Bailout of the Mexican Peso, 1994-95
Gingrich supported this bailout too.
Mexico / What NAFTA Has Brought to Mexicans
Gingrich supported this bailout too.
Mexico / What NAFTA Has Brought to Mexicans
On December 20, 1994 , less than a year after NAFTA took effect, the Mexican peso, which had been trading in a narrow range around 3.11 to the dollar for months, began plunging, losing over 30% of its value against the dollar in the following week. The Finance Ministry at first announced that it had decided to allow the peso to "trade in an expanded 15% range", then announced that it would let the peso "float", then finally admitted that Mexico's reserves of hard currency had been depleted to a level that it could no longer support the peso. On December 26, President Zedillo, who was scheduled to deliver a major economic address, spoke for only 15 minutes in generalities about the need to "control this grave threat". On December 28, the U.S. disclosed that it was discussing a bailout plan that involved new forms of debt in order to keep investor money in Mexico. A few days later the Mexican government announced the replacement of Jaime Serra Puce with Guillermo Ortiz as Finance Minister.
The bailout package, which was signed on February 21, 1995 after approval by Clinton and letters signed by Dole, Gingrich, Daschle, and Gephardt, provided a $52 Billion credit to Mexico which consisted of $17.8 Billion from the International Monetary Fund, $20 Billion from the U.S. Treasury exchange stabilization fund, $10 Billion from the Bank of International Settlements and the remainder from various U.S. banks.