Loans To Help Mexico Revamp Banking, Educate Labor Force

ByBridgeNews The Mexican government has accepted three loans worth US$750 million with the Inter-American Development Bank (IBD). The loans will finance restructuring of the banking sector, business lending by government-owned development bank Nacional Financiera (Nafin), and a labor modernization project. The loans were signed during the International Monetary Fund meeting in Prague, according to the Mexican government. The loan to finance the Program to Support the Restructuring of the Banking System is worth $250 million and matures in 15 years, including a five-year grace period. That program is under the auspices of state-owned bank deposit insurance agency IPAB. Some of the program's objectives are to strengthen the legal framework of the banking system, to transfer shares of state-controlled banks to the private sector in a fair way, to support maximum recoveries of past-due loans, and to establish a viable system for financing and absorbing the costs of the 1994-97 bank bailout. The loan for the Global Program of Multi-Sector Credit is for $300 million and matures in 12 years, including a five-year grace period. It will go toward small-business lending programs managed by Nafin. Finally, the loan to support the second phase of the labor modernization project is for $200 million, matures in 20 years and has a 2.5 year-grace period. The program supports consolidation of several labor policies, with the objectives of facilitating labor mobility, raising employment levels and increasing education and productivity levels.