Mexican President Vicente Fox has attempted to reassure a jittery business sector after comments by the country's finance secretary that Mexico could soon face an economic meltdown like that of Argentina.
President Fox is in damage-control mode in the wake of comments by a member of his own cabinet that sent the Mexican peso plummeting against the U.S. dollar Thursday.
Mr. Fox said Mexico's situation in no way mirrors that of Argentina. He says his country's economy is solid, and there are no concerns of this sort. Thursday, Finance Secretary Francisco Gil Diaz said Mexico has a problem similar to the one Argentina experienced prior to its default on a whopping $141 billion in public debt.
Mr. Gil Diaz said Mexico, like Argentina, is attempting to compensate for insufficient tax revenue by selling off state-owned enterprises. He added that, at some point, Mexico will have nothing left to sell and that that moment is closer than many people think.
Mr. Gil Diaz' comments sent the Mexican peso to an 18-month low against the dollar. The Mexican currency suffered its biggest one-day percentage decline in more than two years.
But President Fox insists Mexico's economy is on a strong footing. He says there are important distinctions between Mexico's economy and that of Argentina before its default.
Mr. Fox said Mexico's country-risk level is the lowest in the nation's history. He said Mexico has the highest levels of international reserves, and that inflation, currency and interest rates are all in correct positions.
Last month, Mexico announced the sale of a state-owned insurance company for just under $1 billion. President Fox has trimmed government expenditures and sought to boost revenues. But Mexico's congress has rejected Mr. Fox's attempts to overhaul the nation's tax code. Economists say, even with the sale of state-owned enterprises, government revenue remains largely flat.