Press Release: IMF Managing Director's Visit to Mexico for Brady Bond Ceremony

June 12, 2003

Mr. Horst Köhler, Managing Director of the International Monetary Fund (IMF), made the following statement today in Mexico City where he participated in a ceremony marking Mexico's early repurchase of its Brady bonds. During his visit, Mr. Köhler met President Vicente Fox, Finance Secretary Francisco Gil Diaz, other senior members of the government, Bank of Mexico Governor Guillermo Ortiz and the Board of the Bank of Mexico, and congressional and business leaders:

"This is my third visit to Mexico as IMF Managing Director. During this trip, I have had the honor of participating in an event to mark Mexico's early retirement of its Brady bonds, a step symbolizing Mexico's success in putting the financial crises during the 1980s and early 1990s firmly behind it. More generally, I have been greatly struck by Mexico's remarkable political and economic transformation to a modern and vibrant economy. Mexico now clearly plays a growing leadership role among emerging market countries and provides a clear example of the rewards of sustained, sound economic management.

"In Mexico, the authorities have established a strong and credible macroeconomic policy framework based on much improved fiscal policy and debt management, a floating exchange rate, and inflation targeting. This has been supported by a high degree of integration with the world economy. Thus, Mexico has been able to better resist adverse external shocks and maintain positive growth even during the recent period when global economic conditions have been difficult and international capital markets have been unsettled.

"Mexico's experience also illustrates that a sound macroeconomic framework needs to be underpinned by strong democratic institutions and well-designed structural policies. In this regard, I have been impressed by the maturity of the multi-party political system and the vigor of the democratic process. Institutions have also been strengthened in key macroeconomic areas such as central bank independence, and structural reforms have emphasized privatization and maintaining a strong banking sector.

"Mexico now faces the challenge of reinvigorating growth on a consistent basis, which is key to improving the welfare of all Mexican citizens. I have been very encouraged by what I have heard from President Fox and his team about their National Development Plan, which is aimed at meeting this challenge while further reducing macroeconomic and financial vulnerabilities. Central to this agenda is further strengthening of the fiscal position, aimed at creating more room for social programs that would improve human capital, strengthen social safety nets and eventually eliminate extreme poverty. Business and congressional leaders—from different sectors and parties—have made clear that their aim is see reforms deepened and accelerated to maintain Mexico's competitiveness.

"During my meetings with President Fox and others, we also discussed the situation in Latin America and in the global economy. There is a clear sense that the region is now emerging from the very difficult conditions of last year, based on a willingness to take the steps to advance stabilization, market reforms, and fiscal sustainability while paying greater attention to reduce poverty and incomes disparities. We agreed that there is now a stronger policy consensus to support higher growth with improved equity in the region, and that the international community should do all that it can to nurture and deepen such a consensus. I believe that the successful examples of Mexico and Chile have been instrumental in helping to show the way forward to other countries in the region.

"The Mexican people are to be congratulated for having brought about the current favorable environment in Mexico and for demonstrating leadership in the region. The IMF is proud to have been able to play a part in Mexico's success and we look forward to continuing to cooperate with the authorities to help improve further the standard of living in Mexico," Mr. Köhler stated.


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