News Brief No. 95/5

News Brief: Camdessus to Recommend that IMF Commit an Additional $10 Billion for Mexico, Raising its Total Commitment to $17.8 Billion

January 31, 1995

The International Monetary Fund has been informed of the decision by the U.S. Government to provide additional support to Mexico from the Exchange Stabilization Fund rather than through the guarantee scheme previously envisaged. In light of this, Michel Camdessus, IMF Managing Director, issued the following statement:

"The Executive Board of the IMF will consider tomorrow my recommendation to approve a stand-by arrangement for Mexico of $7.8 billion. I expect that this entire amount will be available to Mexico immediately. In addition, I intend to recommend that the IMF commit an additional amount of $10 billion under the same terms as those that apply to the stand-by arrangement, bringing the IMF's commitment of resources to a total of $17.8 billion. Simultaneously, we are seeking contributions from a group of central banks and governments in the amount of $10 billion. The $10 billion additional resources to be committed would be provided by the IMF to the extent that contributions of governments and central banks fall short of the targeted amount.

"The IMF, together with the Federal Reserve, will closely monitor developments during the next six months to permit Mexico to keep markets free of any obstacle to convertibility, honor all its commitments, and to make sure that all needed resources are available to the Bank of Mexico on a timely basis to allow the smooth working of markets and the normal carrying out of all transactions.

"All these steps are being taken to allow the Mexican stabilization program that has been agreed with the IMF to be implemented fully and to strengthen the climate of confidence needed for its full success."