1994 economic crisis in Mexico

Tequila crisis is the popular term for the peso crisis, the Mexico 1994/1995 went through and which resulted in an economic crisis. The term originally comes from a work by the Mexican writer Octavio Paz and diplomats

This crisis began in December 1994 with a currency crisis, as the Mexican government was no longer able to maintain the fixed Peso exchange rate against the U.S. dollar, which led to a general crisis of confidence. This had a massive withdrawal of foreign capital resulted. The lack of capital, then brought the Mexican firms in difficulty and so the currency crisis ended in a general economic crisis.

The political instability caused by a revolt of the Zapatistas in Chiapas, the murders at the presidential candidate Luis Donaldo Colosio and the head of the ruling party, the PRI, but also of Mexico beyond the control of rising interest rates in the U.S. that still honored the capital flight from Mexico. This massive capital flight from the Mexican area led to a devaluation of up to 50 percent within a few days. This was followed by a dramatic increase in the cost of credit in the banks that had borrowed in liberalized markets in the U.S., making the extent of increase in bad loans and the banks faced bankruptcy and were then taken over predominantly foreign-owned. Mexican company had to after the banking crisis thus with foreign lenders fault, as far as them that was possible. The state budget has been greatly impacted by the high-yield government securities at the now foreign banks.

In order to address the financial crisis, U.S. President Bill Clinton announced on 31 January 1995 that he strive for an international aid package. For the United States, he agreed to a share of 20 billion U.S. dollars to the neighbors. As a result, there was in February 1995, an aid package of 47.8 billion U.S. dollars for Mexico by the International Monetary Fund ( IMF) and the World Bank, whereby the foreign debt continued to rise, but a collapse of the major banks and investment funds was prevented. The former Managing Director of the IMF, Michel Camdessus described this as "the first financial crisis of the 21st century ", which enormously separate from the previous crises since the 1980s.