Mexico’s economy will be more “dynamic” and experience faster growth once a new pension system is in place in the second half of this year, President Ernesto Zedillo told attendees at a luncheon April 29 at the Federal Reserve Bank of Atlanta.
Mr. Zedillo blamed the peso crisis of December, 1994 on his country’s low savings rate as well as an overdependence on skittish foreign capital. But the new plan, he said, will encourage contributions toward pension accounts which in most cases will be managed by private investment funds.
“The key factor to increase savings is to make workers and taxpayers very aware of their personal savings,” he said. Under the current system, he added, “they feel that they are paying taxes and that somebody somehow in the future will take care of their retirement.”
Once the new plan is in he effect, he predicted, “Our national savings rate will increase substantially, and free trade and the market economy will be enhanced.”
Mr. Zedillo also was effusive in his praise for Nafta, which he called “a sound success.” Under Nafta, he said, bilateral trade between the U.S. and Mexico has increased almost 70%. U.S. exports to Mexico increased by 25.3% in 1996, and exceeded pre-Nafta levels by more than $22 billion.
“Today Americans sell to Mexico more than they sell to Germany and England together,” he said. Mexico also is selling more to the U.S., he added, “because Mexico has become an export powerhouse. Today we export twice as much as Brazil does and four times as much as Argentina does. And we do that because we took the decision to open up our economy to free trade and investment.”
In addition to promoting Nafta, Mr. Zedillo said that his government sought closer ties to the European Union and had signed separate trade agreements with several countries including Costa Rica, Venezuela and Colombia.
For more information about Mexico’s new pension system, call Bernardo Mendez, press attachÈ at the Consulate General of Mexico in Atlanta, at (404) 266-1908.
by Mark Pierson