Mexico Emerges From Crisis but Path Is Uncertain

THAT giant sigh Americans hear is coming from Mexico.

After twisting in the winds of cantankerous United States Congressional hearings on a proposed $40 billion loan-guarantee package, Mexico breathed a sigh of relief Wednesday over President Clinton's new plan offering Mexico a $20 billion line of credit by executive order.

Both Mexican government leaders and private analysts were quick to praise Mr. Clinton's action, which sidesteps the need for US congressional approval.

Yet, while Clinton's plan was well-received here, it does not mean that the country's financial nightmare and economic troubles are over. Comparing Mexico to a family suffocating under a pile of debt payable in three months, Finance Secretary Guillermo Ortiz says the new $51 billion international package, anchored by the $20 billion from the US, was like helping that family convert to longer-term and cheaper debt.

But ``the package does not constitute the push needed to get growth going again,'' Mr. Ortiz says. ``The basis for economic growth rests with the government and the Mexican people.''

At the same time, while Clinton's plan is not expected to include harsh political conditions that some members of Congress were seeking to impose on Mexico, it comes too late to spare the country what many Mexicans considered the ``humiliation'' of seeing their economic future debated in Washington.

Combined with other stepped-up international assistance from the International Monetary Fund (IMF) and the Bank of International Settlements (BIS), the new financial assistance surpasses the ill-fated loan guarantee package. And it begins what that earlier proposal was designed to accomplish: to restore confidence in Mexico's badly shaken financial markets.

The new package includes an increase in IMF funding from an earlier committed $7.8 billion to $17.8 billion, a doubling of credit from the BIS - a consortium of central banks from major industrial nations - to $10 billion, and $3 billion from commercial banks.

Shortly after Clinton announced his new plan the Mexican peso bounced back from historic lows Monday and the stock market jumped 10 percent, the best one-day increase in seven years. That recovery continued Wednesday morning.

``The package is a tremendous help and stabilizer,'' says Felipe Ortiz Monasterio, a financial analyst with Bursamex brokerage house, ``not just because of the amount, but because it puts the confidence of the largest economy in the world behind what Mexico is trying to do.''

YET Mr. Ortiz Monasterio says the potential long-term impact of the new show of international confidence would only be felt if Mexico matched it with strong action. He calls for ``a more comprehensive and cohesive'' economic recovery program from the government of Mexican President Ernesto Zedillo Ponce de Leon.

Mexico needs a more specific exchange-rate policy than the peso's current float, he says. A private banking official, who asked not to be named, said Mr. Zedillo should proceed faster and farther with privatization.

There are calls to privatize the national petroleum company, Pemex, a move that would yield perhaps $140 billion. But this is causing impassioned debates, with some observers citing talk of a Pemex sale as evidence of the country's slipping sovereignty. The Mexican government will commit oil revenues as collateral on the US credit line, Ortiz acknowledged.

Since Mexico's crisis began in December with the devaluation and floating of the peso, Zedillo said Tuesday that Clinton had maintained a ``supportive, committed, and responsible attitude.'' Zedillo did not suggest any changes in Mexico's emergency economic recovery plan.

Ortiz says the government is sticking by it projections for this year of 19 percent inflation, about 1 percent growth, and a stabilized peso exchange rate of 4.5 to the dollar - projections that many economists consider unrealistically optimistic.