The Mexican government has succeeded in getting an extra $450 million to $500 million emergency loan from major private banks to carry it over until a much larger loan package is arranged, sources said yesterday.
Jose Angel Gurria, Mexican general director of credit for the finance ministry, flew to New York late last week to ask Mexico's big private creditors to advance $500 million immediately while negotiations continue on a new $5 billion loan. These negotiations have taken much longer than originally expected, although banking sources say that they still expect agreement to be reached.
Mexico, one of the two largest Third World borrowers, has negotiated a loan with the International Monetary Fund and is stretching out repayments on much of its commercial bank debt after a financial crisis last summer. The Mexican government and the IMF asked private banks in the United States and elsewhere to put up new money of $5 billion to bridge Mexico's financing gap, while the nation struggles to cut back imports and raise exports.
The new, much smaller loan was "coming together," sources said, after Citibank, which is leading the negotiations between Mexico and its private creditors, called a meeting of major banks at the beginning of this week. The money will be made available immediately, the source said. The larger loan is "also coming together, but its taking a little longer to put together," he said.
Mexico originally had expected to receive $1.7 billion of the $5 billion loan package in January, but now thinks that it may not get this cash until next month as the details of the big loan are worked out, said sources in Mexico City. The delays are largely technical, a New York source said. The $5 billion, 6-year loan involves hundreds of different banks and 150 pages of legal documentation, this source said.
Although the big banks agreed this week to put up an amount "closer to $450 million" than the $500 million of emergency money that Gurria requested, a New York source termed the sum adequate to meet Mexico's short-term needs, and the money will act as "a bridge for the $5 billion bridge."