Mexicans Caught Off Guard By U.S. House Measure
MEXICO CITY (AP) _ A U.S. House vote to suspend billions of dollars in financial aid to support the peso caught Mexico off guard Wednesday.
Experts said they didn’t expect the measure would survive a 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 to Mexican markets.
``If the measure is susceptible to a veto, not that much will happen,″ said Felix Boni, director of analysis at the Mexican brokerage Interacciones. ``Investors are simply going to have to sit back for a moment and reevaluate everything, but it definitely introduces a new dimension.″
The measure, a provision to a spending bill for the Treasury, Postal Service and other agencies for the coming fiscal year, passed Tuesday evening by a vote of 245-183. It came just as President Ernesto Zedillo predicted the Mexican economy would begin to recover in the second half of the year.
``It couldn’t have happened at a worse time for Mexico,″ said M. Delal Baer, Mexico expert at the Center for Strategic and International Studies.
The Zedillo administration said it would have no comment on the measure since it was not yet law.
In a Monday meeting with executives of The Associated Press and its member newspapers, Zedillo had said the nation was conquering its economic crisis.
The provision seemed to reflect legislators’ lingering anger at President Clinton for bypassing Congress and approving the $20 billion Mexico bailout by executive order earlier this year.
Even if the United States does not release the remaining $7.5 billion of the total $20 billion package, Mexico has enough foreign reserves to pay off its outstanding debt obligations.
Even Mexican critics of the bailout package called the congressional vote a blow to Mexico.
``The (U.S. credit) reserve was a big support for the peso, and whether it disappears or even threatens to disappear will have repercussions in our country,″ said Heberto Castillo, a senator of the leftist Democratic Revolution Party.