Chronology of a crisis:
June 2, 1981: Faced with a worldwide oil glut, the director of Mexico's state-owned petroleum company lowers prices by $4 a barrel. He is fired, and Mexico attempts to raise its prices rather than face the loss in oil revenues needed to fund development. Many clients, however, cancel contracts, and Mexico ultimately settles for a $2 reduction.
Uncertainty provokes a hemorrhage of capital from Mexico in July.
July 17: President Jose Lopez Portillo announces increased import controls and small reductions in public spending and insists he will defend the peso "like a dog."
Sept. 25: Secretary of Planning and Budget Miguel de la Madrid is named as Lopez Portillo's de facto successor.
January 1982: Accelerating inflation, worsening payments deficit and rumors of imminent devaluation help provoke further capital flight.
Feb. 17: The peso is devalued by about 40 percent; prices rise.
March: Despite new controls, prices continue to rise and the government declares wage increases of up to 30 percent. There is a new run on the peso.
April: Newly appointed finance minister Jesus Silva Herzog announces a 17 point austerity program, including an 8 percent across-the-board cut in public spending and a cut in the public sector deficit.
Alfa, the country's largest industrial group, tells its international creditors that it cannot meet payments on its huge dollar debts.
May: Capital outflow increases as confidence declines.
June: A consortium of major international banks arranges a new "jumbo loan" of $2.5 billion for the government, but smaller banks are unwilling to join in.
July 4: De la Madrid formally is elected president.
Aug. 2: The government doubles the price of tortillas and bread and sharply increases the prices of electricity, gasoline, fuel oil and other public-sector goods.
Aug. 5: Silva Herzog announces that the Bank of Mexico no longer will prop up the peso and introduces a two-tier exchange rate, with preferential dollars for imports of essential goods and repayments of earlier dollar debts.
Aug. 6: The free peso rate immediately drops from just over 49 to the dollar to 77.
Aug. 12: As Mexico's foreign exchange reserves dwindle, the government announces the closing of the exchange markets and freezes dollars in Mexican accounts at the day's closing rate of 69.5 to the dollar.
Aug. 13-16: Mexico's finance minister flies to Washington to ask for emergency U.S. help and also requests a $4.8 billion loan from the International Monetary Fund. The United States makes $1 billion available to Mexico in return for advance oil sales. Western governments are asked to join in a short-term loan of $1.5 billion through the Bank for International Settlements in Basel. Commercial banks are asked to meet to consider delayed payment of short-term debts.
Aug. 20: Bankers in New York agree in principle to renew debts for the next 30 days. While an IMF team in Mexico attempts to sort out the details of an agreement, senior Mexican economic officials travel to San Francisco and London and other cities, seeking additional support from commercial banks.
Aug. 25: Central banks agree to lend $700 million of the $1.5 billion requested from Sept. 1, and negotiations continue over the rest of the money.