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Mexico: Capital Account
Country Study > Chapter 3 > The Economy > Balance of Payments > Capital Account


Mexico hemorrhaged capital through most of the 1980s. According to Morgan Guaranty, some US$53 billion fled the country between 1975 and 1985. Total capital flight from Mexico between 1983 and 1988 was approximately US$18 billion. Debt amortization was another major negative item in the capital account. According to the World Bank, debt repayments averaged US$5 billion annually between 1985 and 1990. Capital began to return to Mexico in 1986 and 1987, as investors and lenders were attracted by high domestic interest rates. The trend was reversed in 1988 as a result of an exchange-rate freeze, domestic interest-rate reductions, competition from higher United States interest rates, and political uncertainty. But capital flows were positive again between 1989 and 1993.

In November 1993, the Mexican government announced that cumulative foreign investment between December 1988 and November 1993 was US$34 billion, exceeding by 40 percent the government's original target. United States direct investment in Mexico more than doubled between 1986 and 1993, to US$23 billion. United States-based multinationals provided more than 60 percent of foreign direct investment in Mexico at the end of 1992. During 1993 foreign investors vastly increased their holdings of Mexican stocks and bonds, producing a huge inflow of portfolio investment. In October 1993, foreign investors held 29 percent of Mexican stocks and 74 percent of bonds.

Foreign investment for all of 1993 reached a record US$16 billion, an increase of 87 percent over 1992. Some two-thirds of this amount (US$11 billion) was portfolio investment, while US$12 billion went to projects approved by the National Foreign Investment Commission (Comisión Nacional de Inversión Extranjera -- CNIE) and the remaining US$3 billion went to investments approved in the government's official register. The manufacturing sector received 47 percent of the new investment, and the services sector received 30 percent. The capital inflow boosted Mexico's capital-account surplus to US$16 billion between January and June 1993, representing a 35 percent increase over the same period of 1992. The government was counting on the capital inflow to ensure a continued large capital account surplus with which to balance the current-account deficit.

Mexico's capital account registered a US$15 billion surplus in 1995, mainly because of the country's huge increase in borrowing. Loan disbursements to Mexico rose from US$7 billion in 1994 to US$27 billion in 1995. Foreign direct investment dropped by US$4 billion to a total of US$7 billion for the year, while stock-market investment plunged from US$4 billion in 1994 to US$519 million in 1995. The capital-account surplus allowed Mexico's international reserves to recover from a low of US$3.5 billion in January 1995 to US$15.7 billion by year's end.

Data as of June 1996

Last Updated: June 1996

Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Mexico was first published in 1996. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on

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Section 142 of 213


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