Officials shrugged off a U.S. House vote to block a multibillion-dollar aid package for Mexico and tried to assure investors Thursday that the economy is sound, with or without a bailout.
“This is not a problem,” Treasury Secretary Guillermo Ortiz said of Wednesday’s surprise vote by the House of Representatives.
But traders admitted to some nervousness as the Mexican stock market and the peso opened slightly lower. Worth 16.39 cents at Wednesday’s close, the peso closed at 16.29 on Thursday, down for the third straight day.
A late rally helped Mexican stocks reverse four days of losses and close higher in light to moderate volume Thursday. The market’s key index was up 25.15 points to 2,461.64 for a gain of 1 percent.
In a slap at President Clinton, the House voted 245-183 to forbid the U.S. government from loaning Mexico additional money after Oct. 1, the start of the next fiscal year.
If the amendment ultimately becomes law, it could immediately affect $7.5 billion remaining in a $20 billion credit package Clinton offered Mexico after the peso’s steep devaluation, which began in December.
The vote’s ultimate effect was uncertain because the U.S. Senate has yet to act - a point not lost on officials here.
Questioned by the Mexican broadcast network Televisa, Ortiz said the House measure “doesn’t have the least significance” for Mexico’s ability to meet its debt obligations.
“It is worth noting that said approval (by the House) is only one of several stages of the legislative process necessary for the amendment to become law,” his Treasury department said in a statement late Wednesday.
The statement noted that Mexico has enough reserves to meet its foreign debt obligations. Mexico’s international reserves stood at $13.6 billion as of July 14, the central bank said this week.
Pro-government newspapers also sought to soothe investors, noting that $12.5 billion of the Clinton package has been dispensed so far.
“This Won’t Affect Us,” the daily El Sol declared, while El Heraldo announced on its front page: “The Package of Financial Aid from the United States to Mexico Remains Intact.”
President Ernesto Zedillo’s office had no comment, other than to note that the measure has not yet become law.
Experts said they didn’t expect the measure would survive a U.S. Senate vote or a presidential veto. But it could set off a new weakening of the peso and increase uncertainty just as some stability had returned.
Ebbing inflation and four consecutive monthly trade surpluses have been interpreted as encouraging signs by Zedillo, who said Monday his country was surmounting the economic crisis.
But the aid package has met with opposition from U.S. lawmakers of all stripes. Some liberals say it mainly helps big investors, while some conservatives have questioned pouring billions of taxpayers’ dollars into a country whose economic and political future is uncertain.