Table: Zedillo's Rescue Scheme: Will It Work?

              PROPOSAL                             RISKS
      PRICE         Zedillo is calling for tight wage-   Price controls will be 
                                                         difficult  to   
      CONTROLS      and-price restraints to              enforce. Already, dis
                                                         contented workers 
                    hold down inflation.                 are being asked to take a 
                                                         cut in real 
                    Companies are to settle income.
                    for lower profit margins.
      AUSTERITY     Zedillo plans to slash the 1995      He is engineering a reces-
                                                         sion as 
      MEASURES      budget by $5 billion and             growth is expected to fall 
                                                         to 0.5% or 
                    slice the current-account            less. This will put pres
                                                         sure on domestic 
                    deficit in half, to $14 billion.     banks and weak companies.    
      
                                                         Mexicans      
                    He hopes this will restore           who expected increases in 
                                                         social 
                    investor confidence.                 spending will be dis
                                                         appointed.
      RESCUE        Mexico is asking the U.S., Can-      The crisis dents image of
                                                         the star 
      PACKAGE       ada, and other governments           emerging market. More money  
      
                                                         could be 
                    and international banks for an       needed if confidence flags. 
                                                         U. S.
                    $18 billion package to stabilize     commercial banks are un
                                                         happy.
                    the peso.
      PRIVATIZATION To raise funds, Zedillo wants to     Proposals may not be ag-
                                                         gressive 
                    open ports, railroads, radio,        enough to win back massive 
                                                         amounts 
                    and satellite telecom to private     of cash from abroad. What 
                                                         really
                    interests. He may allow sales        interests foreign investors 
                    of Mexican banks and open up         is opening state-run elec-
                                                         tricity and oil sectors.
                    petroleum-related sectors.  
      CHARTS BY ALBERTO MENA/BW
      

To continue reading this article you must be a Bloomberg Professional Service Subscriber.