Accession Number : ADA314982

Title :   Mexico's Financial Crisis: Origins, Awareness, Assistance, and Initial Efforts to Recover.

Corporate Author : GENERAL ACCOUNTING OFFICE WASHINGTON DC GENERAL GOVERNMENT DIV

PDF Url : ADA314982

Report Date : FEB 1996

Pagination or Media Count : 170

Abstract : Mexico's devaluation of the peso in December 1994 precipitated a crisis in Mexico's financial institutions and markets that continued into 1995. Investor confidence collapsed as investors sold Mexican equity and debt securities, and foreign currency reserves at the Bank of Mexico were insufficient to meet the demand of investors seeking to convert pesos to U.S. dollars. In response to this crisis, the United States organized a financial assistance package of up to $48.8 billion in funds from the United States, Canada, the International Monetary Fund (IMF), and the Bank for International Settlements (BIS). The multilateral assistance package was intended to enable Mexico to avoid defaulting on its debt obligations, and thereby overcome its short-term liquidity crisis, and to prevent the crisis from spreading to other emerging markets. In light of U.S. commitments to lend Mexico up to $20 billion, the Chairman of the House Committee on Banking and Financial Services asked GAO to prepare a comprehensive report on Mexico's 1994-95 financial crisis. In response to this request, GAO (1) examined the origins of Mexico's financial crisis; (2) assessed the extent to which the U.S. government and IMF were aware of the severity of Mexico's financial problems throughout 1994 and provided financial advice to Mexico; (3) described the U.S. and IMF response to the crisis, and provided an analysis of the statutory authority of the Secretary of the Treasury to use the Exchange Stabilization Fund (ESF) to finance the package and an assessment of the terms and conditions of the various agreements implementing the U.S. portion of the assistance; and (4) examined the initial efforts of Mexico to recover from the crisis, which included a discussion of Mexico's access to international capital markets.

Descriptors :   *RECOVERY, *POLITICAL SCIENCE, *FINANCIAL MANAGEMENT, *GOVERNMENT(FOREIGN), *MEXICO, STABILIZATION, POLICIES, UNITED STATES GOVERNMENT, INVESTMENTS, BANKING, ECONOMICS, CANADA, HISTORY, INTERNATIONAL TRADE, EXCHANGE, AWARENESS, MONEY, FOREIGN AID.

Subject Categories : Economics and Cost Analysis
      Government and Political Science

Distribution Statement : APPROVED FOR PUBLIC RELEASE