[1]Mexico joined the International Monetary Fund (IMF) on December 31st, 1945, a year after the inception of the IMF in 1994[2]. As of 2022, Mexico has 11816.7 million Special Drawing Rights(SDR's,) and a SDR quota of 8912.7 Million. The leading director of Mexico on the IMF Executive Board is Pablo Moreno, with Alfonso Guerra, and Jose Andres Romero serving as alternatives[3].Mexico's current governor is Rogelio Eduardo Ramirez de la O with Victoria Rodriguez Ceja serving as an alternative[4]. As of 2022, Mexico holds 90,586 votes totaling 1.80% of total voting shares in the IMF. Mexico has the second greatest amount of votes in Latin America, behind Spain[5].
As of 2022, Mexico has had 18 numbers of arraignment with the IMF since its membership in 1945[6].
Mexico recorded the largest trade balance deficit in the years 1946 and 1947, as a result of mass consumption during World War 2, causing Banco de Mexico to practically lose all their accumulated reserves during the war[7]. As a result, in July of 1948, Mexico informed the IMF that it could no longer maintain the par value of the peso that was established without further financial support [8]. Seeking financial assistance from both the IMF and the United States, mixed responses from both parties were received. The United States, decided that before agreeing to Mexico's request, the IMF would have to decide if the peso's par value was rational under the their current circumstances[9]. IMF executive board members doubted that the par value of the peso was reasonable, and wether it could be maintained[10] . Following lack of IMF willingness to assist Mexico, the Bank of Mexico chose to float the peso up until June of 1949, when Mexico established a new par value for the peso[11].
Mexico suffered from a massive debt crisis in 1982, resulting in the country requesting emergency financing from the IMF. Despite an early period of economic success, a decline in oil prices and an increase in US interest rates caused Mexico to double its debt from 1979 to 1982 causing an excess inflation rate of nearly 60% of its GDP[12]. Recognizing Mexico's state of economic panic, secretary of finance Jesus Silva Herzog advised former IMF acting manager William Dale to send a mission to Mexico, in attempts to reach a solution[13]. Negotiations began in August of 1982 in order to secure appropriate funding assistance. However on August 11th, Mexico's commercial bank creditors no longer rolled over principle payments that were due on August 16th, creating further economic difficulties for Mexico[14]. As a result, Herzog flew to Washington in order to meet with newly appointed IMF managing director Jacques de Larosière on August 13, 1982. IMF support was promised on the condition that Mexico find a solution to avoid further defaults on future debt payments [15].
Mexico successfully avoided future defaults on debt payments due to $7 billion dollars of American aid that consisted of payments for advanced oil exports, and credit guarantees from both US Department of Agriculture and the Treasury Department’s Exchange Stabilization Fund [16]. The Bank for International Settlements also provided $1.85 billion, giving Mexico the short term funding in order to avoid becoming default. As a result of IMF involvement in Mexico following its economic crisis, many believe this marked the IMF's role of international crisis manager in Latin America [17].
Following the crisis that occurred in 1982, Mexico with IMF assistance managed to reduce inflation by 160 percent by 1987 to 8 percent in 1993 [18]. Following this marginal success of Mexico's economy, 1994 would mark another crisis. In 1994, the value of the peso was devalued, causing an economic crisis. Critics blame past IMF financial assistance, as it is argued past IMF assistance during times of irresponsible financial management set expectations of IMF bailouts if a future economic crisis occurred[19]. However, other explanations for the crisis have been argued such as political developments undermining trust in the government resulting in capital flight, or rise of US interest rates creating capital outflow contributing to the Mexican crisis[20].
Following the devaluation of the peso in 1994, the IMF approved a $17.8 billion dollar bailout package with $7.8 billion becoming instantly accessible to Mexico. However, international efforts from U.S. Exchange Stabilization Fund and central banks from the Bank for International settlements raised the bailout package to nearly $50 billion dollars in aid[21]. As a result, this marked the first international crisis of the 21st century, and a successful instance of IMF involvement in financial crisis[22].
The most recent change in the Flexible Credit Line and the IMF occurred in 2021. The FCL, which is intended for economic crisis prevention was approved by the IMF in 2021 for a two year plan for Mexico valuing at $50 billion dollars[23]. This change in arrangement marks the ninth FCL agreement, and is a considerable decline compared to the FCL agreement made in 2017 and 2019. The FCL in 2017 allowed for access to $86 billion dollars, and in 2019 was valued at $61billion [24]. The decrease in FCL usage comes as a result of Mexican authorities requesting reductions in the limit. As a result, Mexican authorities are treating the new FCL arraignment as a "precautionary" [25]. Mexico has been lowering its FCL usage in response towards its economic growth and confidence in the reduction of financial risk over the years. Despite this, the FCL still serves an important function, and serves a safety net for Mexico's economy incase of economic crisis.
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