WASHINGTON -- The World Bank announced yesterday a $1.8 billion environmental-loan program for Mexico, a down payment on the multibillion-dollar border cleanup that would occur if the North American Free Trade Agreement is approved.
"What a commitment to cleaning up the environment," said U.S. Treasury Secretary Lloyd Bentsen, who was on hand to endorse the program, announced as the World Bank and the International Monetary Fund opened their joint annual meeting here in a somber mood about the global economic outlook.
Mexican matching funds are expected to increase the $1.8 billion to $4 billion that would be spent over the next three years on water treatment, solid-waste disposal, industrial pollution, and other problems, particularly along the U.S.-Mexican border.
Mr. Bentsen, who grew up near the Mexican border, said: "This series of loans to Mexico will serve as an important complement to the programs we have developed in the North American Free Trade Agreement."
Under the trade treaty, which faces an uphill battle in Congress, an additional $3 billion would be raised by the United States and Mexico for the environmental cleanup.
IMF Managing Director Michel Camdessus, opening the annual meeting, said NAFTA and the Uruguay Round of international trade talks both should be part of the effort to liberalize trade as a way of boosting the ailing global economy.
That economy, he said, faced "a daunting catalog of problems," ranging from record unemployment to weak fiscal bases in many industrial countries. "These are formidable difficulties, and they are feeding on one another and so multiplying their damaging effects," he said.
"Recession not only increases human deprivation, but also intensifies protectionist pressures, and injects a virus that can be deadly into even the best-established instruments of economic cooperation."
Mr. Camdessus' formula for recovery: passage of both NAFTA and the Uruguay Round by year's end; reform of social programs that countries cannot afford and the adoption of pro-growth, pro-work policies backed by improved education and training; reduction of budget deficits and lower interest rates in the industrial world; fiscal discipline and pursuit of free-market principles in the developing world; and global coordination of monetary policy.