MEXICAN MINISTER of Finance, Dr. Francisco Gil Diaz, is to visit Jamaica in December.
He will visit during the period December 1- 2 as a special guest of the Bank of Nova Scotia, and also to speak at the Private Sector Organisation of Jamaica (PSOJ) members' luncheon, to be held on December 2.
President of the PSOJ, Beverley Lopez, said, "Minister Gil Diaz is known as a 'straight-talking' and 'hard hitting', individual and the PSOJ is delighted to have him speak at our members' luncheon."
His schedule will include meetings with the central bank governor and the Minister of Finance and Planning, Dr. Omar Davies.
LIBERALISATION
Dr. Gil Díaz became finance minister in 2001 and was given the task of managing the finances of a country that, like Jamaica, had experienced an almost crippling challenge.
Mexico had liberalised its financial markets, resulting in increased competition among institutions. This, however, promoted reduced adherence to lending requirements and regulations that were not sufficiently enforced.
A booming financial sector emerged, impacting positively on the real-estate sector, stock market and a resulting high level of private investment. Eventually, the volume of non-performing loans and less than prudent activities within the financial sector were revealed.
Mexico, like Jamaica, after the headlong drive into financial liberalisation, started showing symptoms of economic and financial deterioration.
FINANCIAL DILEMMA
The country's floating band exchange rate made the situation worse.
This characteristic limited the country's ability to take corrective measures to hedge unfavourable turns in the peso.
Eventually, the foreign currency reserve was too limited to sustain trading activities. The government, having no other option but to float the peso, watched as its currency sharply lost value which translated into increased prices.
By 1995, the country was in a financial dilemma. The experience was not much different from Jamaica, when everyone rushed to withdraw their life long savings from questionable financial institutions.
Like Jamaica, Mexico emerged from the situation and in 2001, saw a drop in inflation to 6.5 per cent, a sharp fall in interest rates, and a strong peso that appreciated five per cent against the U.S. dollar.
