FROM THE OFFICE OF PUBLIC AFFAIRS

           Good Morning.  I am pleased to join President Fox, Secretary Gil Diaz, IMF Managing Director Koehler and World Bank President Wolfensohn for this historic occasion in the economic development of our friend, our ally, our partner  Mexico.

            The early retirement of the last of Mexico’s dollar-denominated Brady bonds is an occasion for celebration.  These bonds, named for Nicholas Brady – one of my predecessors in the office of United States Treasury Secretary – were devised to meet the needs of Latin America in a difficult economic period.  We are here today to formally recognize the resilience of the Mexican economy, in particular, as it has finished repaying these debts ahead of schedule, and is clearly on a path to a bright future. 

            Brady Bonds represent the long-standing spirit of cooperation between our nations and the international financial institutions as we have worked together to overcome our challenges.  That spirit of cooperation is still present today, even as the Mexican economy has strengthened and progressed to a new stage.

            Since 1990, Mexico has taken many important measures to strengthen its economy:  floating its exchange rate, opening markets, privatizing enterprises, resolving its banking crisis and strengthening its financial sector, as well as providing a sound fiscal and monetary framework. 

            Today, Mexico and the United States are working together more than ever before.  In the fall of 2001, our two Presidents agreed on a new “Partnership for Prosperity,” to ensure that the economic benefits from our close ties reach all regions of Mexico.  Lowering the costs of remittance flows from the United States to Mexico has been one goal of the program.  Remittance flows account for over one percent of Mexican GDP, and the cost of these remittances, thanks in part to the Partnership for Prosperity, have fallen by half.  Remittance flows have more than doubled since the mid-1990s, reaching $10 billion last year. 

            Trade has also been an important part of our relationship for many years, with the Mexican government taking important strides in liberalizing trade through NAFTA and integrating Mexico with the global economy. These measures have been enormously successful – exports have increased four-fold since 1990, while trade has risen to over half of Mexico’s GDP. Reflecting Mexico’s strengthened economy and the rewards for these efforts, growth has accelerated in the 1990s to double the average rate of the decade before.

            The retirement of these bonds is a measure of their success.  Much more, however, this retirement is a symbol of Mexico’s success, and the success of the global marketplace.  Today’s occasion is possible in part because of advances in the international financial system which allows nations such as Mexico to borrow funds, if needed, with a cost that accurately reflects national creditworthiness and market competition. 

            The recent history of other nations has shown us that crises do still occur.  Recognizing that debt restructurings may occur again, the United States, the multilateral development banks and our international partners for development have been working to create new, market-oriented procedures for restructuring sovereign debts.  Bonds with collection action clauses, for example, will be easier and less costly for all parties to renegotiate. 

            Implementing such market-oriented reforms will allow nations to recover from economic stumbles more quickly, and with less shock to their citizens and the global financial system.  There will, we hope, not be a need for a new round of Brady Bonds.

            And just as Mexico was the first of 17 countries to reach agreement on the Brady Bond program, in March of 1990, the new bonds that Mexico has issued to pay off the Brady Bonds are among the first to incorporate collective action clauses.  These new bonds are simpler, more efficient, more liquid, and less costly to the people of Mexico.

            Mexico’s leadership in these and other matters is a sign of the kind of flexibility and innovation that promises to keep the country moving forward.

            In closing, let me underscore this: Mexico is an important partner to the Untied States.   Our relationship is wide ranging, and we intend on strengthening it.  My visit here represents the historic nature of our partnership.  We are committed to Mexico’s success, and we will continue to work together to support our mutual agenda.

            Mexico and the United States are truly partners for prosperity, and the people of America applaud your success on today’s economic milestone. 

            Thank you.