EDITOR’S NOTE - As rescue workers sift through the debris, gove
EDITOR’S NOTE - As rescue workers sift through the debris, government officials sort through the numbers to determine how much damage two killer earthquakes did to Mexico’s heavily indebted economy. Many believe the cost of rebuilding will be born by business owners like Javier Romero, whose uninsured design company was destroyed.
MEXICO CITY (AP) _ Marcos Sanchez sat in a gold velvet chair on the sidewalk, surveying what little the recent earthquakes left of his film distribution company.
As moving trucks prepared to carry desks, chairs, papers and other office goods to a new location, Sanchez estimated the damage at about $25,000 and said it would come out of his own pocket. He had no insurance.
Several blocks away, Javier Romero carried papers from his design company, Mundo Creativo, which also was destroyed by the first, killer quake Sept. 19. He also lacked insurance.
″It’s going to be a big loss for me,″ Romero said.
The government has released no official damage figures. But the Engineering Institute at the National Autonomous University of Mexico roughly estimates damage to buildings and property at $1.5 billion.
Many buildings were believed uninsured and experts say reconstruction costs will have to be borne by owners like Sanchez and Romero unless the government helps out.
Damage estimates do not include the loss of income for those whose workplaces were destroyed or the social costs of the disruption.
The earthquakes that rocked Mexico Sept. 19-20 killed thousands of people and left thousands more homeless. An interagency commission on the quakes estimated that 1,132 buildings were damaged.
Like the rescue workers who still are sifting through the debris, government officials and economists are sorting through numbers, trying to calculate the effect of the quake on Mexico’s embattled economy.
Many wonder if Mexico will be able to meet payments on its $96.4 billion foreign debt.
Roberto Meli, deputy director of the Engineering Institute, estimated that 20 percent of the collapsed or badly damaged buildings housed government offices. More than half, he said, were houses or apartment buildings and the rest were commerical property.
Abraham Martinez Rivero of the Federal District Workers Federation told English language newspaper The News that more than 50,000 people had been left jobless, some temporarily and others permanently.
″It’s a very difficult social and political problem,″ said Luis Esteva, director of the Engineering Institute.
Mexico recently signed the final part of an agreement with its creditors to stretch out payments on about half its foreign debt. Mexico has been paying about $12 billion to creditors each year.
However, chief negotiator Angel Gurria said shortly before signing the agreement that the country still might need another $2 billion to $3 billion in new loans next year to close the gaps in its finances.
Carlos Mireles, president of the National Chamber of Manufacturing Industry, has called for a yearlong suspension in debt payments so the country can use the money to rebuild. But there has been no indication Mexico will ask for such a moratorium.
Indeed, some bankers believe Mexico may go out of its way to meet its obligations. One U.S. banker, who spoke on condition he not be identified, said bankers fear that if they give Mexico a break on the debt, it will set an undesirable precedent for other indebted countries.
President Miguel de la Madrid, after touring disaster sites, said, ″Obviously, this earthquake is going to complicate the management of our economic crisis.″ He said the international community must be ″understanding of our problems.″
Jaime Serra, director of the Center of Economic Studies at the Colegio de Mexico, said, ″The event (the quake) might accelerate the thinking of and the possibility of talking about new stages of managing the debt.″
Treasury Secretary Jesus Silva Herzog flew to Washington at the end of the week to talk to officials of the World Bank, International Monetary Fund and the International Development Bank about financial support, while countries and agencies from around the world responded quickly with disaster relief.
Some say the quake could have positive side effects, with the flow of money from abroad giving a boost to the economy and new construction opening up new jobs.
But economist Ignacio Trigueros of the Mexican Autonomous Technological Institute worries the destruction only will add to the economy’s woes.
″You have to take into account that the economy already had quite a problem because of the budget deficit, high domestic interest rates and falling oil prices,″ he said.
″Given that difficult situation, things are a lot worse than before,″ he said. He predicted the economy will grow more slowly than expected next year because money that would have gone into investment projects will now be channeled into rebuilding.
The nation’s productive capacity, including its important oil industry, was largely untouched by the quake with communications, tourist and other service industries suffering the brunt of the blow.
″Undoubtedly for the first weeks we are going to suffer quite a bit,″ said Aureliano Torres Izabal, manager of the Maria Isabel Sheraton Hotel, a popular tourist hotel in Mexico City. ″Tourism has almost disappeared.″
But he said, ″Tourism has a very short memory,″ and predicted that in six weeks to two months, the industry would return to normal.
Government officials, too, hope the industry bounces back in time for the lucrative winter season. The Tourism Ministry says about 80 percent of the city’s hotels suffered little or no damage from the quakes.
Nine hotels in the city’s center were destroyed or severely damaged. The nation’s resort areas were largely intact. In the resort of Ixtapa on the Pacific coast, three hotels were closed because of damage and two others were partially shut down, according to the U.S. Embassy.