President Miguel de la Madrid said tonight that Mexico's foreign creditors must "share the responsibility" for the country's increasingly acute debt crisis and accept less money in interest payments this year on the country's $96.4 billion in foreign debt.
In a nationally televised speech closely watched by foreign bankers and diplomats, De la Madrid said the "chaotic" oil market would deprive Mexico of about $6 billion in anticipated income this year, reducing federal revenue by 12.5 percent and the country's total export earnings by nearly a third.
A financial shortfall of such magnitude cannot be resolved either by "more austerity" or by perpetuating the "interminable vicious cycle" of indebtedness with massive foreign borrowing, he said.
Mexico's debt-servicing load must be lightened "in accord with the country's ability to pay," De la Madrid said, and "requires . . . sacrifice on the part of the international creditors."
Foreign creditors will receive a detailed 1986 financial prospectus and proposal for new debt negotiations next week, the president said. "I won't make economic concessions that compromise our sovereignty," De la Madrid said, replying to foreign bankers and government officials whom he said "have proposed that we radically modify our ecconomic policy."
Tonight's address had aroused great anticipation as Mexico's first economic policy statement since the oil market collapse forced the government to scrap its 1986 federal budget and foreign borrowing plans. Anxious to quash speculation that he might unilaterally declare a debt default, De la Madrid said Mexico wished to retain "the respect of the international community" and hoped to resolve the debt problem "through negotiation, not confrontation."
Normally dependent on petroleum for two-thirds of its hard-currency earnings, Mexico has been forced to cut oil prices three times in the last eight weeks. Today, a barrel of Mexican crude oil costs an average of $15.07 -- $10 less than it did in November -- "a much faster and steeper decline than any of us had expected," a member of the steering committee of Mexico's biggest private creditors acknowledged this week.
Influential Mexican Cabinet members reportedly have been divided over how to react to the oil price drop, with some officials advocating deeper budget cuts and others urging an expansion of state spending to stimulate growth. De la Madrid steered a middle course between these two positions tonight, arguing that oil-revenue losses cannot be compensated totally with budget cuts, but that an increase in state spending "would provoke greater problems than the one they hope to resolve."
While pledging to enact "fundamental structural reforms," De la Madrid tonight offered few specific indications of his country's short-term economic plans. Without mentioning amounts, De la Madrid also said Mexico would be requesting new financing at "lower costs" this year.
De la Madrid's warnings against mounting indebtedness appeared to corroborate the denials by Mexican officials and foreign bankers of reports that Mexico is seeking some $9 billion in new loans this year.
Finance Ministry officials, however, reportedly are drafting a proposal to reduce payments on Mexico's loans to a level two or three points below the London interbank rate, which is used for most of Mexico's debts and stands now at slightly less than 10 percent. Under this plan, a portion of Mexico's scheduled interest payments would automatically be converted into debt principal that would be amortized sometime in the 1990s, according to banking and diplomatic sources.
Some diplomats and foreign bank analysts contend that Mexico, once criticized for excessively optimistic economic forecasts, is now dramatizing its financial dilemma by deliberately underestimating non-oil income sources and exaggerating its debt servicing projections. "Their situation is difficult, but when you put on your green eyeshades and go over the books their financial needs don't seem to be as great as they say they are," a U.S. official said.
Before the oil-price crisis, commercial banks had expected to lend Mexico about $2.5 billion in fresh credit this year, funds that were to be complemented by a projected $1.6 billion in government and multilateral credits and an $800 million International Monetary Fund stand-by loan. Bankers now anticipate a loan package with bigger contributions from multilateral lenders to be paralleled by a further renegotiation of Mexico's $70 billion public sector debt, which was last rescheduled in August.
To help Mexico's short-term payments crunch, banks will postpone the collection of a $950 million principal payment now due in April, banking sources said. The IMF and the U.S. government also may give Mexico emergency credit infusions to assure that it can pay interest while talks with commercial banks continue, bankers said.