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U.S. To Pay Half Of Loan To Mexico

The United States has agreed to pay for half of an $18-billion international loan package to help Mexico stabilize the peso and recover from its economic crisis, Mexican officials said on Monday.

The United States will expand an existing $6 billion credit line to $9 billion, with one half coming from the Treasury Department’s exchange stabilization fund and the other half from the Federal Reserve System, officials said on Monday.

If Mexico uses the money to stabilize the peso - which lost 30 percent of its value against the dollar in the week before Christmas - it will have to repay the loan at an interest rate equal to the three-month Treasury bill rate at the time the money is withdrawn.

Canada will also increase its standing credit line of $1 billion Canadian to $1.5 billion.

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