintain a manageable balance of payments. The corollary to theserequirements is a major adjustment in the private sector.

83. In Table 15 private sector savings and investment are given as aproportion of private sector income. Private sector savings is composed oftwo parts: the voluntary savings, Which the private sector makes in thelight of its income and interest earning possibilities, and the inflation taxor forced savings, which reflect the savings extracted out of the privatesector by means of money and credit creation and the consequent rise in the

TABLE 15: PRIV'ATE SECTOR SAVINGS AND INVESTHENT

I in current Prices 1

1982 1983 1984 1955 1986 18 1988 1989 1990 1995

FIXED INVESTfMENT 3 .5. 13.99

14.61 17.59 18,9 1914 19. 1

NATIONAL SAVINgS (volunatary) 2'1.59' 17379 14612

17.593 18.3 1I3

84 84 84

INFLATION TAX (forced savings) 15 7 8.63 4162 9 1. 19 1.3453 1.36 1.181 18.0

18.79

TOTAL SAVINGS 29.56 2-6.

20.46 1 9.6 19.9 19.87

19.17 19.50 19.41 19.243

(R S THI N R V T N O E ( e 1 50. 60 1 20 .23 50 . 84.0 1 .04 0.73

0.72 0.700. 1.4

PR Ji VT E I N C OM7 X T Ib C OIE 1 00ea l! lO O .O d tO 0 .0 0 1 0 0.606d 1 0 0 .0 0 1 0 0 . o0 1 0 0 .0 0 1 0 0 .0 0 1 0 0 .0 0 1 0 0 .0 0 1 0 0 0 0

BESTNRVTENOM ea!13 -98

-16 1.5 56 638 6,53 6.46 6.46

6.49

BEST COnPY AVAILABLE

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price level.ll/ Naturally, in periods of large fiscal deficits and highinflation, a87characterized the recent past, the inflation tax is high,estimated at 8 percent and 9 percent of private income during 1982 and1983. With the decline in fiscal deficits and inflation over time, theinflation tax falls to one percent of private income.

84. The effect of the slack economic activity during 1982 and 1983 canbe seen in the rather low level of private investment. Savings-investmentgap for the private sector during these years is very large, and remainsquite high in 1984. This gap is composed of public sector borrowing tofinance the deficit, the repayment of the private foreign debtl2/, andprivate capital transfers abroad. The exceptionally large savTu?gs-investmentgap for 1982, however, also includes the capital flight noted earlier.

85. The stabilization program has affected the growth of privateincome. In fact, during 1983, the decline in the private income was muchhigher than the decline in GDP. Although GDP is projected to recoverslightly in 1984, private income is expected to decline further. There is anincrease in 1985, but the growth still remains well below the GDPgrowth. Thus, throughout the stabilization phase, the private sector isexpected to remain under considerable pressure.

86. While the realization of a satisfactory, sustainable, and stablegrowth path is shown to be feasible, it is a path that is likely to beextremely narrow in the early years, and begins to widen only slowly in the199Os. During the early years the economic performance is highly vulnerableto unfavorable domestic or international developments. The two main areas ofuncertainty are (i) how the international financial community interpretsMexico's prospects and (ii) how the domestic private sector responds to thebelt-tightening that is required during the stabilization phase. But it isclear that any slackening of efforts on the Government's part could triggeroff developments that postpone indefinitely the realization of the objectivesof stable growth. The sensitivity of the growth path with respect tosomewhat less favorable international economic environment, internationalinterest rates, and the lower availability of foreign finance is nowexamined. We have consciously avoided giving a scenario with imprudenteconomic management, for it can readily be see.L to be a nonviablealternative.

11/ The inflation tax represents the loss in the real value of moneybalances on account of inflation. There is no set rule as to how theinflation tax should be treated in defining private savings. It couldbe viewed analogous to any other tax paid by the private sector thatreduces the public deficit. From the viewpoint of bringing out theconsequences of public policy for the private sector, it is preferableto include the inflation tax both in the private income and in savings.

12/ For purposes of projections, it is implicitly assumed that the totalexternal debt of the private sector will remain unchanged.

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Unfavorable International Environment - Scenario II

87. This scenario differs from the base scenario essentially in tworespects: (i) the world economy would grow more slowly, and thereforeMexico's non-oil exports would face more severe market constraints; and (ii)the availability of foreign finance would be smaller. The key assumptionsare:

1985-1990 1990-95Z p.a. X p.a.

Growth of OECD economiest 2.5 2.5Growth of Mexican non-oilexports 2.5 3.0

Increase in commercial bankexposure - 1.4

World inflation 4.5 4.0

88. One positive element in the scenario is that the slower growth inthe world economy is held to be associated with a lower rate of inflation,which would lessen the cost of imports and the interest burden. The outcomefor Mexico, therefore, depends on to what extent these influences offset theslower growth in exports and the lower availability of foreign finance. Themain results of this scenario are summarized in Table 16.

89. The Government is assumed to continue with the stabilizationprogram, but is somewhat less successful in bringing down the public deficit(as a pronortion of GDY) than in the base scenario. At the same time, therecovery of the Mexican economy is much slower and inflation during thestabilization phase is appreciably higher. This Implies considerableadditional hardship in the early years. However, if the country is stillable to adhere to the tight fiscal policy, the inflation rate in the 1990sdoes move towards the projected world inflation, a rate that is lower than inthe base scenario. Because of the lower projected level of exports andforeign finance availability, the balance of payments adjusts through areduced level of imports. However, the reduction in real terms is moderatedby the lower projected world inflation. GDP growth in the longer term staysaround 4.5 percent a year.

90. The debt service ratio, despite the lower debt and interest rates,is significantly higher throughout the projected period, particularly duringthe 1980s. The ratio of total debt to exports also remains higher. Becauseof the lower projected world inflation, which implies lower nominal interestrates, interest payments as a proportion of exports, however, are slightlylower. Thus the critical question relates to Mexico's ability to cope withthe international developments in the early years of the projection period.The projections are also sensitive, as in the earlier scenario, to howcommercial lenders interpret the consequent worsening of the standardcreditworthiness indicators.

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TABLE 16: MACRO-ECONOMIC PROJECTION, SCENARIO II

1992 1983 1984 1995 1986 1987 1989 1990 1995

6DP grouth rate CZchangel -0.50 -4.70 1.45 2.07 2.92 4.50 4.59 4.59 4.61

Private Consumption per capita -10.40 -6.60 1.79 -1.91 0.33 2.52 2.60 2.25 2.10(%change)

Investment (Z of GDP) 21.60 16.95 18.02 19.09 19.69 20.09 20.20 20.43 21.06

In Current Prices (I of GDP)

Exports of 6&NFS 17.89 19.66 18.77 18.98 19.05 18.70 18.35 17.68 16.91oil 9.99 10.76 9.49 9.60 9.65 9.46 9.27 5.92 8.53Non-oil 7.90 8.90 9.29 9.38 9.40 9.24 9.08 8.76 8.38

Imports of G&NFS 13.36 9.90 12.96 13.31 14.17 14.76 14.99 15.16 15.52Resource Balance 4.54 9.76 5.81 5.67 4.89 3.94 3.36 2.52 t.39Current Account Balance -1.60 3.52 -O.91 -0.62 0.52 0.19 -0.07 0.42 0.62

As I of ODY

Public Revenue 22.40 25.10 26.68 27.91 28.04 29.08 28.07 28.02 29.12Public Current Expenditure 28.27 25.32 24.42 24.49 23.71 23.49 23.36 23.36 23.39Public Investment 11.91 6.97 7.89 9.04 8.15 9.15 8.14 8.12 9.04Public deficit -17.69 -9.18 -5.64 -4.62 -3.83 -3.55 -3.43 -3.46 -3.31

Debt Service Ratio 47.34 42.60 43.61 65.04 40.73 70.13 61.37 53.04 34.64Debt as Z of Exports 172.75 295.60 306.11 273.54 255.31 ZM.49 220.65 197.37 142.00Interest Payments as 36.92 34.80 39.29 35.08 23.23 20.27 18.91 16.94 11.70

1 of E:ports

Inflation Rate *1 65.80 102.60 50.70 35.00 20.00 15.40 10.80 8.00 9.00

*I Change in waY deflator.SOURCE: Statistical Appendix

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Reduced Availability of Foreign Finance

91. The sensitivity of the base scenario projections to two majoruncertainties - viz. the availability of foreign finance and internationalinterest rates -- was tested. In this alternative commercial lenders areassumed not to increase their exposure, but rather reduce it at 2 percent ayear after 1984. The method of making projections here is qualitativelydifferent from the above two scenarios, in that the projections respond tothe fixed availability of foreign finance. In this alternative (Table 17),although the authorities try to keep the budget deficit at a manageablelevel, they do not succeed in reaching the targets in the stabilizationprogram, mainly because the GDP growth remains very low. The inflation rateafter an initial decline begins to accelerate towards the late 1980s. After1990, the situation becomes quite untenable in that the public sector deficitrises to unsustainable levels and inflation soars to three digits.

92. While the Government remains committed to prudent policies, thetighter foreign resource availability is likely to force certainmodifications. With scarcer foreign exchange, the Government may becompelled to use some system of rationing of foreign exchange and applyimport controls more extensively. Further real depreciation of the pesoeither may be politically unacceptable because of its impact on real wages orwould not succeed in raising the trade balance sufficiently to compensate forthe decline in foreiga finance.13/ The consequences of such policy shiftswill get reflected in a worse performance of non-oil exports, higher budgetdeficits, a higher rate of inflation, and a higher ICOR. All of these wouldadversely affect the creditworthiness indicators. Thus it would appear thatthe considerations that might lead the commercial lenders to withdraw fromlending to Mexico -- poor credit risk - cause the economy to perform sopoorly that the creditworthiness deteriorates much further, and could wellthreaten their existing loans.

Sensitivity to International Interest Rates

93. As noted earlier, international interest rates are difficult topredict, and the premium that Mexico may be charged equally so. Thus it isimportant to examine the sensitivity of the base scenario to somewhat higherinterest rates (additional 2.5 percent) on which Mexico obtains commercialfinance.

13/ In a situation where exports and imports are roughly equal, the successof devaluation (or more precisely the stability of the trade balancewith respect to the exchange rate), can be examined and predictedthrough the values of import and export elasticities. However, whenthe objective is to generate a certain specified level of trade surplus- as in Mexicots case - then devaluation must also ensure thatdomestic savings exceed investment by the requisite amount. Thedynamics of how domestic absorption responds to this is notstraightforward, and cannot be predicted a priori. In any case, thisrequires such degree of "fine-tuning' in demand management that nogovernment may find itself equipped to undertake.

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TABLE 17: NACRO-ECODNOIC PROJECTION, SENSITIVITY TO FOREIGN FINANCING

1992 1983 1984 1985 1986 1907 1989 1990 1995

SGP growth rate (Zchange) -0.50 -4.70 1.45 1.71 2.81 2.96 4.39 6.07 6.25

Private Consuaption per capita -10.40 -6.60 I.91 -4.56 -0.76 -1.56 1.95 3.37 3.28(%change)

Investment (2 of GDPI 21.60 16.95 18.02 20.03 21.10 21.71 21.83 22.03 22.25

In Current Prices (Z of 0OPI

Exports of G&NFS 17.99 19.66 19.07 19.76 20.49 21.21 21.72 22.22 20.86lIoprts of 8&NFS 13.36 9.90 13.45 13.73 15.26 15.60 16.71 17.72 19.19Resource Balance 4.53 9.76 5.62 6.04 5.22 5.6U 5.01 4.50 1.67Current Account Balance -1.60 3.50 0.44 0.92 0.68 1.52 1.47 1.96 0.38

As 2 of SOY

Public Revenue 22.40 25.10 26.68 28.73 29.11 29.11 29.18 29.14 28.69Public Current Expenditure 28.27 26.32 24.42 24.75 25.03 25.64 26.09 26.64 24.43Public Investment 11.81 6.97 7.89 7.91 9.21 9.62 8.91 9.33 9.78Public deficit -17.68 -8.18 -5.64 -3.94 -4.14 -5.15 -5.83 -6.83 -4.53

Debt Service Ratio 47.34 42.60 35.27 56.66 39.02 62.15 51.02 37.22 18.87Debt as I of Exports 172.75 295.60 295.09 250.85 219.37 197.42 160.37 111.38 65.45Interest Payments as 36.92 34.80 30.67 28.23 24.01 20.89 17.74 12.71 6.91

Z of Exports

Inflation Rate #1 65.20 102.60 51.00 35.00 47.70 62.90 60.70 73.00 41.10

Ii Change in SDY deflator.SOURCE: Statistical Appendix

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94. The main consequence of the higher interest rates is that thecurrent account deficit (relative to GDP) remains considerably larger andrises to 2.6 percent, compared to 1.4 percent in the base scenario (Table18). Since the highar current account deficit implies a higher level offoreign finance, all iudicators of creditworthiness are much moreunfavorable. Until 1990, the debt service ratio exceeds 50 percent, and in199Z5 it is still 37 percent. Total debt and interest payments as aproportion of exports are 1.5 and 18 percent, respectively. Because of thehigher interest payments, the public deficit also stays higher than the basescenario, and so does the inflation rate. But GDP growth and the rise in percapita consumption are not significantly affected.

95. The consequences of somewhat lower interest rates (2 percent belowthe base case) were seen to be just the opposite. The debt service burdendeclines considerably both because of lower interest payments and because oflower external borrowing requirements. The debt service ratio is 4percentage points below the base case in 1990, and 5 percentage points in1995. The public sector deficit is also reduced by the lower interestpayments, and the projected inflation falls below the assumed internationalrate. Since the lower interest payments reduce only the need for externalfinance, leaving domestic savings unchanged, GDP growth remains unaffected.

D. Conclusions for Stable Growth

96. The projections discussed above can be seen at best as numericalillustrations of possible outcomes for the Mexican economy. They do not havemuch predictive value. But one thing is quite clear: Mexico, over the nextseveral years, will have to spend considerably less than what it earns. Ourprojections show that the resource surplus (i.e., the excess of exportearnings over imports) would average about 3 percent of GDP in the late1980s. This, by any historical standard for LDCs, is a huge burden. Sincethis is dictated by the requirements of servicing the external debt, thechallenge for the Mexican policymakers is how to achieve this with minimaleconomic and social costs. The burden of adjustment will be eased with theresumption of economic growth, but our projections show that (i) the Mexicaneconomy would secure a path of steady growth only when a reasonable fiscalbalance has been achieved and (ii) the economy would stay on this path onlyif export earnings were to rise rapidly to provide the required foreignexchange and keep Mexico creditworthy. It is equally important that theforeign lenders take a somewhat longer term view of Mexlco's economicprospects in their lending decisions.

97. The options available to the country over the remainder of the1980s are very limited indeed, but by 1990 all indicators of economic healthand economic independence begin to show a decisive improvement, provided theinternational economic environment remains reasonably favorable. The keydomestic parameters on which the economic recovery and stability of futuregrowth depend are the following:

(i) Success in reducing, and then maintaining, the fiscal deficit to asustainable level of around 3 percent of GDP.

(ii) Response of the private sector to the gradual restoration ofeconomic stability in terms of investment and bringing back fundsat present invested abroad.

(lii) Success in raising non-oil exports.(iv) The efficiency of future public and private investments.

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TABLE 19: NACRO-ECONOIIC PROJECTION, SENSITIVITY TO INTEREST RATES

1992 1983 1984 1995 1986 1997 1999 1990 1995

6DP growth rate (Zchange3 -0.50 -4.70 1.45 3.31 5.28 6.09 6.25 6.27 6.31

Private Consumption per capita -10.40 -6.60 1.91 -0.95 2.32 3.23 3.90 3.71 3.61(Zchangel

Investment (Z of GDP) 21.60 16.95 19.02 20.00 21.03 21.50 21.66 21.81 22.19

In Current Prices (Z of 6GP)

Exports of G&NFS 17.90 19.66 19.07 19.53 19.73 19.81 19.90 20.09 20.27Isports of SIdES 13.36 9.90 13.45 15.14 16.34 16.99 17.41 18.23 1M.56Resource Balance 4.54 9.76 5.62 4.30 3.38 2.82 2.49 1.96 0.71Current Account Balance -1.60 3.52 -0.30 -1.47 -2.09 -2.30 -2.38 -2.56 -2.97

As % of 6DY

Public Revenue 22.40 25.10 26.68 20.73 20.81 28.91 28.77 29.69 28.56Public Current Expenditure 28.27 26.32 24.42 24.46 24.27 24.13 24.00 24.00 24.35Public Investment 11.81 6.97 7.99 7.91 7.98 8.02 9.15 9.42 9.52Public deficit -17.69 -9.18 -5.64 -3.54 -3.34 -3.34 -3.46 -3.73 -4.30

Debt Service Ratio 47.34 42.60 39.99 60.60 44.46 69.58 59.14 49.59 37.67Debt as I of Exports 172.75 295.60 298.99 267.63 248.69 233.12 219.96 198.04 164.97Interest Payments as 36.92 34.00 34.57 32.39 29.66 27.75 26.33 23.84 19.40

1 of Exports

Inflation Rate 41 65.80 102.60 51.00 20.00 15.00 13.50 11.00 9.90 9.40

4/ Chanqe in 6DY deflator.SOURCE: Statistical Appendix

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98. Although in terms of net resource transfers and relative to therequired domestic resource mobilization effort, foreign finance is expectedto account only for a small share, it will play a critical role on the marginin enabling the Government to adhere to sound economic policies. In a realsense, sound economic policies and the availability of foreign finance areseen to be intimately related and mutually interdependent. The modestprojected increase in the commercial lenders' exposure in the base case doesnot seem to be unrealistic, but some lenders (particularly the smaller ones)may wish to reduce their exposure in Mexico regardless of the country'seconomic performance. This would imply other lenders will have to raisetheir exposure more than proportionately.

99. The external debt will remain a constraint on the options open toMexico for several years to come. However, the particularly severe debtservice burden during the late 1980s can be clearly foreseen, and this allowstime for entering into arrangements for the refinancing of amortizationpayments. This would avoid undue strains in the balance of payments arisingfrom uncertainty and erosion of confidence.

100. The projections have not dealt with the possibility of a firmer oilmarket, and a higher oil price. Some chance event may indeed cause the oilmarket to recover dramatically, and Mexico's resource position may improvesuddenly. However, if such an improvement were to occur, it should not, inthe foreseeable future, materially affect the Government's policies ofrestraint in public spending. Any additional oil income should be first usedto reduce the external debt burden and/or build up foreign exchangereserves. Considering the risks of premature expansion, this is likely toyield a return superior to any other use of such hypothetical additionalresources.

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PART III

POLICIES FOR STABLE GROWTH

101. The projections given in Part II of this report provide a set ofquantitative goals - relating to the public sector deficit, non-oil exportearnings, productivity of investment, and the availability of externalfinance -- that are necessary for the Mexican economy to achievea satisfactory, stable, and sustainable growth. The public policy in Mexicois already being directed towards attaining them, and considerable progresshas been made during the administration's first year in office.

102. The National Development Plan 1983-88, issued in Nay 1983, providesthe context for the administration's policies. The Plan is devoted torestoring conditions for long-term growth. The immediate task facing thecountry is to fight inflation, protect employment, and achieve stable balanceof payments. But the Plan also seeks to initiate deep changes in theeconomic structure: to overcome sectoral deficiencies and Imbalances,improve income distribution, address basic needs, and decentralizeresponsibilities for economic decision-making.

103. Until 1985, the principal focus of the Government's policy willremain on bringing down the fiscal deficit to a manageable level.Thereafter, it is the balance of payments that becomes the key area forconcern, primarily on account of the heavy burden of the amortizationpayments that come due after the grace periods end under the restructuringarrangements. Rapid growth of exports, specificarly non-oil exports, wouldbe the key to maintaining growth in the long run. Since promotion of exportstakes time - investments have to be made, market connections have to beestablished, etc. - pursuit of this objective cannot be relegated to a laterdate. The authorities are giving active consideration to appropriateincentives framework, trade policy reform, and other institutional changes topromote exports and establish a viable productive structure. A danger,however, remains that in the light of Mexico's relatively strong balance ofpayments position in the initial period (that may give an exaggerated view ofthe economy's robustness), pressures may mount on the Government to relent onthe stabilization program. The projections show the danger of such a shiftin policy.

104. In this part of the report, we review the Government's presentpolicies, offer some ideas on how they may be strengthened, and suggest a fewareas where more research and thought is required. We do this in awarenessthat the issues facing the country are highly complex and the trade-offsbetween different policies are difficult to measure. The policy issues andoptions facing Mexico are subject of intense discussion within and outsidethe administration. Perhaps, our contribution can be seen not so much interms of offering novel solutions or original ideas as in providing anoutside and independent view on public policy that is based on a study of theMexican economy over a number of years as well as on the experience of otherLDCs.

.105. Public policy should be seen as a package: it needs to beinternally consistent and the elements should be mutually supporting. Thus,

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for example, the budgetary policy or public sector investment programmingcannot be isolated from the pricing and subsidy issues, or the latter fromsuch specific sectoral objectives as promotion of exports. Apart fromconsistency, the objectives of public policy need to be spelled out clearly,for a policy may fail because of misperceptions. The private sector inMexico is at present extremely cautious about Mexico's economic prospects.Apart from the recessionary conditions and past over-investment, thiscautiousness appears also to arise from the uncertainty regarding the truesphere of private sector activity, consequent to the nationalization of thecommercial banks in late 1982. The resolution of the issues of compensationand ownership of companies controlled by the nationalized commercial banksshould greatly improve the private sector environment. The Government isalso offering certain fiscal incentives, e.g., accelerated depreciationallowances to private investors.

A. Resource Mobilization

Fiscal Policy

106. Prudent budget management will be decisive in restoring economicstability in Mexico. This means reducing the public sector deficit to about3 percent of GDP over the next few years, and not allowing it to rise there-after. The required adjustments may appear easy when seen in terms of a fewpercentage points of GDP, but there is no question that in reality this goalposes difficult economic and political choices for the authorities. Theexperience of other countries, including the developed ones, suggests thateach additional percentage point reduction of the deficit becomes progres-sively harder. Apart from the intrinsically tough decisions on what taxes/prices to raise and expenditures to cut, they often have unpredictable conse-quences for the economic activity and income distribution. There are nosatisfactory a priori considerations that enable one to foresee the conse-quences of revenue raising or expenditure cuts: the body of economic opinionranges from those Who believe that tax cuts, by stimulating economic growth,would ultimately result in reduced deficits (the so-called supply-siders) tothose who argue for maintaining (or even raising) public expenditures toachieve the same result. Notwithstanding these conflicts, the authorities'present approach towards achieving a satisfactory fiscal balance seems to bebasically sound: in the first year of the stabilization program, publ'cexpenditure cuts (investment expenditure, in particular) bore the brunt offiscal belt-tightening, but policy emphasis is shifting now towards revenueraising measures. As noted earlier, various measures were taken in 1983 toraise public revenue, but the revenue performance fell short of the goalsmainly because of the decline in economic activity.

107. Basically four factors contributed to the rise in the publicdeficit during the last sexenio: public investment, transfers and subsidies,interest payments, and a relatively sluggish non-oil revenue performance.Public investment has already been cut very substantially. The choices inpublic sector investments are examined in a subsequent section, as is theissue of transfers and subsidies. With respect to interest payments, theauthorities do not appear to have much room for maneuver: the interestpayments on the external debt are outside government control for obviousreasons, and the interest payments on the national debt (75 percent of thetotal) are linked, albeit loosely, to the prevailing rate of inflation and

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expectations concernin_ future inflation, exchange rate, and foreign interestrates. The issue of interest rates is addressed later.

108. Federal non-petroleum revenue performance during the last sexeniowas modest when seen in relation to the past or to the growth in publicexpenditures. Taking non-oil taxes together, the tax buoyancy was 1.18,compared to 1.32 in 1964-70 and 1.61 in 1970-76 (see Table 19). The buoyancyfor direct taxes declined by about 30 percent compared to the level during1970-76. However, the deterioration was rather exaggerated by the fall inthe ratio of direct taxes to GDP during 1982, which was associated with theonset of recessionary conditions. Although the buoyancy for the indirecttaxes as a whole also declined sharply, the collection of import duties -

thanks to the considerable increase in the import-GDP ratio -- was muchbetter than in the preceding sexenio, though still below the 1964-70 level.

Table 19: TAX BUOYANCIES 1964-82

1964-70 1970-76 1976-82Total Taxes (excl. oil) 1.32 1.61 1.18Direct Taxes 1.47 1.58 1.14Indirect Taxes 1.22 1.63 1.21Sales Tax (1.36) (2.32) (1.22)Import duties (1.30) (0.73) (1.20)

Source: World Bank staff estimates.

109. As the ratio of taxes to GDP rises some decline in the taxbuoyancies is inevitable. Non-oil taxes in Mexico are 12 percent of GDP atpresent. This is lower than the average for LDCs, and considerbly below thetax-ratios in some of the more dynamic LDCs and advanced countries-14/ Moreto the point is the fact that tax collection in liexico was not commiensuratewith the expansion of public expenditures. Generally, the problem in Mexicois not that tax rates are low, but rather that the tax base is narrow. Manylarge public enterprises and some private sector enterprises are running at aloss or are making low profits. Also, a high proportion of remuneration ofemployees in Mexico is in the form of fringe benefits, which are generallytax exempt. But the nation did pay for the larger public expendituresthrough higher inflation in the form of inflation tax (see para. 83). Thusthe goal of public policy should be to substitute over time explicit tax orother payments for the inflation tax, to ensure financial stability and toprevent unpredictable consequences for income distribution. Our projectionsin Part II, which are consistent with the stabilization program, provide fora 2 percentage point increase in the ratio of non-oil taxes to GDP between1982 and 1985 (implying a buoyancy rate of 1.22); after 1985 non-oil taxesmaintain a roughly constant share in GDP. In the light of Mexico's own pastexperience the implied degree of improvement in tax collection appearsfeasible.

141 International comparisons of tax ratios are fraught with problems ofdefinition. For example, developed countries generally derive a highproportion of public revenue from social security taxes, which arequite insignificant in most LDCs. For a review of tax performanceamong the LDC's see Alan A. Tait, Wilfred L.H. Gratz, and Barry J.Eichengreen, "International Comparisons of Taxation for SelectedDeveloping Countries, 1972-76-, IHF Staff Papers (March 1979).

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110. Another major cause for the deterioration in public sector financeswas the rise in the operating deficits of public entities, which togetherwith capital expenditures accounted for about a quarter of the overall publicdeficit in 1982. To a considerable extent, these deficits were financed bytransfers from the federal budget (see section C below). The deficits roseas a result of the sharp rise in public enterprise investments, a decline inthe operating surpluses due to public pricing policy, and inefficiencies inthe public enterprise sector that appear to have worsened with the speed ofexpansion. The drastic cuts in investment and the raising of public sectorprices is already beginning to make some contribution to the improvement inpublic finances, and this will remain an important source of further gains.However, the question of efficiency in the public enterprise sector involvesmore than pricing issues. While public sector pricing policy may itself havecontributed in certain cases to inefficiency, there remain intractable andpolitically sensitive areas of management practices, e.g., regulationsgoverning the hiring and dismissal of personnel, and the staff incentiveschemes that require close attention. The Government has committed itself toimproving the efficiency of state enterprises, but a program of how this isto be achieved and what criteria are to be applied have yet to bearticulated.

111. The way public income is raised affects both production incentivesand income distribution, but the trade-offs between different revenue raisingpolicies are difficult to measure. Over the past year the Government has, asnoted, taken several steps to raise revenue, in particular the increases inthe value-added tax and energy prices. Consumption of petroleum products(particularly diesel and fuel oils) in Mexico in the last sexenio had beenheavily subsidized in the sense that they were priced well below thecomparable international prices. With the rapid growth in internal demand,the magnitude of the implicit economic subsidy rose over time. Since 1982,however, domestic prices of the petroleum products have been raised a numberof times, with the result that the margin with the international prices hasnow been considerably narrowed.

112. Changes in domestic energy prices affect relative prices of inter-mediate as well as consumption goods depending on the energy intensity of theproduct. Thus, food items, which use relatively little energy but which havea heavy weight in the consumer price index, are affected only to a small ex-tent by a change in energy prices. To the extent that the factors of produc-tion compete with or substitute for energy, relative factor prices are alsoaffected. Since energy can be viewed as substitu:ing for human labor in manyactivities, an increase in energy prices tends to faver employment and toraise the wage rate. On the other hand, increases in the value-added taxtend to have a more uniform effect on the prices of final goods. Consequent-ly, in a hypothetical situation where total revenue is kept unchanged, butthe additional revenue from the higher energy prices is offset by a lowerVAT, relative prices of consumption goods, especially food products, can beexpected to decline. This would raise labor's purchasing power, and theshift in revenue measures should end up favoring the poor. Thus, on the mar-gin, increasing energy prices has generally superior equity effect comparedto raising the indirect tax. However, we believe that the Government wascorrect in raising both the VAT and energy prices in 1983 considering the ex-tremely tight state of public finances, the magnitude of the required fiscaladjustment, and, not least, the various pressure groups within the country.

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Interest Rates and Financial Sector Policy

113. The importance of a healthy financial sector in mobilizing domesticresources need hardly be stressed. Resource mobilization through the bankingsystem will be essential to achieving fiscal stability and bringing aboutover the coming years the required excess of savings over investment as acounterpart for generating the projected trade surpluses. One of the signi-ficant achievements of Mexican economic policy after the end in 1954 of thepost-World War unstable period was the development of a financial system thatcame to rank among the deepest and most sophisticated among the LDCs. Thesize of the financial system, as measured by the ratio of money and quasi-money to GDP, rose from about 10 percent in 1955 to a high of over 30 percentby the early 1970s. As the financing needs of the public sector began torise after the early 1970s, the proportion of total credit absorbed by thepublic sector increased. Public policy sought to capture financial resourcesat a minimal cost in terms of debt service, and set high reserve requirementsand mandatory credit allocation schemes. Required bank reserves, whichremained stable at about 33 percent of deposits between 1955 and 1970, rosesteadily thereafter to a high of 66 percent by 1980. Interest rates paid todepositors in real terms declined and remained negative during all but threeof the last 12 years. They became strongly negative during the inflationarysurge of 1982 (see Table 20).

114. As part of the stabilization program the Government reversed theearlier policy. It now aims at maintaining nominal deposit rates roughly inline with current and expected inflation, so as to restore an adequate flowof financial savings into the financial system, and reduce incentives tocapital flight. The ratio of loanable funds to GDP has recovered only alittle since the low of mid-1983. Three quarters of commercial bankdeposits are subject to legal reserve requirements or mandatory creditallocation, so that the interest rates on the free portion of bank portfolioshave had to be very high over the past two years to enable the banks torecover part of the cost of carrying assets bearing below-market interestrates. The present policy also aims at reducing the spread between loan anddeposit rates.

115. Deposit rates on short-term instruments have remained positive inrecent months, as measured against contemporaneous inflation, and even moreso if measured against generally expected future rates of inflation. Theyhave also remained, through the regulated slide of the peso, roughly in linewith the rates in the international financial markets. With inflationgradually declining, deposit rates have begun to be reduced. However, theterm structure of deposit rates has become i-verted, because in anticipationof declining inflation the authorities wish to avoid locking the bankingsystem into unduly high rates in the future.

116. The authorities foresee only a small recovery in real terms of thefinancial system's overall liabilities to the private sector during 1984.This weak recovery in domestic financial savings performance will not permitthe financial system to recover its pre-1982 real size, which already was lowby Mexican historical standards. In the near term, however, credit to the

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private sector can be expected to increase rather more rapidly, given thelimitations imposed on domestic financing of the public sector, and theexpected growth of external financing to the public sector. But the modeua.increase in the real volume of credit to the private sector should be viewedagainst the sharp declines of the past two years.

Table 20: NOMINAL AND REAL DEPOSIT RATES - 1979-83(December 31)

1979 1980 1981 1982 1983

Effective compound yield3 month deposits 18.62 30.92 38.14 78.73 68.60

12 month deposits 17.23 31.89 41.20 63.21 59.20Treasury billsl/ 19.82 32.62 38.46 71.67 56.50

Real effective compound yield 2 /3 month deposits -4.2 -3.8 0.3 -47.2 1.712 month deposits -5.4 -3.1 0.3 -51.8 -3.9Treasury bills -3.3 -2.5 0.5 -49.3 -5.6

Source: Ba-.k of Mexico and INF staff estimates

1/ Average yield of treasury bills with maturity of about three monthsduring the last week of each period.

2/ Deflated by the monthly annualized change in consumer prices for themonth of December.

117. In the longer term, there is a need for substantial reforms in theorganization of the financial system and in the structure of financialincentives to savers, borrowers, and intermediaries. The authorities areengaged in a review of existing reserve and credit allocation schemes.Interest rates charged on preferential credit are being modified to bringthem into progressively closer relationship with the cost of funds. Thesemeasures should over time improve efficiency in the allocation of financialresources, and reduce the present dispersion of lending rates. Similar stepsare being studied for development banks and official trust funds.

118. The overall dispersion of lending rates, for the nationalizedcommercial banking system subject to mandatory preferential creditallocations as well as for the development banks and official trust funds,became very great during the inflationary surge of 1982-83. Financialinstitutions came under serious pressures of capital erosion, arrearages, andeven liquidity problems. The resulting subsidies and resource transfersgreatly exceeded the original intentions of public credit and subsidypolicies. Hence, the government is now undertaking a major review of creditincentives, with the intention of setting up a formal system of nationalsubsidy accounting and budgeting. Moreover, to control the magnitude ofsubsidies more effectively, and to provide for an orderly reduction, anincreasing number of interest rates are being explicitly linked to the costof funds, and made adjustable on a periodic basis.

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119. Structural reforms in the financial sector are also being studied.Nationalized comercial banks are being combined and reorganized into largerunits to achieve economies of scale and increase efficiency. The non-bankingfirms that were held by the commercial banks, and by implication becamenationalized along with them, are in part being returned to the privatesector, and the government has made provisions to cover interest payments onthe bank nationalization bonds that were issued to original owners ascompensation. Securities markets will continue to be promoted as a means ofstimulating financial intermediation outside the banking system. Finally, aspart of its general review of credit incentive policies, the Governmentshould also consider simplifying and streamlining the development financesystem, which includes many development banks and trust funds, with amultiplicity of objectives, and attempt to remedy the lack of transparency inthe flows of credit and subsidy and transfers.

B. Promotion of Non-oil Exports and Trade Policy

120. Until the late 1960s, Mexico's exports were mainly processedagricultural or natural raw materials. The need to diversify and expandexports, particularly of manufactured products began to be recognized in themid-1960s as import-substitution possibilities declined. Facilitated byfiscal incentives and other measures, several industries started to export,achieving internationally competitive levels of output. By the mid-1970s,manufactured exports accounted for about half of total export earnings. Theperformance of the non-oil exports generally slackened during the lastsexenio due to the pull of the rapidly expanding domestic market, theappreciation of the real exchange rate, and deteriorating market conditionsabroad.

121. Mexican exports have included not only items in which Mexico hassome natural advantage (e.g. processed food, some chemicals andpetrochemicals, and furniture) but also where skilled labor, quality, andtechnology are important (e.g. fashion clothing, steel rolling-millequipment, small electric motors and foundry casting). The composition ofMexico's exports is given in Table 21. Proximity to the Uuited States,particularly to the Western and South Western regions, offers substantiallocational advantages to many Mexican industries. Collaboration agreementswith foreign (particularly U.S.) industries have facilitated technologytransfer in many product lines. Overall, Mexico's exports are welldiversified among different product groups, reflecting the broad base ofMexican industry as well as an increasing capability to achieveinternationally competitive levels of production. In addition to the exportsfrom domestically based industry, there are the "maquila" (in-bond)industries, generally labor-intensive assembly operations located mostlyalong the Mexico-US border. In 1980 these industries earned net foreignexchange of about US$800 million and provided employment to about 125,000workers (7 percent of the total labor force in manufacturing).

122. The Mexican authorities recognize that a rapid expansion of non-oilexports will be critical to sustaining a satisfactory growth in GDP. Ourprojections show that a target of about 10 percent increase in the non-oil

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exports for the 1980s would be desirable in order to meet the expectedforeign exchange requirements and keep Mexico creditworthy. An increase ofthis magnitude will require a major shift of emphasis in the industrialsector, where exports remain basically a marginal activity, and in industrialand trade policy to ensure that export activity becomes at least asprofitable as production for the domestic market. In order to reverse thepast trend in non-oil export earnings, and more generally to foster a dynamicand viable productive structure, several areas of policy need closeattention, of particular importance are the exchange rate and trade policy.The Government has already begun to define and put in place a comprehensiveset of measures and policies to stimulate growth and improve competitivenessof domestic production. However, the Government's own policies will meetwith limited success if the world economy grows only modestly and the currentprotectionist tendencies in several developed countries gain in strength.Relatively free access to foreign markets is a precondition for countrieslike Mexico to be able to service their external debt.

Exchange Rate

123. The 1982 crisis manifested itself mainly in the foreign exchangemarkets, with the result that during the crisis the peso remained conti-nuously under pressure. One of the first tasks that faced the administrationof President de la Madrid on coming into office was to bring stability andorder in the exchange market and stabilize the value of the peso. TheGovernment attempted to do this by both demand management policies andrationalizing the foreign exchange regime. The exchange controls, which wereinstituted over the year as the crisis worsened, were considerably relaxed.Although the system of dual exchange rate was maintained, the objectives ofthe policy were clearly defined. In a situation where the value of the pesowas subject to speculative forces, the adoption of the 'free market" rateprovided a convenient cushion for stabilizing expectations while protectingthe domestic economy from undue exchange market pressures. The authoritieshad initially intended the two rates to meet within a certain period of time(with the controlled rate sliding and the free rate remaining stable, or evenappreciating), but this policy was modified in September 1983 in that thefree rate was also allowed to slide at the same rate as the controlled rate,i.e., 13 centavos a day. The authorities view the dual exchange rate systemas a temporary expedient.

124. The Government has indicated that it intends to rely mainly on anattractive exchange rate to provide incentives for exports and efficientimport substitution, and move towards import liberalization to minimize thebiases against exports. The exchange rate issue, however, is intimatelyrelated to the other stabilization policies. Although the authoritiesrecognize the need for maintaining an exchange rate that keeps domestictradeable sectors competitive vis-a-vis foreign producers, the persistinghigh inflation has caused the peso at the controlled rate (which is therelevant rate for the great bulk of foreign trade) to appreciate about 15percent in real terms during 1983. However, at the end of 1983, it was stillin real terms 24 percent below its average value during 1976-81. The presentrate of slide, if maintained during 1984, would prevent the real effectiverate from appreciating if the authorities' expectations concerning inflationactually materialize. The authorities intend to continue pursuing apragmatic exchange rate policy, and review it in the context of otherpolicies under the economic stabilization program.

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Table 21: EXPORTS OF GOODS AND NON-FACTOR SERVICES(millions of US$)

1977 1978 1979 1980 1981 1982

Petroleum and Gas 993 1774 3765 9878 13830 16101Agriculture 1181 1307 1616 1424 1379 1098Of which:Cotton 195 300 310 321 309 184Coffee 458 386 575 415 334 345Tomatoes 215 198 207 185 250 154

Livestock and Fish 131 194 163 120 104 137Metals and Minerals 217 213 317 503 677 501Manufactured Goods 2125 2574 2936 3379 3427 3167Of which:Food Industry 638 757 799 773 679 791Textiles 180 189 209 201 181 150Chemicals 241 250 336 390 457 442Machinery 449 566 626 675 751 763Steel 92 136 131 61 64 112Other 525 696 834 1279 1295 909

Non-Classified Goods 1 2 0 3 1 1

Total Non-oil Exports 3656 4290 5032 5429 5589 4904Non-Factor Services 4103 4961 6488 8262 9659 8112Border Trade 2076 2364 2919 3661 4770 4149Tourism 867 1121 1443 1670 1760 1406Assembly Industry 345 452 638 773 976 832Other 816 1024 1488 2158 2153 1725

Total 753 11025 15286 23570 29078 29118

Source: Bank of Mexico.

125. It appears that the best way of maintaining a stable, but notnecessarily fixed, exchange rate - a desirable goal given the openness ofthe Mexican economy - will be through the control of inflation. Animportant lesson from the 1982 experience is that the exchange rateadjustments -- while necessary for gaining competitiveness and stabilityare effective only when they accompany appropriate demand managementpolicies. The performance of non-oil exports should be seen as a majorconsideration in future exchange rate policy.

Trade Policy

126. Closely related to the fiscal imbalance and the exchange ratequestion is the issue of trade policy. The level of protection, whilegenerally low in Mexico compared to many other Latin American countries, hasinfluenced the structure and cost of production, specifically it hasencouraged import-substitution industries over exports. As noted, following

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the 1976 devaluation, the administration of President Lopez Portillocommitted itself to a policy of removing import controls, and over timemoving towards lower and more uniform tariffs. One casualty of theaccelerated growth of the last sexenio was that the authorities abandoned theprogram of import liberalization. As the balance of payments deteriorated,the reimposition of import controls was seen as an immediately effectivemeans to improve the balance of trade.

127. Although there is some question about its true significance (seepara. 18), the import liberalization policy did have some result. Ingeneral, the level of nominal protection (i.e., direct comparison of domesticprices with the border prices) in 1979, the last year for which the data areavailable, was considerably lower than in 1970: in the manufacturing sectorit averaged 3 percent compared to 20 percent in 1970.15/ Dispersion wasseen to be relatively small and 11 subsectors, mainly-Tn the processed foodcategory, but also some basic petrochemicals and fertilizer, were subject tonegative protection (implying that the existing nominal tariffs wereredundant from the viewpoint of protection). To a certain extent, the 1979results were influenced by the government's regulation of prices of someimportant inputs, notably fuel and electricity. However, even after allowingfor these input prices in the case of 27 manufacturing subsectors, theresults showed that 24 of these groups had a lower level of nominalprotection than in 1970. The reduction in effective protection between thetwo years - from 56 percent to 11 percent - was also substantial, but thedispersion was somewhat greater in 1979. Protection continued to be veryhigh for electric and electronic machinery and equipment (122 percenteffective) and autos and parts (120 percent). Since that time trade policyhas undergone substantial changes, and the overall protection now hasprobably reverted closer to the 1970 level.

128. In order to ensure that the Mexican exports are internationallycompetitive and that the export activity is at least as attractive as salesto the domestic market, one essential requirement is that exporters payprices for inputs that are not higher than what foreign competitors pay.This means that where inputs are imported, the exporter should not have topay import duty, and where they are domestically produced, they are sold atprices comparable to the international market.

129. Various measures have already been taken to establish a 'freetrade' system for exporters, that is, elimination of controls on temporaryimports, access to foreign exchange at the controlled rate for exporters, andprovision of in-bond facilities (for example, customs warehouses). Effortsare being wade to publicize the availability of customs facilities while anew decree expanding the special provisions of the "maquila' system wasissued in August 1983. Flexible import procedures for duty-free zones, whichwere discontinued following the 1982 foreign exchange control regulations arebeing reinstated. The authority to issue temporary import permits and exportpermits is being delegated to the regional offices of the Ministry of

15/ The World Bank, Mexico: Future Directions of Industrial Strategy,Report No. 4313a-ME. May 31, 1983, pp. 19-22.

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Commerce and Industrial Development (SECOFIN) to cut processing time. Othermeasures include the elimination of export taxes which had been imposed oncertain largely agricultural products and a further reduction in the numberof products subject to export licenses. More generally, export permit andcertification procedures, which have been cumbersome and time-consuming, arebeing simplified.

130. Some selective trade liberalization measures have also been takenearly in 1984: unrestricted authorization for certain essential items (e.g.,pharmaceuticals); the exemption from prior authorization for some 1,703tariff items; the automatic approval of permits for 275 essential imports forsmall and medium-scale enterprises; unrestricted import of machinery up toUS$100,000; and selective Import authorizations to remove sectoral scarcitiesor oligopolistic practices. Early in 1983, as part of the changes in ex-change rate and trade policy, the general tariff level was reduced by about10 percent. The authorities have undertaken a study of effective protectionin order to implement a general tariff reform in 1984. This appears to be agood time to move towards generally lower tariffs with reduced dispersion,since the balance of payments is at present quite strong, there is muchredundancy in the tariffs, and a more liberal import policy could help theauthorities in their fight against inflation. In order to direct futureinvestments, it is also desirable that the authorities announce a program fortrade liberalization in the near future.

Administrative and Other Measures to Promote Exports

131. Institutional support and attention to quality and standardizationof products in practice must accompany price incentives. Mexico has severalinstitutions which are there to support exports. A fund to promote manufac-tured exports (FOMEX), which rediscounts loans by commercial banks for manu-factured exports, has been in operation for over twenty years. The redis-counting facility has now been extended to all development banks. The Mexi-can Foreign Trade Institute (IMCE) is being restructured as a public agencywhose primary function is to stimulate exports, monitor export performance,and ensure adequate coordination among agencies supporting export activi-ties. It is expanding its direct contact with firms and is more activelyengaged in helping exporters draw up realistic export development programs.It is also envisaged that IMCE's regional office staff will act as extensionagents, identifying the needs of individual exporters, providing buyer andmarket information, and directing them to more specialized assistance whenrequired. Together with an effective use of the foreign offices, this shouldimprove buyer and market information and publicity for Mexican products inother countries. IMCE has begun to implement its role as the Single Window(Ventanilla Unica) for exporters. Under previous regulations, exportoperations required processing by different government agencies.

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C. Pricing and Subsidy Policy

132. Goveroment influences prices in two ways: for public enterprisesand for certain key commodities produced by the private sector (e.g., basicfoodstuffs), prices may be fixed directly; but, as discussed above, it doesalso influence prices of a whole range of products through exchange rate andtrade policy. There are two broad implications of public pricing policy: Itsconsequences for the budget in the form of subsidies or contribution to therevenue, and its consequences for resource allocation and use. It isgenerally difficult to assess the economic costs and benefits of pricingpolicy, particularly in cases where subsidies are not explicitly included inthe budget. The present administration attaches great importance to reducingsubsidies generally with due regard to the purchasing power of thelower-income groups and consequences for productive efficiency in commodityproducing sectors. A Commission for Public Sector Prices and Tariffs, underthe Ministry of Finance, has recently been established. It is undertaking acomprehensive review of pricing policy, examining its consequences forproduction and income distribution, and proposes to formulate general rulesand criteria that should apply to public pricing policy. Here we confineourselves to a few salient issues, underscoring the problems rather thanoffering solutions.

133. Transfer payments and subsidies are a major item of FederalGovernment expenditures. These amounted to about M$755 in 1982 (or 8 percentof GDP), excluding the share of states and municipalities (Table 22). Ofthis some M$420 billion were transfers and subsidies to agriculture,education, and health sectors, which are directly or indirectly channelled tothe private sector. Of the public enterprises, for which relatively moredetail is available, electricity and CONASUPO (the national company fordistribution of basic products) together accounted for almost two-thirds ofthe transfers. Other important beneficiaries were railroads, FERTIMEX (thenational fertilizer company), and social security. As noted earlier, therise in the budgetary transfers and subsidies, to some extent, was a directconsequence of the price policy.

134. Electricity utilities (Federal Electricity Commission, CFE, and theCentral Light and Power Company, CLFC) alone account for almost 40 percent ofthe transfers to the public enterprise sector. Major expansion of the elec-tricity sector was undertaken during the 1970s, and capital transfers fromthe federal government were the principal source of finance. However, since1981 current transfers to meet the rising operating deficit have gained inprominence, and in 1982 amounted to almost three-quarters of the total to thesector. Over the last two decades, the real cost of producing and deliveringelectricity declined by some 30 percent, which resulted from the more effi-cient new generating plants, cost savings in distribution due to scale econo-mles, and the declining real cost of fuel. But the fall in the real price ofelectricity was double the reduction in costs. By the mid-1970s, operatingdeficits emerged as the price of electricity ceased to cover the averagecosts. One element of expenditure that rose particularly rapidly is the debtservice; in fact, the operating deficit at present is roughly equal to lt.The electricity prices have been raised regularly since August 1982, when thebasic rate was raised by 50 percent. Thereafter a monthly adjustment of 2.5percent mas made until January 1984, when the basic rate was again raised by35 percent. But costs have risen even faster with the accelerating inflationand adjustments in fuel prices. While increases in electricity and fuel

prices were long overdue, there is a need for exploring ways for reducingcosts, particularly labor costs, which account for about 45 percent of thetotal, and which are considered to be high by international standards.

Table 22: FEDERAL GOVERNMENT TRANSFER PAYMENTS1/(Billion pesos, current prices)

1979 1980 1981 1982

Public enterprises 73.0 130.4 197.0 334.0CONASUPO 14.1 33.6 53.4 75.5Electricity 0.1 21.0 60.3 130.9Railroads 17.4 15.0 22.9 30.7FER.¶IEX 1.9 3.3 8.9 23.0Steel Mill (SICARTSA) 3.5 0.9 3.1 5.3Metro system & AHMSA 1.4 2.0 3.0 5.0PEMEX 0.6 - - -Other 15.3 26.0 29.5 44.1

Other transfers (including 119.7 194.2 336.2 419.5Private Sector)

Total 192.7 324.6 533.2 753.5

Trensfers as Z of CDP 6.3 7.6 9.1 8.0

Source: IMF, based on the data provided by the Ministry of Finance andPublic Credit.

I/ Excludes transfer payments to states and municipalities under the revenuesharing regulation.

134. CONASUPO's operations are wide ranging, from the purchase andmarketing of agricultural products to the sale of light manufactures.Operating deficlts rose rapidly during the last sexenio, and were financedalmost exclusively by federal transfers. Losses on account of the pricesupport to the basic grains (corn, wheat, beans, and sorghum) - the mainarea of goverment's concern - amounted to less than 60 percent of the totalfederal transfers, the rest was used for funding CONASUPO's other operationsand administration. While there is a case for reducing consumer subsidy onagricultural products, there Is also a need for examining whether the cost ofsubsidy and administration could not be reduced if CONASUPO's operations wereconfined only to a few selected commodities and the subsidy was restricted tothe poorer segments of the population.

135. There are possibilities for reaching the poorer income groups moreeffectively in Mexico. If, for example, the maize subsidy were limted onlyto the very poor - e.g. those who spend 25 percent of their income on maize- the reduction in the subsidy could be as much as two-thirds, and to theextent that a tariff on imported maize is raised to effect the price

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increase, the budgetary Impact would be even further reduced. There is needfor further work on developing the criteria for establishing target groupsand the means to reach them. Some schemes may be quite simple to Implement.For example, a better retailing policy by CONASUPO - e.g., simply locatingits stores in the poorer areas, and closing down those in the richneighborhoods - might achieve significant results.

137. There are several other sectors where public sector pricing policyhas become a critical issue, most notably railroads, Mexico City Metro, andFERTIMEX. Federal government transfers to these three enterprises havecontinued to mount, and the subsidy to the metro is likely to rise sharply asits network expands (see para 148 below). Ideally each of these enterprisesshould be a self-financing operation, if not actually earning profits.

138. There are also examples where, for lack of adequate provision forcost recovery, the service has either ceased altogether (e.g., severaldistricts in Mexico City losing the service of waste disposal) or runs therisk of deterioration for want of adequate funding (e.g., irrigation). Inthese cases, while there may not be a budgetary burden of the subsidy, thereis a definite economic loss. Since the direct beneficiaries of the servicescan usually be identified, the cost-recovery could be applied as a rule.

139. To sum up: the Government over the past year has moved resolutelyto raise a wide range of public prices, despite considerable domestic unhap-piness and opposition. The effects of a lower exchange rate are alreadyevident in the rapid rise in tourist trade and growth in export industriesalong the Mexico-U.S. border. Also, during the first few months of 1984,non-oil exports have shown a substantial increase over the correspondingperiod in 1983. With respect to public sector prices, the Government'spolicy emphasis has been on making the enterprise sector financially moreindependent, and reduce the burden of subsidies on the budget. Inevitably,the process of making public enterprises more efficient and putting them on asounder financial basis will take time, but some results are already inevidence: there was a significant improvement in the net contribution ofpublic enterprises to the 1983 budget. The role of the newly establishedCommission for Public Sector Prices and Tariffs will be of critical4mportance in formulating a comprehensive and consistent public pricingpolicy.

D. Public Sector Investments

140. The growth in public investment during 1977-81 was dramatic --about 20 percent a year in real terms -- and was the principal means by whichthe foundations for the accelerated economic growth were to be laid. Withthe severe contraction of available resources in the last two years, publicinvestment bore the brunt of expenditure cuts. In real terms, investmentdeclined by 20 percent in 1982, and another 40 percent in 1983. TheGovernment achieved this by abandoning, postponing and slowing the

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implementation of projects virtually across the board. Our projections inPart II indicete that maintenance of a sustainable fiscal balance wouldrequire public investmeut to be kept around 8-9 percent of GDP in future.This section provides, at a general level, a review of public investments inselected sectors of the Mexican economy - viz. oil, power, steel, transport,telecommunications, and fertilizers - which together accounted for overtwo-thirds of public investment during the last sexenio.

141. The federal government accounts for only about 15 percent of totalpublic sector investment. The balance is made up largely of investment bynumerous public enterprises (including PEMEX, the national oil company) andindependent or semi-independent state agencies which are controlled throughregulatory bodies. In the past, the extent of control exercised by federalauthorities over investments planned and executed by other public sectorentities depended considerably on the federal budgetary transfers to theseentities. As seen earlier, during the last administration, current andcapital transfers to state enterprises accounted for a high proportion of thefederal budget. In the implementation of the stabilization program, theauthorities have taken measures for a more effective review and control overinvestment plans and external borrowing by public enterprises and agencies.

142. Table 23 gives the breakdown of public investment by different eco-nomic sectors. Public investment during 1977-82 was concentrated on indus-try; petroleum, petrochemicals, steel and electricity, accounted for 45 per-cent of the total. Investment in transport and comaunication made up foranother 16 percent. These are sectors where investments are typically capi-tal-intensive and lumpy, and have relatively long gestation periods. Afterthe oil sector, agriculture was the major recipient of public investment.The sectoral distribution of investment shifted little over the period.

143. PEMEX's investments, which amounted to M$830 billion (about US$35billion) during 1977-82, include exploration and development, oil refining,upstream petrochemicals, and distribution infrastructure, i.e pipelines,ports, etc. During 1983, public investment in this sector was reduced bysome !'5 percent. Almost half of PEMEX's investment in the past has consistedof activities related to exploration and development of the oil resources.Although Mexico has large oil reserves, and the output-to-reserve ratio isquite low, output from the oil fields other than those in the Gulf ofCampeche has already started to decline. Further development of the Gulf ofCampeche would therefore be decisive in whether or not the output level ismaintained in the future. Thus the size .-nd distribution of PEHEX'sinvestment program remains an important issue, for reasons both of its claimon the present scarce resources and for oil being a critical deterainant offur re resource availability. PENEX has establisheZ general priorities inii- stment, i.e., exploration and development expenditures are given thehighest priority; social/administrative expenditures, the lowest.

144. In the absence of hard data, PEMEX's investment requirements havebeen derived by means of the estimated output requirements from the fieldsyet to be developed (on the basis of demand projections and the expected

TABLE 23 i PUBLIC SECTOR INVESTMENT

1Billions pesos current prices)

1977 1979 1979 1980 1981 1992 1977-82 1983 1984 PercentageTotal (Prel.) Budget Shares

a/ -------- ---------1977-92 1993 1984

Oil and Petrochemicals 36 63 91 126 230 285 930 349 552 29.24 29.16 28.62Power 16 27 39 63 86 119 349 159 220 12.28 13.29 11.40Steel 3 1 3 a 13 29 57 49 69 2.01 4.01 3.59Transport 16 19 36 53 104 144 372 117 b/ 13.11 9.78 blTelecommunications 7 9 10 14 20 31 91 57 257 3.19 4.76 13.32Fertilizer I 1 3 5 10 8 28 15 24 0.99 1.25 1.24Agriculture I Rural Developeent 26 39 47 77 105 183 477 277 408 16.81 23.10 21.15

Total above 105 159 228 346 567 798 2203 1022 1530 77.62 85.35 79.32

Total public sector 139 203 294 416 779 1006 2938 1197 1929 100.00 100.00 100.00

Total Public Sector (1980 prices ) 251 314 379 416 613 491 291GOP ( 1980 prices ) 3341 3617 3910 4276 4616 4593 4441Share of Public Sector in 6OP IXI 7.51 8.69 9.59 9.73 13.27 10.68 6.5460P Deflator 55.35 64.63 77.70 100.00 127.25 205.02 411.84

a/ Preliminary data.b/ Included in teletonmunications.

Source: Ministries of Finance and Public Credit, and Prograeming and Budgeting.

BEST COPY AVAILABLE

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output decline profile of the fields already in production) and the cost ofthis development. The output required out of the new fields is estimated atroughly 700,000 barrels a day for the 1986-90 period. A very crude estimateof the investment cost of producing one barrel a day offshore under Mexicanconditions is US$13,000 (1982 prices). On this basis some US$9 billion (1982prices) would be required over the 1983-1986 period to ensure the additionaloutput, or over US$2 billion each year. To this must be added PEMEX's otherinvestment needs -- natural gas processing, distribution network - that mayraise the total, considering past trends, by as much as US$1 billion. Thiscompares with the actual expenditure of US$2.9 billion (M$349 billion) in1983, and an investment budget of close to US$3.5 billion (M$552 billion) for1984 (See Table 23).

145. Power sector investments accounted for 12 percent of publicinvestment in 1977-82. During the 1970s, electricity demand increased at 9percent a year, and large investments in elecricity generation, transmission,

- and distribution were made. However, the installed generation capacity doesnot appear at present to be exploited optimally. One indicator of this istine already mentioned heavy dependence of the CFE on government subsidies,which in 1982 amounted to 43 percent of its operating income. Apart fromhigher tariffs and lowering the labor-input costs, the earnings of theutility could be augmented by improving the efficiency of the thermal plantsthrough better maintenance. The recent increases in the price of fuel oilhave increased the concern with the operational efficiency, apart from makingthe coal-based generation (which has so far had only a minor role) moreattractive. The CFEs investment program for the next decade was drawn up onthe basis of a demand forecast of 8.5 percent a year increase in powerconsumption, which is now considered to be too high because of the expectedslower GDP growth over the next few years and the increases in electricitytariffs. The CFE is at present re-evaluating its investment program, takinginto account changes both in demand and in costs.

146. Steel accounted for about 2 percent of public investment, thegreater part of which was for the expansion of the Las Truchas plant(SICARTSA II). Investments by AHMSA and FMSA, the two other stateenterprises, are well-advanced, and are likely to be completed within thenext two years. With these investments and the work-in-progress in theprivate sector, Mexico's total installed capacity is estimated to increase to15 million tons by about 1986, when all the ongoing projects are scheduled tobe completed. Because of the decline in the economic activity, excesscapacity at present is estimated to exceed 30 percent, and the problem islikely to worsen, at least over the next few years. Prospects of exportingsteel, in the present conditions of worldwide excess capacity, are not verybright. Thus while the steel projects may have had sound economic rationalewhen originally conceived, the expansion projects, at least in the near term,are likely to be a drain rather than a source of revenue to the statetreasury. Some 85 percent of the value of equipment and work for SICARTSA IIhave been reportedly already contracted, but under the circumstances thepossibilities for rephasing the expansion project deserve to be seriouslyexplored.

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147. Transport accounted for 13 percent of public investment during1977-82. After a restraint on transport investments in the early years ofthe sexenio, they rose rapidly in the late 1970s consequent to the emergenceof serious bottlenecks that began to hinder both foreign and domestic trade.The general increase in transport capacity and the recent decline in theeconomic activity have relieved congestion. The Government is now in theprocess of rationalizing transport investment by giving priority tocompleting first ongoing projects and complementary components (e.g., roadsconnected with ports), and by placing greater emphasis on maintenance of theexisting infrastructure.

148. For the future, a critical decision relates to the proposedexpansion of the Mexico City Metro. Increasing amounts were spent in recentyears on the expansion of Mexico City transport system, mainly the metro.The ongoing phase of metro expansion is estimated to cost M$82 billion (1982prices), or close to US$1 billion (1982 prices). The Government is committedto completing the expansion phase under construction, for which foreignfinancing has been arranged. If the metro fares were raised to coveroperating costs, the traffic flow on the new lines is not expected to besufficient to make them cost-effective. If the present very low metro farescontinue, and were applied to new lines, the subsidy will have to riseenormously. The transport problems in Mexico City are serious indeed, butgiven the continuing resource constraints the public sector is expected toface over the coming year, the future expansion phases deserve very carefulreassessment, as do the metro fares.

149. Investments in telecommunication amounted to 3 percent of the totalpublic investment during 1977-82. TELEMEX, which accounted for the bulk ofinvestment, is one of the few state enterprises in Mexico that are highlyprofitable. There is at present considerable unmet demand for telephonesdespite the rather high cost of the service, and the situation is notexpected to improve in the foreseeable future. Over the coming years,substantial investment in this sector can be expected if the demand fortelephone lines is to be met. The principal question arises with respect tothe proposed purchase of two communication satellites, for which externalfinancing has been already arranged, and the construction of complementarygroundstations over the next several years.

150. Fertilizers accounted for about 1 percent of public investment. Atpresent, only one project, with a capacity of 2 million tons (mostlysulphuric acid), is under construction; all other projects have beenpostponed or abandoned. The sector suffers from excess capacity, and theprincipal issue relates to the competitiveness of production costs andPERTIMEX's ability to export the surplus.

Overall Assessment

151. There are no official estimates available for the expendituresrequired to complete the ongoing public investments and those which are at anadvanced stage of preparation. The sectoral development plans, which areexpected to follow the broad priorities laid out in the National DevelopmentPlan 1983-88, are expected to be ready within the next few months. On thebasis of the review of investments in the above-mentioned sectors, it is

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estimated that just completing the work-in-progress and those projects (e.g.,metro expansion) which are at present being seriously considered forimplementation would require an expenditure of about M$1.5 trillion (1982prices) over the 1984-86 period. Our projections in Part II indicate thattotal public investment that is consistent with fiscal stability would amountto about M$2.2 trillion (1982 prices) over the sane period. Although theseestimates should be seen only as rough orders of magnitude, it is clear thata high proportion (about 70 percent by our estimate) of what may beconsidered as the prudent level of public investment over the next few yearshas already been more or less committed. Hence, it will be difficult in theyears ahead, with Mexico's tight resource position, to shift resourcestowards sectors and projects that may have to be assigned higher prioritythan in the past. A major reassessment of sectoral investment plans andpriorities is currently being undertaken by the Government. As a result ofthat process some additional flexibility may be created, but the scarcity ofresources is such that the the Government will inevitably be confronted withvery difficult and painful choices.

152. Although the above review of public investments does not provideany conspicuous examples of a misallocation of resources to low priority pro-jects, substantial savings could have been realized by better control overcosts. A serious effort is being made to improve the cost-effectiveness ofpublic investments. For the future we can identify a few areas where furtherwork and reassessment is of particular importance. Of utmost importance isthe need to examine closely PEMEX's expenditure requirements. The estimategiven in this report is only crude, and it is critical both for resource useand resource generation that it be firmly based. There is a need for explor-ing possibilities for reducing power sector investments through improvementsin operational efficiency. Given the prospects of excess capacity and poorinternational market conditions for steel, consideration should be given toslowing the steel expansion at Las Truchas. Mexico City metro expansion pro-gram poses a major claim on future public sector resources in terms both ofinvestment and of meeting the operating expenses. The future expansion phaseand metro fares need close reconsideration. The purchase of the two communi-cation satellites and the construction of ground stations appear to be comrplementary investments, but there may be possibilities for rephasing some ofthe investments.

153. Following the 1982 crisis, the Government acted decisively inreducing public investment, and is fully aware of the need for continuingrestraint in undertaking new investments in the years ahead. It has takenvarious steps to improve and streamline the administrative procedures for theconception, approval, and monitoring of public sector investments. At thesame time, a conscious effort is being made to decentralize theresponsibility for regional investment, particularly with respect toagricultural and rural development, by channelling a large proportion ofinvestable resources directly to states. A new office of the ComptrollerGeneral has been established to monitor investment and audit publicexpenditures.

154. Today's structure and procedures relating to public investmentplanning and implementation are the result of an administrative reformstarted in 1965, but which was implemented largely under President LopezPortillo. His administration put in place a reasonable planning and

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budgeting system, though it was not always effectively used. The informationflow remained inadequate, and auditing and control procedures were not suffi-ciently enforced. While initiatives of the present administration are basic-ally a continuation of the reform process started earlier, an attempt isbeing made to remedy these weaknesses, and the planning and budgeting systemis being streamlined. There is a need for a central office in the adminis-tration where individual sectoral Investment plans are integrated and evalu-ated on a continuing basis, a role that the recently established projectsunit (Unidad Central de Proyectos) in the Ministry of Programming and Budget-ing may be able to fulfili. This had remained a conspicuous gap, partlybecause sectors tend to take different approaches to investment planning:while a few sectors have detailed investment plans going as far as the end ofthe decade (e.g., the power sector), there are others where rigorousinvestment plans either do not exist or are formulated in very broad terms(e.g., agriculture). Because of the sector-specific characteristics,complete uniformity in investment programming is neither possible nordesirable, but there is a need for formulating and applying uniform criteriato make choices between different investments.

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STATISTICAL APPENDIK

TABLE OF CONTENTS

POPULATION AND EMPLOYMENT

TABLE 1.1.1 POPULATION BY SEX AND 1950-1982 6qTABLE 1.1.2 SELECTED REGIONAL DATA, 1980 70-71TABLE 1.2.1 EMPLOYMENT BY SECTOR, 1970-1982 72TABLE 1.2.2 AVERAGE ANNUAL EARNINGS, 1970-1982 73TABLE 1.3 SELECTED NAGE, 1970-1992 74

NATIONAL ACCOUNTS

I. GROSS DOMESTIC PRODUCT BY SECTOR OF ORIGIN, 1970-1983TABLE 2.1.1 (In Current Prices ) 75TABLE 2.1.2 1 In Constant Prices ) 76TABLE 2.1.3 C Shares Based In Current Prices 3 77TABLE 2.1.4 1 Implicit Price Indices, 1960=100 ) 79TABLE 2.1.5 l Annual Rate of Growth in 1980 Prices ) 79TABLE 2.1.6 I Sectoral Relative Prices 1 90II. GROSS ONESTIC PROOUCT BY EXPENDITURES, 1970-1983TALE 2.2.1 (In Current Prices e l1TAKLE 2.2.2 C In Constant Prices ) 82TABLE 2.2.3 1 Shares Based In Current Prices 83TABLE 2.2.4 1 Implicit Price Indices, 1980--l00 ) 94TABLE 2.2.5 1 Annual Rate of Growth in 1980 Prices 1 95III. GROSS FIXED INYESTMENT BY MAIN COMPONENT, 1970-1983TABLE 2.3.1 1 In Current Prices 1 86TABLE 2.3.2 ( In Constant Prices 1 97TABLE 2.3.3 I Shares Based In Current Prices B 99TABLE 2.3.4 (Implicit Price Indices, 1990=100 8 9TABLE 2.3.5 C Annual Rate of Growth in 1990 Prices 1 90

FOREIGN TRADE

TABLE 3.1 SUMMARY BALANCE OF PAYMENTS, 1970-1993 91I. INPORTS OF BOODS AND NON-FACTOR SERVICES, 1970-1983TABLE 3.2.1 1 In Current Prices 1 92TABLE 3.2.2 1 Shares Based In Current Prices 1 93TABLE 3.2.3 ( In Constant Prices, domestic currency ) 94TABLE 3.2.4 ( Implicit Price Indices, 1980=100, domestic currency 1 95TABLE 3.2.5 C Annual Rate of Growth in 1990 Prices 1 96TABLE 3.2.5 Merchandise lparts by Type of Goods, 1979-1983 9711. EXPORTS OF GOODS AND NON-FACTOR SERVICES, 1970-1993TABLE 3.2.1 ( In Current Prices ) 98TABLE 3.2.2 1 Shares Based In Current Prices ) 99TABLE 3.2.3 ( In Constant Prices, domestic currency ) 100TABLE 3.2.4 ( Implicit Price Indices, 1990=100, domestic currency ) 101TABLE 3.2.5 1 Annual Rate of Growth in 1980 Prices 1 102

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EXTERNaL DEBT

TABLE 4.1 EXTERNAL DEBT BY LENDER COUNTRY 113-104TABLE 4.2.1-9 EXTERNAL DOT BY LENDING CLASSIFICATIONS 105-113

PUBLIC SECTOR FINANCES

TABLE 5.1.1 CONSOLIDATED PUBLIC SECTOR ( In Current prices I 1970-1983 114TABLE 5.1.2 CONSOLIDATED PUBLIC SECTOR ( In Constant Prices ) 1970-1983 115TABLE 5.2 GENERAL GOVERNMENT ACCOUNTS, 1970-1983 116TABLE 5.3 FEDERAL GOVERNMENT ACCOUNTS, 1970-1983 117TABLE 5.4 CDNSOLIDATED ACCOUNTS OF STATE ENTERPRISES

(excl. PENEK and Social Securities l 1970-10983 119TABLE 5.5 SUMMARY ACCOUNTS OF PEREZ, 1970-1983 119TABLE 5.6 SUMARY ACCOUNTS OF SOCIAL SECURITIES, 1970-19B3 120TABLE 5.7 FEDERAL DISTRICT ACCOUNTS, 1970-1983 121TABLE 5.8 SUMMARY ACCOUNTS OF ENTERPRISES OUTSIDE OF BUDGETARY CONTROL, 1970-1983 122

MONETARY STATISTICS

TABLE 6.1.1 FACTORS AFFECTING HONEY SUPPLY ( In Current Prices ) 1976-1992 123TABLE 6.1.2 FACTORS AFFECTING HONEY SUPPLY

I Shares as Z of GDP based in Current Prices 3 1976-1982 124TABLE 6.2 SELECTED MONETARY A66REGATES ( In Current Prices 1 1970-1983 125TABLE 6.3 MEXICO - BANKING SYSTEM CREDIT BY SECTOR ( In Current Prices ) 1970-1993 126

PRICES, EXCHANGE RATE, AND INTEREST RATES

TABLE 7.1 COMPARISON BETWEEN THE 6DP DEFLATOR AND CPI IN NEXICO 1970-1983 127TABLE 7.2 CONSUMER PRICE INDEX, 1970-1993 128

Monthly Changes, Yearly AveragesMonth to Month Change

TABLE 7.3.1 ACTUAL AVERAGE RATE OF EXCHANGE, 1960-1983 129TABLE 7.3.2 REAL RATE OF EXCHANGE, 1979-1983 130TABLE 7.4.1 SELECTED INTEREST RATES FOR MEXICO AND THE UNITED STATES, 1977-1983 131TABLE 7.4.2 SELECTED REAL INTEREST RATES FOR MEXCID AND THE UNITED STATES, 1977-1983 132

AGRICULTURE

TABLE 8.1 PRODUCTION OF PRINCIPAL CROPS, 1966-81 133TABLE 8.2 HARVESTED AREA OF PRINCIPAL CROPS, 1966-61 134TABLE 8.3 ESTIMATED YIELDS OF PRINCIPAL CROPS, 1966-81 135TABLE 9.4 APPARENT CLYSUMPTION OF BASIC FOOD CROPS, 1966-81 136TABLE 8.5 PRINCIPAL AGRICULTURAL EXPORTS, VALUE (FOB) AND VOLUME 1970-81 137TABLE 8.6 IMPORTS OF SELECTED AGRICULTURAL PRODUCTS, VALUE (FOB) AND VOLUME, 1970-91 138TABLE 8.7 CONASUPO REVENUE FROM SALES AND SUBSIDIES, BY PRODUCT, 1976-82 139TABLE 8.8 SUPPORT PRICES OF MAIN CROPS, 1965-92 140

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INDUSTRY

TABLE q.1 PRODUCTION OF PETROLEUM & GAS, 1970-1982 141TABLE 9.2 SALES OF PETROLEUM & sAS, 1970-1982 142TABLE 9.3 INDEX OF INDUSTRIAL PROCUCTION, period averages 143

1575-193

tARSO-ECONONIC PROJECTIONS

TABLE 10.1 IIACRO-ECONOMIC PROJECTION, SCENARIO I 144TABLE 10.2 MACRO-ECONOMIC PROJECTION, SCENARIO II 145TABLE 10.3 NACRO-ECONONIC PROJECTION, SENSITIVITY TO FOREIGN FINANCING 146TABLE 10.4 MACRO-ECONOMIC PROJECTION, SENSITIVITY TO INTEREST RATES 147

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TABLE 1.1.1 POPULATION BY SEX AND ABE 1950-1"0

(In Thousands I

1950 1960 1970 1980 1992

POPULATION

(THOUSANS)

TOTAL 27376 37073 51176 6939 73122MALE 13716 18557 25624 34748 3W614FEIIE 13b59 18516 25552 3445 36508

SE STRUCTURE(l OF TOTAL)

0-4 17.51 18.65 19.48 16.235-9 13.74 15.06 15.33 15.32

10-14 11.97 11.90 12.85 13.1515-19 10.33 9.75 10.57 11.0420-24 9.37 8.30 8.21 9.1525-2~? 7.46 7.11 6.62 7.44i0-34 5.83 5.74 5.63 5.7635-39 5.42 5.10 4.82 4.6340-44 4.60 3.95 3.97 3.245-49 3.94 3.62 3.41 3.3250-54 3.16 3.01 2.58 2.6255-59 2.52 2.50 2.31 2.24b0-4 1.8q 1.91 1.83 1.6365 + 3.37 3.38 3.50 3.55

0-14 43.12 45.62 46.66 44.6915-64 53.51 51.00 49.84 51.7565 + 3.37 3.39 3.50 3.55

HEDIAN AGE 18.33 17.25 16.58 17.40

SOURCE: CONAPO, SPP, AND CELADE.

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TABLE 1.1.2 SELECTED EGIONAL DATA1 1980

POPULATION: ECMICALY

SURFACE POPULATION AVERAGE AWAL ACTIVE GRSS DNESTIC E!ITY

1000 SoKn 1990 RATE OF GROWTH POPULATION PRODUCT 11IBITA

I) 1970-1980 l Z I (BILL $NE) PER 5gK

TOTAL 1958.20 100.00 3.30 53.90 4276.49 35.44

AGUJASCALIENTES 5.47 0.90 3.90 51.90 25." 101.47

BAJA CALIFORNIA 69.92 1.80 3.40 53.10 95.96 17.86

JA CALIFORNIA SUR 73.4w 0.30 5.40 55.60 t8.00 2.83

CAPECE 50.91 0.60 3.90 60.00 22.76 L9?

COAHUILA 149.98 2.30 3.30 54.20 126.36 10.64

COLINA 5.1? 0.50 3.40 47.60 23.24 66.94

CHIAPAS 74.21 3.10 2.80 52.50 112.94 28. 9

CHIHU^IUA 244.94 2.90 1.80 52.90 120.44 8.22

FEDERAL DISTRICT 1.49 14.00 3.00 56.40 1075.05 6561.64

D!RAMSO 123.18 1.70 2.10 53.40 59.64 9.56

6ANAJUIATO 30.49 4.50 2.90 54.20 132.48 102.41

GORERO 64.28 3.20 3.00 55.30 71.95 34.54

HIDALGO 20.81 2.20 2.30 56.00 69.84 73.35

J.ALISCM 80.84 6.40 2.bD 53.40 278.92 54.94

NEXICO 21.36 11.20 6.80 54.80 418.70 363.94

NICHOACN 59.93 4.50 2.70 50.90 105.02 52.11

NORELOS 4.95 1.40 4.10 50.O0 52.34 l16.26

NAYARIT 26.99 1.10 2.90 48.00 31.49 28.29

NUEVO LEON 64.92 3.60 3.70 51.90 250.77 31.49

DARACA 93.95 3.70 2.20 56.90 59.72 27.33

PUEBLA 33.90 4.90 2.60 53.50 126.57 100.30

GlUETARO 11.45 1.10 4.00 50.60 39.76 66.67

DINTAMA ROO 50.21 0.30 8.70 55.20 14.23 4.15

SAN LUIS POTOSI 63.07 2.50 2.60 50.90 55.82 27.51

SINALCA 58.33 2.80 3.90 52.00 103.24 33.31

SDIORA 192.05 2.20 3.00 53.20 204.91 8.3?

TASASCO 25.27 1.70 4.00 51.60 125.41 46.69

TANAULIPAS 79.39 2.90 2.70 53.60 149.86 2L35

TLAXCALA 4.02 0.90 2.60 49.40 19.31 131.23

VEACRUZ 71.70 7.80 3.20 54.50 262.76 75.49

YUCATAN 38.40 1.50 3.00 52.70 50.95 27.11

ZACATECAS 73.25 1.70 1.90 47.00 31.80 16.10

TERRITORIAL HATERS 42.37

SOURCE: SPP

BET WPY AVALBLE

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TABLE 1.1.2 SELECTED RE6IONAL DATA, 1980

(CONT.)

BP POPULATION NUH8ER OF INHABITANTS.PER CAPITA ILLITRACY COVERED BY PATIANTS PER PERtThous.SNEX) I Z ) SOCIAL SECURITY HOSPITAL ROOM HOUSING UNIT

I Z)

TOTAL b3.47 15.00 40.29 1780 5.50

AGUASCALIENTES 51.63 9.80 51.51 2157 5.90BAJA CALIFORNIA 78.23 6.10 51.72 2501 5.10BAJA CALIFORNIA SIIR 81.32 6.30 53.47 537 5.30CAMPECHE 61.15 15.80 35.4 1597 5.50COAHUILA 81.08 7.30 69.44 2591 5.40COLINA 68.51 11.60 43.30 824 5.30CHIAPAS 53.86 29.90 15.50 1930 5.20CHIHUANUA 62.28 7.20 39.67 3461 5.10FEDERAL DISTRICT 114.69 5.50 106.52aX 1075 5.00DURANGO 51.41 6.70 31.21 961 6.30SUANAJUATO 43.52 20.60 27.86 1755 6.30GUERRERO 33.09 29.20 18.52 1767 5.50HIDALGO 45.39 20.60 20.66 868 S.70

JALISCO 64.96 9.90 34.43 2396 5.70NEXICO 55.49 12.70 4.81 1975 5.80NICHOACAN 34.45 26.90 16.61 1376 5.70NORELOS 56.18 15.20 35.74 4197 5.50NAYARIT 43.14 14.30 33.21 1184 5.30NUEVO LEON 101.90 7.70 64.32 4035 5.60OAXACA 23.72 26.70 15.71 1558 5.30Pl£BLA 38.59 26.10 25.07 2099 5.60GLERETARO 54.75 24.50 39.55 1244 5.90OUINTAIA ROD 67.80 19.40 50.96 1190 4.90SAN LUIS POTOSI 33.41 19.70 26.75 2622 5.80SINALUA 54.91 16.70 43.11 3008 6.10SONORA 69.99 8.70 59.75 1304 5.40TABASCO 109.08 17.70 25.02 2340 6.00TANAULIPAS 77.33 8.70 46.10 3791 5.10TLAXCALA 35.29 14.90 5.33 1650 6.20VEACRUZ 49.91 19.40 35.12 6228 5.30YUCATAN 49.24 16.30 51.43 988 5.40ZACATECAS 27.76 19.50 14.78 1345 6.30

al Regional separation does coincide with administrative and political divisionwhich results in a figurthan IOOZ.

SOURCE: SPP

TABLE 1.2.1 EMPLOYMENT BY SECTOR I1

(IN THOUSADS)

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1q80 181 1m

TOTAL 12863 13322 13702 14441 14647 15296 15550 16238 16844 17676 18795 20043 19863

AGRICULTURE,FORESTRY,FISHING 4466 4624 4550 4759 4503 4655 4472 4897 4891 4737 4901 5199 5035

MINING 155 155 162 174 186 194 193 197 206 220 240 263 270

MANUFACTURING 1726 1772 1931 1925 1996 2002 2046 2051 2133 2291 2417 2542 2485

CONSTRUCTION 810 792 990 1010 1070 1151 1200 1163 1321 1497 1697 1881 178S

ELECTRICITY 3S 40 42 44 46 49 52 55 55 58 63 66 66

COMMERCE, RESTAURANTS AND HOTELS 2011 2053 2104 2157 2202 2267 2300 2345 2369 2534 2637 2762 2701

TRANSPORT AND COMMUNICATION 443 475 507 539 569 602 642 664 712 780 907 98 993

SERVICES 2/ 3214 3411 3616 3834 4015 4386 4645 4866 5159 5559 5943 6352 6528

I/ THE FIGURES ARE NOT ACTUAL NUMBER OF EMPLOYEES BUT ONLY ESTIMATES.THEY ARE DERIVED AT BY DIVIDIN6 THE WAGE BILL BY AVERASE SALARIES.CONSEWUENILY, ONE PERSON COWUL IHEORETICAILY OECUPY ONE OR MORE OFTHE POSITIONS IN EACH CATE60RY.

2/ INCLUDES FINANCIAL SERVICES, 6OVERNMENT SERVICES, INSMCE AD OTHER NON-TRADABLE SERYICES, ETC.SOURCEE SPP (CUENTAS NACIONALES)

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TABLE 1.2.2 AVERAGE ANNUAL EARNINGS

(Thousand Pesos/Person)

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982

TOTAL 12 13 15 17 23 27 35 44 53 65 93 109 170

A6RICULTUREJFORESTRY,FISHIN6 3 4 4 5 6 7 8 10 12 15 19 24 34

MININ6 30 30 33 35 44 53 67 95 102 131 161 214 322

MANUFACTURING 23 24 27 31 39 49 61 78 91 109 134 177 275

CONSTRUCTION 18 19 21 22 29 37 47 63 74 97 105 140 219

ELECTRICITY 56 57 64 71 103 127 193 233 271 313 377 500 835

COMHERCE, RESTAURANTS AND HOTELS 12 12 15 16 22 26 33 42 49 60 73 91 141

TRANSPORT AND COHMUNICATION 22 23 34 29 36 44 55 70 82 96 113 150 347

SERVICES 15 17 19 22 27 33 42 53 63 39 100 136 210

SOURCEi SPP ( Cuentas Nacionales )

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TABLE 1.3 SELECTED WAGE DATA

.................. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ..

INIMNUM URBAN WAGE INDEX OF SALARY AND SALARY INDEX IN INDEX OF BENEFITSBENEFITS IN THE HA- MANUFACTURING IN THE HANUFACTURING

CONSUMER PRICE NUFACTURING SECTOR SECTOR SECTORINDEX PESOS REAL NOMINAL REAL NOMINAL REAL NOMINAL REAL NOMINAL

PER DAY INDEXI/ INDEX INDEXI/ INDEX INDEXI/ INDEX INOEXII INDEX.-- -----........................................... . . . .

1970 32.30 26.9s 83.90 27.10 79.57 25.70 100.93 32.60 56.04 18.101971 34.00 26.99 79.71 27.10 82.94 28.20 102.94 35.00 62.06 21.101972 35.71 31.93 89.99 32.10 97.09 31.10 104.45 37.30 72.25 25.801973 40.01 33.59 94.40 33.80 87.23 34.90 99.49 39.80 77,99 31.201974 49.53 45.65 92,67 45.90 89.04 44.10 97.92 49.50 90.96 40.101975 57.01 52.97 93.49 53.30 92.97 53.00 97.88 55.80 88.58 50.501976 65.98 68.46 104.59 68.90 101.40 66.80 103.37 68.10 100.03 65.901977 85.14 87.56 103.48 89.10 102.65 87.40 103.24 87,90 100.19 95.301978 100.01 99.37 99.99 100.00 99.99 100.00 9q.99 100.00 99.99 100.001979 118.18 116.02 9B.83 116.90 98.41 116.30 98.32 116.20 99.00 117.001990 149.34 136.62 92.07 137.50 95.69 142.90 94.95 141.80 99.44 148.501991 190.83 178.87 94.32 180.00 100.77 192.30 96.37 183.90 111.20 212.201992 304.46 272.93 90.23 274.70 2/ 99.52 303.00 2/ 90.32 275.00 2/ 115.94 353.00 2/

1/ Deflated by the CPI.2/ Estiates.

SOURCEi BANK OF MEXICO.

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TABLE 2.1.1 GROSS DOMESTIC PRODUCT BY SECTOR OF ORIGIN. ...........................

BILLIONS OF CURRENT $MEX

1970 1971 i972 1973 1974 1975 1976 1977 1978 1979 1980 1991 1992 1993

A6RICULIUREJFORESTRY,FISHIN6 54.12 59.41 62.50 80.31 104.02 123.15 146.20 194.72 239.57 281.26 357.13 477.46 693.32 1374.95CROP PRODUCTION 31.52 34.73 35.70 46.02 60,39 72.24 84.95 119.52 143.21 162.04 217.16 302.24 ... ...LIVESTOCK 19.52 21.39 23.04 29.20 36.09 42.86 51.14 62.92 79.45 94.57 109.94 136.97 ...FORESTRY 2.26 2.37 2.54 3.67 4,98 6.09 7.53 9.92 10.16 15.22 19.52 21.62 ...FISHING 0.93 0.92 1.22 1.42 1.76 1.96 2.59 4.35 6.75 9.43 11.61 16.64 ...

MINING 6.84 6.46 7.02 9.91 13.04 14.34 19.27 26.42 30.67 45.61 65.62 67.61 152.59 319.59

PETROLEUM 4.36 4.92 4.72 5.68 13.53 17.38 16.52 35.97 48.93 85.96 225.96 301.91 781.70 1632.19

MANUFACTURING 105.20 119.06 134.72 164.01 215.72 256.70 316.21 440.91 550.96 714.61 985.01 1311.49 2000,79 3957.51

CONSTRUCTION 23.53 22.14 29.08 35.17 48.56 65.91 95.26 104.32 139.42 194.12 276.19 409.32 599.83 929.57

ELECTRICITY 5.15 5.65 6.21 7.19 8.61 9.79 13.70 21.80 24.49 31.24 42.03 52.36 77.34 172.25

CONMERCE 115.16 126.79 146.42 180.37 234.96 277.03 338.12 445.77 560.36 743.44 999.56 1361.23 2146.41 3960.12

TRANSPORT AND COHMUNICATION 21.36 23.69 28.66 34.92 46.19 62.61 82.44 113.81 150.43 199.69 279.11 398.79 604.39 1173.10

GOVERNMENTCe) 32.10 37.90 47.42 61.18 90.10 109.07 145.00 195.00 247.90 332.70 469.90 702.30 1109.32 185.34

OTHER SERVICES 91.95 91.57 105.13 134.77 143.98 205.24 225.41 292.29 370.30 472.30 623.97 872.69 1368.52 2325.95

IMPUTED SERVICE CHARGES -5.42 -3.47 -7.16 -7.87 -9.03 -12.12 -16.15 -20.64 -25.51 -33.41 -47.99 -70.97 -107.09 -200.36

GROSS DOMESTIC PRODUCT 444.27 490.01 564.73 690.99 999.71 1100.05 1370.97 1949.26 2337.40 3067.53 4276.49 5974.39 9417.09 17428.99

MEMORANDUM ITEMS

NON-OIL SDP 439.92 495.09 560.01 685.21 896.17 1092.67 1354.45 1213.29 2288.57 2981.57 4050.53 5572.47 9635.39 1579t.60PRIMARY 60.96 65.87 69.52 99.22 117.06 137.50 164.47 221.14 270.24 326.97 422.75 545.07 845.90 1693.43SECONDARY 138.24 150.77 174.74 212.06 286.42 349.69 431.69 602.90 763.68 1025.93 1529.20 2075.09 3449.66 6591.52TERTIARY too) 245.09 273.39 320.47 399.61 496.23 612.96 774.81 1025.22 1303.47 1724.72 2324.54 3254.23 5121.54 9144.04

e/ ESTIMATES(4) 1970-1982 INCLUDES ALSO PRIVATE MEDICAL AND EDUCATIONAL SERVICES.(6') IMPUTED SERVICE CHARGES HAVE BEEN IKCLUDED IN THE TERCtARY SECTOR.... NOT AVAILABLE IN DISAGGREGATES BUT INCLUDED IN THE TOTAL.SOURCEt SPP (CUENTAS NACIONALES)

1-' liTr wr717.BLr1

TABLE 2.1.2 GROSS DOHESTIC PRODUCT BY SECTOR OF ORIGIN...................................

( BILLIONS OF 1980 $0EI I

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1993

AGRICULTURE, FORESTRY, FISHING 254.70 269.39 270.93 282.32 289.25 295.08 298.70 320.39 340.26 337.47 357.13 378,98 376.00 399.99CROP PROOUCTION i3b.97 169.85 166.36 172.33 176.92 177.91 175.82 194.25 209.69 197.74 217.16 234.59 227.77 239.70LIVESTOCK 79.39 82.17 95.02 88.68 91.12 94.79 99.04 101.29 104.55 106.59 109.94 113.09 116.14 118.81FORESTRY 13.50 13.14 13.74 14.34 14.34 14.94 16.13 16.13 16.73 22.70 I.52 18.52 18.54 18.63FISHING 4.83 5.22 5.91 6.97 6.97 7.55 8.71 8.71 9.29 10.45 11.61 12.77 13.55 12.84

HINING 41.53 41.31 43.74 47.39 51.64 50.43 53.46 53.46 55.90 58.93 65.62 72.30 72.51 66.00

PETROLEUM 59.29 58.53 61.25 63.98 76.23 99.94 96.64 111.62. 140.20 170.15 225.96 268.16 307.04 305.20

MANUFACTURING 494.16 513.41 563.67 622.39 661.84 659.08 730.42 756.26 830.47 918.78 985.01 1053.59 1022.95 948.73

CONSTRUCTION 140.06 133.93 150.60 172.62 184.53 195.24 204.17 193.45 217.26 245.84 276.19 308.93 293.49 251.27

ELECTRICITY 17.17 19.01 20.69 23.02 26.02 27.36 30.69 33.03 35.70 39.37 42.03 45.37 48.36 49.21 0

COMMERCE 532.43 553.41 608.43 660.67 693.96 730.49 753.60 767.00 927.57 924.66 919.56 1094.16 1063.58 972.42

TRANSPORT AND COMMUNICATION 94.62 101.90 116.96 134.68 152.85 167.91 176.33 188.29 211.77 244.55 279.11 309.79 297.68 215.62

GOYERNMENT(f) 211.55 232.64 252.41 268.23 293.28 324.91 345,34 359.84 388.84 427.72 469.qO 512.74 542.77 554.22

OTHER SERVICES 390.77 405.79 435.39 457.93 476.93 501.75 523.23 542.91 567.06 597.23 623.97 655.00 669.59 668.00

IMPUTED SERVICE CHARGES 20.43 22.4q 26.39 31.69 27.45 57.46 17.00 14.69 -0.39 -16.86 -47.99 -71.71 -100.75 -111.95

GROSS DOMESTIC PROOUCT 2256.71 2350.93 2550.45 2764.91 2933.96 3098.54 3229.59 3340.83 3616.65 3947.84 4276.49 4616.31 4593.23 4377.71

MEMORANDUM ITEMS

NON-OIL GOP 2197.42 2292.29 2489.20 2700.93 2857.73 3008.70 3132.95 3229.22 3476.45 3777.69 4050.53 4349.16 4286.19 4072.51PRIHARY 296.22 310.71 314.67 329.71 340.89 345.51 352.17 373.85 396.15 396.41 422.75 451.28 448.51 454.99SECONDARY 710.68 723.89 796.20 992.00 948.62 970.52 1061.93 1094.36 1223.64 1374.13 1529.20 1676.05 1671.85 1554.42TERTIARY (01 1249.80 1316.23 1439.58 1553.10 1644.45 1782.51 1915.50 1872.63 1996.87 2177.30 2324.54 2488.98 2472.98 2368.31

elESTIMATES(i1 1970-1982 INCLUDES ALSO PRIVATE MEDICAL MD EDUCATIONL SERVICES.(10) IMPUTED SERVICE CHARGES HAVE BEEN INCLUDEO IN THE TERTIARY SECTOR.

NOT AVAILABLE IN DISA66REGATES BUT INCLUDED IN THE TOTAL.SOURCEi SPP (CUENTAS NACIONALESI and 8ANK STAFF ESTINATES.

BEST COPY AVAILABLE

TABLE 2.1.3 GROSS DOIESTIC PRODUCT BY SECTOR OF ORIIN...................... ..........................................

SHARES IASED ON CURRENT PRICES I

1970 1971 1972 1973 1974 1975 1976 1977 1979 1979 1990 1981 1962 193

AGRICULTURE, FORESTRY, FISHING 12.19 12.12 11.07 11.62 11.56 11.20 10.66 10.53 10.25 9.17 9.35 9.13 7.36 7.89CROP PRODUCTION 7.09 7.09 6.32 6.66 6.71 6.57 6.20 6.41 6.13 5.29 5.09 5.15 see ...LIVESTOCK 4.39 4.37 4.08 4.23 4.10 3.90 3.73 3.40 3.40 3.09 2.57 2.33 too seeFORESTRY 0.51 0.48 0.4! 0.53 0.55 0.55 0.55 0.49 0.43 0.50 0.43 0.37 ... .FISHIES 0.19 0.19 0.22 0.21 0.20 0.19 0.19 0.24 0.29 0.31 0.27 0.28 9ee ...

NINING 1.54 1.32 1.24 1.29 1.45 1.30 1.33 1.43 1.31 1.49 1.53 1.15 1.62 1.83

PETROLEUN 0.99 1.00 0.94 0.92 1.50 1.59 1.21 1.94 2.09 2.90 5.29 5.14 9.30 9.36

NAMUFACTURING 23.69 24.09 23.96 23.74 23.98 23.34 23.06 23.94 23.57 23.30 23.03 22.33 21.25 22.13

CONSTRUCTION 5.30 4.52 5.15 5.09 5.40 5.99 6.22 5.64 5.96 6.33 6.46 6.97 6.26 5.33

ELECTRICITY 1.16 1.15 1.10 1.04 0.96 0.89 1.00 1.18 I.05 1.02 0.98 0.99 0.92 0.99

CONNERCE 25.92 25.95 25.93 26.11 26.12 25.18 24.66 24.11 23.97 24.24 23.37 23.17 22.79 22.72

TRANSPORT AND COMIJNICATtON 4.81 4.93 5.07 5.05 5.13 5.69 6.01 6.15 6.44 6.51 6.53 6.62 6.42 6.73

GOVERIIIENTI') 7.23 7.71 9.40 9.96 9.90 9.91 10.59 10.54 10.61 50.95 10.99 11.96 11.79 10.62

OTHER SERVICES 19.42 19.69 18.62 19.51 16.00 19.66 16.44 15.75 15.84 15.40 14.59 14.86 14.53 13.34

INIUTED SERVICE CHARGES -1.22 -0.71 -1.27 -1.14 -1.00 -1.10 -1.19 -1.12 -1.09 -1.09 -1.12 -1.21 -1.14 -1.15

GROSS DOINESTIC PRODUCT 100.00 100.00 100.00 100.00 10000 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

NON-OIL G0P 99.02 99.00 99.16 99.19 98.50 99.42 98.79 98.06 97.91 97.20 94.72 q4.86 91.70 90.64PRIMARY 13.72 13.44 12.31 12.91 13.01 12.50 12.00 11.96 11.56 10.66 9.89 9.29 8.99 9.72SECONDARY 31.12 30.77 30.94 30.69 31.93 31.79 31.49 32.60 32.67 33.45 35.76 35.32 36.63 37.92TERTIARY (it) 55.16 55.79 56.75 56.39 55.15 M5.71 56.52 55.44 55.77 55.90 54.36 55.40 54.39 52.46

el ESTIlATES(5) 1970-1982 INCLUDES ALSO PRIVATE lEDICAL AND EDUCATIONAL SERVICES.(U) IlPUTED SERVICE CHAR6ES HAVE BEEN INCLUDED IN THE TERTIARY SECTOR.... NOT AVAILABLE IN DISAGERESATES BUT INCLUDED IN THE TOTAL.SOURCE: SPP (CUENTAS NACIONALES) and BANE STAFF ESTIIATES.

r r- tCOPY AVAILABLE

TAOLE 2.1.4 GROSS DOMESTIC PRODUCT BY SECTOR OF ORIGIN

I IHPLICIT PRICE INDICES, 19801O00 )

1970 1971 1972 1973 1974 1975 1976 1977 1979 1979 1980 1981 1982 1983

A6RICULTURE, FORESTRY, FISHING 21.20 22.01 23.00 26.37 35.65 41.57 48.73 60.61 70.33 83.38 100.00 126.19 194.39 353.44CROP PRODUCTION 20.08 20.57 21.46 26.70 34.16 40.63 49.31 61.01 68.30 81.95 100.00 128.83 ...LIVESTOCK 24.58 26.03 27.10 32.93 40.48 45.22 52.16 62.12 76.00 88.73 100.00 121.12 ...FORESTRY 16.74 18.05 19.48 25.61 34.74 40.79 46.68 55.31 60.72 67.04 100.00 116.72 ...FISHING 17.22 17.52 20.96 20.35 25.23 25.92 29.68 50.01 72.65 90.25 100.00 130.26 ... ...

MININS 16.46 15.63 16.05 18.80 25.25 28.45 34.17 49.42 54.87 77.39 100.00 93.52 210.43 492.70

PETROLEUM 7.35 8.41 7.70 8.89 17.76 19.35 17.10 32.22 34.83 50.52 100.00 112.59 254.59 534.79

MANUFACTURING 21.29 22.99 23.90 26.35 32.59 39.01 43.29 58.29 66.34 77.78 100.00 124.48 195.59 406.60

CONSTRUCTION 16.80 16.53 19.31 20.38 26.32 33.71 41.76 53.93 64.17 78.96 100.00 132.49 200.97 369.94

ELECTRICITY 29.96 31.37 30.03 31.23 33.07 35.80 44.63 6b.00 68.57 79.37 100.00 115.41 159.92 350.00

COMMERCE 21.63 22.91 24.06 27.30 33.86 37.92 44.87 58.12 67.71 80.40 100.00 125.56 201.91 407.24

TRANSPORT AND COMMUNICATION 22.57 23.24 24.50 25.93 30.22 37.29 46.75 60.44 71.03 91.66 100.00 125.91 203.03 410.72

GOVERNMENT(41 15.17 16.25 18.79 22.91 27.31 33.57 41.99 54.19 63.75 77.78 100.00 136.97 204.38 340.18

OTHER SERVICES 20.95 22.57 24.15 29.44 30.19 40.90 43.08 53.66 65.07 79.08 100.00 133.26 204.38 348.19

GROSS DOMESTIC PRODUCT 19.69 20.84 22.14 24.99 30.67 35.50 42.45 55.35 64.63 77.70 100.00 127.25 205.02 398.13

NON-OIL GDP 20.02 21.16 22.50 25.37 31.01 35.98 43.23 56.15 65.83 78.93 100.00 128.16 201.47 397.89PRIMARY 20.58 21.20 22.09 27.06 34.34 39.80 46.70 59.15 68.22 82.46 100.00 120.78 188.60 372.19SECONDARY 19.45 20.83 21.95 24.04 30.19 36.03 40.65 55.09 62.41 74.66 100.00 123.81 206.34 424.05TERTIARt (4tt 19.61 20.77 22.26 25.09 30.18 34.36 42.68 54.75 65.28 78.75 100.00 130.75 207.11 386.10

(4' 1970-1982 INCLUOES ALSO PRIVATE MEDICAL AND EDUCATIONAL SERVICES.f#*l !MPUTED SERVICE CHARGES HAVE BEEN INCLUDED IN THE TERTIARY SECTOR.. NOT AVAILABLE IN DISAGGREGATES BUT INCLUDED IN THE TOTAL.SOURCE: SPP (CUENTAS NACIONALES) and BANK STAFF ESTIMATES.

BEST COPY AVAILABLE

TABLE 2.1.5 6ROSS DOMESTIC PRODUCT BY SECTOR OF ORIGIN

( ANNUAL RATE OF GRONTH IN 1990 PRICES I

1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

AGRICULTURE, FORESTRY, FISHING 5.77 0.57 4.21 2.45 2.02 1.23 7.26 6.20 -0.82 5.83 6.12 -0.79 3.46CROP PRODUCTION 7.57 -1.47 3.59 2.60 0.56 -1,12 10.48 7.95 -5.70 9.82 9.03 -2.91 4.80LIVESTOCK 3.51 3.47 4.31 2.75 4.02 3.43 3.32 3.21 1.95 3.05 2.96 2.70 2.30FORESTRY -2.66 4.55 4.35 0.00 4.17 6.00 0.00 3.70 35.71 -19.42 0.00 0.09 0.50FISHING 8.08 11.11 20.00 0.00 8.33 15,38 0.00 6.67 12.50 11.11 10.00 6.08 -5.20

MINING -0.51 5.98 9.33 9.97 -2.35 6.02 0.00 4.55 5.43 11.34 10.19 0.29 -9.99

PETROLEUM -1.27 4.65 4.44 19.15 17.86 7.58 15.49 25.61 21.36 32.80 18.67 14.50 -0.60

MANUFACTURING 3.89 9.79 10.42 6.34 -0.57 10.99 3.54 9.81 10.63 7.21 6.96 -2.91 -7.26

CONSTRUCTION -4.39 12.44 14.62 6.90 5.81 4.57 -5.25 12,31 13.15 12.35 11.85 -5.00 -14.38

ELECTRICITY 4.92 14.81 11.29 13.04 5.13 12.20 7.61 8.08 10.28 6.78 7.94 6.60 1.75

CONKERCE 3.94 9.94 8.59 5.04 5.26 3.16 1.78 7.90 11.73 8.10 8.46 -1.90 -9.57

TRANSPORT AND CONNUNICATION 7.69 14.78 15.15 13.49 9.96 5.01 6.79 12.47 15.49 14.13 10.63 -3.6P -4.05

GOVERNMENT(O) 9.97 8.50 6.27 9.34 10.79 6.29 4.20 8.06 10.00 9.96 9.12 5.86 2.11

OTHER SERVICES 3.84 7.29 5.15 4.17 5.21 4.28 3.74 4.84 4.95 4.48 4.97 2.23 -0.24

GROSS DONESTIC PRODUCT 4.17 8.49 8.40 6.12 5.61 4.23 3.44 8.26 9.16 9.32 7.95 -0.50 -4.69

NON-OIL GOP 4.32 8.59 8.50 5.81 5.28 4.13 3.07 7.66 8.67 7.22 7.35 -1.43 -4.99PRIMARY 4.99 1.28 4.78 3.39 1.36 1.93 6.16 5.97 0.06 6.64 6.75 -0.61 1.45SECONDARY 1.86 9.99 10.78 7.55 2.31 9.42 3.05 11281 12.30 11.29 9.60 -0.25 -7.02TERTIARY (II) 5.32 9.37 7.89 5.68 8.40 1.95 3.15 6.63 9.04 6.76 7.07 -0.65 -4.23

Ii) 1970-1982 INCLUDES ALSO PRIVATE NEDICAL AND EDUCATIONAL SERVICES.(Ci) IMPUTED SERVICE CHARGES HAVE BEEN INCLUDED IN THE TERTIARY SECTOR.,.. NOT AVAILABLE IN DISAGGREGATES BUt INCLUDED IN THE TOTAL.

BEST COPY AVAILABLE

TABLE 2.1.6 GROSS DOMESTIC PRODUCT BY SECTOR OF ORIfIN

SECTORAL RELATIVE PRICES

1970 1971 1972 1973 1974 1975 1976 1977 1970 1979 1990 !951 1992 1983

AGRICULTURE, FORESTRY, FISHIN6 107.67 105.62 103.87 113.54 116.91 117.09 114.78 109.49 109.83 107.31 100.00 99.17 89.94 98.77CROP PRODUCTION 101.98 98.67 96.91 106.96 111.39 114.44 113.91 110.23 105.68 105.47 100,00 101.24 ... seLIVESTOCK 124.87 124.90 122.41 131.78 132.00 127.38 122.88 112.22 117.59 114.19 100.00 95.18 ... ...FORESTRY 95.01 86.59 83.48 102.50 113.27 114.90 109.96 99.92 93.96 86.28 100.00 91.72 ... ...FISHING 87.50 84.06 94.65 81.42 82.29 73.00 69.91 90.34 112.42 116.15 100.00 102.36 ... ...

HININS 83.61 74.99 72.48 75.24 82.34 80.13 80.49 99.29 84.90 99.60 100.00 73.49 102.64 121.24

PETROLEUM 37.32 40.36 34.80 35.55 57.90 54.51 40.27 59.22 53.89 65.02 100.00 88.48 124.18 134.33

MANUFACTURING 108.14 110.32 107.94 105.46 106.29 109.97 101.98 105.30 102.65 100.10 100.00 97.82 95.40 102.13

CONSTRUCTION 95.34 79.30 87.22 91.54 85.83 94.94 98.38 97.42 99.29 101.62 100.00 104.12 98.02 92.92 co

ELECTRICITY 152.26 15O.48 135.61 124.98 107.85 100.84 105.14 119.24 106.10 102.14 100.00 90.69 78.00 87.91

COMMERCE 109.87 109.92 108.68 109.25 110.41 106.82 105.69 104.99 104.77 103.47 100.00 98.67 99.43 102.29

TRANSPORT AND COMMUNICATION 114.65 111.52 110.65 103.75 98.56 105.03 110.13 109.19 109.91 105.09 100.00 98.94 99.03 103.16

6OVERNMENT 77.07 77.95 94.85 91.29 99.07 94.55 99.91 97.90 98.65 100.11 100.00 107.64 99.69 95.44

OTHER SERVICES 106.40 108.26 109.05 117.00 98.45 115.22 101.49 96.94 100.68 101.78 100.00 104.72 99.69 87.45

GROSS 0OMESTiC PRODUCT 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

NON-OIL 6DP 101.69 101.52 ;01.60 101.53 101.12 101.36 101.84 101.44 101.86 101.59 100.00 100.71 98.27 97.43PRIMARY 104.53 101.70 99.77 108.29 111.98 112.09 110.02 106.87 105.55 106.12 100.00 94.92 91.99 93.49SECONDARY 98.80 95.92 99.12 96.22 98.46 101.49 95.76 99.53 96.57 96.09 100.00 97.29 100.64 106.51TERCIARY 99.61 99.64 100.54 100.39 98.40 96.94 100.53 98.91 101.00 101.36 100.00 102.74 101.02 96.98

SOURCE : BANK STAFF ESTIMATES

BEST COPY AVAILABLE

TABLE 2.2.1 BROSS DOMESTIC PRODUCT BY EXPENDITURES

BILLIONS OF CURRENT SNEX

e/

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1952 1983

BROSS DONESTIC PRODUCT 444.27 490.01 564.73 690.89 899.71 1100.05 1370.97 1849.26 2337.40 3067.53 4276.49 5974.39 9417.09 17428.99

IMPORTS 42.08 42.72 49.99 65.40 95.15 105.82 135.29 189.01 258.00 392.00 577.94 792.14 1053.85 1640.39EXPORTS 34.43 37.44 45.54 58.13 75.68 75.84 116.40 190.90 244.71 343.29 537.24 701.05 1636.50 3474.43

GROSS DOMESTIC EXPENDITURES 452.72 495.30 569.0B 698.17 919.19 1130.03 1389.95 1947.47 2350.69 3106.24 4317.09 5965.47 8834.44 15594.95

CONSUMPTION 364.06 407.22 461.95 564.83 740.31 894.42 1101.43 1494.14 1858.27 2387.78 3284.17 4456.11 6735.61 12607.48PRIVATE CONSUMPTION (II 331.82 369.99 413.21 501.40 658.02 780.93 910.52 1295.17 1603.07 2053.47 2821.33 3771.57 5679.05 10645.64PUBLIC CONSUMPTION 32.24 37.33 48.74 63.43 82.29 113.49 150.92 198.97 255.20 334.32 462.84 684.54 1057.56 1961.84

FIXED INVESTMENT 88.66 88.07 107.13 133.34 178.87 235.61 288.42 363.33 492.43 719.45 1032.92 1509.37 2098.83 2997.47PRIVATE INVESTMENT 59.41 65.37 72.77 81.64 110.98 136.88 176.33 21B.60 270.32 403.93 568.57 820.61 1169.23 1705.27PUBLIC INVESTMENT 29.25 22.71 34.36 51.70 67.89 98.72 112.09 144.73 222.11 314.52 464.35 688.75 929.60 1282.20

NET FACTOR INCOME -4.90 -5.70 -6.60 -9.00 -13.50 -16.20 -26.50 -39.10 -48.00 -72.00 -111.10 -192.80 -492.09 -1116.29FROM ABROAD

GROSS NATIONAL PRODUCT 439.37 484.31 558.13 691.99 886.21 1093.85 1344.47 1810.16 2269.40 2995.53 4165.39 5691.59 9925.00 16312.70

MEMORANDUM ITEMS

GROSS DOMESTIC SAVINGS (It 90.21 92.79 102.78 126.07 159.40 205.63 269.54 365.12 479.13 679.74 992.32 1418.28 2681.49 4821.51GROSS NATIONAL SAVINGS ltt) 75.31 77.09 96.18 117.07 145.90 189.43 243.04 326.02 431.13 607.74 981.22 1225.48 2189.39 3705.21GROSS DOMESTIC EXPENDITURES 409.84 452.57 519.19 632.76 824.03 1024.21 1254.57 1658.46 2092.69 2724.24 3739.25 5173.33 7780.59 13954.56ON DOMESTIC GOODS AND SERVICES

e/ ESTIMATES.I') CHANGES IN STOCKS ARE INCLUDED IN PRIVATE CONSUMPTION.(tI) EXCLUDES CHANGES IN STOCKS.SOURCEs SPP (CUENTAS NACIONALES)

BEST COPY AVAILABLE

TABLE 2.2.2 GROSS DOMESTIC PRODUCT BY EXPENDITURES.. ... ... .....................

I BILLIONS OF 1990 SNEI I

e/1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1992 1993

GROSS DOMESTIC PRODUCT 2256.72 2350.93 2550.43 2764.92 2933.95 3099.54 3229.59 3340.83 3616.65 3947.84 4276.49 4L16.31 4593.23 4377.35

IMPORTS 213.04 200.66 221.23 257.39 307.90 306.27 302.98 273.24 337.67 439.39 577.84 690.70 432.33 261.92EXPORTS 202.57 206.55 235.30 261.46 264.96 241.92 276.82 316.70 390.99 455.24 537.24 609.95 711.92 983.08

bROSS DOMESTIC EXPENDITURES 2267.19 2344.94 2536.36 2760.75 2976.89 3162.89 3255.75 3297.37 3563.33 3931.99 4317.09 4698.06 4313.64 3756.19

CONSUMPTION 1901.82 1988.76 2023.46 2171.27 2342.27 2469.81 2557.45 2643.59 2910.30 3032.81 3284.19 3515.77 3324.98 2998.55PRIVATE CONSUMPTIONII) 1602.73 1668.51 1773.67 1659.64 2050.02 2135.27 2202.68 2292.85 2424.70 2610.25 2821.34 3006.35 2803.58 2505.82PUBLIC CONSUMPTION 199.09 220.26 249.79 311.63 292.25 333.54 354.76 350.75 395.60 422.56 462.94 509.42 521.40 492.72

FIXED INYESTMENT 465.37 456.18 512.90 589.48 634.62 694.08 699.30 653.78 753.03 999.18 1032.91 1192.29 988.66 757.64PRIVATE INYESTMENT 305,23 333.23 339.79 348.77 399.85 397.23 423.68 396.82 413.47 501.50 569.56 644.99 519.03 425.37PUBLIC INVESTMENT 160.14 122.95 173.12 240.71 245.77 296.85 274.62 256.96 339.56 397.68 464.35 537.40 469.63 332.27

TERMS OF TRADE EFFECT -31.51 -30.72 -33.36 -32.70 -20.08 -22.42 -16.13 -40.97 -70.72 -60.39 0.00 2.33 -40.57 -328.32

GROSS DOMESTIC INCOME 2225.21 2320.12 2517.09 2732.12 2913.97 3076.11 3213.45 3299.96 3545.93 3887.46 4276.49 4619.64 4552.66 4049.03

NET FACTOR INCOMEFROt ABROAD -24.34 -26.77 -29.27 -35.42 -43.68 -46.89 -59.35 -56.52 -62.92 -92.92 -111.10 -168.11 -201.69 -179.24

GROSS NATIONAL INCOME 2200.86 2293.35 2497.81 2696.70 2870.19 3029.23 3154.10 3243.44 3483.11 3804.64 4165.39 4450.52 4350.79 3870.79

GROSS NATIONAL PRODUCT 2232.37 2324.06 2521.17 2729.40 2890.27 3051.65 3170.24 3284.31 3553.92 3965.02 4165.39 4448.20 4391.35 4199.11

MEMORANDUM ITEMS

GROSS DOMESTIC SAVINGS (It) 423.39 431.35 493.61 560.85 571.60 607.31 656.01 656.37 735.63 954.65 992.31 1102.87 1227.68 1050.48GROSS NATIONAL SAVINGS lit) 399.05 404.58 464.35 525.43 527.92 560.42 596.65 599.85 672.91 771.83 881.21 934.76 1025.81 972.24IMPORT CAPACITY 171.06 175.83 201.94 228.76 244.89 219.50 260.69 275.83 320.27 394.86 537.24 611.29 671.35 554.76GROSS DOMESTIC EXPENDITURES 2054.15 2144.28 2315.13 2503.36 2668.99 2856.62 2952.77 3024.13 3225.66 3492.60 3739.25 4007.36 3881.31 3494.27ON DOMESTIC GOODS AND SERVICES

e/ ESTIMATES.(1) CHANGES IN STOCKS ARE INCLUDED IN PRIVATE CONSUMPTION.(4*1 EXCLUDES CHANGES IN STOCKS.SOURCE: SPP (CUENTAS NACIONALES) and Bank Staff Estieates.

BEST COPY flflFK -n -

TABLE 2.2.3 GROSS DOMESTIC PRODUCT BY EXPENDITURES

I SHARES BASED ON CURRENT PRICES I

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

GROSS DOMESTIC PRODUCT 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

IMPORTS 9.65 8.72 8.83 9.47 10.58 9,62 9.87 10.22 11.04 12.45 13.51 13.49 11.19 9.41EXPORTS 7.75 7.64 8.06 8.41 8.41 6.99 8.49 10.32 10.47 11.19 12.56 11.93 17.39 19.93

GROSS DOMESTIC EXPENDITURES 101.90 101.08 100.77 101.05 102.16 102.73 101.38 99.90 100.57 101.26 100.95 101.55 93.81 89.48

CONSUMPTION 81.95 83.11 81.80 81.75 82.28 81.31 80.34 80.26 79.50 77.84 76.80 75.86 71.53 72.34PRIVATE CONSUMPTION 74.69 75.49 73.17 72.57 73.14 70.99 69.33 69.50 69.58 66.94 65.97 64.20 60.30 61.08 1PUBLIC CONSUMPTION Itl 7.26 7.62 9.63 9.18 9.15 10.32 11.01 10.76 10.92 10.90 10.82 11.65 11.23 11.26 Co

FIXED INVESTMENT 19.96 17.97 18.97 19.30 19.88 21.42 21.04 19.65 21.07 23.42 24.15 25.69 22.29 17.14PRIVATE INVESTMENT 13.37 13.34 12.89 11.82 12.34 12.44 12.86 11.92 11.56 13.17 13.30 13.97 12.42 9.78PUBLIC INVESTMENT 6.59 4.63 6.08 7.48 7.55 8.97 8.18 7.83 9.50 10.25 10.86 11.72 9.87 7.36

NET FACTOR INCOME -1.10 -1.16 -1.17 -1.30 -1.50 -1.47 -1.93 -2.11 -2.05 -2.35 -2.60 -3.28 -5.23 -6.40FROM ABROAD

GROSS NATIONAL PRODUCT 9B.90 98.84 98.83 98.70 98.50 98.53 98.07 97.89 97.95 97.65 97.40 96.72 94.77 93.60

GROSS DOMESTIC SAVINGS Itt) 19.05 16.89 18.20 18.25 17.72 18.69 19.66 19.74 20.50 22.16 23.20 24.14 28.47 27.66GROSS NATIONAL SAVINGS Itt) 16.95 15.73 17.03 16.94 16.22 17.22 17.73 17.63 19.44 19.81 20.61 20.86 23.25 21.26GROSS DOMESTIC EXPENDITURES 92.25 92.36 91.94 91.59 91.59 93.11 91.51 89.68 89.53 88.81 87.44 99.07 82.62 80.07ON DOMESTIC GOODS AND SERVICES

e/ ESTIMATES.(tl CHANGES IN STOCKS ARE INCLUDED IN PRIVATE CONSUMPTION.Itt EXCLUDES CHANGES IN STOCKS.SOURCE: SPP (CUENTAS NACIONALES)

BEST COPY AVAIL rr-

TABLE 2.2.4 6ROSS DOMESTIC PRODUCT BY EXPENDITURES

IMPLICIT PRICE INDICES 1980 100

el1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

6ROSS DOMESTIC PRODUCT 19.69 20.84 22.14 24.99 30.67 35.50 42.45 55.35 64.63 77.70 100.00 127.25 205.02 398.16

IMPORTS 20.13 21.29 22.55 25.41 30.90 34.55 44.65 69.17 76.41 86.94 100.00 114.69 243.76 626.30EXPORTS 17.00 18.13 19.35 22.23 28.56 31.35 42.05 60.25 62.59 75.41 100.00 115.12 229.87 393.44

GROSS DOMESTIC EXPENDITURES 19.97 21.12 22.44 25.29 30.89 35.73 42.69 56.03 65.97 79.00 100.00 126.99 204.80 415.18

CONSUMPTION 20.21 21.56 22.83 26.01 31.61 36.23 43.07 56.14 66.12 78.73 100.00 126.75 202.58 420.45PRIVATE CONSUMPTION(O 20.70 22.17 23.30 26.96 32.10 36.57 43.15 56.05 66.11 78.67 100.00 125.45 202.53 424.94PUBLIC CONSUMPTION 16.20 16.95 19.51 20.35 28.16 34.03 42.54 56.73 66.18 79.12 100.00 134.38 202.83 398.16

FIXED INVESTHENT 19.05 19.31 20.89 22.62 28.19 33.95 41.30 55.57 65.39 79.90 100.00 127.66 212.29 394.31PRIVATE INVESTMENT 19.46 19.62 21.42 23.41 28.54 34.46 41.62 55.09 65.38 80.55 100.00 127.25 225.27 400.99PUBLIC INVESTHENT 19.27 18.47 19.85 21.48 27.62 33.26 40.81 56.32 65.41 79.09 100.00 129.16 197.94 395.89

NET FACTOR INCOMEFROM ABROAD 20.13 21.29 22.55 25.41 30.90 34.55 44.65 69.17 76.41 86.94 100.00 114.69 243.76 626.30

GROSS NATIONAL PRODUCT 19.96 21.12 22.43 25.29 30.99 35.78 42.63 55.81 65.73 79.73 100.00 127.66 205.14 421.43

GROSS dOMESTIC SAVINGS Ittl 18.94 19.19 20.82 22.49 27.89 33.86 41.09 55.63 65.13 79.53 100.00 128.60 219.42 458.98GROSS NATI!^NAL SAVINGS (I## 18.87 19.05 20.71 22.28 27.64 33.80 40.73 54.35 64.08 78.74 100.00 131.10 213.43 424.79GROSS DOHESI:C EXPENDITURES 19.95 21.11 22.43 25.28 30.87 35.95 42.49 54.84 64.98 78.00 100.00 129.10 200.46 399.36ON DOMESTIC 6DODS AND SERVICES

el ESTIMATES.(tl CHANGES IN STOCKS ARE INCLUDED IN PRIVATE CONSUMPTION.(0) EXCLUDES CHANGES IN STOCKS.SOURCEi SPP (CUENTAS MACIONALES) and Bank Staff Estioates.

BEST COPY AVAIUBLE

TABLE 2.2.5 6ROSS DOMESTIC PRODUCT BY EXPENDITURES

(ANNUAL GROWTH RATE IN 1980 PRICES

el

1971 1972 1973 1974 1975 19776 177 1978 1979 1980 1981 1982 1983

GROSS DOMESTIC PRODUCT 4.17 8.49 8.41 6.12 5.61 4.23 3.44 8.26 9.16 8.32 7.95 -0.50 -4.70

IMPORTS -5.81 10.25 16.34 19.62 -0.53 -1.07 -9.92 23.58 30.12 31.51 19.53 -37.41 -39.42EXPORTS I.96 13.92 11.12 1.34 -8.70 14.43 14.41 23.46 16.43 19.01 13.35 16.91 24.04

6ROSS DOMESTIC EXPENDITURES 3.43 9.16 9.95 7.83 6.25 2.94 1.29 8.07 10.35 9.79 9.82 -8.18 -12.92

CONSUMPTION 4.83 7.13 7.30 7.88 5.40 3.59 3.37 6.31 7.92 8.29 7.05 -5.43 -9.02PRIVATE CONSUMPTlON(# 4.10 6.30 4.85 10.24 4.16 3.16 4.09 5.75 7.65 8.09 6.56 -6.74 -10.62PUBLIC CONSUMPTION 10.63 13.41 24.75 -6.22 14.13 b.36 -1.13 9.94 9.59 9.53 10.06 2.35 -5.50

FIXED INVESTMENT -1.97 12.43 14.93 7.66 9.37 0.61 -6.38 15.18 19.41 14.87 14.46 -16.38 -23.37PRIVATE INVESTMENT 9.17 1.97 2.65 11.49 2.16 6.66 -b.34 4.20 21.29 13.37 13.43 -19.52 -18.05PUBLIC INVESTMENT -23.22 40.81 39.04 2.10 20.78 -7.49 -6.43 32.15 17.12 16.76 15.73 -12.61 -29.25

GROSS DOMESTIC INCOME 4.27 8.47 8.54 6.65 5.57 4.46 2.69 7.45 9.63 10.01 9.00 -1.43 -11.06

NET FACTOR PAYMENT 9.97 9.33 21.02 23.33 7.33 26.59 -4.16 11.14 31.83 34.15 51.31 20.08 -11.71

GROSS NATIONAL INCOME 4.20 6.48 9.40 6.43 5.54 4.12 2.93 7.39 9.23 9.48 6.85 -2.24 -11.03

6ROSS NATIONAL PRODUCT 4.11 8.49 8.26 5.89 5.58 3.89 3.60 8.21 8.76 7.77 6.79 -1.29 -4.38

6ROSS DOMESTIC SAVINGS (O10 1.88 14.43 13.62 1.92 6.25 9.02 0.06 12.09 16.19 16.11 11.14 11.32 -14.436ROSS NATIONAL SAVINGS IW: 1.39 14.77 13.15 0.47 6.16 6.47 0.53 12.16 14.72 14.17 6.08 9.74 -14.97IMPORT CAPACITY 2.79 14.85 13.28 7.05 -10.37 19.77 5.81 16.11 23.29 36.06 13.78 9.83 .-17.37GROSS DOMESTIC EXPENDITURES 4.39 7.97 8.13 6.62 7.03 3.37 2.42 6.66 8.28 7.06 7.17 -3.15 -9.97ON DONESTIC 6000S AND SERVICES

el ESTIMATES.(0) CHANGES IN STOCKS ARE INCLUDED IN PRIVATE CONSUMPTION.('i) INCLUDES CHANGES IN STDCoS.

BEST COPY AVAILABLE

TABLE 2.3.1 FIXED INVESTMENT BY MAIN COMPONENTS

BILLIONS OF CURRENT MEX I

el1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

CONSTRUCTION 50.76 50.05 61.92 75.26 102.06 135.52 170.21 213.57 288.61 404.71 587.73 956.16 1367.05 2035.20PUBLIC 19.99 15.52 24.88 35.63 46.21 63.26 72.33 91.93 149.96 215.31 327.14 492.68 739.76 1000.63PRIVATE 30.78 34.54 37.04 39.63 55.84 72.27 97.89 121.64 139.64 199.40 260.58 363.48 628.29 1034.58

MACHINERY i EOUIPNENt 37.91 38.02 45.21 59.08 76.82 100.09 118.21 149.76 203.92 313.75 445.19 653.21 671.05 952.26PUBLIC 9.27 7.19 9.48 16.07 21.69 35.47 39.76 52.79 72.15 99.21 137.21 196.07 221.49 281.57PRIVATE 28.63 30.83 35.73 42.01 55.14 64.62 78.45 96.97 131.67 214.53 307.98 457.13 449.57 670.69 0'

OF WHICH:

DOMESTIC 22.02 23.44 27.39 35.68 49.23 59.73 71.71 95.04 132.70 193.79 258.16 365.34 ...IMPORTED 15.95 14.46 17.65 22.09 21.25 40.11 46.11 54.19 71.19 129.18 186.35 286.25

TOTAL INVESTMENT 68.66 88.07 107.13 133.34 178.87 235.61 288.42 363.33 492.43 718.45 1032.92 1509.37 2098.83 2997.46

I/ Estimates.Nee Not Avallable ueparately but included In the total.

SOURCE: SPP (CUENTAS NACIONALES)

mrST Mm' flr!FF2'

TABLE 2.3.2 FIXED INVESTHENT BY MAIN COCPONENIS

(BILLIONS OF 1990 $HEX

el1970 t971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

CONSTRUCTION 284.12 278.96 312.71 354.29 374.07 402.33 417.70 406.65 4b1.42 521.95 587.73 654.65 621.01 518.48PUBLIC 113.61 87.52 128.70 172.02 169.33 188.72 176.19 170.50 236.69 277.19 327.14 376,87 342.57 258.30PRIVATE 170.51 191.44 184.00 182.27 204.74 213.61 241.51 236.15 224.74 244.76 260.58 277.78 278.44 260.17

MACHINERY & EQUIPMENT 181.25 177.22 200.20 235.20 260.55 291.74 280.60 247.13 291.61 378.23 445.19 527.64 367.65 239.16PUBLIC 46.53 35.43 44.42 68.69 76.44 108.13 98.43 96.46 102.98 120.49 137.21 160.53 127.06 73.97PRIVATE 134.72 141.79 155.78 166.50 184.11 193.62 182.17 160.67 188.73 257.74 307.98 367.11 240.59 165.20

TOTAL INVESTMENT 465.37 456.18 512.90 589.49 634.62 694.07 698.30 653.78 753.03 900.18 1032.92 1182.29 988.66 757.64

e/ Estimates.SOURCEt SPP (CUENTAS NACIONALES)

BEST COPY AVAILABLE

TABLE 2.3.3 FIXED INVESTHENT BY MAIN COMPONENTS

(SHARES BASED ON CURRENT PRICES

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

CONSTRUCTION 57.25 56.83 57.80 56.44 57.06 57.52 59.01 58.78 58.61 56.33 56.90 56.72 65.13 68.12PUBLIC 22.53 17.62 23.22 26.72 25.84 26.85 25.08 25.30 30.45 29.97 31.67 32.64 35.20 33.49PRIVATE 34.71 39.21 34.57 29.72 31.22 30.67 33.94 33.48 29.16 26.36 25.23 24.08 29.94 34.63

MACHINERY X EQUIPMENT 42.75 43.17 42.20 43.56 42.94 42.48 40.99 41.22 41.39 43.67 43.10 43.28 31,97 31.88PUBLIC 10.46 8.16 9.05 12.05 12.12 15.05 13.79 14.53 14.65 13.81 13.28 12.99 10.55 ?.43 ooPRIVATE 32.29 35.01 33.35 31.50 30.83 27.43 27.20 26.69 26.74 29.86 29.82 30.29 21.42 22.45

OF WHICH:

DOMESTIC 24.03 26.61 25.57 26.76 26.96 25.35 24.86 26.16 26.95 25.58 24.99 24.21 ... ...IMPORTED 17.98 16.42 16.47 16.57 15.79 17.02 15.99 14.91 15.68 17.98 18.04 18.96 ... Its

TOTAL INVESTMENT 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

e/ Estilates.... Not available separately but included in the total.SOURCE: SPP (CUENTAS NACIONALES)

BEST COPY AVAILABLE

TABLE 2.3.4 FIXED INVESTMENT DY MAIN COlPONENTS

(IMPLICIT PRICE INDEX 1980 100

el1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

CONSTRUCTION 17.86 17.94 19.80 21.24 27.28 33.68 40.75 52.52 62.55 77.54 100.00 130.78 220.13 327.72PUBLIC 17.58 17.73 19.33 20.71 27.29 33.52 41.05 53.92 63.36 77.68 100.00 130.73 215.65 387.39PRIYATE 16.05 18.04 20.13 21.74 27.28 33.63 40.53 51.51 61.69 77.38 100.00 130.85 225.65 397.65

MACHINERY & EQUIPMENT 20.91 21.45 22.58 24.69 29.40 34.31 42.13 60.60 69.90 82.95 100.00 123.80 182.52 259.01PUBLIC 19.93 20.29 21.34 23.40 28.36 32.80 40.39 61.06 70.13 82.34 100.00 122,14 174.32 390.67PRIVATE 21.25 21.74 22.94 25.23 29.95 35.19 43.07 60.35 69.77 83.24 100.00 124.52 186.96 405.99

TOTAL INYESTMENT 19.05 19.31 20.89 22.62 28.19 33.95 41.30 55.57 65.39 79.61 100.00 127.66 212.29 302.17

el Estimates.SOURCE: SPP (CUENTAS NACIONALES), BANK STAFF ESTIMATES

BEST COPY AVAILABLE

TABLE 2.3.5 FIXED INVESTMENT BY MAIN COMPONENTS

(ANNUAL 6ROWTH RATE IN 1980 PRICES

e/1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

CONSTRUCTION -1.81 12.10 13.30 5.58 7.55 3.82 -2.65 13.47 13.12 12.60 11.39 -5.14 -16.51PUBLIC -22.96 47.05 33.66 -1.56 11.45 -6.64 -3.23 38.82 17.11 18.02 15.20 -9.10 -24.60PRIVATE 12.27 -3.88 -0.94 12.32 4.34 13.06 -2.22 -4.83 8.91 6.46 6.60 0.24 -6.56

MACHINERY & EQUIPMENT -2.22 12.97 17.48 10.78 11.97 -3.82 -11.93 18.00 29.70 17.70 18.52 -30.32 -34.95PUBLIC -23.86 25.38 54.64 11.28 41.45 -8.97 -12.16 18.99 17.11 13.88 17.00 -20.85 -41.78PRIYATE 5.25 9.86 6.89 10.57 -0.27 -0.79 -11.80 17.46 36.57 19.49 19.20 -34.46 -31.34

TOTAL INVESTMENT -1.97 12.43 14.93 7.66 9.37 0.61 -6.38 15.18 19.54 14.75 14.46 -16.38 -23.37

e/ Estitates.SOURCEt Babk Staff Estimates.

BEST COPY AVAILABLE

- 91 -

TABLE 3.1 SUNNY BALANCE OF PAYTENTS

C MILLIONS OF US S I

1970 1971 1972 1773 1974 1975 1976 1977 1979 1979 1990 1991 1992 1993

TOTAL EXPORTS '117 3402 4127 5156 6469 6793 7926 0873 11025 15312 23606 29079 27258 26642MEPCHANDISEIF.O.B.L 1290 1366 1666 2072 253 3062 3656 4650 6063 9019 15132 19420 21230 2139

PETROLEUM ... ... ... 39 435 544 999 1774 3765 9430 U1305 t5623 14793NON-PETROLEUM 1290 1366 1666 2072 2916 2627 3112 3662 4290 553 5702 6115 5607 6606

NON-FACTOR SERVICES 1929 2036 2461 3094 3615 3731 4270 4103 4961 6495 8474 9659 6029 5444NRDER TRADE 11 1050 1176 1313 1526 1650 1925 2267 2076 2364 2919 3722 4770 2276 1627TOURISM 415 461 563 724 942 900 936 867 1121 1443 1671 1760 1406 1625ASSEMBLY INDUSTRY 83 102 156 239 375 332 366 345 452 639 772 976 951 830OTHER 280 297 430 595 749 674 903 316 1024 1494 2309 2253 1495 1363

TOTAL IIMPORTS 3B82 3076 4649 6103 9984 9910 9068 8597 11531 17035 26206 34364 2190' 12673HERCHANDISE(F.O.B.I .2328 2255 2762 3S92 6149 6699 6300 5704 7913 11900 10932 2930 14437 7721

PRIVATE 1771 1902 2117 2670 3947 4141 4113 3599 5001 4029 6767 1322 5401 4243PUBLIC 55E 453 645 1223 2202 2550 2187 2117 2916 MI 12065 15109 9O37 3477

MUN-FACTOR SERVICES 1554 1621 1996 2211 2735 3211 3568 2093 3614 50G6 7373 10434 733'3 4952BORDER TRADE 11 931 969 939 1104 1'53 1529 1147 1361 1632 2246 3130 4594 2417 1457TOURISM 291 201 260 303 392 446 423 396 519 694 1044 1571 7E0 442OTHER 535 552 697 904 1091 1176 1299 1126 1463 2127 3200 4279 4179 3054

RESOURCE BLANCE -765 -474 -521 -947 -2416 -3117 -1942 166 -507 -1723 -2600 -5295 5439 14170

FACTOR INCEDE I NET i -479 -512 -552 -655 -929 -1459 -1996 -1933 -2393 -3371 -409H -7549 -10691 -980REMITTED PROFITS -129 -129 -144 -167 -190 -210 -347 -109 -214 -357 -444 -551 -642 -194PUBLIC SECTOR INTEREST PAYMENTS -290 -306 -321 -442 -707 -1032 -1319 -1542 -2023 -2998 -3959 -5476 -1400 -7346OTHER -127 -136 -160 -Z06 -266 -405 -405 -432 -549 -921 -1519 -2907 -2964 -2515F3REIGN INVESTMENT INCOME 6e 59 73 161 234 197 174 230 403 695 1022 1396 1325 1065

BALANCE OF GOODS RND SERVICES -1244 -996 -1073 -1602 -3345 -4576 -3338 -1767 -2999 -5095 -7498 -12933 -5143 5190

TRANSFERS I NET I 56 59 67 73 119 133 155 170 196 224 275 299 265 356

CURRENT BALANCE -1199 -929 -1006 -1529 -3226 -4443 -3603 -1596 -2693 -4971 -7223 -12544 -4079 5546

CAPITAL ACCOUNT 949 996 432 2051 3923 5459 5070 2276 324 4533 11946 21860 9631 -153

LOND TERM CAPITAL I NET 1 561 709 942 1966 2793 4373 47D2 4271 4699 4591 6835 11696 10369 4187PUBLIC I NET I 262 292 411 1209 2075 3593 4215 3372 4063 3147 4059 0657 9862 3465

DISBURSMENTS 929 793 1017 2111 2766 4422 5412 6232 9343 10415 7771 12323 14250 9305AMORTIZATION -566 -511 -601 -097 -690 -955 -1156 -2295 -4264 -7296 3723 -4906 -5270 -4590EXTERHAL CREDIT -1 9 -5 -5 -4 17 -47 -65 -16 19 11 -360 -117 -251

PRIVATE tIETI 3Q0 416 430 657 719 789 497 397 626 1444 2777 3040 1506 722DIRECT FOREIGN INVESTMENT 195 173 156 222 291 204 212 327 395 792 1254 1199 709 374PURCHASE OF FOREIGN ENTERPRISES ... ... -10 -22 -2 -36 -12 -1 -21 -40 -20 ... .FOREIGN LIABILITIES 120 233 294 486 472 635 341 104 260 753 1664 1961 789 416PORTFOLIO OPERATIONS -5 10 -10 -29 -42 -14 -54 -31 2 -51 -132 -10 9 -69

SHOPT TERM CAPITAL 1 NET 299 188 -409 195 1029 1096 369 -195 -1435 -5B 5113 10163 -1737 -5040NET LIABILITIES 330 157 -95 636 1510 1292 1122 -1061 -960 1711 5979 12696 -614 -1903

PUBLIC 192 129 -262 415 947 765 979 -950 -1499 206 69 9267 -1925 772PRIVATE 149 29 167 220 663 517 244 -119 529 1506 5911 3429 1211 -2575

NET ASSETS -43 31 -314 -450 -480 -195 -754 -929 -475 -1769 -965 -2532 -1124 -3236

CREDIT FRON IMF 45 40 39 ... ... ... ... .. ... 70 74 70 .ERRORS AND OMMISSIONS 21 396 193 799 -400 -560 -951 -2391 -23 -127 616 -3649 -9373 -69V7 -1517CHANSE IN RESERVES -102 -200 -265 -122 -37 -165 1004 -657 -434 -419 -1151 -1012 3185 -3106

[-INCREASEi

11 After 1992, this classification has been changed to measure the actual magnitude of income in the border zone rather than the masurement of financial trans-action which could also include capital. Proper adjustments have been made in the capital account.

2/ After 1992, errors and omissions include changes in the reserve position of the Bank of Mexico, monetary gold and silver, and a new item which signifies thedifference in the liabilties incurred by the BdM with international institutions.

SOURCE: BANK OF MEIICo.

BEST COPY AVAIUBLE

TABLE 3.2.1 IMPORT OF GOODS AND NON-FACTOR SERVICES I/

1 MILLIONS OF SUS

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

CONSUMPTION GOODS 463 443 608 851 1314 847 573 503 651 1002 2450 2813 1517 555

INTERMEDIARY GOODS 21 781 796 918 1414 2508 3939 3697 3719 5285 7404 11209 13541 8418 5347

CAPITAL GOODS 1083 1015 1192 1549 2230 1897 1930 1481 1982 3574 5174 7575 4502 1819

NON-CLASSIFIED GOODS 3J 1 2 44 79 96 117 110 ... ... ... I.. ... ...

TOTAL MERCHANDISE IMPORTS 2328 2256 2762 3892 6149 6699 6300 5704 7918 11980 1u832 23930 14437 7721

NON-FACTOR SERVICES 1554 1621 1886 2211 2735 3211 3568 2883 3614 5056 7373 10434 7383 4952BORDER TRADE 828 868 939 1104 1253 1589 i847 1361 1632 2246 3130 4584 2417 1457TOURISM 191 201 260 303 392 446 423 396 519 684 1044 1571 788 441OTHER 535 552 687 804 1091 1176 1298 1126 1463 2127 3200 4279 4179 3054

TOTAL 3882 3976 4648 6103 8884 9910 9868 8586 11531 17035 26206 34364 21820 12673

MEMO ITEM

MERCHANDISE IMPORTS 2328 2256 2762 3892 6149 6699 6300 5704 7918 11980 18832 23930 14437 7721PUBLIC 558 453 645 1223 2202 2558 2187 2117 2916 3994 7106 8822 5401 4243PRIVATE 1771 1802 2117 2670 3947 4141 4113 3587 5001 7985 11726 15108 9037 3477

1/ ALL MERCHANDISE IMPORTS ARE AT f.0.B. PRICES. INSURANCE AND FREIGHT ARE INCLUDED IN NON-FACTOR SERVICES.2/ AFTER 1975 INTERMEDIARY GOODS INCLUDES IMPORT OF WHEAT.3/ BETNEEN 1972 & 1978 NON-CLASSIFIED GOODS INCLUDE THE ADJUSTMENT MADE FOR IMPORT OF USED CARS IN THE BORDER ZONE AND 'ARTICULOS GANCHOS.'NOTE: ZERO SIGNIFIES VALUES BELOW (0.5).SOURCE1 DANK OF MEXICO.

I | ' * 11 ! 1

TABLE 3.2.2 IMPORT OF GOODS AND NON-FACTOR SERVICES 1/

1 SHARES BASED ON CURRENT PRICES

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

CONSUMPTION GOODS 11.93 11.42 13.09 13.94 14.79 8.54 5.81 5.86 5.64 5.88 9.35 8.19 6.95 4.39

INTERMEDIARY 60ODS 2/ 20.11 20.54 19.75 23.17 28.24 38.74 37.36 43.32 45.93 43.46 42.77 39.41 39.58 42.19

CAPITAL GOODS 27.89 26.19 25.64 25.37 25.10 19.14 19.56 17.25 17.18 20.98 19.74 22.04 20.63 14.35

NON-CLASSIFIED GOODS 3/ 0.04 0.04 0.95 1.29 1.08 1.18 1.11 0.00 0.00 0.00 0.00 0,00 0.00 0.00

TOTAL MERCHANDISE IMPORTS 59.97 58.19 59.43 63.78 69.21 67.60 63.85 66.43 68.66 70.32 71.66 69.64 66.16 60.92

NON-FACTOR SERYICES 40.03 41.81 40.57 36.22 30.79 32.40 36.15 33.57 31.34 29.68 28.14 30.36 33.84 39.08BORDER TRADE 21.33 22.39 20.20 18.08 14.10 16.03 18.72 15.85 14.15 13.18 11.94 13.34 11.08 11.49TOURISM 4.93 5.19 5.59 4.96 4.41 4.50 4.29 4.61 4.50 4.01 3.98 4.57 3.61 3.48OTHER 13.77 14.23 14.78 13.17 12.28 11.87 13.15 13.11 12.68 12.48 12.21 12.45 19.15 24.10

TOTAL 100.00 100.00 100.00 100.00 1oo.ou 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

MEND ITEM

MERCHANDISE IMPORTS 59.97 58.19 59.43 63.78 69.21 67.60 63.85 66.43 68.66 70.32 71.86 69.64 66.16 60.92PUBLIC 14.36 11.69 13.88 20.03 24.79 25.82 22.16 24.65 25.29 23.45 27.12 25.67 24.75 33.48PRIVATE 45.61 46.50 45.54 43.74 44.42 41.79 41.68 41.77 43.37 46.88 44.75 43.96 41.41 27.44

1/ ALL MERCHANDISE IMPORTS ARE AT F.O.B. PRICES. INSURANCE AND FREIGHT ARE INCLUDED IN NON-FACTOR SERYICES.2/ AFTER 1975 INTERMEDIARY GOODS INCLUDES IMPORT OF WHEAT.3/ BETWEEN 1972 & 1978 NON-CLASSIFIED GOODS INCLUDE THE ADJUSTMENT MADE FOR IMPORT OF USED CARS IN THE BORDER ZONE AND 'ARTICULOS 6ANCHOS.'NOTEt ZERO SIGNIFIES VALUES BELOW (0.5).SOURCEi BANK OF MEXICO.

BEST COPY AVAIlAB-

TABLE 3.2.3 IMPORT OF 600DS AND SERVICES

(BILLIONS OF 1980 $51EX

e/1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

TOTAL 213.04 200.66 221.23 257.39 307.90 306.27 302.94 273.24 337.67 439.39 577.84 690.70 432.33 261.92

600 (C.I.F.I 155.32 145.74 161.04 197.69 246.24 239.03 204.30 192.03 247.06 326.59 448.87 516.22 314.38 169.66

INTERMEDIATE CONSUlPTICNS 91.63 87.39 91.85 118.31 165.16 149.09 125.08 133.07 166.56 201.34 270.61 303.12 193.39 123.99FINAL CONSUMPTION 16.91 17.77 22.60 25.78 22.64 19.69 16.46 13.48 22.14 30.68 55.51 59.14 31.73 11.27CAPITAL 600DS 46.78 40.58 46.59 53.59 58.44 70.24 62.76 45.48 58.36 94.57 122.76 153.96 89.25 34.39

NON-MONETARY GOLD & SILVER 10.11 6.54 7.31 5.50 3.64 2.80 4.10 2.97 5.47 7.01 1.42 3.18 2.12 n.a.

SERVICES 47.61 48.38 52.89 54.20 58.03 64.45 94.54 78.24 85.13 105.80 127.55 171.30 115.84 92.26

et Estimates.Note: The data for the constant price series have been obtained from SPP (Cuentas Nacionales). Ihere are

discrepancies between Bank of hexico and SPP data, which are due to different classifications used bythese sources.

SOURCE i Bank Estisates

BEST COPY AVAILABLE

TABLE 3.2.4 IMPORT OF GOODS AND SERVICES

(IMPLICIT PRICE INDICES 19600100,IN DOMESTIC CURRENCY I

el1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1932 1983

TOTAL 20.13 21.29 22.55 25.41 30.90 34.55 44.66 69.17 76.41 86.94 100.00 115.56 243.76 626.29

GOOD (C.I.F.) 19.00 20.65 21.94 24.95 30.72 34.54 44.55 69.34 76.83 87.94 100.00 114.88 262.29 589.07 1'0

INTERMEDIATE CONSUMPTIONS 19.92 20.76 22.12 25.17 31.08 34.85 44.74 60.95 77.33 98.84 100.00 113.65 248.34 558.20FINAL CONSUMPTION 17.32 18.22 19.33 23.75 31.96 33.60 44.32 63.22 67.96 75.30 100.00 102.16 273.78 637.24CAPITAL GOODS 20.48 21.47 22.87 25.03 29.23 34.13 44.24 72.31 78.76 90.13 100.00 122.21 288.42 694.60

NON-MONETARY 6OLD I SILVER 3.12 3.57 5.08 0.44 13.84 14.04 14.12 23.53 30.77 49.39 100.00 90.05 255.97 n.a.

SERVICES 24.80 25.63 26.81 28.83 32.74 35.50 46.20 70.50 78.11 86.32 100.00 118.24 193.26 694.72

e/ Estimates. Deflators for 1933 have been obtained by using current price data from the balance of payments converted into daeestic currency at the aritheeticof the controlled and market exchange rates. Constant price series have been estieated from the National Accounts data in 1970 hexican Pesos.

SOURCE i Bank Estimates

BEST COPY AVAILABLE

TABLE 3.2.5 IMPORT OF GOODS AND SERVICES

(ANNUAL GROWTH RATE IN CON-STANT 1980 PRICES)

1971 1972 1973 1974 1975 1q76 1971 1978 1979 1990 1901 1992 1983

TOTAL -5.91 10.25 16.34 19.63 -0.53 -1.09 -9.91 23.58 30.13 31.51 19.53 -37.41 -39.42

GOOD IC.I.F.) -6.17 10.50 22.76 24.56 -2.93 -14.53 -6.01 28.66 32.19 37.44 15.00 -39.10 -46.03

INTERMEDIATE CONSU%PTIONS -4.64 511 29.91 39.59 -9.73 -16.11 6.39 25.17 20.89 34.40 12.02 -3b.20 -35.99

FINAL CONSUMPTION 5.12 27.13 14.11 -12.20 -13.00 -16.44 -19.09 64.21 39.59 80.92 6.55 -46.35 -64.47

CAPITAL GOODS -13.24 14.81 15.02 9.05 20.19 -10.65 -27.54 28.33 62.04 29.61 25.41 -42.03 -61.46NON-KONETARY SOLD X SILVER -35.32 11.73 -24.73 -33.71 -23.08 46.39 -27.46 84.03 28.08 -79.73 123.70 -33.40 n.a.

SERVICES 1.63 9.31 2.48 7.07 11.06 46.70 -17.25 9.91 24.28 20.56 34.30 -32.39 -20.35

SOURCE D Bank Estimates

BEST COPY AVAIUBLE

- 97 -

TABLE 3.6.2 MERCHANDISE IMPORTS BY TYPE OF GOODS________________________________

C BILLIONS OF SUS

1979 1980 1981 1982 1983

AGRICULTURE 810 1871 2204 927 1619OF WHICH:CORN 102 589 453 38 634WHEAT 185 163 214 87 60SORGHUM 160 308 432 195 433

LIVESTOCK L FISH 162 140 217 172 76

METALS AND MINERALS 241 256 279 221 105

MANUFACTURED GOODS 10566 16364 21035 12996 5936OF WHICH:

FOOD INDUSTRY 342 1175 1080 707 524TEXTILES [61 262 404 150 32CHEMICALS 1444 2020 2353 557 1194MACHINARY 2829 8826 12474 763 2971STEEL 1126 1824 2220 112 396OTHER 4663 2257 2504 10696 728

NON-CLASSIFIED GOODS 201 200 195 130 85

TOTAL MERCHANDISE IMPORTS 11990 18032 23930 14437 7721

MEMO ITEM

MERCHANDISE IMPORTS 11980 18832 23930 14437 7721PUBLIC 3994 7106 9822 5401 4243PRIVATE 7986 11726 15108 9036 3479

SOURCE: BANK OF MEXICO.

BEST COPY AVAILALE

TABLE 3.3.1 EIPORTS OF GOODS AND NON-FACTOR SERVICES

I MILLIONS OF SUS I

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Iq80 1981 1982 1983

AGRICULTURE 422 430 510 626 620 719 1061 1191 1307 1616 1407 1379 1097 1063OF VHICHgCOTTON 124 120 148 166 182 175 267 195 309 310 321 309 184 115COFFEE 86 el 86 157 157 185 379 458 386 575 415 334 345 484TOMATOES 108 90 99 127 94 133 141 215 198 207 195 250 154 112

LIVESTOCK I FISH 201 203 277 278 234 173 115 131 194 163 120 104 136 221

METALS AND MINERALS 184 157 181 182 376 208 209 217 213 338 512 677 502 447

PETROLEUM I 6AS 38 31 21 25 123 438 540 993 1774 3975 10441 13830 16101 15143

MANUFACTURED GOODS 444 545 677 960 1500 1525 1730 2125 2574 2726 2653 3427 3386 4519OF NHICH:

FOOD INDUSTRY 144 161 179 220 349 455 531 638 737 799 773 679 707 707TEXTILES 39 51 78 168 269 169 182 180 189 209 201 181 150 160 0CHEMICALS al 90 102 152 261 205 236 241 250 336 390 457 557 607HACHINARY 37 51 82 153 170 254 329 449 566 626 675 751 763 915STEEL 37 61 73 43 93 48 54 92 136 131 61 64 112 283OTHER 106 130 163 224 369 394 398 525 696 625 553 1295 1096 1848

NON-CLASSIFIED 60ODS ... ... ... ... 0 0 2 2 2 0 0 2 8 5

TOTAL MERCHANDISE EIPORTS 1290 1366 1666 2072 2853 3062 3656 4650 6064 8818 15133 19420 21230 21399

NON FACTOR SERVICES 1829 2036 2461 3084 3615 3731 4270 4103 4961 6494 8473 9659 6028 5444BORDER TRAOE 1050 1176 1313 1526 1650 1925 2267 2076 2364 2919 3722 4770 2276 1627TOURIS4 415 461 563 724 842 800 836 867 1121 1443 1671 1760 1406 1625ASSEMBLY INDUSTRY 83 102 156 239 375 332 366 345 452 638 771 976 851 930OTHER 280 297 430 595 748 674 903 916 1024 1494 2309 2153 1495 1363

TOTAL 3117 3402 4127 5156 6469 6793 7927 8754 11025 15312 23606 29079 27258 26843

MEMO ITEH

MERCHANDISE EIPORTS 1290 1366 1666 2072 2853 3062 3656 4650 6064 8818 15133 19420 21230 21399PUBLIC 211 247 295 308 615 997 892 1257 2604 5151 11538 15847 17789 17321PRIVATE 1078 1119 1371 1764 2239 2166 2764 3393 3459 3667 3595 3573 3441 4078

NOTE: ZERO S16NIFIES VALUES LESS THAN 0.5.SOURCE: BANK OF NEIICO.

BEST COPTl FTfT

TABLE 3.3.2 EIPORTS OF 6OODS AND NON-FACTOR SERVICES

I SHARES EASED GM CURRENT PRICES I

l970 1971 1972 1973 1974 1975 1976 1977 1978 1979 190 1981 1992 1913

AhRICULTURE 13.54 12.64 12.36 12.14 9.58 10.58 13.38 13.50 11.96 10.55 5.96 4.74 4.02 3.96OF UHICH:COTTON 3.97 3.53 3.59 3.22 2.81 2.59 3.37 2.23 2.80 2.02 1.36 1.06 0.67 0.43COFFEE 2.76 2.39 2.09 3.05 2.43 2.72 4.79 5.24 3.50 3.75 1.76 1.15 1.27 1.80TOMATOES 3.46 2.65 2.40 2.47 1.46 1.95 1.78 2.46 1.80 1.35 0.79 0.96 0.56 0.42

LIVESTOCK I FISH 6.44 5.97 6.72 5.40 3.62 2.55 1.45 1.50 1.76 1.06 0.51 0.36 0.50 0.52

METALS AND MINERALS 5.91 4.60 4.37 3.54 5.91 3.06 2.64 2.48 1.93 2.21 2.17 2.33 1.84 1.66

PETROLEUM 4 GAS 1.23 0.92 0.52 0.49 1.90 6.44 6.81 11.35 16.09 25.96 44.23 47.56 59.07 56.41

MANUFACTURED 6GODS 14.26 16.02 16.40 12.62 23.19 22.44 21.82 24.28 23.35 17.90 11.24 11.79 12.42 16.84OF WHICHt

FOOD INDUSTRY 4.62 4.74 4.34 4.26 5.40 6.69 6.70 7.29 6.69 5.22 3.27 2.34 2.60 2.63TEXTILES 1.24 1.50 1.68 3.26 4.14 2.48 2.29 2.06 1.72 1.37 0.95 0.62 0.55 0.59CHEMICALS 2.61 2.65 2.48 2.95 4.04 3.02 2.97 2.75 2.27 2.19 1.65 1.57 2.04 2.26MACHINARY 1.17 1.51 2.99 2.96 2.63 3.73 4.15 5.13 5.13 4.09 2.96 2.58 2.90 3.41STEEL l.19 1.90 1.76 0.83 1.29 0.71 0.68 1.05 1.24 0.86 0.26 0.22 0.41 1.06OTHER 3.42 3.92 3.95 4.35 5.69 5.81 5.02 6.00 6.31 4.09 2.34 4.45 4.02 6.85

NON-CLASSIFIED 6000S ... ... ... ... 0.01 ... 0.02 0.02 0.01 ... 0.00 ... ... 0.02

TOTAL MERCHANDISE EIPORTS 41.37 40.15 40.37 40.19 44.11 45.08 46.13 53.12 55.00 57.59 64.12 66.79 77.09 79.72

NON FACTOR SERVICES 58.63 59.85 59.63 59.82 55.99 54.92 53.97 46.89 45.00 42.41 35.89 33.22 22.11 20.28BORDER TRADE 33.69 34.57 31.81 29.60 25.51 28.34 28.60 23.72 21.44 19.06 15.77 16.40 8.35 6.06TOURISH 13.31 13.55 13.64 14.04 13.02 11.78 10.54 9.90 10.17 9.43 7.08 6.05 5.16 6.05ASSEMBLY INDUSTRY 2.66 3.00 3.77 4.64 5.90 4.89 4.61 3.94 4.10 4.17 3.27 3.36 3.12 3.09OTHER 8.98 8.73 10.41 11.54 11.56 9.92 10.13 9.32 9.29 9.76 9.78 7.41 5.48 5.08

TOTAL 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

MEMO ITEM

MERCHANDISE EIPORTS 41.37 40.15 40.37 40.18 44.11 45.09 46.13 53.12 55.00 57.59 64.11 66.78 77.99 79.72PUBLIC 6.78 7.26 7.16 5.9S 9.50 13.20 12.25 14.36 23.62 33.64 40.98 54.50 65.26 64.53PRIVATE 34.59 32.89 33.22 14.21 34.61 31.89 34.97 38.76 31.38 23.95 15.23 12.29 12.62 15.19

NaTE: ZERO SIGNIFIES VALUES LESS THAN (0.51.SOURCE: BAD OF MEXICO.

BEST COPY AVAIIf -

TABLE 3.3.3 EXPORT OF GOODS AND SERVICES IY SECTOR OF ORIGIN

IILLIONS OF 1980 REISI

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 192 1983

tOTAL 202.57 206.55 235.30 261.46 264.96 241.92 276.82 316.70 390.99 455.24 537.24 08.95 711.92 883.08

GOODS 110.70 113.35 127.18 131.36 142.30 128.07 136.27 154.94 227.13 271.93 351.98 411.70 496.60 627.74

AGRICULTURE, FORESTRYFISHING 16.49 15.18 17.31 17.29 13.57 12.48 13.48 16.30 20.65 18.32 16.11 14.87 17.09 18.07

MINING 44.11 44.04 44.55 39.80 67.11 72.59 67.38 85.74 114.17 156.18 241.11 305.86 378.44 452.49OF I2ICHa OIL 19.30 10.22 4.79 2.24 13.07 25.43 29.14 49.81 89.00 129.58 216.42 283.43 377.41 442.35 _

MANUFACTURING 50.10 53.27 61.59 70.20 69.98 59.44 65.72 71.29 92.31 97.43 94.76 90.97 101.07 157.18 g

SERVICES 91.88 93.20 208.22 124.10 122.66 113.85 140.55 161.76 163.86 183.30 185.27 197.25 215.33 255.34

ASSEIIKY INDUSTRY 3.62 1.10 8.92 13.33 14.20 15.69 18.48 19.9 15.75 23.09 17.76 19.60 19.49 25.95NON-MONEIARV SILVER

ANO SOLD 17.76 14.35 14.42 13.03 14.88 25.64 17.75 19.74 21.91 20.62 19.38 23.19 21.36OTHER SERVICES 70.50 74.75 64.77 97.74 93.59 82.51 104.32 122.03 126.21 144.59 148.13 154.45 174.43 229.39

MEMO ItEINON-OIL EIPORTS 233.27 196.33 230.50 259.22 252.89 216.49 247.63 266.88 302.00 325.66 320.82 325.52 334.52 440.74NON-OIL MERCHNODISE EIPORT 91.39 103.13 122.39 135.12 129.23 102.64 107.13 205.13 138.14 142.35 135.56 128.27 119.11 185.39

Notet the data foe the constant price series adve Aem ultaieu froo 6Fr (Cuustas hcioaalmsl. There aredtscrepancies beiteea the Oank of Mt:to and the 5?P data, shici are dve tC differmit classificationsby these sourges.

SOUlCE. lanR Estacates

BEST COPY AVAIUBLE

TABLE 3.3.4 EXPORT OF GOODS AND SERvICES BY SECTOR OF ORIGIN

(IIPLICT PRICE INDEX 19802100, domestic currency

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1992 1983

TOTAL 17.00 18.13 19.35 22.23 28.56 31.35 42.05 60.25 62.59 75.41 100.00 115.21 229.97 393.44

600DS 14.55 15.01 16.34 18.82 25.01 27.89 38.06 64.36 60.76 73.74 100.00 115.22 240.24 441.12

AGRICULTURE, FORESTRYFISHING 19.96 21.13 23.28 25.61 26.91 29.18 41.55 68.60 72.69 97.88 100.00 116.91 366.97 919.86

MINING 5.58 5.24 5.63 6.71 7.75 13.18 19.97 35.02 41.93 61.45 100.00 116.53 250.83 445.97OF WHICH: OIL 4.73 4.74 4.76 4.91 2.06 21.52 28.82 44.98 45.37 66.27 100.00 115.09 236.69 443.09

MANUFACTURINS 20.69 21.59 23.11 26.72 39.20 37.87 49.92 82.09 81.37 98.89 100.00 110.53 179.19 372.14

SERVICES 19.94 21.91 22.90 26.00 32.69 35.24 45.92 56.31 65.12 77.89 100.00 115.19 205.95 276.22

ASSEMBLY INDUSTRY 27.93 31.09 23.07 26.18 39.05 36.17 44.69 59.38 65.39 80.36 100.00 123.10 244.07 413.99NON-MONETARY SILvER

AND GOLD 4.67 4.08 4.46 6.69 12.50 11.63 14.79 21.94 25.97 53.97 100.00 53.34 103.45 n.j.OTHER SERVICES 23.37 24.94 26.02 28.55 34.93 39.54 51.43 61.37 71.86 .l4.99 100.00 123.47 214.24 260.64

NON-OIL EXPORTS 19.29 18.92 19.66 22.39 29.94 32.50 43.60 63.10 67.66 79.04 100.00 115.32 222.19 343.62NON-OIL MERCHANDISE EXPORTS 16.63 16.03 16.79 19.05 27.33 29.47 40.57 73.54 70.67 80.53 100.00 115.52 251.54 436.44IMPORT PRICE INDEX 20.13 21.29 22.55 25.41 30.90 34.55 44.65 69.17 76.41 96.94 100.00 114.69 143.76 626.29TERMS OF TRADE INDEX

NON-OIL EXPORTS 90.95 88.41 87.17 98.09 96.09 94.08 97.66 91.22 98.55 90.92 100.00 100.55 91.15 54.87NON-OIL MERCHANDISE EXPORTS 92.61 75.28 74.48 74.99 88.44 85.30 90.87 106.32 92.49 92.63 100.00 100.73 103.19 69.69

e/ Estimates. Deflators for 1983 have been obtained by using current price data from the balance of payments converted into dosestice currency at the aritheetic averageof the controlled and earket exchange rates. Constant prices have been estimated froe SPP data In 1970 Mexican Pesos.

SOURCEi Bank Estimates

BEST COPY Alf r -

TABLE 3.3.5 EXPORT OF GOODS AND SERVICES BY SECTOR OF ORIGIN............................. .............................. ........ ........... ....

(ANNUAL GROWTH RATE IN 1950 CONSTANT SHEX

el1971 1972 1973 1974 1975 1976 1977 1978 1979 1960 1981 1982 1983

TOTAL 1.96 13.92 11.12 1.34 -8.70 14.43 14.41 23.46 16.43 18.01 13.35 16.91 24.04

GOODS 2.40 12.20 8.00 3.60 -10.00 6.40 13.70 46.60 19.72 29.44 16.97 20.62 26.41

AGRICULTURE, FORESTRYFISHING -7.94 14.41 -0.42 -21.50 -0.04 8.02 20.92 26.64 -11.26 -12.07 -7.70 14.92 5.73 N

MINING -0.15 1.17 -10.68 68.64 8.16 -7.17 27.23 33.17 36.79 54.38 26.86 23.73 19.57OF NHICHi OIL -47.05 -53.10 -53.30 483.96 94.51 14.59 70.94 76.67 45.60 67.02 30.97 33.16 17.21

MANUFACTURING 6.31 15.62 13.99 -0.32 -15.06 10.56 8.46 29.51 5.55 -2.75 -4.00 11.10 55.52

SERVICES 1.44 16.01 14.78 -1.16 -7.18 23.46 15.09 1.30 11.97 1.07 6.47 9.16 18.59

ASSEHBLY INDUSTRY 13.22 117.69 49.36 6.50 10.53 17.61 9.13 -21.22 14.96 -1.95 10.41 -0.61 33.18NON-MONETARY SILVER

AND GOLD -19.17 0.46 -9.67 14.16 5.15 13.47 11.22 10.96 -5.86 -6.02 19.66 -7.91 n.a.OTHER SERVICES

NON-OIL MERCHANDISE EXPORTS 7.13 17.41 12.46 -2.63 -14.05 14.41 7.75 13.16 7.84 -1.49 1.46 2.76 31.76

SOURCE: Bank Estieates

' !' I P Is X

I 1E 4. 1 FNT1 <4AIE D B .'1' I OL.)ER. C Lt iP. IE S

EXTERNAL PUBLIC DEBT OUTSTANDING INClAUDINtG UNDISBURSED AS OF DEC. 31, 1982DEBT REPAYABLE IN FOREIGN CURRENCY ANU GCODS

(IN THOUSAtNOS OF U.S. IJdLLARS)

D E B T O U T S T A N D I N G : I N A R R E A R STYPE OF CREDITOR ----------------------------------

CREDITOR COUNTRY DISBURSED :UNDISBURSED: TOTAL PRINCIPAL INTEREST----------------- . .. b................. .... b .. .................. .... .............. . --------- ............ " .... *.......

sUPPLIERS CREDITSARGENTINA 363 408 771 -CANADA 27 - 27 -

DENMARK 86 3 89 *FRANCE 208 - 208 208 17GERMANY, FED.REP. OF 28,377 13.323 41,700 3,126 1,269ITALY 98,552 27.547 126,099 21.553 1,242JAPAN 5,743 - 5,743 544 6NE THERLANDS 3,075 - J,075 3,075 178NORWIAV 7,636 - 7.636 - -

PANAMA 12,334 - 12,334 2,326 173SWEDEN 677 2.817 3,494 -SWITZERLAND 7,805 33.562 4t,3G7 131 79Ul4ITEn KINGDOM 110,502 28,518 139,020 9,720 2,056UNITED STATES 32,399 1,565 33,964 11,578 1.098USSR 5,417 13 5,430 644 43YUGOSLAVIA 1,974 - 1,974 55MULTIPLE LENDERS 33,053 - 33,053 32,795 88

TOTAL SUPPLIERS CREUITS 348,22R 107,756 455,984 85.755 6,249

FINANCIAL INSTITUTIONSAUSTRIA 16,0R7 189 16,25G 506 57BAHAMAS 45,445 - 45,445 4,084 1.339BELGIUM 33G,917 67,002 403,919 91,474 749BRAZIL 40,439 55.417 95,85G 777 80CANADA 1.969,644 6,300 1,975,944 5,296 60.706FRANCE 1.080,333 59,926 1,140,259 98,931 8,154GERMaN DEM. REP. 3.509 - 3.509 - -

GERMANY, FED.REP. OF 386,822 14,729 401,551 45,247 5,73dISRAEL 161,000 161,000 160.000 19,122ITALY 140,713 1 140,714 10,442 2,598JAMAICA 15,417 - 15,417 306JAPAN 1,348,739 - 1,348,739 91.580 6,989KUWAIT 31,919 - 31,919 2,927LUXEMBOURG 282,041 3,000 285,04f 236 1,249NETHERLANDS 43.646 - 43,646 - 2,215SINGAPORE 10.000 - 10,000 - -

SPAIN 14,510 16,322 30,832 20 3SWEDEN G1,545 16,791 98,336 36.452 3.483SWITZERL.AND 233,259 4,024 237,2B3 27,761 584lUNITED KINGDOM 3,415,R23 117,048 3,532.871 122,152 113.374UNITED STATES 4.346,371 157,889 4,504,260 314.517 75,257MUl.rlPLE LENDERS 24,181,327 429,903 24,611,230 2,156.848 389,963

TOTAL FINANlCIAL INSTITUTIONS 38,1a5,486 948,641 39,134,027 3,167,f56 690,740

BEST COPY AVAILABLE

'DETI:. 4,1 EM'XhA1 DISIT BY I FMER COU&'CS (cont.)

EXTERNAL PUBLIC DEBT CUTSTANDINn INCLUUING LJNDISBURSED AS OF DEC. 31. 1982DEBT REPAYABLE IN FOREIGN CURRENCY AND GOODS

(IN THOUSANDS OF U.S. DOLLARS)

D E B T O U T S T A N D I N G : I N AR R E A R STYPE OF CREDITOR . -----------------------CREDIlOR COUNTRY DISBURSED :UNDISBURSED: TOTAL PRINCIPAL : INTEREST

BONDSBAHRAIN 346 - 346 -FRANCE 318,545 - 318,545 -GERMANY, FED.REP. OF 907.666 - 907,666 21,039 8,491JAPAN 485,938 - 485,938 15.385 17,060KUWAIT 411.357 - 41.357 485LUXEMDBOURG 350,000 350,000 - -NETHERLANDS 28,577 - 28.577 -SPAIN 50,000 - 50,000 - 4,082SWITZERLAND 720,167 - 720,167 - 1,504UNITED ARAB EMIRATES 54,482 - 54,482 -UNITED KINGDOM 622,250 - 622,250 132 14,182UNITED STATES 612,597 - 612,597 17,027 2,443MULI.TIPLE LENDERS 210,590 - 210.590 2,265

TOTAL BONDS 4.402,515 - 4,402,515 54.068 50,034

MULTILATERAL LOANS 0BIS 926,000 - 925,000 -ISRD 2,698.909 2,185,233 4,884,142 - -IDB 1.342,721 576,265 1,918,986 -

TOTAL MULTILATERAL LOANS 4,966,630 2,761,498 7,725,128 -

BILATERAL LOANSAUSTRALIA 2,778 - 2,775 281 30BRAZIL 19,359 3,919 23,278 3,576 871CANADA 178,725 96,401 275,126 2,450 578FINLAND 194 - 194FRANCE 46,852 4,858 51,710 94 218GERMANY, FED.REP. OF 42,832 42,197 85,029 1,392 623JAPAN p01,419 211,504 712,923 20,851 2,9G9NETHERLANDS 6,744 - 6,744 - 9GSPAIN 226,848 17,521 244,369 38,679 1.540SWEDEN i17,886 - 17,886 -UNITED STATES 1,033,891 323,538 1,357,429 14,640 5,917USSR 7,928 1,475 9,403 4,322YUGOSLAVIA 1,062 230 1,292 - -

TOTAL BILATERAL LOANS 2,086,518 701,643 2,788,1f1 86,285 12,842

TOTAL EXTERNJAL PUBLIC DFRT 49.989,377 4,519,438 54,508,815 3,393,664 759.e65

NOTES: (1) ONLY DEBTS WITH AN ORIGINAI. OR EXTENDED MATURITY OF OVER ONE YEAR ARE INCLUDED IN THIS TABLE.(2) DEBT OUTSTANDING INCLUDES PRINCIPAL IN ARREARS BUT.EXCLUDES INTEREST IN ARREARS.(3) THE FOLLOWING UNCOMMITTEn PARTS OF FRAME AGREEMENTS AND STANDBYS ARF NOT INCLUDED IN THIlS TABLE.

I I .1 1 aaF r n 1 1 n 1 I ! 1 '

TABLE 4.2.1 EXTERNAL DEDT BY LENDING INSTITUTION

SERVICE PAYVMN.TS, COI.1-'1ITMENTS, DIcttijRSE. l',5 AND (. llZTANOT&U AMO'UJN TS OF EXTERNAL,PUDLIC DE0T

PROJECTIONS CASEO ON1 OEBT OUTSTANDING INCLUDIN3 UNOS.UURSED AS OF OEC. 31. 1932D1EBT REPAYABLE IN FO;E IGo CURRENCY AND GOODS

(IN THOUSANOS Of U.S. DOLLARS)TOTAL

YEAR : DEOT CUISTANDING AT T R A N S A C T I O N S D U R I N G P E R I00 O OTHER CHANGES: 8CC!':NINZ. Of PERIOD_l*Zb.................. ............................................................ ....................... _ *_

DISSURSEO : INCLUDING : COPMIT- : DISBURSE- : S E R V I C E P A Y M E N T 5 : CANCEL- : ADs'UST-: L44Y ;UNOISSURSED: MENTS : M8NTS ......... ......... . . ---........- LATSCNS : MENrT

: :. : : : PRINCIPAL : INTERF.ST : TOTAL* : (1) : ~~~~~~(2) : () : (4) : () : (6) Is (7) 6 (9)

1973 3.916.981 4,733,490 3,202,940 2,246,612 729,665 34U.788 1,075,453 7,e92 1e5,§43197 .5,84,9557 7,.:0,022 3,299.882 3,073,441 623.519 573.148 l.19G.G67 8.863 436.86i1975 8,313,059 10.512,408 4,378,574 4.075,268 7G1,083 831.754 1,592,S43 174,590 119,457197*; ii,937,Zt2 13.035,3G6 5,671,767 *5,503,343. 10152,781 1,035,735 2,2d,584 o,696 -4,9:21'j77 15.93O,0S9 ¶8.291,273 8.941,503 6,751,131 2,2'18.430 1,313,449 3,951,079 2£0.271 404.S5).1078 :0,782.,52 25,149,C:3 9,43'3,312 8,573,070 4,400,441 1,817,678 6.224,113 88,701 085,$:4¶973 25,61,033 30,985,032 12,S03,053 10,761,335 7,110.996 2.854,637 9,?5,633 26-1.743 -C9.01G% 19^0 2e,241,790 2Z,413,303 7,0i5,980 8,602,'20 4,02fi,358 q.041,058 7.8G6,216 173.7C4 -2S0,.21;i9ut 33.550,848 38,938,311 13,260,607 13,432.462 3,778.035 4,702,696 8,480,730 122.988 a 3s, £$1092 42,7368405 47,G58,528 10,925,777 S1,162,823 3,072.598 5,891,742 8,904,340 61,679 -4&U,924 1983 50,412,225 54,9C.3,144 '

* * * ' ' w THE FOiLOWING FIGURES ARC PROJECTED.* d . . * w

*11e3 50,41,^25 b 4,9'3,144 - 1,454.900 8,090,:52 4,010,503 13,506.87 - -3.851.2121964 3),28G,S.S 42,215,530 - 928.869 5,746,430 3,8059234 9.607.G,Z4 -21959 34.4S,007 3G,467,140 * 743.467 5,9013303 3,370,450 9.2a337CS - 715iu 23,.297.164 30.593,347 - 619,068 7.244,P26 2,720,358 9,974.184 - -71987 22,571,3;0 23.209,014 - 362,409 7,987,124 2.097,411 10,084.535 - -131588 14,5s6,0O8 15,321,877 - 105.403 4,944,2G6 1,341,078 6,285,344 4 .1,C9 10,197,R0C5 10.377,Ui - 90,391 3,611,879 918,897 4,530,77G -:1250 6,684,312 6,765,720 56,976 1,507,360 616,833 2.124,193 - -1991 5,232,028 5,258,303 - 19,553 1,236,815 475,033 1,711,88 -41092 4.015.660 4.021.647 - '4.890 055,831 361,425 1,317.657 ' 2

. .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I

Tfl:S CCLUMN' SHOWS TYE AMOUONY OF ARITI.METIC IM3ALANCE 6N THE AMOUNT OUTSTANDING !NCLUDING UNIOZSEURSEO FRCM. ONEYCAQ TO ThE ?FXT. THE MoSr COMMoN CAUSES OF IMSALANCES ARE CHANGES IN EXCHANGE RATES AND TRANSFER OF DEBTSFRCM CNE CATEGORY TO ANOTHER IN THE TABLE.

*I_tv 1'lT 1

TABLE 4.2.2 EXTERNAL DEBT BY LENDING INSTITUTION

SERVICE PAYMENIS, COMll'l[!JS. J'.'l AND OU.STANJING AMUUNTS OF EXTERNAL PUBLIC DEBT

PROJECTIONS BASED ON DEST OUTSTAND2NG IINCIl.UDING UNDISBURSED AS OF DEC. 31, 1032DEBT REPAYABLE IN FOREIC.IN CURRENCY ANO GOODS

(IN THOUSA';OS OF U.S. DOLLARS)TYPE OF CREDITOR SUPPLIERS CREOITS

TOTALYEAR D DEBT OUTSTANDING AT T R A N S A C T I 0 N S D U R I N G P E R I 0 D : OTHER CHANGES

B OCGlNFNLN OF PERIOD

DISBURSED : INCLUDING : CCMMiY- : DISBURSE- : S E R V I C E P A Y M E N T S : CANCEL- : ADJUST-: OiLY :UNDISSURSED: MENTS MENTS , , -- LATIOeJS : MENT: : : ; : PRINCIPAL : INTEREST : TOTAL

(1) (2) : (3) : (4) : (5) (6) : (7) (8) (9)

1973 230.207 314,949 113,400 95,375 ' 82,039 20;777 102.816 6,792 25.9221974 331.S47 3GS,SC0 94,055 140.418 160,770 30.292 151,0;2 2,383 334.:C71075 522.079 633,469 167.731 1i6,5a4 1U4,309 35,839 200.148 9,5:8 -1S._-31c97G 527,854 603,790 .123,903 12G,073 150,G76 37,066 187,742 1,es3 12.C-E51977 512,205 52,C6'3 105.,23 149,671 154,149 .38,455 1S2.604 650 16,1.91*78 E522,402 552,076 133,307 93,923 135,042 39.783 174,825 2,173 -10.7451979 4C3,E36 545,412 20.026 70,750 126,718 44,502 171,2:0 16,421 -1,1:4419sO 411,202 427,155 108,848 47,422 112,018 42,238 154,256 8,SlO -6.016liG1 341,023 409,159 240,346 . 172,786 , 123,838 35,973 159,811 2.740 -11,6281932 373,736 511,299 43,792 68,561 90,590 30,597 121,187 - -4,60319a3 i352,13S 459,893

* 4t * 4t4 TfHE FOLLOWING FIGURES ARE PROJECTED * * 4 4 * *

1983 352,135 459.833 - 64,577 122,503 21,231 143,794 -89.1461534 207.256 24a,184 - 21,061 84,454 14,606 99d49 - -4195i 144,65G 163,726 , 11,670 40,643 10,438 51,0Jl - -i;a5 lis5,686 123,033 - 6.577 38,408 8,248 44,656 - -21537 85,353 8,f673 - 824 32,815 5,896 38.711 :- 11Va3 53,857 53,857 - - 19,368 3,543 22,911 - -

19339 34.4&9 34,439 - 7,411 2,637 9,043 -1530 27,073 27.07a - - 6,156 1,056 8,112 '11991 20,921 20,921 - - 4,861 1,52G 6,387 - ft1992 16,050 18,059 . - 4,799 1,151 5.950

* THIS COLUY'N SHOWS THE AMOUNT OF ARITHMETIC IMBALANCE IN THE AMOUNT OUTSTANDING INCLUDING UNDISBURSED FRCM ONEYEAR 10 THi- NEXT. THE MOST COMMON CAUSES Of IMBALANICES ARE CHANGES IN EXCHANGE RATES AND TRANSFER OF O£CTSFROM CNE CATcGORY TO ANOTffER IN THE TABLE.

BEST COI'r TTfV F 7

TABLE 4.2.3 EXTERNAL DEBT BY LENDIN6 INSTITUTION

SERVICE PAYMENTS, CCMMITMENTS, DISOURSECE:JTS AND OUTSTAI;DNG AMOUNTS OF EXTERNAL PU8LIC DEST

PRCO.JCTIONiS GASSED CN CE3T OUTSTANDING INCLUDING LJNDISEURSED AS OF DEC. 31, 1982DEST REPAYABLE IN FOREIGN CURRENCY AND GOODS

(IN THOUSANDS Of U.S. DOLLARS)TYPE OF CREDITOR BONDS

TOTALYEAR DEaI OUTSTA'IDINIG AT T R A N S A C T I O N S O U R I N G P E R I 0 : OTHER CHANGES

: e£GIN;N'= CF PZPIOD . :

: DISBURSED : INCLUDING COM.MIT- : DISBURSE- : S E R V I C E P A Y M E N T S : CANCEL- : ADJUST-: Ol;LY :UNDISGURSED: MENTS : MENTS :...........-...--.......: LATIONS : HENT: .: : : : PRI,NCIPAL : INTEREST : TOTAL :: (1) : (2) : (3) : (4) : (5) (6) : (7) : (8) : (9)

1';73 1A.5,375 4C7,075 134.553 155,053 50,442 33,4G5 88.907 - 29,1541574 5131.%70 E81,170 50,0000 0 ,000 50,.96 42.459 92,90 5 - 22,1321575 S02,803 602,003 139,883 179,83 37,958 40,410 84,36 - 16,7511976 617,980 687,C20 318,620 318,620 38.733 62,948 101,681 - 425,.i21'.77 393,709 953,799 1,2G2,318 1,124,097 45.990 91,964 137,962 - 170.4431070 2,237,782 2,3n0,5G2 205.140 461,749 64,904 189,338 2t4,322 - 2S,2i1979 2,935,117 2,9-,117 161.805 1G1.805 259,586 229,439 489.025 - 16,31310s0 2.2J3.654 2,S23,654 235,547 235,547 121,163 212,689 333,857 - -135,34412'31 2,002.668 2,002,689 1,'02.413 1,502,413 ¶3G,874 218,81 35E5,692 ' -2,5%61SS2 4,005.7t2 4,00,712 1,121,962 1,121,962 589.137 413,835 1,002,972 --36.0221983 4,402,515 4,402,515

' ' * * THE FOLLOWING FIGURES ARE PROUECTEO * * * * *

1533 4,402.5:5 4,402,515 - 411,852 464,672 876,524 -54,Cs;ICR4 3,9.6,534 3,93o,554 - - 550,2G5 428,372 978,637 . 61535 3.3D.5335 3,326,335 - - 285,675 308.115 673,7GO - 115 _G 3,100,631 3ICO,&6u1 - 402,405 359.686 762,031 31937 2,008,259 2.693,259 - - 532j365 315,675 848,040 - -1s80 2,165.094 2,6C5,894 - - 620,383 255,053 075,436 - 513.89 1,545,516 1,545,516 157,347 196,135 353,482 - -1990 1,388,169 1,328,169 - - 343,747 183,651 527,398 - 11991 1,044,423 1,044,423 - - 221,853 142,023 363,876 - 21992 822,572 522,572 - - 314,741 107,657 422,598 -1

* THIS COL'JM.4 SHOWS THE AMCUNT OF ARITHMETIC IMBALANCE IN THE AMOUNT OUTSTANDING INCLUDING UNDISBURSED FROM ONEYEAR TO THE N'XT. THE MOST CCMMON CAUSES OF IMALANCES ARE CHANG£S IN EXCHANGE RATES AND TRANSFER OF DEOTSFR2M ONE CATEGORY TO ANOTHER IN THE TABLE.

BESI Mlfl I¶w: r

TABLE 4.2.4 EXTERNAL DEBT BY LENDIN6 INSTITUTION…

SERVICE PAYMENTS, CO1MMITMENTS, DISBURSEMENTS AND CUTSTANDING AMAOUNTS OF EXTERNAL PUBLIC DEBT

PROJECTIONS BASED ON OEBT OUTSTANDING INCLUDING UNDISBURSED AS OF DE,C. 31. 1982CEBT REPAYABLE IN FOREIG.N CURRENCY AND GOODS

(IN THOUSANDS OF U.S. DOLLARS)TYPE OF CREDITOR FINANCIAL INSTITUTIONS

TOTALYEAR : OEPT OUTrTAN'DlI'G AT : T R A N S A C T I O N'S D U R I N G P E R I O O OTHcR CHANGES

: BEGINNING OF PERIOD._.__ . ...__.__,e.............................. ... ........ :_.. .......... ................ e.................................................. .......................

DISBURSEO : ItNCLUDING : COMMIT- : DISBURSE- : S E R V I C E P A Y M E N T S : CA'CEL- : ADO'JST-ONLY :UXDIS3URSED: MENrS MENTS ...........- :..-.......:-----------: LATIOtiJS : MENT

:4 : : : :PRINCIPAL : INTEREST : TOTAL: (1) : (2) : 3) : () : (5) : (6) : 7 : (8 : (9

1973 * 1.7G3,178 1.971,928 2.214.009 1,712.895 400,991 188,778 669.769 103 84.CO01974 3,0S5,119 3,780.533 2,630,042 2,491,544 294,845 387,717 692.5G2 3,231 I.,1975 5.257,740 6.186.923 3.373.423 3,217,943 437,874 612,675 1,050,549 73,735 -e3.51076 7.997,484 8,979.142 4,414,910 4,635,903 833,253 814.926 f,648.179 42,775 *67.73;1977 1t.783,4C06 12,450,208 7.091.181 4,597.327 1.881.237 973,747 2,854.934 47.269 92.8.11978 1-1.959,847 17,705.744 8.019,G74 7,534,318 4,010.429 1,322.606 5.333,035 84.113 424.2391959 13.609,723 22.055.2G5 11,600,399 9.790,294. 6,287.341 2,299,346 8,586.687 15S,143 32,7291)9t 22.311,037 27,245.C09 4.090,452 7,285.504 3.504,.201 3.274.233 6.778.434 101.351 '154 1351SS 25.561,7.1S 2n,37,.704 9,5G4,484 10,500,745 3,175.0.63 4,083,640 7.250.703 75,899 -372.3;31532 33,015,502 34,3:7.028 7.470,466 7,788,558 1,996,0OG 5,010,619 7,000,635 10 -203,604 01983 38,534,922 39,493,4C4

* * ^ * * +THE FOLLOWING FIGURES ARE PROJECTED * * a * * *

1983 38,554,922 30.493,404 - 465.930 6.711..26 3,538,530 10,249.856 - -3,439,0571934 28,9'iO.6tS 29.343.0'1 ' 137,357 4,400,457 2,905,531 7,205,938 -1K95 24.0C7,5C3 24,042,014 - 85,054 4.81l,138 2,455,509 7,266,72719'6 %9,971.!;C2 20.131.4?6 - 62,497 6,037,131 1,C50,812 7,8S5,943 - -515a7 13:,t. ,1 14.004i,310 69,9-8 6.G52.790 1,3O3,507 7,956.397 -9159i8 7,4t4,.01 7,4'.1,541 - 27,480 3,617,G.;C 651,991 4,260.6,6 - -3iSag 3,E23,870 3,E23,370 * ' ' 2,794,535 333,333 3,127,916 - .-iSCO 1,029,:£4 1,029,284 - , 500,585 92,249 * 592,834 -I 1991 523,700 623,700 ' ' 411,242 41,4S1 452,693 '1992 117,458 117,458 - - 76,385 10,770 87,155 - I

* '-- : S tWS THE &MCUNT OF AqiTrIMETIC IMBALANCE N THE AMOUNT OUTSTANDING INCLUDING UNDISBURSEO FRCM CNE''-.' '-T. HE V.ST CCMMDON CAUSES OF IM2ALANCES ARE CHANGES IN EXCHANCE RATES ANO TRANSFER CF DEBTS

*- .. :-i t To L1.3x3T IN THE TABLE.

nITST CVy T,q,Ff r-

TABLE 4.2.5 EXTERNAL DEBT BY LENDIkG INSTITUTION

SERVICE PAYMENTS, COMMITMENTS. 61SBIRSEPSMrtITS AND CUTSTANDING AMOUNTS OF EXTERNAL PUBLIC DEBT

PROJECTIONS BASED 0 OEST OUTSTANDING INCLUDING UNDISBURSED AS OF DEC. 31, 1982DEaT REPAYABLE IN FOREIGN CURRENCY AND GOODS

(IN THOUSANOS OF U.S. DOLLARS)TYPE OF CREDITOR OILATERAL LOANS

TOTALYEAR : DEST CUTSTANDING AT : T RA N S A C T I O N S D *J R I N G P E R IOD : OTHER CHANGES

: EESGINNING OF PERIOO D .e ~~....................... ................... ............................ ... ... _ ; .......................

DISCURSED : INCLUDING : COMMIT- : DISBURSE- : S E R V I C E P A V M E N T S : CANCEL- : ADO'UST-ON;LY %UNDISGURSCO: R.ENTS : MENTS ----- * ------ *---- -------- LATIONS : MENT

; : . : : : PRINCIPAL : INTEREST : TOTAL(1) : (2) : (3) : (4) : (5) : (6) : (7) : (8) . (9)

1073 400.632 44G,024 381,429 77,175 62.532 21,683 84,215 797 31.1341-4 421.305 79s,30a 134,736 186,6417 63.11t 24,203 87,314 2,636 2.:.71975 554.03- 9 CG6,544 2GB,778 213,552 50,685 30,581 90.266 91.337 *6-.!2176 699.802 974,778 233,073 165.291 62.091 42,577 104,668 10,732 13Q.C1977 810.845 1,148,108 19a.172 170,536 77,104 55.466 132,570 4,161 84.94:1970 943,.405 1,349,959 334,415 161,150 97.026 69.647 16G,673 2,415 125.2761979 c1.07,805 1.710,209 274,210 241,896 314.503 70,849 3S5,352 93,176 -91.7011980 .30,060 1,405,039 798,156 . 392,181 147.171 76,180 223,351 57.552 34.51810a1 1.2U9,197 2.112,990 640,859 578,264 175.969 107,929 283.898 14,174 -5654601082 1,CC9,741 2,507,228 639,720 657,355 195,397 155,605 351,002 48.503 -22,8571083 2,13C.020 2.879,1.44

* - * - * * THE FOLLOWING FIGURES ARE PROJECTED * * e * * * *

19a3 2,136,020 2,879,144 - 342,153 457.222 155.403 612.625 ' -268,0421584 1,32,6G45 2,152.990 - 179,492 373.013 144,287 517.300 ' -61855 1,G33,116 1,779.G1 - 103.531 208,086 129,903 413.053 -

1Q5G 1,448,s31 1.491,575 * 29.579 277,469 113.073 300,542 - -31527 1.2C0.C62 1,214,403 - 9.cs9 257,364 92,292 349,6S6 -61S;8 952,996 957,033 1,7a6 160.088 73,392 233,480 - -21089 794,682 7S6,943 - 1,267 147,408 60,318 207,816 - -31590 648.448 649,442 * 817 131.568 48,166 179.7341901 517.693 517,870 - 177 111,677 37,441 149,118 -11992 40.1092 406,192 8 '8,245 23,561 116,806 -2

* THIS COLUMN SHOWS THE AMGUNT OF ARITHMETIC IMBALANCE IN THE AMOUNT OUTSTANOIN2 INCLUDING UNDISSURSED FROM ON!YEAR TO T;IE NEXT. THN. MOST COMMON CAUSES OF IMBALANCES ARE CHANGES IN EXCHANGE RATES ANO TRANSFER OF DEBTSFR*V,4 O!*E CATEGCORY TO ANOTHER IN THE TASLE.

I I Ii TT-

TABLE 4.2.6 EXTERNAL DEST BY LENDING INSTITUTION

SERVICE PAYMENTS. COMMITMENTS. OISBUdSEMEtJTS AtJD OUTSTANDING AMOUNTS OF EXTERNAL PUBLIC OEBT

PROJECTIONS BASED ON DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF DEC. 21, 1982DEBT REPAYABLE IN FO.EIG.N CURRENCY ANDOGOODS

(IN THOUSANQS OF U.S. DOLLARS)TYPE OF CREDITOR MULTILATERAL LOANS

TOTALYEAR : DEBT OUTSTANDING AT : T R A N S A C T I O N S D U R I N G P E RI : O OTHER CHANGES

: BEGI?J)JNG OF PERIOD~~~........ ................ .. ..... ,....... ................... _ .......... ....................... ._................................................ . .

DISBURSEO ; INCLUOING : CONMIT- : DISeURSE- : S E R V I C E P A Y M E N T S CANCEL- : ADJUST-OtNLY :UNOISUURSEO: MtEt4TS : MENTS .........---- : LATlONS : MENT

:. i :: : PRINCIPAL : INTEREST : TOTAL(1) : (2) : (3) : (4) ': (5) (6) : (7) : (8) : (9)

1973 1,006,061 1,542,282 359,549 205.114 49,4'6 75.,270 124.75G - 14,904074 1,176,554 1.867,249 391,049 274,832 50.122 68,107 133.229 613 13.01i1975 1,414,278 2,220,579 431,759 277.006 59.176 10i.181 165.357 -- 7431976 1,624,152 2,585.206 581,172 257,39G 68,03G 128,278 196,314 3,730 *11,7c31077 1.824,834 3,10a,380 283,OS3 300.500 79.942 153,817 233,759 198,C31 40.421193 2, 095. 0o6 3.152,767 64 ,C8 301.930 98,960 190.304 2S3.264 - 68.5241079 2.3C4,762 3.7G3O,29 8C1.512 49G.590 122,848 210.5O1 333,349 - -1i,1431930 2.725,937 4.431,G46 982,977 *641,956 141.800 236,516 378.318 6,051 -29,5:3 l1931 3.i'5,191 5.236,7G9 1.312,S05 670.2.14* 166,291 256,335 422,626 30,173 -36,3471082 3,666,254 6.316,463 1,649,837 1,526.387 201,451 281,086 482.544 12,161 -24.553 01983 4,66,030 7.728.128'

* * * ' w s THE FOLLOWING FIGURES ARE PRODJECTED * * * *

1933 4,9C6,G30 7.723.128 - 5O2.131 1.193,339 430.669 1,624.053 - 219i4 4,355,375 6,534,741 - 50. irJ 240.231 366.349 70u.550 - 2

1935 4,C05,304 6,104,512 - 543,212 487,766 356,333 874,09 9 61035 4,E90,754 5.70G,752 - 420.418 491,413 309.539 820,952 - -

1087 4,E39,761 5.215,239 - 281.895' 511,790 379.951 891,741 * 21S38 4,2S9,870 4.703,552 - 166,137 526,759 357.099 CB3385S _192' 3,S52.24a 4,173,793 - 97.124 505.038 326,574 a31,612 -

ISCO 3.591.3S3 3,071,755 - 55.159 525,304 200,811 81u,115 -3

1991 3,121,19i 3,146,454 - 19,376 487,182 252,592 739.774 - -61992 2,653,379 2.650,266 - 4,890 471,661 213,487 685,148 -

* TH:S CGLU!9N SHOW-:S THE AMOUNT OF ARITxIKIETIC lRALAXCE 114 IAE AMOUN4Y OUTSTANDINO INCLUDING UNDISSURSED FROM ON.YEAR TO THE NEXr. 7HE MOSST COMIMN CAUSES Oe IM8ALANCES APE CHANGES ZtN EXCHANGE RATES AND TRANVFER CF 023TSFROM ONE C&TEGORY TO ANOTHER IN THE TA3LE.

.rN~ C~A)T! .U VViIm,o r,P qIrF-F

TABLE 4.2.7 EXTERNAL DEBT BY LENDING INSTITUTION

SERVICE PAYMENTS. CO1MMITMENTS, CISCURSEMENTS AND OUTSTANDING AMOUNTS OF EXTERNAL PUBLICdOEST

PROJECTIONS BASED ON DEBT GUTSTANDI.:G INCLUDING UNDISBURSED AS OF DEC. 31, 1982DEBT REPAYABLE IN FCREIGN CURRENCY AND GOCODS

(IN THOUSANDS OF U.S. QOLLARS)TYPE OF CREDITOR MULTILATERAL LOANS

CREDITOR COUNTRY IBROYEAR : DEBT OUTSTANOING AT : T R A N S A C T I O N S D U R I N G P E R I O : OTHER CHANGES

: BEGINNING OF PERICD............................... ...................... ..... ..................................... ___.. ._,,,, ......................... ,, ..... ,_,_____

OISEURSEO : INCLUDING : CGMMIT- : DIS2URSE- : S E R V I C E P A Y M E N T S : CANCEL- : ADJUST-ONLY :UNDISBURSED: MENTS : MENTS :----------.- -........... : ---- -: LATICNS : VEXNT

PRINCIPAL : INTEREST : TOTAL: (1) : t~~2). : () : (4) : () : (6) : (7) : (8 : 9

1973 723.479 1,077.810 270.000 117.578 32,594 55,263 87,857 - -

1974 so8,463 1,315.216 289.000 1963.254 31.558 .62,57D 94.1i4 6131975 973,159 1,572.045 3;0,000 188,447 3d.509 77,703 116,212 - -1976 1,123.037 1,843.6Z6 410,000' 141,815 42,403 89.4:0 131.28 -2'1977 1.222,e03 2,211,129 162,000 201ts55 50.100 10i,077 152.057 195.2Z3 -1978 1.374,160 2.127,696 494.5C0 167.312 60.633 123,086 183,719 - -19-:9 1,4180.8E 8 2.5G.t,C53 527,0C0 325,682 . 75.977 144,453 220.430 - -1030 1.730,5S.4 3,012.,57G 625.000 421.323 89.099 165,90S 255.007 - -1981 2,G0C*.2RO 3.548,477 1,021,000 460.006 106.428 176,733 283,161 23.789 -119S2 2.416.866 4,439,259 586,670 % 4t4,799 132.762 194.744 327,SC0 9,028 31iof3 2.698.909 4.084.142

* * a * * * THE FOLLOWING FIGURES ARE PROJECTEO * * * * * l

1923 2.G93.9C9 4,8894,142 - 420,043 197,417 232,476 4129.893 -1634 2,922.435 4,0G0,725 - 48.G.10 2GO0,41 255,018 51-.059 -19S5 3,131,024 4,42G,C4 433.988 302,784 271,315 65.:.059 - 219.56 3.%32.237 4.043,902 - 344.312 371,900 274,934 646,834 - -31987 3,154.G48 3,671,999 - 227.656 381,574 -26a,927 650.501 -1S£ 3,000,732 3.250,42G - 135.475 390.079 252,503 642.537 * -1929 2.740,12Q 2,900,348 - 81,958 369,954 230,374 600,328 -1990 2,458.132 2,530,394 - 47,709 393,369 203,892 597,261 - 31991 2.112.685 2,137,020 - 18,578 357,079 175,312 532,391 - 11992 1,774.0C1 1,779,94a - 4,890 347,924 146,004 493,928 - -

* THIS COLUMN SHOWS THE AMOUNT OF ARITHMETIC IMaALANCE IN THE AMOUNT OUTSTANOING INCLUDING UNDISOURSED FROM ONEYEAR TO TH_ NEXT. THE MOST CC,:MON CAUSES OF IMBALANCES ARE CHANGES IN EXCHANGE RATES ANO TRANSFER OF DEBTSFRO?4 ONE CATECORY TO ANGTHER IN THE TABLE.

BEST COPY AVAILABLr

TABLE 4.2.8 EXTERNAL DEBT BY LENDING INSTITUTION

StRVtC[ P*YICNTS. COWV4T`INTS. DISBURSEMENTS 0b OUTITANING 8NCUNtS OF XLATEIIl PULIC Ofi?PROJECTIONS BASED ON DEST OUTSTANDING INCLUDING UNDISGURSED AS OF DEC. 31, 1982

OEOT REPAYABLE IN FOREIGN CURRENCY AND GOODS(IN THOUSANDS OF U.S. DOLLARS)

TYPE OF CREDITOR MULTILATERAL LOANSCREDITOR COUNTRY BIS

YEAR : OEBT OUTSTANDiNG AT : T R A N S A C T I O N S D U RI N G P E R I O D : OTHER CHANGES: CEGINNING OF PEnIOD :~~~... .... __................_. .. 0_.... .............. __. ......... __...... .- _................. ....... ... ...... _.._..

DISOURSED : INCLUDING: COMMIT- : OISBURSE- : S E R V I C E P A Y M E N T S : CANCEL- : ADJUST-ONLY :UNDISSURSED: MENTS : MENTS :--------- ;........... ........ -- :LATICNS : MENT S

. ' : : : PRINCIPAL : INTEREST I TOTAL.(1) . . (2) : (3) 1 (4) ra (5) (6) (7) (8) (9)

1973 , . -a - - - a -I574 _1975 -. -, ,'176 . . . . . . . .1077 - - -. . .1078 aaa

11573... 1072 . . . . . . . . .. ,10380a aa -

1902 * 025,000 025.000 - -1013 025.000 925,000

* . * * * * THE FOLLOWING FIGURES ARE PROJECTED s S * * *

1983 925.000 925,000 - - 925.OpO 94,013 1019.813 -

* THIS COLU'4N SHOWS THE AMOUNT OF ARITHMETIC IW.BALANCE IN THE AMOUNT CUTSTANDING INCLUDING UNDISBURSED FRZM ONEYEAR 10 THE NEXT. THE M3QST CCMM.N CAUS£S OF IM9ALANC!S ARE CHANGES IN EXCHANGE RATES AND TRANSFER OF O£BTSFRCM CNE CATEGORY TO ANOTHER IN THE TABLE.

BEST COPY VFU I

TABLE 4.2.9 EXTERNAL DEBT BY LENDING INSTITUTION

S£PVICE PAYIMEITS. COMCMiI1.ENIS, DISGVRISEMCO'1u A.ND OUrSrE.0'4t; AhMOUN7S OF EXTERNAL PtU".LIC DEBT

PROJECTIONS BASEO ON ODET OUTSTANDING INCLUDING UNDISCURSEO-AS OF DEC. 31, 1982DEBT REPAYABLE IN FOREIGN CURRENCY AND GOODS

(IN THOUSANDS OF U.S. DOLLARS)TYPE OF CREDITOR NATIONALIZATION

TOTALYEAR : DEBT OUTSTANDING AT : T R A N S A C T I O N S O U R I N G P E R I D : OTHER CHANGES

: BEGINNING OF PERIOO :........................ ....... i........................................ …........... -------- ,-,,:DISEURSED : INCLUDING : COMMIT- : DISBURSE- S E R V I C E P A Y M E N T S : CANCEL- : ADJUST-ONLY :UNOISBURSED: MENTS : MENTS ........... : ...................... LLTIONS : ME1T *

* : : : : : PRINCIPAL : INTEREST : TOTAL: l1) : (2) : (3) : (4) : (5) : (6) : (7) : (8) : (9)

1973 , 0,438 10,438 - - 4,175 .813 4,990 -1974 6.262 6,262 - - 4.175 30.0 4,515

* 1975 2.087 2.087 .2,087 63 2,155 -1976 - - -. . . _

12t77 ---... . . _ 1907 - @ .. * --- .- -

* 1570 - - . . . . .

19E0 - S S - S

1982'1983 -

* ' * S * * THE FOLLOWING FIGURES ARE PROJECTED a a * * * *

a THIS C3LUMIN4 SH5WS THE AM-UNT CF ARITH#:ATIC IMBALANCE IN THE AMOUNT OUTST'NDING INCLUDING UN3DS;URSeD F2OM C.N_YEAR TC THE NHXT. THC M3ST COMM0Ci CAUSES OF IMBALANCES ARE CHANGES IN EXCHANGE RATES AN# TRANSFER OF DE.-TSFRDM CNE CATEGCRY TO ANOTHER IN THE TABLE.

BEST COPY FilifF 1 I

AILE 5.1.1 CONSOLIDATED PUBLIC SECTOR...........................

I 1 IILLIIIN mlE I

1970 1971 1972 1973 3974 1975 1976 1977 1978 3979 1980 1981 192 1983

CURRENT REVENUE 16.79 71.71 84.94 103.60 135.49 188.01 252.95 346.61 471.40 *52.47 963.22 1251.56 2341.53 4t09.80...............

TAIES 37.06 40.69 47.70 62.54 H5.39 122.10 155.37 220.35 291.72 399.16 657.27 904.N0 1345.49 2813.00NOR-TAlES 29.73 31.01 31.23 41.2 50.10 65.41 97.58 126.26 179.69 253.32 305.95 346.75 996.05 20.30

6ENERAE 60VERENT 6.98 6.57 9.134 9.3 12.51 17.07 23.79 27.31 38.29 46.75 67.03 104.35 183.79 566.80SOCIAL SECIMITY CONtRI-

tUtlON 6.63 8.24 9.75 10.87 15.29 39.78 25.41 35.84 44.14 57.04 77.06 103.16 156.44 244.30VA ENTERFRISES uIETI 36.11 16.28 13.35 20.56 22.30 28.5 418.33 63.11 97.25 149.53 161.82 139.24 655.32 1284.70

CURlENT EIPEND1TUIES 52.38 57.27 74.37 104.07 143.46 195.44 264.67 334.65 420.07 571.04 04.61 129.41 2389.52 5128.00. ..................

CONSUMPT0N 22.90 26.72 31.20 41.17 57.84 75.79 98.44 136.19 161.90 204.61 287.73 442.74 713.53 1442.60VAgES 9.10 10.41 11.71 15.69 18.03 25.33 29.92 41.71 55.90 70.56 90.35 128.34 228.41 365.10INIERHEDIATE S00N 13.11 1b.31 19.42 25.41 39.02 50.46 68.52 94.48 105.9" 134.12 197.38 313.3N 535.09 1077.50

INTEREST 1.71 7. 10.41 12.61 17.72 25.21 45.3 56.36 73.65 103.90 156.39 304.88 317.82 2117.90EIPEIOITURES Of 01THE

ENTITIES 0.6O 0.60 2.40 2.60 6.13 6.30 9.21 0.57 2.02 1.75 24.56 27.64 t6.59 160.00EIPENDITURES Of FINANCI

ENIIIIES 1.50 1.30 3.S0 8.60 11.50 13.40 22.10 25.15 27.40 41.60 43.31 69.12 12.00 200.00CURR"t TRVWI.j3 30.00 9.7? 14.63 23.40 31.20 49.33 59.11 74.67 9.21 141.54 281.78 326.27 355.14 342.40

CURRENT SAVI1S l33.9 14.52 10.57 -0.27 -7.97 -7.42 -11.72 33.96 51.33 81.44 71.55 -47.93 -547.99 -21S.20

CAPITAl EIPEUITIURES IIETI 30.69 26.63 31.40 41.14 57.23 102.72 121.32 136.45 207.25 307.4 413.33 117.33 3333.90 3260.63....................

DIAECT INVESINENT 25.34 19.45 24.61 35.21 50.43 14.41 39.03 111.11 175.51 241.24 379.96 594.13 80.24 901.90INDIRECt IiSfltHENT 5.35 7.17 13.79 33.36 6.30 33.3 34.79 25.35 31.74 61.30 33.15 222.51 N02.I 353.78

DEFICIT -16.73 -12.11 -27.14 -4?.41 -65.20 -330.35 -135.54 -124.49 -155.J2 -2:1.10 -334.53 -365.26 -1659.13 -1479.31

RENO ITEN

CLt. [I. OF OTHER ENTITIES 0.&9 0.60 2.40 2.60 6.38 6.30 9.21 0.57 2.02 1.75 24.56 27.64 96.*5 S 10.00CUR. E(I. OF FIN. ENTItIES 1.50 1.13 3." 1.60 11.50 13.40 22.10 25.15 27.40 41.60 43.34 69.12 20.00 12.001% Of 69P)CLIRENT IEVEMU 15.09 14.65 15.04 35.02 15.06 7.09 13.45 11.74 20.17 21.27 22.52 21.31 24.64 23.16CUlRENT EIEJtII3T3ES 11.99 11.69 13.17 15.0 15.S5 17.77 19.11 11.10 17.97 11.62 20.69 22.12 30.61 29.42CAPIIM. E2:EIllt*tES S.9I 5.43 6.0 6.32 6.13 1.34 9.03 7.31 3.17 30.0i 9." 13.93 1.t1 7.23SEfICItI -. 71 -2.47 -4.1.: -6.6 -7.25 -30.01 -9.11 -6.73 -6.67 -7.37 -7.12 -14.713 -17.63 -3.49

I1 Eotamate.SOU10C: [,IITISTIY O Fl3t

BEST COPY AVAILAD

TABLE 5.1.2 CONSOLIDATED PUBLIC SECTOR

(CONSTANT 1980 $REX I

el1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

CURRENT REVENUE 334.62 344.45 383.63 415.38 441.76 529.62 595.87 626.21 729.39 839.73 963.22 983.54 1142.10 1232.87

TAXES 185.68 195.26 215.46 250.28 278.41 345.36 366.00 398.10 451.37 513.72 657.27 711.04 656.27 706.50NON-TAXES 148.94 149.19 169.18 165.10 163.36 194.26 229.87 228,11 278.01 326.02 305.95 272.50 485.93 526.37GENERAL SOVERNMENT 34.98 31.52 41.29 39.34 40.80 48.00 56.04 49,35 59.24 60.16 67.09 82.00 89.65 142.35SOCIAL SECURITY CONTRI-

BUTION 33.23 39.54 44.02 43.48 49.85 55.73 59.96 64.75 68.30 73.41 77.06 81.07 76.30 61.36VA ENTERPRISES (NET) 80 .3 79.14 82.86 92.28 72.71 80,45 113.97 114.01 150.47 192.45 161.82 109,43 319.88 322.66

CURRcNT EXPENDMTURES ^64.95 274.80 335.91 416.46 467.75 550.52 623.48 604.60 649.96 734.92 984.64 1021.21 1409.39 1287.92

CONSUMPTION 114.75 ;28,19 140.93 164.74 188,60 213.50 231.88 246.06 250.50 263.43 287.73 347.93 372.42 362.32NAGES 45.58 49,93 53.22 62.78 61.38 71,35 70.49 75.36 86.49 90.81 90.35 101.25 111.42 91.70INTERMEDIATE GOODS 69.17 78.26 87.70 101.96 127.22 142.14 161.40 170.70 164.00 172,62 197.38 246.68 260.99 270.62

INTEREST 44.01 38,30 47.23 50.48 57.77 71.23 107.95 101.82 113.96 133.72 156.89 239.59 398.90 531.92EXPENDITURES 8F OTHER

ENTITIES 3.01 2.89 10.e4 10.41 20.79 17.73 21.70 1.03 3.13 11.27 24.56 21.72 47.11 40.29 FEXPENDITURES OF FINANCIAL VI

ENTITIES 7.52 8.64 17.62 34.41 37.50 37.75 52.06 45.43 42.39 53.54 43.34 54.32 62.43 50.23CURRENT TRANSFER 50.09 46,86 66.07 93.64 101.72 138.97 139.40 134.91 153.50 182.16 291.78 256,40 417.10 211.57

CURRENT SAVINGS 69.67 69.65 47.72 -1.09 -25.99 -20.91 -27.61 21.61 79.42 104.81 78.59 -37,66 -267.29 -55.05

CAPITAL EXPENDITURES (NET) 153.74 127.77 173.45 188.64 296.59 289.36 291.68 246.52 320.67 395.80 413.11 642.31 542.34 316.63

DIRECT INVESTMENT 126.94 93.35 111.17 141.18 164.42 237.76 209.73 200.73 271.56 316.91 379.96 467.45 394.71 227.77INDIRECT INVESTMENT 26.80 34,42 62.28 47.46 22.17 51.60 81.95 45.79 49.11 79.89 33.15 174.86 147.63 98.85

DEFICIT -84.07 -58.12 -125.73 -199.72 -212.58 -310.27 -319.29 -224.92 -241.25 -290.99 -334.53 -679.97 -809,62 -371.69

MENO ITEM

CUR. EXP. OTHER ENTITIES 3.01 2.89 10.84 10.41 20.79 17.73 21.70 1.03 3.13 11.27 24.56 21.72 47.11 40.18CUR. EXP, FINAN. ENTITIES 7.52 8.64 17.62 34.41 37.50 37.75 52.06 45.43 42.39 53.54 43.34 54.32 97.55 32.15GROWTH IN DEFICIT -- -30.86 116.32 50.89 12.05 45.96 2.91 -29.56 7.26 20.62 14.96 103.26 19,07 -54.09

el EstiBatVs.

BEST COPY AVAILABLE

TABLE 5.2 GENERAL GOVERNMENT ACCOUNTS

(IN BILLIONS $HEX

el1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1991 1992 1983

CURRENT REVENUE 50.68 55.50 66.59 83.24 113.19 159.46 204.57 293.50 374.16 502.94 801.40 1112.31 1695.72 3624.10

TAXES 37.06 40.69 47.70 62.54 85.39 122.60 155.37 220.35 291.72 399.16 657.27 904.80 1345.49 2813.00NON-TAX 6.98 6.57 9.14 9.83 12.51 17.07 23.79 27.31 38.29 46.75 67.08 104.35 193.79 566.90SOCIAL SECURITY 6.63 9.24 9.75 10.87 15.29 19.79 25.41 35.84 44.14 57.04 77.06 103.16 156.44 244.30

CURRENT EXPENDITURE 40.87 43.02 54.64 75.59 109.03 149.49 196.23 261.19 328.67 432.06 696.08 1057.59 2366.12 4101.70

CONSUMPTION 22.90 26.72 31.20 41.17 57.94 75.79 98.44 136.19 161.90 204.68 297.73 442.74 763.53 1442.60WAGES 16.18 19.50 22.10 29.45 38.25 53.92 74.54 110.06 130.11 165.56 219.17 316.94 549.63 831.20INTERMEDIATE GOODS 6.73 7.21 9.10 11.72 19.59 21.97 23.90 26.13 31.78 39.12 69.55 125.80 213.90 611.40

INTEREST 6.22 4.32 6.44 6.99 10.07 14.93 29.31 35.06 46.72 61.60 93.39 192.19 526.01 1402.00CURRENT TRANSFERS 11.75 11.98 17.00 27.44 40.11 58.76 68.48 99.93 120.06 165.77 324.97 432.66 1076.58 1257.10

CURRENT SAVINGS 9.80 12.48 11.95 7.65 5.16 9.97 9.34 22.32 45.49 70.89 105.32 54.73 -680.40 -477.60 O

CAPITAL EXPENDITURES 17.83 15.66 28.49 32.30 34.79 57.04 73.74 82,59 114.43 178.14 261.76 487.17 649.49 789.30

DIRECT EXPENDITURES 8.41 7.11 12.12 17.76 21.81 28.69 33.66 38.21 62.67 93.49 141.60 212.80 319.90 302.00INDIRECT EXPENDITURES 9.42 8.55 16.38 14.54 12.99 28.36 40.08 44.36 51.76 94.66 120.16 274.39 328.60 486.30

DEFICIT -9.03 -3.19 -16.55 -24.66 -29.63 -47.07 -65.40 -60.26 -69.94 -107.26 -156.44 -432.45 -1329.99 -1265.90

MEMO ITEM

lX OF GOP)CURRENT REVENUE 11.41 11.33 11.79 12.05 12.59 14.50 14.92 15.33 16.01 16.40 19.74 19.93 17.90 20.79CURRENT EXPENDITURE 9.20 8.78 9.68 10.94 12.01 13.59 14.31 14.12 14.06 14.08 16.29 18.00 25.13. 23.53CURRENT SAVINGS 2.21 2.55 2.12 1.11 0.57 0.91 0.61 1.21 1.95 2.31 2.46 0.93 -7.23 -2.74CAPITAL EXPENDITURES 4.01 3.19 5.05 4.68 3.87 5.19 5.39 4.47 4.90 5.91 6.12 8.29 6.99 4.52DEFICIT -1.81 -0.65 -2.93 -3.57 -3.29 -4.28 -4.77 -3.26 -2.95 -3.50 -3.66 -7.36 -14.11 -7.26

e/ Estimates.SOURCE: MINISTRY OF FINANCE and Bank Staff Estisates. BEST COPY AVAILABLE

- 117 -

tARLE 5.3 FEDERAL. ;OVERIEIIT ACCaITS

tIN BILLION $NES I

I170 1971 1972 I173 1974 1975 1976 1971 1978 1979 1990 1991 1592 1993

CURRENT REVENUE 39.53 42.95 51.01 65.16 99.44 126.66 161.79 227.71 301.73 411.90 680.00 947.09 1432.72 3237.00

TAXES 36.04 39.57 46.41 61.14 93.84 120.19 152.53 217.05 288.14 394.7n 651.72 897.05 1333.50 2797.00PEREZ 1.18 1.19 1.75 1.19 5.29 14.46 14.54 29.89 40.75 62.70 180.39 253.17 450.51 1330.00

EXPORT -- - -- - -- -- -- - - 33.10 132.70 195.00 290.60 620.00DONESTIC 1.19 1.18 1.75 1.19 5.2B 14.46 14.54 29.89 40.75 29.60 47.69 58.17 £59.91 4N9.00

DIRECT 16.11 17.bO 21.92 27.06 37.51 50.99 67.71 96.36 136.64 117.05 25.20 346.92 476.65 707.00VA 4.23 4.19 5.42 11.19 14.51 20.41 30.23 39.02 48.37 73.21 119.12 171.17 250.28 470.00OTHER INDIRECT 5.77 7.66 9.94 12.18 16.06 17.11 23.75 20.54 26.03 31.96 30.78 41.73 61.44 120.00IMPORT 6.36 5.81 6.53 6.30 9.62 10.50 12.32 10.74 15.34 27.31 44.30 66.75 92.55 90.00EXPORT 1.02 0.97 0.s5 1.26 1.68 1.44 2.74 5.30 2.51 2.13 1.79 0.21 1.6 -

OTHER 1.36 1.46 1.0 1.598 0.Z2 5.39 1.22 16.20 19.49 20.39 24.14 17.11 10.33 30.00MON-TAX 3.99 3.28 4.60 4.02 4.60 6.47 9.26 10.66 13.59 17.10 28.29 50.03 9.22 450.00

(CAPITAL REVENUES) 0.29 0.45 0.50 0.99 0.57 0.45 1.54 2.80 2.09 0.92 1.94 0.64 7.98 9.00

CURRDNT EIPENDITURES 32.22 32.76 41.96 62.13 87.13 123.46 163.11 219.60 278.24 370.66 601.98 937.44 2191.53 3556.40

CONSUNPTIU 15.08 17.27 19.96 2B.26 37.98 52.35 61.69 89.79 112.03 145.57 20L63 321.94 568.31 970.00NAGES 11.11 13.09 14.63 19.95 24.76 36.35 51.19 76.09 92.92 119.59 151.53 224.96 399.21 600.00hDS & SERVICES 2.65 2.66 3.23 4.79 9.30 11.00 11.90 6.50 8.91 12;30 15.26 28.69 55.54 90.00OTHER & ADEFAS 1.32 1.52 2.11 3.51 3.92 5.00 5.61 7.20 10.20 13.69 29.94 68.20 113.56 190.00

INTEREST 6.14 4.20 6.22 6.69 9.35 13.93 27.81 34.26 44.80 57.44 77.03 173.55 519.19 1390.00

TRAISFERS 11.00 11.29 15.68 27.18 39.80 57.18 66.61 4.57 121.41 167.65 322.21 441.65 1094.03 1306.40REVENUE SHARING 1.53 1.81 2.02 6.59 9.39 14.26 19.38 26.69 35.27 49.24 102.13 152.9 21IL23 129.00

FEDERAL DISTRICT 1.37 1.54 1.72 2.74 3.74 4.70 5.62 9.24 10.76 14.12 25.18 34.23 50.85 129.00OTHER 0.16 D.27 0.31 3.85 5.64 9.57 13.76 19.45 24.50 35.12 76.95 119.77 167.39 0.00

CURRENT TRANSFER 9.47 9.49 13.65 20.59 30.42 42.92 47.24 67.87 86.15 11.40 220.06 298.76 975.90 1177.40PEREZ - -- - - 1.09 1.69 1.91 0.59 0.60 0.60 - - - -

ENTERPRISES VITHIN THEBUETARY CONTROL 2.71 3.32 3.69 6.47 10.87 11.45 12.27 24.12 29.14 34.40 43.50 114.96 252.41 416.40

ENTERPRISES OUTSIDE OFTHE BMDUETARY CIITROL -- - - - 0.0e -- - - - - 1.64 2.75 3.95 11.00

OTHER 6.76 6.17 9.96 14.12 18.38 29.78 33.16 43.16 56.41 83.41 174.95 171.05 619.44 750.00

CURRENT SAVINGS 7.71 10.09 9.16 3.03 1.32 3.20 -1.32 9.11 23.49 41.24 79.13 9.65 -743.91 -319.0

CAPITAL ESPENDITURES INET) 15.99 13.47 24.06 24.31 29.45 46.97 60.40 70.90 90.62 142.68 211.79 40?.13 546.43 655.30

DIRECT INVESTEIIT 5.14 4.68 6.98 10.49 12.92 19.07 21.70 29.25 42.09 53.w9 92.74 121.79 207.60 155.00FINANCIAL INVESTHENT 10.75 9.79 17.08 13.92 15.64 28.91 38.70 41.56 48.53 88.69 119.05 297.36 M33.83 500.30

CAPITAL TRNSFERS 10.52 B."9 17.27 14.46 15.69 29.43 39.29 41.94 47.el 14.37 104.59 244.43 252.45 459.30PENEX -- - 0.57 - -- 1.47 -- -- - - -- - - -

ENTERPRISES VITHIN THEBUSDETARY CONTROL 3.49 3.55 .3.81 4.28 10.16 23.75 15.10 17.03 23.15 36.74 83.78 78.57 80.97 213.80

ENTERPRISES OUTSIDE OFTHE BUDGETARY CONTROL 1.97 0.10 0.01 0.50 0.52 0.60 0.60 0.60 - 0.29 0.52 0.30 1.07 4.50

OTHER 5.17 5.34 12.89 9.69 5.e2 2.61 23.59 24.30 24.46 37.34 20.30 165.57 170.41 240.00

OTHER 0.22 -0.20 -0.19 -0.64 -0.06 D.49 -0.59 -0.33 0.92 14.32 14.46 42.93 86.33 42.00

DEFICIT -9.17 -3.33 -14.90 -21.28 -27.14 -43.77 -61.72 -61.69 -67.13 -101.44 -U33.66 -359.48 -1295.24 -974.70

HEHO ITEM

;.X OF UDP)CURRENT REYENUE B.99 8.74 9.03 9.43 9.83 11.51 21.B0 12.31 12.91 13.43 15.90 16.12 15.21 13.57CURRENT EXPENDITURES 7.25 6.69 7.41 9.99 9.68 11.22 11.90 11.92 11.90 12.09 14.07 15.96 23.17 20.41CAPITAL EXPENDITURES (NET) 3.58 2.75 4.26 3.52 3.16 4.27 4.41 3.83 3.89 4.65 4.95 1.96 5.90 3.76DEFICIT -1.94 -0.69 -2.64 -3.08 -3.02 -3.99 -4.50 -3.34 -2.87 -3.31 -3.13 -1.80 -13.75 -5.59

el Estimates.

SOURCE: HINISTRY OF FINANCE

BEST COPY AVAILARIr

TABLE 5.4 STATE ENTERPRISES OTHER THAN PEMEX AND SOCIAL SECURITIES

IN BILLIONS $HEX I

el1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

CURRENT REVENUE 20.29 21.89 24.03 37.31 56.61 81.13 84.57 116.58 150.65 190.05 280.35 399.83 673.54 1340.40

SALES OF GOODS 15.46 16.61 18.22 28.81 38.89 49.36 61.19 84.69 108.80 131.34 165.7 217.31 369.67 682.30OTHER 0.69 0.67 0.92 1,63 2.23 3.60 4.34 4.51 4.51 7.77 11.85 17.64 24.85 60.60SS CONTRIBUTION --- --- --- --- --- --- --- --- --- --- ---CURRENT TRANSFER 1.76 2.22 2.37 4.04 7.75 7.74 7.50 13,76 19.34 22.54 41.56 103.64 217.49 403.70CAPITAL TRANSFER 2.37 2,40 2.53 2,83 7.74 20.23 11.54 13.62 18.01 28.41 61.07 60.25 62.53 193.80

CURRENT EXPENDITURES 15.23 !.75 20.27 34.62 51.02 66.05 77.45 105.78 132.03 157.32 231.75 374.34 591.44 1267.00

CONSUMPTION 9.15 10.00 11.45 23.06 35.81 44.30 47.23 66.90 93.94 105.36 1498.3 250.61 352.38 743.70NWAES 4.33 4.96 5.50 8.68 10.13 12.76 16.52 22.30 34.00 42.42 56.63 81.16 135.61 208.70INTERMEDIATE 6000S 4.81 5.03 5.95 14,38 25.68 31.54 30.71 44.60 59.94 62.95 92.19 169.45 216.76 535.00

INTERSTS 1.41 1.74 2.04 3,24 4.73 7.07 10.90 13.41 15.46 22.12 34.94 51.11 115.29 324.10OTHER 4.56 5,37 6.05 7.70 9.70 13.94 17.42 22.46 20.03 26.02 42.06 69.51 108.81 190.60TAXES FAID 0.12 0.64 0.73 0.63 0.77 0.75 1.90 3.01 2.60 3.81 5.92 3.11 4.96 8.60

CURRENT SAVINGS 5.06 4,14 3.77 2.69 5.58 15.08 7.12 10.80 18.62 32.73 49.60 24.49 92.10 73.40

CAPITAL EXPENDITURES 7.22 8.08 7.37 11.20 18.94 40.64 32.61 27.87 42.71 64.92 97.46 126.40 173.90 219.50 1

FIXED INVESTMENT 6.91 6.72 6.14 9.04 15.92 35.72 25.54 27.22 39.81 60.14 93.03 124.66 166.94 225.50FINANCIAL INVESTMENT 0.02 0,02 0.03 0.73 0.35 0.79 0.36 0.06 0,57 0.64 0.33 0.71 0.53 8.00AJENAS 0.29 1.34 1.20 1.43 2.68 4.13 6.72 0.59 2.33 4.15 4.10 1.04 6.53 -14.00

CAPITAL REVENUES 0.05 0.03 0.05 0.86 0.17 0.17 0.26 0.14 1.19 0.51 0.21 0.16 0.12 0.12

DEFICIT -2.12 -3.91 -3.55 -7.65 -13.19 -25.40 -25.24 -16.93 -22.90 -31.68 -48.65 -101.75 -81.69 -145.98

MEMO ITEM

(X OF GDP?CURRENT REVENUE 4.57 4.47 4.40 5.40 6.29 7.37 6.17 6.30 6.45 6.20 6.56 6.79 7.15 7.69CURRENT EXPENDITURES 3.43 3.62 3.71 5.01 5.67 6.00 5.65 5.72 5.65 5.13 5.42 6.37 6.17 7.27CAPITAL EXPENDITURES (NET) 1.61 1.64 1.34 1.50 2.09 3.68 2.36 1.50 1.78 2.10 2.27 2.15 1.85 1.26DEFICIT -0.49 -0.80 -0.65 -1.11 -1.47 -2.31 -1.84 -0.92 -0.98 -1.03 -1.14 -1.73 -0.97 -0.84

e7 Estiates.SCURCE: MINISTRY OF FINANCE

v1 mlr lp" T71IL1ABLE

TABLE 5.5 SUMMARY ACCOUNTS OF PENEI

IIN BILLION SNEI )

1970 1971 1972 1973 1974 1975 1976 1977 1q78 1979 I980 1981 1992 1993

CURRENT REVENUE 13.68 14.67 16.47 18.27 31.95 39.77 48.06 70.06 106.02 172.54 327.07 445.35 1027.10 2569.00

VALUE OF SALES 13.64 14.60 15.76 18.13 30.23 36.33 45.52 68.71 104.27 169.06 321.78 431.12 992.17 2494.00DOMESTIC 13.64 14.60 15.76 18.13 30.23 36.33 45.52 69.71 104.27 81.16 94.19 92.22 71.37 550.00EXPORT -- -- - -- --- -- 6.90 227.60 338.90 920.80 1944.00

OTHER REVENUES 0.04 0.08 0.14 0.14 0.63 0.28 0.73 0.75 1.16 3.B8 5.29 14.23 34.93 75.00CURRENT TRANSFERS

RECEIVED -- -- -- -- 1.09 1,69 1.91 0.59 0.60 0.60 -- -- -- --CAPITAL TRANSFERS

RECEIVED -- -- 0.57 -- -- 1.47 -- -- -- -- -- -- -- --

CURRENT EXPENDITURES 11.12 11.65 13.26 15.73 25.47 32.47 34.61 55.02 77.50 125.57 284.04 s28.36 707.92 1971.00. ............ ----.

CONSUMPTION 6.54 7.26 8.98 10.97 15.98 17.16 17.35 25.06 27.96 41.00 54.07 77.06 124.59 105.00iAeES 4.03 4.27 4.81 5.24 6.59 8.75 8.99 13.20 14.19 18.53 23.38 34.82 65.47 105.00INTERlEDIATE GOODS 2.51 2.99 4.07 5.73 9.39 8.41 8.46 11.86 13.77 22.47 30.69 42.24 59.12 --

INTEREST PAYMENTS 0.68 1.01 0.95 1.22 1.32 1.52 2.96 3.89 7.39 14.85 32.25 61.74 159.35 353.00OTHER EIPENDITURES 2.73 2.19 1.69 2.36 3.28 5.20 6.54 7.82 13.85 21.51 34.35 57.16 89.18 313.00TAXES PAID 1.18 1.19 1.75 1.19 4.90 9.60 7.76 18.25 28.30 49.21 163.36 232.40 334.90 1100.00

CURRENT SAVINGS 2.56 3.03 3.21 2.54 6.47 7.30 13.45 15.03 29.53 46.96 43.04 16.99 319.18 698.00

CMITAL EXPENDITURES (NET) 2.22 4.25 3.94 5.95 7.96 20.99 22.74 32.00 61.28 94.50 102.44 241.16 329.39 369.90

DIRECT INVESTMENT 1.90 3.91 3.94 5.90 8.00 12.53 21.45 35.60 62.70 90.60 126.42 229.55 284.98 317.90IIDIRECT INVESTMENT 0.31 0.34 0.01 0.05 -0.13 9.37 1.29 -3.61 -1.42 -6.10 -23.98 11.60 44.41 51.90

DEFICIT 0.35 -1.22 -0.63 -3.41 -1.39 -13.59 -9.29 -16.96 -32.75 -37.54 -59.41 -224.17 -10.21 329.20

MEMO ITEM

(2 OF GOP)CURRENT REVENUE 3.08 2.99 2.92 2.64 3.55 3.62 3.51 3.79 4.54 5.62 7.65 7.58 10.91 14.74CURRENT EIPENDITURE 2.50 2.38 2.35 2.28 2.93 2.95 2.52 2.99 3.32 4.09 6.64 7.29 7.52 10.73CAPITAL EXPENDITURE 0.50 0.97 0.69 0.86 0.97 1.90 1.66 1.73 2.62 2.75 2.40 4.11 3.50 2.12DEFICIT 0.09 -0.25 -0.11 -0.49 -0.15 -1.24 -0.68 -0.92 -1.40 -1.22 -1.39 -3.82 -0.11 1.89

*/ Estliate.SOURCE: MINISTRY OF FINANCE

BEST COPY AVAILAB"'

TABLE 5.6 SOCIAL SECURITY ACCOUNTS

(IN BILLIONS SEXI

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

CURRENT REVENUE 10.25 12.25 14.75 18.37 26.04 34.29 43.74 61.02 76.18 98.96 131.21 176.11 281.21 390.70

VALUE OF SALES 1.41 1,54 2.19 3.12 4.61 6.51 9.14 10.49 15.54 19.63 23.76 32.53 49.56 73.80SS CONTRIBUTIONS 6.63 8.24 9.75 10.87 15.29 19.79 25.41 35.84 44.14 57.04 77.06 103.16 156.44 244.30OTHER 0.14 0.21 0.22 0.52 0.60 0.77 0.86 0.92 1.55 2.10 5.76 10.79 21.83 30.00CURRENT TRANSFERSRECEIVED 0.95 1.10 1.32 2.43 3.13 3.71 4.77 10.36 9.90 11.86 1.94 11.31 34.93 12.60

CAPITAL TRANSFERSRECEIVED 1.12 1.16 1.28 1.45 2.41 3.52 3.56 3.42 5.14 8.33 22.70 18.32 18.44 20.00

CURRENT EXPENDITURES 9.10 10.59 12.93 14.92 22.73 27.86 35.20 51.59 59.03 75.52 101.23 144.56 231.94 387.90

CONSUMPTION 6.14 7.39 8.61 9.94 16.06 18.46 23.67 39.30 40.76 52.62 71.26 108.25 174.83 295.60VASES 4.38 5.27 5.93 7.53 11.06 14.22 19.02 28.87 30.93 38.85 51.66 79.61 132.97 196.20INTERNEDIATE GOODS 1.76 2.11 2.68 2.41 5.00 4.24 4.66 9.43 9.83 13.77 19.60 28.64 41.87 99.40

INTERESI 0.05 0.06 0.07 0.02 0.02 0.00 0.13 0.21 0.05 0.01 0.01 0.00 0.00 0.00TRANSFER MADE BY SS 2.91 3.16 4.15 4.97 6.64 9.41 11.41 13.06 19.22 22.99 29.18 36.32 57.11 92.30TAXES PAID 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.79 0.00 0.00 0.00

CURRENT SAVINGS 1.15 1.65 1.93 3.45 3.32 6.43 8.54 9.45 17.15 23.44 29.99 31.54 49.27 -7.20-- - - - -- -

CAPITAL EXPENDITURES (NET) 0.72 1.22 1.75 3.32 3.46 7.03 10.39 8.77 15.70 19.82 39.99 32.40 45.57 22.00

DIRECT 0.99 0.72 1.66 2.16 4.89 5.49 6.85 4.35 7.97 9.58 19.99 28.44 40.36 16.00INDIRECT -0.26 0.50 0.09 1.16 -1.43 1.55 3.54 4.42 7.73 10.23 21.00 3.96 5.21 6.00

DIFICIT 0.43 0.43 0.18 0.13 -0.14 -0.60 -1.85 0.67 1.45 3.62 -10.00 -0.96 3.69 -29.20

MEMO ITEM

(I AS GDP)CURRENT REVENUE 2.31 2.50 2.61 2.66 2.89 3.12 3.19 3.30 3.26 3.23 3.07 3.00 2.99 2.19CURRENT EXPENDITURES 2.05 2.16 2.27 2.16 2.53 2.53 2.57 2.79 2.53 2.46 2.37 2.46 2.46 2.23CAPITAL EXPENDITURES INET) 0.16 0.25 0.31 0.48 0.38 0.64 0.76 0.47 0.67 0.65 0.94 0.55 0.48 0.13DIFICIT 0.10 0.09 0.03 0.02 -0.02 -0.05 -0.14 0.04 0.06 0.12 -0.23 -0.01 0.04 -0.17

el Estiuates.SOURCEt MINISTRY OF FINANCE

BEST COPY AVAILABLE

TABLE 5.7 FEDERAL DISTRICT ACCOUNTS

(IN BILLIONS 5MEXI

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1991 1982 1983

CURRENT REVENUE 3.94 4.20 5.14 6.32 7.99 10.43 12.98 16.78 21.95 26.40 40.01 52.87 76.02 169.00

TAXES 1.02 1.12 1.29 1.40 1.55 2.41 2.84 3.30 3.58 4.36 5.56 7.75 11.99 26.00NON-TAX 1.54 1.54 2.14 2.18 2.70 3.32 4.52 5.24 7.61 7.91 9.28 11.00 13.19 13.00CURRENT TRANSFER

FROM FS 1.37 1.54 1.72 2.74 3.74 4.70 5.62 8.24 10.76 14.12 25.18 34.13 50.85 129.00CAPITAL TRANSFER

FROM F6 ---- --- .... --- - ---- ---- ----- ---- -- -- .. .. ---- ---- ... -

CURRENT EXPENDITURES 1.88 2.31 3.00 3.71 5.04 6.57 8.30 9.60 11.96 11.86 21.66 21.02 38.43 299.00

CONSUMPTION 1.68 2.07 2.63 2.97 3.81 4.99 6.07 9.11 9.11 6.49 13.84 12.65 20.39 277.00INTERESTS 0.04 0.06 0.16 0.27 0.70 1.00 1.38 0.59 1.87 4.16 6.33 8.24 6.82 22.00 -

TRANSFERS GRANTED 0.16 0.18 0.21 0.47 0.54 0.58 0.95 0.90 0.99 1.21 1.48 0.12 11.21 ---- N

CURRENT SAVINGS 2.06 1.89 2.15 2.61 2.95 3.86 4.68 7.18 9.99 14.53 18.35 31.95 37.59 -131.00

CAPITAL EXPENDITURES (NET) 2.35 2.12 3.97 6.12 5.30 6.56 6.51 6.42 13.26 23.97 32.69 63.96 74.94 131.00

DIRECT 2.30 1.71 3.47 5.11 4.10 5.13 5.12 4.62 12.61 19.91 29.87 62.58 71.94 131.00INDIRECT 0.05 0.41 0.50 1.00 1.20 1.43 1.39 1.81 0.65 4.07 2.82 1.38 3.00 ..

DEFICIT -0.28 -0.23 -1.82 -3.50 -2.35 -2.70 -1.83 0.76 -3.27 -9.44 -14.34 -32.11 -37.34 -262.00

MEMO ITEM

(X OF GDP)CURRENT REVENUE 0.89 0.86 0.91 0.91 0.89 0.95 0.95 0.91 0.94 0.86 0.94 0.90 0.81 0.96CURRENT EXPENDITURES 0.42 0.47 0.53 0.54 0.56 0.60 0.61 0.52 0.51 0.39 0.51 0.36 0.41 1.72CAPITAL EXPENDITURES (NET) 0.53 0.43 0.70 0.89 0.59 0.60 0.47 0.35 0.57 0.78 0.76 1.09 0.80 0.75DIFICIT -0.06 -0.05 -0.32 -0.51 -0.26 -0.25 -0.13 0.04 -0.14 -0.31 -0.34 -0.55 -0.40 -1.50

e/ Esticates.... Included in the total.SOURCEt MINISTRY OF FINANCE

BEST COPY AVAILABLE

TABLE 5.8 SUPIARY ACCOUNTS OF ENTERPRISES OUTSIDE OF BUDGETARY CONTROL

A AHNSA, TELNEX, METRO 1IN BILLIONS $0EX I

el1970 1971 1972 1973 I?74 1975 1976 1977 1978 1979 198O 1981 1952 1983

CURRENT REVENUE 6.20 3.88 5.59 7.62 9.67 15.02 17.30 23.15 30.02 41.02 50.14 66.78 90.32 18B.70

VALUE OF SALES 4.08 3.62 5.17 6.69 8.60 13.91 14.64 20.47 28.57 36.47 44.92 63.61 85.05 173.20OTHER REBENUE 0.25 0.17 0.41 0.43 0.47 0.51 2.06 1.17 0.54 3.16 3.06 0.14 0.26 CURRENT TRANSFERS -- -- -- -- 0.08 -- -- 0.90 0.91 1.10 1.64 2.75 3.95 11.00CAPITAL TRANSFERS 1.87 0.10 0.01 0.50 0.52 0.60 0.60 0.60 - 0.29 0.52 0.28 1.07 4.50

CURRENT EXPENOITURES 34B 4.12 4.54 6.23 8.72 12.79 14.47 19.40 23.90 31.10 39.03 53.63 81.01 143.40

CONSUMPTION 2.29 2.13 2.53 3.59 4.64 6.91 8.39 10.32 14.58 18.49 23.12 31.49 45.98 80.50WAGES 0.93 1.18 1.47 1.77 2.11 3.83 4.52 6.21 7.71 9.61 10.34 12.86 27.36 51.40INTERMEDIATE GOODS 1.36 0.96 1.06 1.82 2.53 3.08 3.89 4.11 6.87 8.88 12.78 18.62 18.62 29.10

INTEREST 0.40 0.90 1.04 1.18 1.59 1.76 2.66 3.99 4.09 5.32 6.32 9.94 17.18 38.80 N

OTHER CUR. EXPENDITURES 0.50 0.73 0.57 0.95 1.98 2.79 2.57 4.58 4.30 5.71 7.59 12.31 17.96 24.10TAXES 0.31 0.35 0.41 0.52 0.51 1.33 0.85 0.50 0.86 1.59 2.00 --- --- ---

CURRENT SAVIN6S 2.62 -0.24 1.05 1.39 0.95 2.23 2.83 3.75 6.12 9.91 11.11 13.15 9.32 45.30

CAPITAL EXPENDITURES (NETi 7.70 1.16 1.85 1.98 4.06 6.62 7.13 8.36 8.03 9.19 13.25 23.29 23.83 91.50

DIRECT INVESTMENT 8.12 1.71 2.52 2.58 4.71 7.47 9.38 10.07 10.33 12.02 18.91 27.92 37.52 61.50INDIRECT INVESTMENT -0.42 -0.55 -0.67 -0.10 -0.65 -0.86 -1.25 -1.10 -2.30 -2.84 -5.66 -4.53 -13.69 20.00

DEFICIT -5.08 -1.40 -0.81 -0.50 -3.11 -4.39 -4.30 -4.62 -1.91 0.73 -2.15 -10.14 -14.51 -36.20

REND ITEM

(Z AS GOP)CURRENT REVENUE 1.40 0.79 0.99 1.10 1.07 1.37 1.26 1.25 1.28 1.34 1.17 1.14 0.96. 1.09CURRENT EXPENDITURES 0.81 0.84 0.80 0.90 0.97 1.16 1.06 1.05 1.02 1.01 0.91 0.91 0.86 0.82CAPITAL EXPENDITURES (NET) 1.73 0.24 0.33 0.27 0.45 0.60 0.52 0.45 0.34 0.30 0.31 0.40 0.25 0.47DEFICIT -1.14 -0.29 -0.14 -0.07 -0.35 -0.40 -0.31 -0.25 -0.08 0.02 -0.05 -0.17 -0.15 -0.21

e! Estimates.SOURCE: MINISTRY OF FINANCE BEST COPY AVAILABLE

- 123 -

TABLE 6.1.1 FACTORS AFFECTING MONEY SUPPLY

(BILLIONS $HEX, end of year)

1976 1q77 1978 1979 1980 1981 1982

NET FOREIGN ASSETS 17.20 40.10 54.80 82.10 119.90 155.70 -99.50

NET DOMESTIC CREDIT 631.32 817.70 1028.10 1338.90 1802.00 2829.30 6761.20

NET CREDIT 70 THE PUBLIC SECTOR 369.99 513.40 5E89.0 749.40 95B.70 1622.90 4965.40FEDERAL GOVERNMENT 290.50 344.60 392.10 501.30 633.30 1124.90 3540.40PUBLIC GOVERNMENT 99.39 169.80 196.70 247.10 325.40 499.00 1425.00

NET CREDIT TO THE PRIVATE SECTOR 275.00 325.10 454.30 613.20 866.20 1198.00 1568.50MISCELLANEOUS CAPITAL -13.57 -20.80 -15.00 -22.70 -22.90 8.40 227.30

SDR ALLOCATION 2.90 3.40 3.70 5.40 7.00 8.90 30.00

NLT FOREIGN LIABILITIES 217.90 290.20 316.30 380.40 486.90 823.30 3044.80

LIABI-ITIES TO NON-BANK FINAN-

CIAL PUBLIC SECTOR 24.60 29.20 43.20 58.70 76.80 133.10 198.30

MONEY AND QUASI-HONEY 395.40 521.20 700.00 949.00 1311.70 1964.90 3320.30

MONEY 79.90 B8.60 114.90 149.60 194.70 281.90 503.90QUASI-MONEY 315.50 432.60 585.20 790.40 1117.00 1683.10 2816.50

CAPITAL AND SURPLUS 7.72 14.90 19.70 28.50 39.50 54.80 68.50

SOURCE: BANK OF MEXICO, BANK STAFF ESTIMATES.

BEST COPY AVAILABLE

- 124 -

TABLE 6.1.2 FACTORS AFFECTING HONEY SUPPLY

( O OF GDP 3

1976 1977 1978 1979 1980 1991 1982

NET FOREIGN ASSETS 1.25 2.17 2.34 2.68 2.80 2.65 -1.05

NET DOMESTIC CREDIT 46.05 44.22 43.98 43.65 42.14 48.16 71.80

NET CREDIT TO THE PUBLIC SECTOR 26.98 27.76 25.19 24.40 22.42 27.63 52.73FEDERAL GOVERNMENT 20.46 18.63 16.78 16.34 14.81 19.15 37.60PUBLIC GOYERNMENT 6.52 9.13 9.42 8.06 7.61 8.48 15.13

NET CREDIT TO THE PRIVATE SECTOR 20.06 17.59 19.44 19.99 20.25 20.39 16.66MISCELLANEOUS CAPITAL -0.99 -1.12 -0.64 -0.74 -0.54 0.14 2.41

SDR ALLOCATION 0.21 0.18 0.16 0.19 0.16 0.15 0.33

HLT FOREIGN LIABILITIES 15.89 15.69 13.53 12.40 11.39 14.02 32.33---------------------

IlABILITIES TO NON-BANK FINAN-

CIAL PUBLIC SECTOR 1.79 1.52 1.85 1.91 1.80 2.27 2.11

HONEY AND QUASI-HONEY 28.84 28.18 29.95 30.90 30.67 33.45 35.26

HONEY 5.83 4.79 4.91 4.88 4.55 4.80 5.35QUASI-HONEY 23.01 23.39 25.04 26.03 26.12 29.65 29.91

CAPITAL AND SURPLUS 0.56 0.80 0.94 0.93 0.92 0.93 0.73

SOURCE: BDNK OF MEXICO. BANK STAFF ESTIMATES.

BEST COPY AVAILABLE

TABLE 6.2 : SELECTED MONETARY A66REGATES

(BILLIONS SMEI, end of year)

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1990 1981 1982 1903

A. MONEY (MI) 49.00 53.10 64.30 79.90 97.50 119.30 154.80 195.70 260.30 346.50 461.20 612.40 991.50 1409.10CURRENCY 20.10 21.80 26.80 34.20 42.70 52.30 79.90 99.60 114.90 149.60 194.70 281.90 503.90 683.40DEMAND DEPOSITS 29.90 31.30 37.50 45.70 54.90 66.00 74.90 iO7.10 145.50 196.90 266.50 330.60 497.70 725.70

9. QUASIMONEY IN 96.20 113.80 133.80 143.90 169.70 217.10 199.50 252.40 352.50 461.20 657.00 996.10 2156.50 3726.00DOMESTIC CURRENCY

M2zMltB 145.20 166.90 198.10 223.90 266.20 335.40 353.30 448.10 612.80 807.70 1119.20 1609.50 3149.00 5135.10 ~

C. GUASIMONEY IN 5.70 5.00 4.50 7.40 6.90 10.70 42.10 73.10 97.20 140.30 193.50 356.40 172.30 132.30FOREIGN CURRENCY

1. DEMAND DEPOSITS 1.90 1.70 2.10 4.20 3.50 4.00 11.20 13.90 15.40 22.10 30.20 42.80 18.80 21.802. gUASIZONEY 3.80 3.30 2.40 3.20 3.30 6.70 30.90 59.30 71.90 119.20 163.30 313.60 153.50 110.50

M3:M24C 150.90 171.90 202.60 231.20 273.00 346.10 395.40 521.20 700.00 948.00 1311.70 1964.90 3320.30 5267.40

MEMORANDUM ITEMS

M4:II#CI 50.90 54.80 66.40 84.10 101.00 122.30 166.00 209.50 275.70 368.60 491.40 655.20 1010.30 1430.90

IONETARY BASE I/ 57.50 68.30 81.80 99.40 127.60 170.70 221.40 290.10 366.20 496.60 698.90 1028.90 2012.20 3131.80

1/ InCludes ctUfgnEy and desand deposits in the hand of the public plusthe reserves of the commercial banks.

SOURCEi BANK OF MEXICO.

BEST COPY AVAILAT

- 126 - BEST COPY AVAILABLETABLE h.. NEIICO - 0AN92N6 SiSTER: CREDIT BY SECTOR

I BILLIDNS SKEN. emdso ci ar 2

2970 2972 29721 1913 2974 2975 1976 2977 2979 2979 2910 2992 29921 299

0TOTON 230.20 253.99 17.3.961292.50 23.7 29.3 :92.11 522.95 6533.28 961.40 23309.91 :1092.82 4412.52 6929.44

I. ERAWIAT2ONS. ENTERPRISES

;AD INDIVIDUIALS 227.01 1.2 513.59 266.19 2107.72 255.07 3 25.55 4216.96 5721.09 84333 26.57 17296.512lM 5 4.6? 182.09

I1 ASRIEuLlIhSE. Hmim.;FORESTRY MID FINHING 1.2 242 410 9.2.5 31.70 50.51 4.1.4 .9.95 922 2.2 114 04.77 9.7 636

1.2 0662N1.I2NE 217.72 22.227 23.4 21.217 33.90 41.79 44.90 63.75 94.91 210.77 212.59 2121.49 3210.63 410.45

2.2 HIEING 0.79 0.92 0.96 2.11 2.27 1.90 2.6 13.219 31.99 5.121 9.29 24.02 64.214 222.14

1.3 DTHER 4.32 0.39 0.52 0.92 2.12 2.17 22.43, 2.92r 31.47 4.82 6.67 9.27 9.97 20.49

2. INDUSTRIES 54.96 65.62 74.77 79.63 93.09 224.94 150.02 195.120 2155.421 356 455.09 654.22 1462.61 22.5

2.2 ERGY6 IN915181 9.91 13.79 17.96 17.76 16.431 16.03 19.01 19.7r3 3.7.57 710.9 2 16.24 276.19 599.2 9,74.96

2.2. P118111 2.26 4.19 6.05 5.36A 4.52 3.02 3.02 2.84 12.93, 19.(6 36.12 66.22 246.23 303.122

2.26 ELECtRICITI 7.76 9.61 11.91 12.40 12.11 13.01 16.00 26.99 25.64 52.19 80.04 222.57, 352.99 572.95

2.2 RUNACTURING INDUSTRY 33.27 39.49 39. 99 42.60 55.47 71.14 99.07 236.50 169.22 207.92 269.54 396.24 751.42 11221.07

2.2. RUWACIURINI 2.1t5 226.97 29.47 31 I.:1, 41.21l 50.37 65.97 92. r. 111.0 143.97 179.26 2242.09 545.77 937.29

2.21 PARIDUCTION OF' N0-ETRLICA 21.59 21.40 2.35 2.22 21.64 2.64 33.33 4.01 5.22 6.42 9.3 14.03. 32.2.5 45.63

.lc PRC92CUOH CFSTEEL Oi OTHER 99582.5 .321 6.0 54=.9 75 34 226 32.60 42.73 43.90 62.97 202.93. 231.42 180.90

2.25 O~~Eh AND 012(9 EII2PENTS 2.23 3.02 ~~~2.69 3.24 4.4 4.74 6.52 7.97120.17 23.B2 29.09 29.30 42.99 62.36

22.3 CONSTRUCTION INDUSTRY 21.69 23.34 26.99 29.217 221.29 27.77 32.94 39.97 49.633 56.92 19.40 99.99 122.97 252.55

3. SMION INTEREST HNIUSING .3.69 4.39 4.94 5.7 6.27 7.54 9.07 9.3 2.6 2.9 3.4 4.7 49.06 242.39

4. SERVICMS MDOGTIE! ACTIVITIES 29.321 2.2114 22.fi9 26.227 30.99 39.95 69.52 94.2.9 203.95 226.2.0 287.29 407.27 646.59 27273.99

TNONFDIRTATION 5.43 6.25 1.72 7.99 20.39 13.43 23.231 21.77 32.46 35.42 49.99 95.69 257.46 299.20

b. COMKNICATIIINS 0.02. 0.05 o.w6 o.o& 0.07 0.05 0.01 0.20 0.19 2.52 0.37 0.55 3.291 10.219

EcITEEITAIIN(N 1.07 2.323 1.42 2.50 2.44 2.59 2.31 2.79 2.9" 3.39 5.53 9.29 9.55 9.59

d. DM1196 SWRICES 21 ... ... ... ... ... ... ... ... ... 30.92 42.19 73.39 92.23 252.79

v. 01M6 INTERIEOIOTE SERVICES 5.49 6.9 6.25 7.65. 9.62 25.62 23.99 30.27 40.55 46.22 55.50 52.917 66.321 173.25

f. OTHER ACTIVITIES 7.32- 6.72 7.217 9.26 7.99 9.27 19.96 22.37 2.7.77 97.47 135.72 E106.51 31.74 539.79

5. ECoNmm 20.34 25.30 27.42 27.96 35.77 42.17 49.10 6L114 94.95 140.97 207.93 313.77 312.69 414.56

12. Sf929011 23.09 14.9 2 9.49 25.92 29.46 35.76 66.62 95.99 91.10 213.07 149.2.9 364.30 1606.95 2322.35

a.FEERO 10.36 11.34 24.42 20.49 23.12 313.26 62.42 90.22 r-.02 104.921 22.09 334.25 2542.92 227.65

6. STATE US ENICIPRL 2.73 3.49 5.00 5.32 6. 34 4.50 5.22 5.77 9.20 23.16 29.28 30.15 64.94 73.70

111. FINANIAL. SERIMES 21 ... ... ... ... ... ... ... ... ... 68.70 231.84 270.45 214.68 249.65

a. aTNna VA ... ... ... ... ... ... ... ... ... 48.18 296.29 249.52 293.21 213.22

6. PRIVATE Alm JOINTi INK .. ... ... . .. .... ... 1... 9.12 25.6 21.63 21.27 217.43

2I ME ~CEPT INDEIRD IN JUNEl 197.21 29F7021979 FISH NMR RECIDE OS SERVICES. This us LATER 3191910 fINMBNKWING SERVICEr PA MMNl IETERFDIAR SERVICESLSOIRCEE: BAN OF NEICL

TABLE 7.1 CONPARISON BETNEEN 6DP DEFLATOR AND CPI IN MEXICO

1 1980 : 100 )

1970 1971 1972 1973 1974 l975 1976 1977 1978 1979 1980 1981 1982 1983

EDP DEFLATOR 19.69 20.94 22.14 24.99 30.67 35.50 42.45 55.44 64.63 77.70 100.00 127.25 205.15 398.15

tPI 21.63 22.77 23.91 26.79 33.16 38.17 44.12 57.01 66.97 79.14 100.00 127.82 203.87 411.99

CHANGE IN GDP INDEX --- 5.88 6.23 12.85 22.73 15.77 19.56 30.60 16.58 20.23 28.70 27.25 61.21 94.08

CHANGE IN CPI --- 5.26 5.02 12.04 23.79 15.11 15.57 29.23 17.46 18.17 26.36 27.82 59.50 102.09

. to~~~~~~~~~~~~~~~~~~~~~~~~~-

hENO ITEM

DEFLATORFOR TRADABLES 18.97 20.17 20.94 23.96 30.43 35.85 40.14 53.80 61.48 73.94 100.00 121.84 189.96 412.31FOR NON-TRADABLES 20.13 21.26 22.90 25.63 30.81 35.35 43.90 56.32 66.62 80.06 100.00 130.64 207.62 386.10NON-OIL TRADA6LES 20.56 21.69 22.82 25.76 32.14 38.31 44.00 58.09 66.58 79.16 100.00 124.69 193.78 390.37

CHANGE IN TRAD.IND. --- 6.33 3.80 14.43 27.00 17.81 11.96 34.04 14.26 20.27 35.25 21.84 55.91 117.05

CHANGE IN --- 5.60 7.72 11.93 20.17 14.73 24.19 28.31 18.28 20.18 24.90 30.64 59.92 95.96NON-TRAD. INDEX

CHANGE INNON-OIL TRA- --- 5.49 5.22 12.85 24.79 19.21 14.83 32.04 14.61 18.89 26.33 24.69 55.41 101.45CABLES INDEX

TRAD/NON-TRAD 94.23 94.88 91.44 93.47 98.79 101.43 91.45 95.53 92.28 92.35 100.00 93.26 91.49 106.79

NON-OIL TRAD./NON-TRADABLES 102.12 102.02 99.65 100.47 104.33 108.40 100.23 103.14 99.94 98.87 100.00 95.44 93.33 101.11

'OURCEi BANK OF MEXICO, SPP, AND BANK STAFF ESTIMATES BEST COPY AVAILABLE

-128 BEST COPY AVAILABLETiiLE t. itmCl - CMIS PRICE INDEX

I 1978 * 100 3

AVERASS JAN FED MAR AR MAY JUN JUL AUB EP OCT NOY DEC

1970 32.30 31.80 31.0 31.90 31.90 32.00 32.20 32.40 32.50 32.60 32.60 32.10 33.ID1971 34.00 33.30 33.50 33.60 33.90 33.80 33.90 33.90 34.30 34.40 34.40 34.50 34.601972 35.71 34.90 34.80 35.10 35.30 35.40 35.70 35.90 36.10 36.20 36.20 36.D0 36.01973 40.01 37.10 37.40 37.70 38.30 38.70 39.00 40.10 40.70 41.70 42.20 42.80 44.401974 49.53 44.00 47.00 47.40 49.00 49.40 48.80 49.60 50.10 50.70 51.70 53.10 53.501975 57.01 54.30 54.60 54.90 55.40 56.10 57.10 57.50 53.00 5.50 59.80 59.20 59.701976 65.18 60.30 61.9 62.50 63.00 62.40 63.70 64.30 64.80 67.00 70.10 74.00 75.901977 85.14 79.20 90.00 91.40 92.60 83.30 94.30 35.30 97.00 3.60 3.30 ".20 91.501971 100.01 93.50 96.9 95.90 9.90 97.90 ".20 100." 101."0 103.10 104.30 105.40 106.301979 118.1, 110.00 111.60 113.10 114.20 115.70 2l1.90 111.40 120.10 121.60 123.70 125.30 127.601990 I.34 133.90 136.0 139.70 142.10 144.40 147.30 151.40 154.60 156.30 1538.60 161.40 165.601991 190.33 171.00 175.20 179.90 112.90 185.70 186.30 191.60 195.0 1".20 203.60 207.50 213.101992 304.46 233.70 232.50 241.00 254.10 269.40 231.30 2M5.10 329.00 346.50 364.50 3112.O 423.90I193 613.36 469.90 495.10 519.10 552.00 5.90 597.70 627.30 651.76 672.97 69.14 735.10 770.2

INIITLY 01E 1N UPIAVERA6EYEARLY JAN FE NlA AP HAY JUN JUL Ns SEP OCT NOV NE

1970 - - 0.00 0.31 0.00 0.31 0.63 O.U 0.31 0.31 0.00 0.61 0.911971 5.26 0.60 0.60 0.30 0.60 0.00 0.30 0.00 1.1 0.29 0.00 0.29 0.291972 5.02 0.59 0.00 0.96 0.57 0.29 0.95 0.21 0.80 0.29 0.00 0.13 0.271973 12.04 1.37 0.91 0.90 1.59 1.04 0.73 2.32 1.50 2.46 1.20 1.42 3.741974 23.79 3.60 2.17 0.L5 1.27 0.13 0.3 1.64 1.01 1.20 1.97 2.71 0.75175 15.11 1.50 0.55 0.55 0.91 1.26 1.70 0.70 0.17 0.9 0.51 0.61 0.941976 15.57 1.01 2.65 0.97 0.90 -0.95 2.09 0.94 0.71 3.40 5.67 4.52 2.571977 29.23 3.03 2.30 1.75 1.47 0.15 1.20 1.19 1." 1.94 0.79 1.02 1.44Im 17.46 2.19 1.50 0.95 1.15 1.03 1.33 1.71 0.9" 1.10 1.1. 1.05 0.951979 19.17 3.49 1.45 1.34 0.97 1.31 1.04 1.2 2.44 1.25 1.73 1.29 1.141910 26.36 4.16 2.32 2.05 1.72 1.62 2.01 2.78 2.11 1.10 1.47 1.77 2.601991 27.92 3.26 2.46 2.11 2.24 1.53 0.32 2.N1 2.09 1.N0 2.21 1.92 2.70192 59.50 9.6 -0.51 3.66 5.44 5.63 4.91 5.15 11.22 5.32 5.19 5.05 10.61993 101.46 10.1 5.36 6.34 6.34 4.33 3.79 4.5 3.90 3.10 3.30 5." 4.90

VEARLY CIWGES IN THE CPI

I IINWI" TO MMNin I

YEARLY JAN FEB AR AP HAY JUN JUL AI SEP OCT NOV EC

1971 5.26 4.72 5.35 5.33 5.96 5.63 5.29 4.63 5.54 5.52 5.52 5.19 4.531972 5.02 4.50 3.0 4.46 4.44 4.73 5.31 5.60 5.25 5.23 5.23 5.90 5.791973 12.04 6.61 7.47 7.41 3.50 9.32 9.24 12.01 12.74 15.19 16.57 17.26 21.311974 23.79 23." 25.67 25.73 25.33 25.06 25.13 23.69 23.10 21.59 22.51 24.07 20.501975 15.11 19.04 16.17 15.82 15.42 15.91 17.01 15.93 15.77 15.33 13.73 11.49 11.591976 15.57 11.05 13.37 13.94 13.72 11.23 11.56 11.93 11.72 14.53 20.41 25.00 27.141977 29.23 29.69 29.24 30.24 31.11 33.49 32.34 32.66 34.26 32.24 26.13 21.19 20.5519 17.46 19.57 19.6 17.6 17.31 17.53 17.67 19.29 17.13 16.37 16.90 1.95 16.171979 11.17 17.65 17.60 19.06 17.95 19.19 17.30 17.34 17.6 17." 11.0 13.J 20.041910 26.36 21.64 22.67 23.52 24.43 24.91 2L601 27.97 28.73 21.54 23.21 21.91 29.791"1 27.92 27.10 27.91 23.06 21.71 29.60 26.43 26.55 26.52 27.4 23.37 29.56 23.63192 59.50 36.67 32.71 34.71 3.3 44.53 50." 54.30 68.20 7L35 79.03 30.53 L971983 101.46 101.07 112.9 115.39 117.24 114.57 112.49 112.07 ".10 93.93 .44 91.93 9.79

SUCE: O K IF ETCO

TABLE 7.3.1 ACTUAL AVERAGE RATE OF EXCHANGE

I PESOS PER SUS I

1960-75 1976 1977 1978 1979 .19B0 1981 19621/ 198311 1982111 1983##/

YEARLY PERIOD 12.49 15.44 22.58 22.77 22.81 22.95 24.51 57.18 148.63 ... 110.25AVERAGES

MONTHLY JAN 12.49 20.90 22.72 22.71 22.81 23.34 26.43 148.95 ... 98.56FEB 12.49 22.55 22.72 22.66 22.82 23.48 31.43 148.65 ... 102.40MAR 12.49 22.67 22.74 22.81 22.90 23.65 45.27 148.65 106.23APR 12.49 22.62 22.74 22.83 22.83 23.85 45.95 148.65 ... 110.20MAY 12.49 22.75 22.73 22.82 22.84 24.09 46.78 148.65 ... 114.16JUN 12.49 22.89 22.80 22.84 22.88 24.33 47.62 148.58 ... 118.13JUL 12.49 22.91 22.84 22.84 22.97 24.57 48.50 148.36 ... 122.09AUG 12.49 22.86 22.84 22.81 23.02 24.77 83.75 148.35 69.50 126.12SEP 20.05 22.78 22.76 22.78 23.00 25.04 70.00 148.47 50.00 130.09OCT 20.77 22.68 22.77 22.81 23.06 25.36 70.00 151.34 50.00 134.05NOV 24.38 22.66 22.79 22.86 23.15 25.68 70.00 155.31 50.00 136.02DEC 20.21 22.67 22.74 22.91 23.19 26.01 100.39 159.27 67.72 141.98

t/ Free Market Ratett/ Controlled Rate

SOURCE: BANK OF MEXICO, INDICADORES ECONOMICOS.

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- 130 -

TABLE 7.3.2 EFFECTIVE EXCHANGE RATE

ACTUAL RATE OF EXCHANGE

PESOS PER SUS

Q1 02 03 04

1979 22.72 22.83 22.81 22.831980 22.84 22.85 23.00 23.13

1981 23.49 24.09 24.79 25.68

1982 34.37 46.78 67.42 80.131983 148.72 148.63 148.39 155.31

NOMINAL EFFECTIVE RATE OF EXCHANGE INDEX 11

( 1976-1981 = 100

GI 02 03 04

1979 106.30 105.80 106.00 105.201980 104.60 104.40 105.50 105.201981 105.30 105.80 107.20 111.901982 148.10 200.00 236.60 394.901983 640.90 634.90 627.60 653.90

REAL EFFECTIVE RATE OF EXCHANGE INDEX 21

(1976-1981 = 100 )

01 02 03 04

1979 105.00 104.70 104.60 103.00

1980 98.60 95.50 93.50 90.901981 86.60 84.10 81.80 80.50

1982 96.30 113.40 111.50 154.50

1983 197.80 169.10 149.60 139.30

1/ TRADE WEIGHTED BY 11 MAJOR PARTNERS, WHICH CONSTITUTED DURING THE PERIOD OF 1978-8091 PERCENT OF TOTAL IMPORTS AND 83 PERCENT OF TOTAL EXPORTS.

21 INDEX ADJUSTED FOR THE RELATIVE PRICE MOVEMENTS IN THE WHOLESALE PRICE INDEX.

SOURCE : IMF, BANK OF MEXICO

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- 131 -

TABLE 7.4.1 SELECTED INTEREST RATE FOR HEUClD - UNITED STATES

INTEREST ON 3 HINITH CDs

MEICO UNITED STATES

91 82 93 94 91 92 93 94

1977 12.31 12.92 13.52 13.52 1977 4.69 5.02 5.50 6.421978 13.52 13.52 13.52 14.19 1978 6.55 7.11 7.96 9.771979 14.52 14.52 15.37 18.93 1979 9.75 9.38 10.40 13.071980 21.26 23.29 21.83 26.23 1980 14.45 10.94 9.42 15.091991 29.45 29.95 34.39 34.56 1981 15.35 16.46 17.26 13.021982 36.40 44.10 53.52 50.31 1982 13.96 13.99 11.07 0.85193 62.46 62.80 60.17 57.43 193 8.17 B.33 9.23 9.17

NINTEREST ON 6 NONTH CDs

;EXICD UNITED STATES

91 92 3 94 91 92 93 94

1977 14.36 4.94 15.52 15.52 1977 4.96 5.25 5.U 6.73I178 15.52 15.52 15.52 15.52 1978 7.00 7.56 8.35 10.121979 15.52 15.52 15.52 19.61 1979 10.19 9.88 10.26 11.781990 21.56 23.77 22.79 26.81 1980 12.57 11.10 9.85 14.691991 30.50 31.45 35.60 36.13 1951 14.70 15.59 16.63 13.181992 39.00 44.90 54.39 52.46 1982 13.94 13.99 11.36 8.971993 60.50 62.03 60.78 57.23 1983 9.26 8.42 9.48 9.32

INTEREST ON 12 llM011 CDs

mEICO UIITED STATES

91 22 3 94 91 82 93 94

1977 15.17 16.35 17.52 17.52 197 5.75 5.53 6.12 6.971978 17.52 17.52 17.52 17.52 1978 7.26 7.77 9.52 10.331979 17.52 17.52 17.52 19.38 1979 20.73 9.94 10.14 12.041990 21.27 24.69 24.95 27.50 1990 13.06 10.17 9.72 13.931981 31.48 33.01 35.75 36.95 1981 13.80 15.19 16.38 13.252992 39.57 43.76 51.56 51.84 S192 14.09 13.86 11.63 9.941983 52.52 52.52 52.52 52.05 2993 8.29 8.43 9.75 9.6a

SWD:ANK IF EXICM BEST COPY AVAILBLE

- 132- BEST COPY AVAIUBLETABLE 7.4.2 SELECTED EAL INTEREST RATES FM NEIICO AND THE UNITED STATES

INTERST ON 3 ORNTH CDsNEXICO INITED STATES

91 92 03 94 Al 92 93 94

1977 -19.15 -5.03 -3.99 -2.48 1977 -1.33 -3.69 -0.24 1.691979 -6.15 -0.88 -3.14 0.29 1979 -0.21 -3.54 -1.55 1.591979 -9.01 -0.65 -0.75 -0.67 1979 -0.79 -4.41 -3.10 0.791990 -14.02 -1.24 -5.55 3.69 1990 -1.77 -3.9 1.83 3.571991 -5.32 4.20 7.76 4.91 I819 4.09 6.14 4.82 6.79192 -17.22 -13.65 -29.00 -28.90 1982 9.4 7.47 3.06 7.761983 -36.99 -10.93 -1.99 -2.56 1983 3.92 5.49 6.39 5.31

INTEREST ON M IONTH CDs

1977 -17.67 -3.34 -2.30 -0.76 1977 -1.07 -3.48 0.04 1.991979 -4.49 0.97 -1.43 1.44 1979 0.21 -3.13 -1.20 1.92197Y -8.21 0.22 -0.62 -0.85 1979 -0.39 -3.97 -3.22 -0.361990 -13.90 -0.85 -4.01 4.17 1980 -3.39 -3.75 2.23 3.211981 -4.55 5.41 8.73 6.03 1981 3.50 5.34 4.25 6.94Im -16.25 -13.17 -27.59 -28.35 1982 10.02 7.47 3.32 7.791983 -37.75 -11.35 -1.61 -2.69 1983 4.00 5.59 6.63 5.46

INTEREST ON 12 IONTM CDs

1977 -17.09 -2.15 -0.60 0.96 1977 -0.32 -3.22 0.27 2.211978 -2.94 2.62 0.27 3.20 1978 0.45 -2.94 -1.04 2.111979 -6.62 1.96 1.10 -1.04 1979 0.10 -4.01 -3.32 -0.131990 -14.01 -0.11 -3.13 4.73 1990 -2.97 -4.56 2.11 2.531991 -3.84 6.66 8.85 6.67 t991 2.69 4.99 4.03 7.011982 -15.90 -13.86 -28.92 -28.18 1992 10.16 7.35 3.57 7.941993 -40.84 -16.55 -6.67 -5.89 1983 4.03 5.59 6.89 5.75

NEMO ITEM:

OIATEERLY ANNULIZED IJFLATION

1977 38.91 18.91 19.24 16.41 1977 6.09 5.04 5.83 4.651978 20.95 14.52 17.20 13.88 1978 6.77 11.04 9.67 9.051979 25.96 15.26 16.25 19.63 1979 10.62 14.43 13.93 12.181980 41.03 24.83 29.99 21.74 1980 16.51 15.43 7.45 11.121991 36.73 24.71 24.71 28.39 1991 10.82 9.73 11.87 5.931992 64.77 66.89 113.22 111.40 1982 3.56 6.06 7.78 1.021993 157.03 92.77 63.42 61.56 1993 4.10 2.69 2.67 3.66

NOTE: Real Interest rates have been calculated uithe the folliming foruula:t(l + nominal interest rate)/Ci + inflationrate)]-l = real rate of interest.

tau 1.1 tmlit W t lzl^L On. 1166-19G t........... .................. ..

1964 2947 2969 1949 1970 2973 1972 1933 1974 1973 2976 1977 196 12979 19t90 196-1' 196-1980........................................... Thougad Ton.................... . ................................. . . ...

hasa 1013.2 980.2 856.9 834.6 925.0 9532. 969.3 1001.9 971.6 1027.3 79. 770.21 949 .7 41.3 971.4 149.0 - 0.9Kalso 9271.5 6603.3 9061.6 9410.9 9379.4 9795.7 9222.9 8*09,1 7841.6 8448.7 9017.3 10137.9 10930.2 3463.3 12383.2 24761.5 1.2Rice 312.2 417.9 347.2 394.9 405.4 369.2 403.2 450.4 491.6 714.4 463.4 147.3 401.9 494.7 454.2 643,6 2.4Sn are. 22228.4 32104.6 31683.2 32445.8 34651.4 32715.1 32252.0 32841.2 33497.1 35140.6 313S4.6 29297.3 35474.9 34537.4 36440.2 3197533 0.OUbuat 1647.4 2122.4 2090.7 2226.0 2676.4 1830.9 1309.0 2090.9 2766.4 2798.2 3343.2 2455.8 291b.7 2281.2 2783.2 3189.4 2.7

Chlle Min) 22.5 21.0 23.2 22.6 20. 20.3 29.4 32.6 34.7 2913 29.1 37.5 41.4 33.4 33.3 MA 4.4Chile (reen) 167.1 199.5 191.7 178.4 190.8 310.z 433.1 399.3 615.6 273.1 338.9 461.7 131.3 472.2 357.1 NA 7.1ion 109.0 160.5 170.6 235.2 138.6 226.3 269,9 342.3 334.2 243.1 259.3 215.3 154,0 383.6 372.0 NA 7.1Potsto 34.5 398.8 4 3IS.1 40.1 308.1 479.1 397.0 440.4 602.8 692.7 687.1 631.2 923.2 1049.7 901.6 Ma 7.2

CGpra 201.7 184.6 294.0 141.6 146.4 212.2 246.5 243.7 242.1 147.0 160.1 151.6 160 7 120.1 1.O ONA - 2.4Cattgoeed 811.7 622.0 946.0 634.6 34175 623.5 69.9 591.5 824.4 320.3 349.9 438.7 171.9 545.4 537.8 530.2 3.7Pasout 59.9 74.1 82.3 72.9 89.6 79.9 69.8 59.4 42.9 69.9 33.6 90.9 109.4 61.3 67.0 NA - 2.4Saffloerw 234.2 149.0 102,1 208.9 268.1 410.7 271.3 293.2 272.4 532.3 240.3 511.4 615.6 626.3 445.3 412.0 9.1leanve 164.7 155.3 219.2 23.0 1279.4 290.3 120.4 171.2 15299 110.7 94.9 121.3 133.9 137.9 171.6 166.0 - 2.5oybsa 94.8 131.0 215.2 286.7 214.6 255.9 37t8 5 3 .5 491.1 198.7 302.3 5124.3 34.0 729.4 111.7 711.9 7.5

Appl^e 139.6 21S.1 1226.4 24.5 141.4 232.6 226.9 19013 232.3 194.0 229.4 166.7 234.5 292.5 217.6 266.0 1.4Avocado 149,S 173.9 192.3 201.7 226.0 2264. 234.3 239, 2390.9 779.3 290.4 333 59532 343.9 440.5 457.0 4.8taosa 977.6 981.6 790.4 754.9 965.2 1121.1 1093.3 106313 1096.0 11961. 1199.4 1276.0 1393.1 2043.1 200.4 15629.0 3.3Grapes 101.9 102.4 110.5 118.2 128.1 182.) 191.0 217,9 237.7 247.1 262.7 299.8 427.1 410.0 433.4 458.0 11.51.s 191.2 123.1 1629. 193.4 210.7 494.4 431.0 454.5 438.7 439.6 421.9 444.1 41122 471.7 435.3 499.0 6,3 -Ramp 262.0 261.6 270.9 274.7 207.6 312.7 274.1 299.5 245.7 389.2 427.9 403.0 540.7 619.2 390.7 392.0 7.2 ?Quips 1537.2 2803.0 1721.1 1526.2 1254.7 1525.9 1313.3 1797.9 120U4 261513 1787.5 1556.7 1902.2 1812,7 1950 * t.2 Nteadbz 78.7 79.1 92.9 76.6 177.5 225.6 239.7 243.1 20396 23.4 177.9 192.5 2764 237. 14565 232.0 4.

Alfalfa (grosa) 5726.9 7633.2 7644.7 8312.2 9240.4 9488 10433.5 11157.8 13274,2 12259.6 13493.3 15534.5 17626.7 16090.4 12359.2 KA 7.7harlq 220.1 203.4 252.7 212,5 217.6 270.3 310.1 392.4 230.4 440.2 349.2 417.9 305.2 372,4 609.7 190.0 7.9Oat. 42.7 48.4 42.4 29.1 42.8 26.0 26.6 39.4 11.1 97.5 47.6 122.4 6144 49.9 181,9 KA 9.3Sant 1411.0 1266.6 2122.6 2455.9 2747.2 2512.0 2621.5 3269.3 3499.4 4125.8 4026.9 4325.0 4293.0 3994.1 4912.4 4283,7 7.5

Cacae 22.4 25.2 264. 27,4 28.9 26.1 38.0 32.3 14,3 33.9 3110 25.4 42.2 27.2 35.9 5A 2.9Chicaes 151.9 165.2 179.2 183.2 285.6 266.9 228.0 226.0 249.2 191.1 7215 271.6 215.5 345.6 254,4 NA 317C.ffu. 183.0 224.5 212.6 172.7 1.51 1287.5 203.5 221.7 220,8 221,3 212.2 10290 242.6 223.2 192.7 RA 0.7Canltc 270 20.8 28,6 26.3 29.0 33.5 34.7 349. 33,4 30.0 24.2 35.0 47.4 61.5 49.2 PA 5.4Taunts (rod) 553.2 619.0 469.7 714.9 923.1 938.6 1203.7 1091.0 2220.9 1056.4 8064, 974.2 1393.9 1522.4 1451.0 KA 6.0

HSelm. 213.4 212.4 200,0 168.5 163.1 171.2 206.9 213.0 216.2 170.5 267.4 249.0 354.3 342.8 342.0 322.0 4.6Utna4mny, 143.7 127.9 115.2 104.2 122.6 103.4 39.1 105,0 102.9 49.0 89.3 104.0 99.4 92.5 94.2 109.0 - 2.7Vatasloao 337.4 102,4 123.2 200.2 203.6 133.3 2821.5 310.1 212. 2721. 326.2 272.0 474.4 397.0 4921 . A 6.4

Cottoe (fiber) 521.3 494.5 392.0 391.0 333.7 396.6 416.5 392.6 S12g. 2011. 224.0 419.4 344.4 345.0 3296 344.2 - 3.5Eaqs 1 242.7 149.4 137.0 137.7 145.4 244.3 149.2 147.4 154.2 140.4 233.4 101.2 98.3 87.6 75.0 KA - 3.3

Gaceulr 1' MA NA ISA KA NA A lA 121.5 113.3 15.4 92.9 128.0 157.3 211.5 200.9 t 12.0Tobs co 56.5 42.2 49.2 69.8 68.6 77.3 82.0 61.0 72.5 49,2 67.1 55.0 69.9 71.9 79.1 IA 2.1

it larest n6"I4 c, nd

e/ Dt rot reported bafore 19731 growth rata foa 1973-1960

ounces 1944-1977 trom "ooatso Apanreatas publlihed by Mtnecleo Geeral do eonots l 4Ticole, 9L41 1979-1991 from sopoblited official data.

BEST COPY AVAILABLE

'l.WI?1)1 MIs u FI:ecID4. Cwgl. is, :. jAIG .; .... W J I ................... ...........

Srvt ate-,1966 1967 2968 1969 1970 1972 1972 1971 1976 215 2976 1971 291 1111 1980 l98Ii' 19eth1te0._ _______ ...... ___ _._.__....__.__-... ........-..-.----.----- thou.........--............----t-----------------------------------------------------------------------------------............---------------------------------------.........-.-----..

easne 2240.0 1930.0 1790.7 163S.S 17t6.9 1965.1 1686.7 1869.7 35S1.9 f732.6 1315.8 1630.7 2580.2 1040.9 1763.3 2150.2 - .4NaIze 8286.9 7610.9 7675.8 710.3 1439.1 7691.6 7292.2 7606.3 4717.2 6694.3 6783.2 7469.6 7291.1 0368.9 6933.2 8150.2 - 1.4ts IS2.9 161.4 139.7 IS3.0 130.0 153.6 IS6.5 150.4 112.9 236.7 159.4 180.5 121.3 530.9 132.0 179.6 0.1Iugercane 487.6 489.1 304.8 523.5 546.7 482.0 465.3 302.1 491.5 497.7 496.3 34.0O 531.2 338.0 543.5 357.2 0.6Ahbet .30.8 118.4 790.6 841.3 saa.2 624.2 636.1 640.4 114.2 118.2 894.1 708.9 759.5 589.3 738.5 862.2 - 0.6Chils (dry) 24.4 20.6 21.4 19.7 28.8 58.2 24.9 27.3 26.9 26.2 25.8 33.3 36.9 28.4 28.2 KA 3.6Chile I(gon) 6235 31.8 38.2 35.6 36.3 44.9 60.8 36.9 55.8 60.2 40.2 49.8 33.9 33.4 42.0 NA 1.9Onion 17.0 16.2 17.5 23.3 16.7 22.S 24.6 26.0 23.5 20.0 20.7 21.0 24.0 26.6 26.5 NA 3.3Porsto 40.9 60.7 42.4 46.4 48.2 43.4 53.8 55.2 58.4 57.1 55.8 54.1 69.5 66.9 12.4 NA 4.8Copti ,6 2 86.4 69.9 99.3 113.6 126.2 129.9 131.8 138.1 160.6 153.3 233.1 234.9 151.3 142.1 NA 4.3Cotton 695.4 662.0 705.3 513.2 411.2 457.8 521.4 423.1 578.3 226.8 235.0 419.6 349.8 373.0 3172.3 33.0 - 3.3Peonut 62.7 59.8 44.2 33.6 64.6 59.1 48.4 4.4 48.3 61.4 42.9 44.9 75.5 63.5 61.6 KA - 0.2Safllover 264.9 200.3 95.7 166.6 1153. 254.9 298.8 198.0 191.6 363.1 266.9 403.7 429.1 522.7 392.2 390.3 20.9Beseam 252.1 270.8 259.0 264.1 273.8 281.2 276.5 255.2 240.2 228.1 198.0 204.7 243.9 307.2 282.3 130.5 - 0.4SoybasnO 53.2 69.9 133.0 263.2 222.6 128.9 221.6 111.9 300.1 344.1 112.4 314.1 216.3 427.6 154.4 371.9 8.3Apples 11.8 11.2 12.0 153.3 5.7 22.2 29.8 33.4 34.9 32.1 34.3 60.0 43.1 43.8 40.5 47.0 10.2Avocado 13,1 15.0 16.0 17.1 19.1 33.8 26.9 31.3 31.6 37.4 36.9 46.2 51.4 48.1 36.0 61.0 10.8varants 76.0 76.3 61.7 60.9 71.4 .l 6 74.2 66.6 10.6 74.8 13.4 61.7 71.9 33.0 61.0 79.0 - 5.2Carops 12.2 11.9 14.9 17.2 19.7 11.4 22.5 21.8 25.7 24.5 29.1 31.9 40.4 37.9 37.3 42.0 8.6Lion 19.7 19.1 19.0 20.6 22.7 46.3 69.3 48.1 47.9 4*.7 45.2 4t.7 47.1 46.6 49.7 54.0 6.8mango 25.Z 11.3 11.4 12.4 16.6 26.0 25.0 29.4 29.4 40.5 63.2 45.7 51.4 60.0 53.0 61.0 13.3Oranges 99.4 139.0 143.0 143.4 154.2 150.9 134.6 167.2 161.0 166.6 160.6 164.7 244.6 168.1 161.4 NA 2.0Poach 1.8 5.6 6.1 6.6 15.4 23.7 28.9 21.0 23.6 25.0 23.6 25.2 24.0 23.2 22.5 26.0 8.0Alfalfa 108.1 121.9 119.9 142. 1523.5 163.8 167.9 180.6 201.1 203.6 193.8 209.6 220.9 230.0 220.5 MA 3.2buoty 240.8 238.5 235.6 245.0 224.0 221.2 217.4 262.5 173.4 286.3 363.3 249.5 296.4 250.4 329.4 274.3 280Oats 77.6 33.6 42.3 31.9 53.9 54.8 41.6 46.5 60.0 59.1 6t.8 68.1 54.6 31.8 121.3 NA 3.4Searht 313.9 6713.3 29.7 883.2 970.9 935.8 1109.0 284.6 1155.17 1445.1 1251.1 1413.4 1399.3 1162.2 1578.6 1761.3 5s7Cacao 70.0 69.0 69.9 72.9 73.9 78.4 78.4 80.1 82.4 72.4 72.4 64.4 64.9 66.4 61.2 NA 0.6 -Chicbpese 163.3 192.6 202.2 206.2 208.3 216.8 247.4 216.2 248.1 190.6 106.0 252.3 198.2 299.5 231.2 NA 1.7Coffee 354.0 3187.6 383.5 308.0 328.6 280.6 173.9 3178.6 13.4 373.6 370.3 389.4 393.4 403.9 418.4 NA 0.1Carlic 5.8 6.4 6.4 6.5 6.6 6.1 6.6 6.5 6.9 6.3 5.1 7.12 1.7 .9 9. NA 2.1Tomato (red) 45.2 46.2 52.1 35.2 63.7 61.4 71.1 69.4 62.6 59.4 48.4 62.1 65.4 75.9 73.9 PA 2.3Melons 25-9 18.3 16.7 17.6 16.6 17.1 17.2 26.0 18.5 13.7 15.6 17.9 26.3 24.3 23.8 23.0 2.6Stvbemry S.S 8.3 7.0 6.6 7.9 6.9 3.6 6.1 5.6 3.4 5.4 3.6 6.2 6.6 5.9 7.0 - 2.6uaemlon 28.9 22 9 19.2 58.3 29.6 24.6 23.4 32.0 23.9 21.0 2317 26.2 332 37.6 20.5 VA 2.1

Fenq"ein 205.4 206.9 185.6 188.8 178.8 183.0 202.1 200.0 199.0 190.6 190.1 175.3 165.8 149.7 159.0 INA - I.Cucmber f NA NA NA NA NA NA NA 9.4 9.2 6.17 6.2 6.7 7.6 11.3 10.6 PA 3.3Tobacco 39.6 32.1 33.4 42.2 43.1 50.2 38.1 39.0 42.6 60.2 39.9 40.4 44.5 46.4 51.6 NA 1.6

it Pincrst annual Compound (7 * an '-t Data not reported until 197131 roeth race for 1913-1980if fstinte

Souraes 1966-1977 from "Consus Aparentes" pubilthed by Diretoton Ceneral de c.anosa Agricola SARNI 197S-1981 from unpublished officeil date.

BEST COPY AVAILABLE

tYlLE I.: ESTIMAIED TIELCS OF PRIV IF. 'LPi. :Kfl.I:

1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1919 1980 1981 Growth Rate-_____________---------------------------------------------_------ ----- Ton/Ha -- ----------------------------------------- ~---~------~~~~~^ ~ ~~~~~~ 1966-1980

Beans 0.452 0.508 0.478 0.504 0.530 0.465 0.516 0.540 0.626 0.586 0.5b2 0.472 0.600 0.616 0.551 0.683 1.5Maite 1.119 1.130 1.181 1.184 1.194 1.272 1.265 1.132 1.168 1.262 1.182 t.357 1.520 1.517 1.780 1.812 2.6Rice 2.423 2.481 2.269 2.581 2.703 2.404 2.583 2.996 2.843 2.791 2.907 3.143 3.312 3.278 3.456 3.583 2.7Sugercane 66.096 65.645 62.764 61.743 63.383 68.015 69.314 65.448 68.157 72.012 63.241 53.645 66.037 64.289 66.875 64.595 -0.1Wheat 2.254 2.727 2.632 2.765 3.020 2.981 1.634 3.265 3.602 3.596 3.762 3.464 3.666 3.881 3.771 3.704. 3.4

Chile(dry) 0.922 1.019 1.084 1.157 1.106 1.149 1.141 1.185 1.290 1.118 1.128 1.054 1.122 1.183 1.252 NA 1.1Chile(green) 3.932 5.278 5.018 5.011 5.256 6.090 7.156 7.021 7.448 6.794 8.430 9.673 9.504 8.525 8.502 NA 5.4Onion 6.353 9.907 9.748 8.716 8.299 10.535 10.837 13.135 13.180 12.155 13.986 15.014 14.750 14.421 14.038 NA 4.8Potato 8.521 9.798 9.790 10.347 10.541 11.039 10.097 11.601 11.081 12.131 12.314 11.667 13.283 12.093 12.627 NA 2.4

Copra 2.340 2.136 2.183 1.426 1.271 1.206 1.128 1.090 1.025 1.046 1.044 1.037 1.037 0.860 1.112 NA -6.5Cottonseed 1.233 1.225 1.370 1.241 1.331 1.362 1.280 1.401 1.429 1.412 1.485 1.570 1.646 1.447 1.444 1.494 1.6Peanut 1.434 1.239 1.282 1.360 1.387 1.352 1.438 1.401 1.302 1.222 1.296 1.356 1.452 0.965 1.088 NA -1.1Safflower 1.432 1.486 1.191 1.443 1.645 1.611 1.365 1.506 1.423 1.466 1.300 1.284 1.435 1.202 1.136 1.288 -1.1Sesame 0.661 0.573 0.614 0.1663 0.655 0.641 0.581 0.698 0.666 0.506 0,428 0.592 0.549 0.449 0.622 0.622 -1.5Soybeans 1.749 1.874 2.069 1.757 1.919 1.985 1.700 1.877 1.636 1.738 1.755 1.643 1.543 1.682 2.014 1.894 -0.7

Applee 11.847 10.277 10.533 9.510 9.274 10.525 7.614 S.698 6.656 6.044 9.603 4.668 6.601 6.678 5.373 5.660 -5.0Avocado 12.372 11.593 12.019 11.795 11.832 9.950 8.706 9.150 7.765 7.473 7.600 7.369 7.689 7.563 8.223 7.492 -4.1Bananas 12.863 12.917 11.648 12.396 12.973 13.739 14.737 15.921 15.552 15.973 16.340 18.848 19.376 19.534 24.600 19.861 4.5Grapes 8.680 8.622 7.416 6.872 9.061 8.519 8.884 9.143 9.249 10.086 9.715 9.318 10.572 10.818 11.673 10.905 2.6Lemone 9.700 9.586 9.621 9.388 9.282 10.236 9.337 9.449 9.159 9.216 9.422 8.936 8.730 10.122 8.758 9.241 -0.4mango 23.274 23.150 23,353 22.153 18.530 12.027 10.964 10.187 11.758 9.610 9.905 8.818 10.519 10.988 10.957 9.705 -7.6Oranges 15.465 12.986 12.036 11.340 8.137 10.377 10,435 10.752 8.822 9.696 11.130 11.273 11.556 11.259 12.084 NA -1.0Peaches 13.569 13.638 13.574 11.909 11.526 8.778 8.294 7.842 8.754 9.416 7.534 7.609 7.358 6.780 6.191 8.923 -5.6

Alfelfa(Creen) 52.977 62.618 63.759 58.209 60.593 59.150 62.143 61.781 66.028 70.037 68.863 74.354 80.700 69.958 83.262 NA 3.6Barley 0.914 0.653 1.004 0.867 1.061 1.222 1.426 1.495 1.444 1.536 1.511 1.681 1.705 1.488 1.851 1.758 5.3Oats 0.808 0.903 1.007 0.768 0.794 0.474 0.639 0.847 0.852 1.473 0.723 1.797 1.124 0.928 t.500 NA 4.4Sorghum 2.450 2.475 2.570 2.781 2.830 2.689 2.355 2.760 3.028 2.855 3.219 3.060 2.996 3.437 3.048 3.562 2.0

Cacao 0.334 0.365 0.380 0.376 0.379 0.333 0.485 0.408 0.422 0.464 0.428 0.394 0.650 0.560 0.585 NA 3.9Chickpea 0.930 0.857 O0d87 0.888 0.891 0.777 0.922 1.045 1.004 1.024 0.693 1.076 1.087 1.152 1.074 NA 1.7Coffee 0.517 0.579 0.554 0.561 0.564 0.493 0.544 0.586 0.591 0.611 0.573 0.467 0.614 0.553 0.460 NA -0.2

Garlic 2.931 4.812 4.469 4.431 4.394 5.000 5.258 5.354 4.840 4.615 4.745 4.861 6.182 6.989 5.466 NA 3.0TomatoCred) 12.283 13.398 12.805 12.951 14.491 15.287 16.788 15.720 17.904 17.784 16.670 15.789 21.312 20.192 19,209 NA 3.5

Melon 13.421 11.606 11.976 9.574 9.825 9.898 12.029 11.833 11.686 12.445 12.013 13.911 13.471 13.992 14.370 14.000 1.7Strawberyr 16.330 15.398 16.457 15.788 16.063 14.986 15.431 15.672 18.178 12.778 16.537 18.571 16.032 14.015 15.949 15.571 -0.1Vateremlon 11.675 9.242 9.646 10.822 10.388 13.520 10.996 9.703 12.069 13.028 13.759 13.227 14.332 15.612 24.054 NA 11.0

Cotton (Fiber) 0.750 0.747 0.839 0.774 0.812 0.866 0.796 0.923 0.887 0.907 0,953 0.997 1.047 0.925 0.883 .970 1.8Henequen 0.695 0.711 0.738 0.729 0.816 0.788 0.738 0.737 0.775 0.736 0.702 0.577 0.593 0.585 0.540 NA -1.8

Cucumber b/ - - - - - - - 12.926 12.315 12.746 14.984 19.104 20.697 18.391 18.943 NA 7.7Tobacco 1.427 1.315 1.362 1.670 1.592 1.544 1.602 1.564 1.702 1.696 1,682 1.361 1.568 1.54? 1.533 NA 0.6

-r Percent annual compound.b/ Deat not reported befor 1973; grovth rate for 1973-1980./ Estimate.

Soure-a Tables 8 and 9.

REST COPy AVIAL

rIA g.e wow cligaisr sIP C992 FM On t1s-i

1ff4 Iff7 II8 19f7 1770 I971 17t2 2973 1974 1975 1976 2977 1978 1979 2960 1981 bl- 964 It10

9tcduetlc 1,013,389 980,139 853,919 934,597 925,042 953.783 869,504 1.008,887 971,571 1.027.301 79,*111 770,093 94;,744 641,2?7 971,359 1,449,021 -0.9t1ovte 583 409 302 361 8,L47 494 2,989 18,088 39,471 106,400 179 29.256 1,220 4,17 3083,8 490,187EPoote 102,141 53,338 9.831 s.lO 11,331 353 38,357 28,198 7U 364 42,201 130,071 44,084 2,391 2,238 13985Ocestioe 944,340 943,059 654,754 841,998 923,944 647,907 797,969 1,142,208 90t,575 824,088 811,552 793,422 1,097,593 684,492 1,4134142 1,470,265 0.°4 pew ctpita 22,1 21.3 18.7 18.2 18.9 18.9 1.1 21.2 24.3 14.3 10.3 22.9 16.8 20.5 20.9 21.2 -2.6

ptdutti 9.eS271,485 8,903,279 9,03,4823 8,410,894 8,839,384 9,783.734 9,222,938 8,909,132 7,947,763 8,448,708 8,017,294 10,127,194 10,920,071 8,44,795 132,32,243 14,793,740 1.2toetto 4.502 5,080 5,300 8,442 741,791 25,30 204,213 1,145,314 1,282,132 2,980,839 931879 1,985,819 1,344,04 744,278 4,287,072 2,844,349Exports 851, I 253,942 894607 789,083 2,394 274,411 423,696 31,589 1,603 8,289 4,131 2,13 2,702 12497 429 823Cohe,tto 8,280,033 1,460,080 8,24 8,42 7,924 9,12,649 9,271798 9,227,784 9,984,901 9,22;1902 10,673,247 9,252,135 11,587,142 12,333,094 9,481,417 12,540,511 13,2987,90 4,0I Pet capita 193.4 142.4 180,5 191.1 187,2 190.3 176.8 179.2 165.4 122.5 155.7 188.8 194.7 144.9 244.6 234. 0.5

Productls 243,970 275,808 229,164 260,8638 297,34 241,130 268,107 297,280 224,421 472,974 303,893 374,443 265,173 329,492 301,103 424.743 2.4Iwprts 11,514 28 9,107 4,844 91,301 g0al 42 37,896 71,274 9 18 92 232 33,479 95,002 U8.071 -bEptte 0 0 45,733 0 . 2 112785 122002 4,150 0 277 3,212 59,830 1 0 - -CxuosstBxc 259.401 278,193 1292,43 2 2150t 272,903 2471,293 234 ,38 3222138 393 032 452,237 198,249 401 56 293,278 384,354 351.395 466,709 2.04 per capita 6, 9.2 4.2 5.8 5.9 4.9 4.9 2.6 15 1.9 3,3 9.39 5.2 9.7 .2

110du Uproductolm 2,011,390 2,327,250 2.195,728 2,393,993 2,207,964 2,392,850 2,359,428 2,22,271 2,949,162 2,546,297 2,548,299 2,541,095 2,849.31 2,8O8,59 2,063,153 A 12,9tworts 1,110 1,024 1,211 1,238 2,019 21,12 1,370 1,749 1,489 497 848 340 4 0 134,295 NAEports 482,242 550,292 941,127 90..932 378097 5469324 377,138 404,829 426,850 161,806 384 299 383 93,08 0 NA -Corsptilo 12,530,2U8 17.18.012 2,533,972 1,791,249 1,920,908 12,47,92 1,721,842 1,927,191 2,222,021 2,07,I2 2,546,838 2,541,304 2,948,994 2,787,478 2,966,448 tA 5.2Is per capita 33,7 40.1 34.0 27,8 23.3 34.5 34.21 14.8 1,9 41,5 42.9 41.4 45.0 92.9 42,9 IA 1.7

roduettot 2941,2478368 2,22,19 2.080.713 2,322,055 2,479,451 1,830,879 1,609,018 2,090,944 2,788,577 2,798,219 3,233,299 2,453,774 1,784,660 2,282,174 2,785,209 3,189,402 2.7tworts 1,212 1.172 1,599 792 71 177,711 042,044 718,327 977,908 87,070 2,096 471,194 458,301 149,11006 922,4u9 1,027,930 ? ports 47,827 279,053 2,978 1352,873 41,9I 8,945 29,69 21,149 2s,8& 35,978 13,738 45,304 21,487 21,871 24,469 5,000Cexsiuptioo 2,733.298 2,990,845 2,127,437 1,924,324 2,953,909 1,042,307 2,377,943 2,688,278 3,745,0 2,04,305 2,994,859 3,663,959 3,072,933 3,102,144 3,423,389 4,1165,007 5,1ha per capita 40.4 44,2 44.9 40,9 54.2 40.4 43.5 498 87. 48,9 7434 0,6483..9 901 1.8

Caoampt9eo Isysts bhns been adjusted to talleet heque is COVA3O atoehs except is the cage of supr.I/Patentsa. ~ard2 rete est , ewound.

g/bused,

luce: 8AM. gaces deo * taiso, C ?O1433, cad MAISa.

BEST COPY AVAILABLE

Table 8.5: PRINCIPAL AGRICUILTURAL EXPORTS, VALUE FOB AND VOL"UME, 1970-1981

,7 b2i 343' 3li |s ls la 4 31 391 3971 it-I __ -m,. - … v.2~e sill tns f., .. W is.. th..v.s to_.--… ------- - _ _----;--- .. ..................

VaIam A 101.1 7FI. 0 A&8.0 1,014.4 2,20132 2,164.6 4tl0.S 4.127. i 6.412 7.61.S 7.3 77.?la. 222.5 3^.3 2.4i.0 2t1.3I.6 166.5l 56A 142.7 ?i0.6 191.1 2II1 2121.6 22.4

CQdr..e (taw)V4.2. 929.4 913.5 1.172.1 2,094.1 2.009.4 2,419.1 5.710.3 10.112.0 8.631.8 12.818.6 Sf2J.5 811.Vel.M6 8 *. SG.O 100.3 136.5 120.0 14.0 e.A 204.4 1MA 310.3 24.1: 18.5

heel 4as1.V.3,.. 386.0 2 1.0 1,45s.9 3,137.6 i 704.9 313 1.2;,5.2 3,68.9 3.191. 2,106.5 1,513.0 .7641.4Vol.. ( 000 bLd) S3 1 1757.6 I4. $52.5 343. 2;5.7 SU.A * $41.7 S02.l 42.3 242.6

40.0 MA.2 2.4 16.0 3.17 622.5 317.4 359.0 $21.6 f9.0 884.6 71.8 1,178.3V.3.... 10.8 10.8 14. 13.3 26.4 1.6 31.4 I t). 2i.2 31.1 I1.$ 20.8

Oi3ble;;.Ye Iwo 5.5 20.4 . 102.S 211.7 28.1 * 201.7 170.1 605.4 3,116.0 10,S.4 *,490.6 1,422.6v.3... 8.5 32.3 33.2 34.8 43.1 , 38.0 28.4 4.1 93.2 1030.2 64.2 64.5

Sem.." 1'V ; we 3 S .31. 184.8 4.31 11.0 11.1 2 2C.? 187.1 548.4 I,913.6 L348.) 53.0Vilod 3;4 3.5 23.3 13.1 6.9 U.0 . . .3 1. 21.0 304.2 42.3 7:.

* 7:~~~I'ocas t{, .1^Vii.. 417.1 11*.7 12236.5 1,338.e 1.172.4 13.5).1 3,5.2. * 4,789.1 * 4,253.0 3,41 . 42356.0 6,123.4V06as 241.4 311.6 322.5 .4.1 294. .9 1 28.6 22.6 426.0 413.7 404. 212. 292.6

v;-.. *47.1, s 4. 4.8 71.2 39.0 38.4 300.2 197.8 945.6 3,323.6 3,76.17 2,404.6v.alue 58.4 1103 18.4 82.1 14.0 69,9 03.8 021. MA 147.1 1 69.3 159.6

O.,r frsh v4puebh VVa,...4 101.9 114.9 24 I 234.5 348,. 249.0 344.6 226.7 1,434.2 12,11.8 3,9:1.6 2,553.4 3d., 3.... 19.5 19.9 104.1 ' 13.0 211.4 104.1 ' 101.0 144.3 1254.2 392. ., 138.6 I32.

3.35d 1, 1.1. 3*41.4 161.0 145.1 149.5 154.1 131.4 35.8 113.2 180.9 119.2 132.4 2V.1.....11 52.) 84.4 61.3 92.0 13.9 17.6 100.0 114.3 2MA.5 103.1 34

Vii,,342.7 254.2 3311.0 453.1 "54.2 388.1 331.6 893.5 1,0413. 1,413.9 Ul.3 W11.v.ala 88.6 *6.4 14.2 84. * 300. 62.3 41. 60.4 60. 2.2 *. 2.4 5.

Qliwt fIrgb VssA. 'V.a. 6.1 1ot 10 1. . 8 399.0 434.5 322.8 452.1Vol_ 8 :6 213013 o03,2 3 00.3 1 93.31 S': 73 5 130.2 ll5.1 134.7 lo0 .153.4

V lye 61.4 51.8 114.8 224.5 21.3 244.2 414.6 671.8 603.1 144.1 124.3 82131V=. 22.6 i1t. 31.1 23.2 20.2 20,6 48.0 . 13.2 43.1 45.8 3.4. 46.6

v.a.u Am 3,733.9 ),612. 1.026.4 8,76.0 2fi38. 8*,.2e9 0,. 3,50C2.5 31,634.9 26,4.1 310,26.8

lot.2 Vals. .oA116.U,14,.fe al .s 9 ,2 .Z44.1' 20,3.09.4 04,2886.2 24,244.6 38,240.0 U14,7.4 11,204.6 36,379. 41,791.3 42,509.1 42,321.5 40,866.6

fecal Vee e .of 419.6 * 30.9 261.2 20.8 2,133.8 ,1746.6 *1.oo. 23,343.6 40,850.4 80,611.8 226,20.4 342,21.1Vestelu.. S.pcr

e. total perchdadIlo 1,1. 51. 1.634.6 3421.6 31,2,72.3 37,s424.1 7 s37.os2 1MGM.0 103,43.2 24 11,101.0 233,125.4 351,306.? 416.124.1

A lUlIh ot wvII4t 11421,let 2IJ. ergi atzholWs, 1,ne, ciay, cbbble, IsAples1, 8040h, vale.. 3eaa 51.44 bases r6dlehge, e4goet., a.9.te-avalorib .eli, NW 6412. a.ittMww. bt¢. e4441. usvehl,, as pateley

gAI.bt oen~ 901f104 .,e3,.ed O ffe$ SNis.e *%pOrle vary widelyame lNOA M 46h354od de hellOf £sm140SLI IUa rosh ted Li..,,.

Imlearn 8411 aed Seats do hales ~~~~~~~BESt COPY AVAILABL,~

liKE 1S. IAFOTS YF SELECTEC APilkitiAl. "PGOLC'S. :.4 0.0. RIS Yk I.'-................... .. . ..... . ........ .. .. .. .. . ....

1970 1971 1972 1973 1974 1975 1976 197; t91 3979 1980 1981------------- ----------------- --------- Value ;n million ptisos; Volume In th.-uiind L -----------------------------------------------------------------Me icaeValue 704.0 24.2 204.6 1,535.7 2,4eO.0 5,004.5 1,539.2 4,426. 7 3,982.9 2,274.. 13,537.4 11,008.6Volume 736.0 17.2 197.5 1,136.1 1,270.4 2,618.0 905.4 1,751.1 1,412.4 744.0 3,777.3- 2,844.4

Deans blValue 26.9 - 9.7 56.0 387.2 802.3 - 233.4 11.8 86.7 5,533.2 8,255.3Volume 8.6 - 2.6 18.1 39.4 104.4 - 29.1 1.1 6.5 443.1 490.2

RiceValue 23.8 - 1 340.8 334.9 _ - -_ 130.6 807.8 610.0Volume 16.3 - - 37.0 71.2 _ _ _ 17.8 90.4 58.1

SugarValue

- 6,270.4 8,860.6Volue - - - - - - 363.3 552.1Wheat

Value - 146.6 581.6 976.2 2,360.8 217.7 3.0 1,061.6 1,495.5 4,294.0 3,745.5 5,253.6Volume - 176.7 640.0 718.3 975.9 87.3 1.5 476.2 483.8 1,147.9 822.7 1,027.9Soybeans

Value 132.2 89.6 28.2 159.1 1,234.5 92.5 1,654.6 3,516.6 4,023.4 3,577.7 2,037.7 8,701.3Volume 89.6 53.0 10.7 42.4 434.8 22.0 348.9 520.3 681.3 577.8 523.6 1,110.2 _

SorghumValue 20.5 34.2 238.4 49.4 801.2 1,451.5 144.9 1,637.5 1,885.5 3,528.2 7,073.2 10,065.2Volue 30.9 12.8 246.3 33.6 426.7 835.1 44.1 703.3 735.8 1,276.7 2,255.0 2,508.8

Oil SeedsValue 32.3 - - 140.6 168.5 1 6.2 312.5 3,438.0 3,066.9 2,432.0 3,711.4Volume 17.4 - - 39.9 39.6 - 1.3 36.9 211.1 372.0 323.8 368.3

Valuk 120.1 266.0 485.2 441.5 3,133.3 350.3 531.5 812.4 1,023.8 1,472.1 4,305.0 5,535.6Volume 36.0 48.2 67.8 60.7 106.6 38.1 68.8 77.6 90.5 107.2 244.0 209.4

VALUE ABOVE 1,059,8 301.8 1,527,7 3,45'.3 8,880.4 7,918.8 3,879.4 11,990.7 13,840.9 16,375.6 46,920.6 62,001.6

TOTAL AGRICULTURALIMPORTS 2,654,0 2,212,5 3,234.4 6,577 2 13,601.3 11,382.7 7,956.4 18,986.6 23,747.0 29,103,2 65,973.5 87,818.5TOTAL IMPORTS 29,379,0 28,366.0 34,293.8 48,05 ,5 76,095.3 82,606,4 93,740.9 133,689.4 187,114,8 267,732.7 425,182.0 568,368.2

S/ Preliminary.E/ Less than 1,000 tons,c powdered, evaporated, condensed, end fresh milk,

source: SARI and Banco de Mexico.

'2 7 COPY AVAILABLE

atEZ u. mt t 'tl Usti w bi:srii rb MUM ire-c. _. _._.__ ..................... . .. _.,., . .. .

7A aste' JJsa4 ese. Lubeid l te| aulesdt ell x la JIO a Sales H h 1 uousdsit ate me i W iriTR-snd VA MA- Thousand Mail PA's Theuend H9ii -e reula Mai eSflhasasad Mal " ThoWa M . mToo It'lllen Itllllon Toe. , i5jj Millionj tee IIIIem Mille. Ton Itllie, millien Tee " Millie. Mlle. Tee Sllts Millie. Ten plllle MillieMae. 2,. 1 4. 3 4.705.5 994.1 2,721.7 6.339,7 13472.7 31130.0 7.663.4 3.12J.7 31380.1 7450.6 2.7331.2 4.246.1 11.130.4 7.9)2.5 4*068.9 16.719.9 8,520.0 4.720.0 12. 74. 1 7211.99.699 199.1 1.141.) 70.2 264.1 2,193.7 46.7 198.9 1.479.2 342.6 220.7 1,726.4 (20.53 142. 3.934.0 1,130.7 261.9 .*e.0 2.1641.0 269.2 6.16* . 2,206.0wbbt4 8S4.7 1.140,6 294.0 13608.6 3,190.1 232.4 1.424.6 21,40.3 1119U.9 2,085.3 6,301.2 ,596.1 10.8 343.3 322.2 52.4 222.1 607.1 27.9 49.6 102.7iergltm 1776.3 349,5 162.6 912.2 1,975.9 494.9 1,183.0 4,004.6 939.3 1,979.0 4,406.8 16134.2 1,545.2 4,3128. 2,045.6 2,795.2 9,612.9 6.90.9 3.606.6 14,395.3 6.418.0%it. 46.) 269.5 77.9 38.5 245.1 64.5 I2.2 915.4 207.1 76.7 61.7 (4.0) 89.1 912.8 27.0 108.4 1.464.& (126.0) 229.2 2,2 0.0 42.6aIler7 * * - 1.3 121.6 (3.2) 6.1 10.0 (4.9) 0.2 0.8 (0.33 0.1 0.2 (0.7) 0.1 -

pwdertd Ilh 6910 3,061.3 (243.23 76.8 1.217.2 (296.5) 16.2 1,197.9 (438.3) 94.0 1,793.3 (117.2) 97.7 2.003.6 052.8) 121.9 2,280.' s1.9 130.0 5.240.6 663.8T1lle 23.1 1U1.9 (1s.) 7e.1 437.3 (65.7) 12.9 620.9 (17.2) 33.4 145.7 19.6 8.2 143.9 (16.13 23.) 436.s (83.9) 93.1 2.769.2

oill3 ede 1001.3 2.752.6 424.9 353.8 1,913.0 675.5 1.004.2 53502.5 1,14e.0 524.1 2.182.5 569.2 120.4 852.7 92.0 7123.9 6.6691 761.9 1591.1 20.346.6 606.3oila 10.9 120.4 (7.73 22.3 282.3 37.4 61.6 870.0 85.5 5.7 82.7 18.6 20.3 521.1 3M. 19.4 459.8 (113.51 109.0 3.210.) 160.1

tel.tn MAlI 46.3 618.1 q17.5) 194.0 1,064.9 3Y7,7 17 2.6 1,064.0 131.3 2321. 2.04,6 209.6 247.5 2,539.6 78.5 236.6 1,456.3 OO.t 2132.2 1432.3 92.3saute for Ccle 10.6 176.9 95.8 16.6 241,9 60.9 24.3 306.9 132.0 36.2 46530 35.2 11.6 340.2 236.4 1.2 42.0 336.0 11.2 593.2osuet Preluce 4.5 8.4 1. 7.. 7.7 203Jg 223.0 9.2 298.2 420.6 1.5 310.4 43.0 9.8 296.8 621.6 19.9 £68.6 ". 7 131.1 2,218. _

14,314.4 2,941.9 19,407.9 1398,137.U.9 7,514.0 29,167.0 7.444.7 26.924., 12,505.0 43,885.8 21.712.2 11.15.3 711542.6 27,514.9

lurtert CaKUo VlIanilel Sialitnuto for 911 1 1982 estliled.

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Table 8.P: SUPPORT PRICES OF MAIN CROPS, 1965-82

Year Maize.' Beans Whent. Rice Sorghum Safflower Sesame Soybean Cottonseed------- ----- - -- - ------…Mex$ per K- …--- --------

.1965 940 , 1,750 913 1,100 - 1,500 - - -*1966 940 1,750 800- 1,100 625 1,500 2,500 1,600 9001967 940 1,750 8B0 1,100 625 1,500 2,500 1,600 9001968 940 1,750 800 1,100 625 1,500 2,500 1,600 900.1969 940 1,750 800 1,100 625 1,500 2,500 1,450 900

1970 940 1,750 800 1,100 625 1,500 2,500 1,300 9001971 940 1,750 800 1,100 *625 1,500 2,500 1,600 9001972 940 1,750 800 1,100 627 1,500 3,000 1,800 9001'J73 940 2,150 870 1,100 725 ,1,600 3,000 2,700 9001974 1,5C0 6,0X0 1,300 3,000 725 3,000 5,000 3,300 2,2001975 1,750 6,000 1,750 2,500 1,100 . 3,500 6,000 3,500 2,2001976 1,900 4,750' 1,750 2,875 1,600 3,200 6,600 3,500 2,650 -1977 2,900 5,000 2,050 2,925 1,600 , 3,900 7,540 4,000 2,6501978 2,900 6,250 2,600 2,925 2,030 4,600 7,540 5,500 2,650 1979 3,480 7,750 3,000 3,510 2,335 5,000 9,050 8,000 3,825

1980 4,450 12,000 3,550 4,500 2,900 6,000 11,500 8,000 5,0001981 6,550 16,000 4,600 6,500 3,930 7,800 15,525 10,800 6,7501982a/ 9,850 21,100 6,930 8,600 5,200 1Trt50' 20,900 14,300 8,800

/ !ost crops are rrorn in the spring-autun.n period. Consequently support prices for each calendar yearcorrespond to the agricultural year. Noticeable exceptions are safflower and wheat. Both correspondto the fall-winter cycle. They are generally planted in October-November and harvested in the first quarter ofthe following year. In these cases support prices correspond to the srain harvested in the year forwhich thc price is reported. For example the prices for wheat and safflower announced for the 1981/82season are %14 6,930/XT and $ 11,150/MT respectively and will be recorded under year 1982.

Source: DCEA, SARl

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TABLE 9.1 PRODUCTION OF PETROLEUM AND BAB

IDTAL RE- TOTAL PRO- PRODUCTION PRODUCTION OF PRODUCTION OFSERVES DUCTION OF NUMBER OF RESERVE PER HELL CRUDE OIL NATURAL SAS

(Kill bbl) HYDROCARBONS VELLS RATIO (bbl/day) (Hill bbll (Hill d3)

1970 5569 304 4146 18 201 156.59 38.831971 5428 298 4455 19 183 155.91 18.221972 5389 309 4375 17 194 161.37 19.691973 5432 319 4339 17 201 164.91 19.16i974 5773 379 4043 15 257 209.86 21.091975 6331 439 4074 14 295 261.59 22.271976 11160 469 3082 24 417 293.12 21.861977 16002 533 4079 30 358 358.09 21.151979 40194 658 4309 61 419 442.61 26.471979 45803 785 4390 59 490 536.93 30.151990 60126 1015 4706 59 591 709.59 36.771991 72001 1199 4621 60 711 844.24 41.971992 72009 1372 4350 52 864 1003.01 43.89

1/ Includes crude, condenuates, liquid gas and asssociated gases.

SOURCEi PEREX

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TABLE 9.2 SALES OF PETROLEUN AND GAS

B ILLION SHEI I

DONESTIC EIPORTS.. . . ... . . . ....... ........ . . ..... ----------------- ----------------- -------------------------- .TOTAL

GAS & OIL PETROCHEMICALS OTHER TOTAL GAS t OIL PETROCHEMICALS OTHER TOTAL SALES

1970 1l.6t 1.24 0.02 12.93 0.46 0.05 -- 0.50 13.431911 12.84 1.32 0.M4 14.20 0.39 0.05 -- 0.43 14.631972 14.02 1.66 0.02 15.70 0.29 0.04 -- 0.32 16.031913 16.12 1.95 0.03 18.09 0.39 0.06 -- 0.45 19.541974 27.55 3.14 0.05 30.73 1.55 0.12 -- 1.67 32.401975 29.04 4.07 0.05 33.16 5.23 0.05 -- 5.29 39.441976 32.70 5.75 0.04 38.49 6.99 0.01 -- 7.00 45.491977 43.75 9.02 0.05 52.92 23.36 0.09 -- 23.43 76.251978 49.04 10.04 0.03 59.11 40.26 1.54 -- 41.80 100.901979 62.12 12.42 0.11 74.64 89.21 2.49 -- 91.69 166.331980 77.17 17.49 0.75 95.40 236.22 2.88 0.40 239.50 334.911981 90.81 21.23 1.31 113.41 353.77 3.77 -- 357.54 470.951992 145.10 34.95 2.10 122.15 945.13 9.06 -- 953.19 1135.33

SOURCE a PENEX

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- 143 -

TABLE 9.3 INDEX OF INDUSTRIAL PRODUCTIDN

( 1980=100, periad averages )

1975 1976 1977 1979 1979 1990 1981 1982 1993p1

GENERAL INDEX OFINDUSTRIAL ACTIVITY 68.60 72.10 73.89 91.92 fl.lQ 100.00 108.85 106.95 98.24

MINING it 54.66 57.97 62.38 71.26 81.74 100.00 115.32 127.61 123.57

MANUFACTURING 21 70.78 74.20 76.26 83.95 92.76 100.00 107.39 103.12 94.85CONSUMER 6000S 73.17 76.15 79.08 85.20 93.66 100.00 106.78 104.93 98.18DURABLES 68.12 71.23 71.50 81.34 91.96 100.00 109.56 97.12 81.88NON-DURABLES 74.3B 77.36 80.Y1 86.15 ?4.09 100.00 106.02 106.87 102.24

INTERMEDIATE GOODS 69.75 73.89 75.60 83.13 92.45 100.00 107.16 107.65 85.63CAPITAL FORMATION 65.52 65.96 66.29 76.62 89.78 100.00 112.66 95.70 72.49

CONSTRUCTION 68.25 71.13 68.97 78.34 8B.71 100.00 111.48 209.22 93.26

ELECTRICITY 63.65 71.12 78.23 85.22 93.48 100.00 108.22 116.61 117.97

PETROLEUM 31 48.70 52.59 57.V1 68.12 90.64 100.00 116.71 129.11 115.99

p/ Preliminary estimates based on Jan-Oct figures.1/ Includes extraction of crude cil and natural gas.2/ Includes the refining of crude oil and derivatives and basic pertochemicals.3/ Includes a subgroup *ining ISTIC 0601 for the extraction of crude oil andand natural gas and a subgroup in oanufacturing (STIC 3301 & 3401 for refin-ing and basic petrochemicals.

SOURCE: BANK OF MEXICO

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TABLE 10.1 NACRO-ECONONIC PROJECTION, SCENARIO I

1982 1983 1984 1985 19B6 1987 1988 1990 1995

6DP ( in 1980 billion $Nex 1 4593.23 4377.35 4440.78 4587.55 4829.82 5123.90 5444.20 6080.56 8341.00

Private Consumption per capita 41.67 38.92 39.66 39.33 40.24 41.54 43.12 46.00 55.00( in 1980 million SHex i

Investsent ( in 1980 billion $Sex 9 992.14 741.07 800.01 917.69 1015.76 1105.74 1179.05 1326.11 1849.95

In Current Prices ( in billion SUS I

Exports of S&NFS 29.47 29.60 31.20 35.58 40.27 45.62 51.75 66.60 123.33Oil 16.46 16.20 15.50 17.05 18.67 20.44 22.39 26.84 44.02Non-oil 13.01 13.40 15.70 18.53 21.60 25.18 29.36 39.76 79.31

Imports of 6&NFS 22.00 14.90 22.00 27.60 33.37 39.12 45.27 60.42 119.00Resource Balance 7.47 14.70 9.20 7.98 6.90 6.50 6.48 6.18 4.33Current Account Balance -2.64 5.30 0.73 -1.19 -2.34 -3.00 -3.35 -4.49 -9.59

(in 1980 billion Se)

Public Revenue 1006.86 1070.39 1139.53 1270.15 1345.04 1431.00 1522.75 1723.79 2356.67Public Current Expenditure 1270.58 1122.25 1043.04 1076.72 1120.69 1179.96 1247.21 1397.34 1898.97Public Investment 530.76 297.12 337.17 343.94 367.98 398.41 431.39 506.04 702.60Public deficit -794.48 -348.98 -240.69 -150.51 -143.63 -147.39 -155.85 -179.59 -244.90

(in billion SM

Debt Service Ratio 13.95 12.61 11.00 20.12 16.03 29.02 27.79 2B.46 34.75Debt as I of Exports 50.91 87.50 92.07 92.46 95.39 99.22 103.72 114.24 152.85Interst Payments as 10.88 13t.30 9.57 10.03 10.02 10.29 10.66 11.62 14.95

NOTE: This table summarizes the results of projection runs. There aay be small discrepancies between data shown herefor 1982 and 1983 and data presented elsewhere.

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TABLE 10.2 MACRO-ECONOMIC PROJECTION, SCENARIO II

1982 1983 1984 1985 1986 1987 1998 1990 1995

GDP ( in 19BO billion Shex 1 4593.23 4377.35 4440.78 4532.53 4664.79 4874.79 5098.06 5576.60 6984.00

Private Consumption per capita 41.67 38.92 39.62 3B.86 ERROR ERROR ERROR 43.00 48.00( in 1980 billion SHex )

Investment ( in 1980 billion SHex 9 992.14 741.87 BOO.01 065.30 918.68 979.10 1029.66 1139.19 1470.48

In Current Prices ( in billion SU5)

Exports of 6&NFS 29.47 29.60 30.70 33.71 35.99 38.89 41.22 47.21 69.99Oil 16.46 16.20 15.50 17.05 18.23 19.67 20.83 23.83 35.29Non-oil 13.01 13.40 15.20 16.66 17.76 19.21 20.39 23.38 34.70

Imports of GUlFS 22.00 14.90 21.20 23.64 26.78 30.69 33.67 40.49 64.23Resource Balance 7.47 14.70 9.50 10.07 9.21 8.20 7.55 6.72 5.76Current Account Balance -2.64 5.30 -1.49 -1.09 0.98 0.38 -0.15 1.12 2.56

(in 1980 billion Slerx

Public Revenue 1006.86 1070.39 1142.66 1223.63 1269.30 1332.45 1390.10 1533.64 1961.93Public Current Expenditure 1270.57 1122.25 1045.91 1073.81 1073.31 1114.11 1157.01 1278.39 1631.55Public Investment 530.76 297.12 338.10 352.43 369.16 386.71 403.05 444.52 560.94Public deficit -794.47 -348.98 -241.35 -202.61 -173.17 -168.37 -169.96 -189.26 -230.56

(in billion SUS 1

Debt Service Payments 13.95 12.61 13.39 21.93 14.66 27.27 25.29 25.04 24.24Debt 50.91 87.50 93.98 92.22 91.88 91.19 90.95 93.17 99.39Interest Payments 10.88 10.30 12.06 11.83 8.36 7.88 7.79 9.00 8.19

NOTE: This table sumearizes the results of projection runs. There may be small discrepancies between data shown herefor 1982 and 1983 and data which has been presented elsewhere.

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TABLE 10.3 NACRO-ECONONIC PROJECTION, SENSITIVITY TO FOREIGN FINANCING

1982 1983 1984 1985 1996 1987 19B8 1990 1995

GDP ( in 1980 billion SHex ) 4593.23 4377.35 4440.76 4515.68 4643.44 4780.72 4990.34 5561.39 7473.77

Private Consumption per capita 41.67 36.91 39.65 37.85 37.56 36.98 37.70 39.00 47.00( in 1980 million Shex I

Investment ( in 1980 billion SHex ) 992.2B 741.87 800.01 904.54 979.95 1038.09 1089.59 1225.17 1663.21

In Current Prices ( in billion $US I

Exports of 6SNFS 29.47 29.60 31.20 35.53 40.22 45.56 51.71 66.55 113.73Imports of 6&NFS 22.01 14.91 22.00 24.68 29.97 33.51 39.79 53.07 104.62Resource Balance 7.46 14.69 9.20 10.85 10.26 12.05 11.92 13.4B 9.10Current Account Balance -2.64 5.27 0.73 1.66 1.34 3.2L 3.50 5.86 2.07

(in 1980 billion SHex )

Public Revenue 1006.86 1070.43 1141.01 1250.54 1305.74 1347.36 1413.60 1580.86 2118.24Public Current Expenditure 1270.57 1122.25 1044.40 1077.55 1122.87 1186.68 1263.97 1445.27 1804.07Public Investment 530.76 297.12 337.61 344.37 366.40 398.83 431.79 506.39 64B.35Public deficit -794.47 -348.94 -241.00 -171.39 -185.52 -238.15 -282.16 -370.80 -334.18

(in billion SUS

Debt Service Payments 13.95 12.61 11.00 20.13 15.69 28.31 26.38 24.77 21.46Debt 50.91 87.50 92.07 89.13 8B.24 85.39 82.92 74.12 74.44Interest Payments 10.88 10.30 9.57 10.03 9.66 9.52 9.17 8.46 7.86

NOTE: This table sunmarizes the results of projection runs. There may be small discrepancies between data shown herefor 1982 and 1983 and data which has been presented elseNhere.

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TABLE 10.4 MACRO-ECONOMIC PROJECTION, SENSITIVITY TO INTEREST RATES

1982 1983 1984 1985 1986 1987 1988 1990 1995------------------------------------------------------------------- __--------__

GOP (in 1980 billion $hex 1 4593.23 4377.34 4440.78 45B7.55 4829.83 5123.92 5444.21 6147.71 8341.15

Private Consumption per capita 41.67 38.91 39.65 39.32 40.23 41.53 43.11 46.00 56.00(in 1900 million SNex )

Investment ( in 1980 billion $Mex 0 992.14 741.37 800.01 917.69 1015.76 1105.74 1179.05 1340.75 1849.98

In Current Prices ( in billion $US;

Exports of 6&NFS 29.48 29.60 31.20 35.59 40.27 45.62 51.75 66.60 123.34Imports of 6&NFS 227.00 14.90 22.00 27.60 33.36 39.12 45.27 60.42 119.01Resource Balance 7.48 14.70 9.20 7.9? 6.90 6.50 6.48 6.18 4.33Current Account Balance -2.64 5.30 -0.49 -2.68 -4.25 -5.30 -6.19 -8.49 -18.07

(in 1980 billion SHex

Public Revenue 1006.86 1070.39 1141.01 1271.47 1346.54 1432.46 1524.16 1725.0? 2357.45Public Current Expenditure 1270.57 1122.25 1044.40 1082.32 1134.19 1199.93 1275.92 1443.14 2009.87Public Investment 530.76 297.12 337.61 345.64 368.39 398.82 431.79 506.42 702.83Public deficit -794.47 -34B.98 -241.00 -156.49 -156.04 -166.29 -1831.55 -224.47 -455.26

( in billion $115

Debt Service Payments 13.95 12.61 12.16 21.57 17.9O 31.29 30.60 33.03 46.46Debt 50.92 87.50 93.28 95.25 100.13 106.36 113.78 131.89 203.47Interest Payments 10.88 10.30 10.79 11.53 11.94 12.66 13.63 15.88 23.93

NOTE: This table summarizes the results of projection runs. There may be small discrepancies between data shown herefor 1982 and 1983 and data which has been presented elsewhere.

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a _

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