ernal debt US$108 billion
interest payments US$ 14 billion
gross national product (GNP) 52.4%
gross domestic product (GDP) 56.4%
total exports 396.0%
net exports 733.3%
of gross national product (GNP) 6.8%
of gross domestic product (GDP) 7.3%
of total exports 51.3%
of net exports 95.1%
[Sources: The World Bank, 1989; The World Bank, 1988; International Monetary Fund, 1989]
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As the data presented in Table 1 indicate, Mexico's total external debt exceeds 50 percent of the country's GNP and its GDP. Of even greater importance is the fact that the external debt may be expressed as multiples of Mexico's exports and net exports. Within the existing import/export structure, Mexico has no hope of making any significant reduction in its total external debt. Under existing conditions, such reductions could be effected only through the application of stringent austerity measures to an economy in which the per capita GNP is only US$2,080 per year, and where 40.6 percent of the country's total annual income flows to only 10 percent of the population (The World Bank, 1988).
With respect to scheduled annual principal and interest payments on the total external debt, these payments require (as indicated in Table 1) 95.1 percent of Mexico's net exports. Thus, the incentive to further develop the export sector is small. As portions of the external debt are rolled over in the future (as they must be to preclude default), scheduled interest payments will increase, and the incentive for exporters will shrink...