President Miguel de la Madrid, adopting a cautiously upbeat tone in his first state-of-the-nation address, said today that his austerity policies had brought under control the worst aspects of Mexico's economic crisis.
Outlining his accomplishments after nine months in office, de la Madrid noted that Mexico had successfully renegotiated terms for repaying its enormous foreign debt, had sharply cut its budget deficit and gradually was lowering the inflation rate.
"The adversities that plague us today will one day become mere incidents in the life of our nation. Mexico will make it!" he told a joint session of Congress.
As one indication of the progress that has been made, de la Madrid announced an average pay increase of $28 a month for government employes and members of the armed forces, and a smaller increase for teachers.
But the president also acknowledged that the current economic problems, the worst in Mexico's modern history, had not passed away. He compared the economic challenge to that of a time of war, saying that "the destiny of the nation is at stake."
"I know that the crisis has not yet been overcome. My administration has only stated that the most acute and serious aspects of the crisis are now under control. We are no longer in a nosedive. But we cannot let down our guard; we must steer clear of complacency and premature claims of victory," he said.
Mexico's economic troubles--and the possibility that they could lead to social unrest--have aroused concern in the United States from Wall Street to the State Department. De la Madrid said at the start of his speech that when he took office the economic situation "constituted a threat to the country's economic and social stability."
De la Madrid's portrayal of the economic situation was generally in line with views of U.S. and other foreign analysts. De la Madrid appeared to be trying to avoid the heavy-handed rhetoric and dramatic announcements that have characterized some previous state-of-the-nation speeches here.
"There weren't any surprises. He was frank and open," a Western diplomat here said.
The address, which lasted more than three hours, contrasted in particular with last year's speech by former president Jose Lopez Portillo. He surprised Mexicans and foreigners alike by announcing the nationalization of the banking system.
Today, de la Madrid said, "We do not intend to 'state-ize' the economy. . . . We prefer a strong efficient state to an obese, incompetent one."
On other topics, de la Madrid emphasized that his government would pursue its anticorruption campaign. In a fresh sign of continued efforts in this field, local radio stations reported that the government intends to confiscate the summer home of former senior police official Gen. Arturo Durazo on grounds that the home was purchased with illegally obtained funds.
Speaking of relations with the United States, de la Madrid reiterated past complaints about U.S. trade barriers to Mexican goods but avoided any specific mention of disagreements with Washington over Central American policy.
A year ago Mexico was forced to halt repayments of principal on a quarter of its more than $80 billion of foreign debt because of a severe shortage of foreign exchange. The inflation rate narrowly missed hitting 100 percent for all of 1982, and the peso plunged in value.
The economy was hurt by the weakening of the world petroleum market and resulting fall in Mexico's oil revenues, the rise in interest rates that pushed up debt-servicing costs, and the world recession that reduced demand for Mexican exports.
To win back the confidence of international bankers, Mexico negotiated an agreement with the International Monetary Fund in which it agreed, among other things, to reduce its public sector deficit from 18 percent of its gross domestic product in 1982 to 8.5 percent this year. Foreign bankers accepted the package and loaned the country $5 billion.
When he came into office, de la Madrid imposed a variety of austerity measures including a 10 percent income tax surcharge for higher income taxpayers, and increases in the national sales and luxury taxes. Government-controlled prices were raised sharply for products ranging from gasoline to tortillas, while the nation's largest unions agreed to accept relatively small increases in wages.
The result has been a sharp decline in the standard of living and increased unemployment, but the nation's financial situation has begun to stabilize. De la Madrid pointed to a 124 percent increase in tax revenues, the agreement signed Aug. 26 fixing new terms for debt repayments and an increase in foreign currency reserves from $1.77 billion when de la Madrid took office to $3.55 billion yesterday.
De la Madrid acknowledged that inflation still is a problem but said it was falling. He did not predict what the rate would be this year, but some analysts expect an 80 percent rate.