The Mexican Pulse
By Glenn Holland
Mexico City, Feb. 9 In 1995 the Mexican financial system had to be rescued. This meant that the federal government had to set aside billions of dollars to give to the insolvent banks, in this way sustaining the countrys economic base. Although many know that there were institutions that illegally received credits, at least the money remained in the hands of Mexican businessmen.
In 2005 Bancomer will receive a payment for 6.2 billion dollars. BBVA, a Spanish financial institution, wants to acquire 40% of Bancomers stocks to take 100% control of the Mexican bank, a transaction valued in 4.1 billion dollars. This means that the Mexicans that pay the taxes that generate the money for the bank bailout will technically be giving one of their biggest banks to Spaniards plus 2.1 billion dollars. Two payments more are still pending; in 2006 Bancomer will receive 3.65 billion dollars and in 2008 they will receive 2.5 billion dollars.
It seems that Mexican banks truly are profitable, but only for foreigners.
--Last summer President Fox said that street vendors would be his economic instrument to confront the countrys high unemployment rate. Although it does not seem very wise from a fiscal perspective, Fox has helped the informal merchants with special credits.
La Red de la Gente (the peoples network), headed by the National Savings Bank, currently assists to 5 million low income people, giving them the necessary credits to support their businesses. In a press conference, Fox said that this program can now be used to confront poverty. It is expected that 2 million more people will have access to these micro-loans by the end of this year.
--As part of the financial package for the 2004 budget, Congress authorized 10.8 billion pesos for various agricultural programs, a stimulus that this industry direly needed. Up to today, the funds have still not been delivered. At stake are 60 agricultural programs since the deadline to hand over the money expires February 15. Supposedly the Treasury and the Secretary of Agriculture still do not have the necessary information from Congress in order to assign the funds to the proper place.