DAILY REPORT LATIN AMERICAN STATE OF THE NATION SPEECH BY MEXICAN PRESIDENT DE LA MADRID ON 01 SEPTEMBER 1986

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP98-01394R000200110005-1
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 26
• Document Creation Date: December 27, 2016
• Document Release Date: August 2, 2013
• Sequence Number: 5
• Publication Date: September 12, 1986
• Content Type: REPORT

FBIS Declassified and Approved ForRelease2013/08/06 : CIA-RDP98-01394R000200110005-1
Friday CiUppleMent
12 September 1986
Vol VI No 177 Supp 101
FBIS
Daily Report
LATIN AMERICA
STATE OF THE NATION SPEECH BY
MEXICAN PRESIDENT DE LA MADRID
ON 1 SEPTEMBER 1986
FOREIGN BROADCAST INFORMATION SERVICE
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1
President's State of the Nation Address
PA012215 Mexico City XEW Television Network in Spanish
1659 GMT 1 Sep 86
[State of the nation speech delivered by President Miguel de la
Madrid Hurtado at the San Lazaro Hall of the Legislative Palace
in Mexico City ? live]
[Text] Honorable Congress of the Union, Mexicans: Fulfilling
the provisions of the Constitution of the Republic, lam attending
the opening session of the regular session of the Honorable
Congress of the Union to present the state of the nation report. I
am also presenting a written expanded document, with various
annexes. The officials of the federal executive branch offices will
present their respective reports in due time.
The period from 1 September 1985 to date was characterized by
tragic and acute problems which complicated and worsened the
already severe difficulties we had confronted.
First of all, a devastating earthquake brought sorrow and
mourning to our homes. The emergency shook our consciences
and mobilized our people's utility and feeling of solidarity. Our
society was not depressed nor did it fall into chaotic or anarchic
situations. On the contrary, it knew how to react in a courageous
manner and was able to organize itself effectively to act positively
in the face of tragedy.
The complex problems and the damage provoked by the quakes
forced us to immediately embark on the great task of recon-
struction. It has been conducted through coordinated and agile
actions and with the participation of all social groups and all
levels of government: the federation, states, and municipalities.
The citizens' participation has been a determining factor in the
progress made. Without them, the government's work would not
have been enough.
Reconstruction is being carried out with a spirit of renovation. It
has not been an attempt simply replace what was destroyed. We
have decided to simultaneously rebuild and renew.
We had not yet concluded the first steps for coping with the
quake's effects when we were confronted by a true economic
cataclysm: The price of oil ? our main export product and
main source of public revenue ? suddenly dropped as a result of
a generalized price and market war throughout the world. The
drop in revenue from our oil sales abroad has meant a loss of
one-third of the foreign currency we obtain from exports, and is
equivalent to nearly 20 percent of the total public revenue and
approximately 6 percent of the national production. This inter-
national challenge occurs after 3 years of great efforts by our
peoples to resolve their internal and external problems.
In addition to these serious setbacks resulting from national
calamities and economic difficulties, there have been unfavor-
able external circumstances. The world is undergoing tense
international relations. In addition to the great anguish created
over the possibility of a nuclear war where there would be no
winners and mankind would disappear, there are critical circum-
stances in the world economy and attempts to impose viewpoints
and styles of life that are trying to form institutions and deter-
mine fates by imposing dogmatic ideologies.
Mexico cannot ignore what is around it, because today nations
cannot be isolated from the rest of the world. This year we have
endured pressures, criticism, misunderstandings, and foreign
observations that have shown us that the sovereignty and inde-
pendence left by our forefathers demand that we wage a constant
battle for our sovereignty and independence.
We have had to collect strength and will so our country will not
be discredited as an independent and sovereign nation. This
year's serious events have created a very complex situation. They
have made evident and promoted the deep process of changes that
our society is enduring in the face of the challenges it must
surpass.
Different and new demands have arisen, and new groups arise in
the political and social spheres with an intensity much greater
than what we were accustomed to having. Our society has
become more complex and dynamic. Today, we are a different
nation.
It is necessary that the social groups become aware of the new
reality. We are a population that keeps growing. More Mexicans
have been born from 1980 to date than from independence to the
revolution.
In recent decades, we became a country where most of the
population lives in the cities, yet with strong rural origins. New
middle classes have appeared. More of their members participate
in the country's activities. The mass news media have increased
in number and criticizing ability and penetrate the people's
consciences to a greater extent. General training and education
levels are now higher and, as a result, numerous social groups are
better informed about, pay more attention to, and are more
critical of national events, particularly government actions.
There is a new strength in the society, which makes it more able
to effect initiatives and take actions of spontaneous solidarity.
Ours is a more mature society, and its social leaders are compe-
tent and responsible in rural areas, in plants, and among youth
and women, employers, professionals, students, and popular '
groups. Summing up, we have a civilian society more aware of
its problems, more vigorous, more generous, and more deter-
mined.
In moments of economic crisis, this huge social transformation,
together with natural adversities and pressures from the outside,
has generated a sense of uncertainty. Although this uncertainty
is natural in the current phenomena and times, it can sometimes
be attributed exclusively to the government's action because of
naivete, ignorance, or dishonesty. Minorities try to take advan-
tage of the country's difficult situation to distort the system
derived from the Mexican revolution.
Deep transformations do not occur in our country alone. It is
often said in international circles that economic stability, secu-
rity, and even liberty now encounter difficult times. It is said
these are times dominated by fear. In various regions, the search
for radical solutions hurls many in the arms of irrational
prophets.
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In developed countries, basic social programs are in peril, unem-
ployment increases, and the people grow uncertain. In this way,
the comfortable world of everyday things becomes sadly attrac-
tive, but these everyday things can be no more.
Finally, our planet is in great danger of being left desolate, either
because of the deterioration of the environment or the danger of
military conflicts. The entire world is immersed in situations of
conflict and change.
Consequently, let us avoid the false fronts of the outside world
that some try to present to us, such as the opportunity for
happiness and trust. The current crisis is not exclusive to Mexico.
We live in a world with serious threats and difficulties. Let us
recognize the new times in which we live. These are times of
change, either forced or deliberate. These times demand careful
judgment and determined action. These are times that require
the society to make a great objective effort to evaluate problems,
actions, and results. These are times to take risks and incur the
possible costs of so doing. These costs are much less than the costs
of inactivity and an arms-folded stance.
Our revolutionary regime has had an answer for the changing
times. Yesterday, this regime led the country through a process
of social progress that moved forward faster than the population
grew. In addition, the regime considerably expanded the basic
education, health, and food services, and employment opportuni-
ties.
Today, my government has had to change to lead the nation
through the deep changes that the new society has undergone and
also to cope efficiently with the difficult and unexpected sit-
uations that pressure us. In my inauguration speech, I proposed
a deliberate, planned, and orderly change, a result of our will and
not of chance. I called the nation to improve our democratic life.
I demanded a change in our behavior. I fostered reforms in the
development process. Since the beginning of my administration,
I have proposed a change in quality and structure. In view of the
(?facts) that the new social awareness presents us and in view of
unpredictable events, both domestic and foreign, we have deter-
mined the necessary strategic actions and have been willing to
carry them out.
We have expanded the mechanisms of political participation,
making consultations and negotiating daily, as well as reaching
accords. We have admitted criticism, encouraged pluralism, and
respected disagreement. We have rejected the notion that only
the president's will exists in the country and that the nation can
be made,or consummated in a 6-year period. We have spoken
truth, and our government has abided by the standards that rule
over the citizens. In view of desperation and uncertainty, we have
acted calmly. In view of the new challenges, we have set reflection
before urgings. We have followed the law in our actions and have
always taken the necessary actions during each of the days of our
government. In view of foreign insecurity, let us strengthen our
convictions and our will to continue to execute our national
project. We live in a time of challenge. It would be a grave historic
mistake to let difficulties as well as domestic and outside pres-
sures endanger our national existence.
The climate of change is such that the conditions of- the crisis
themselves have been changing. Now, we have serious problems.
Their nature, however, is different from that of those of 1982.
Had our oil revenues not dropped, our economy would have
continued to grow more firmly during this year and inflation
would have been reduced. This year, we would have completed
the reorganization effort initiated at the end of 1982 to cope with
the emergency at the time. Considering the unprecedented oil
revenue drop ? this is not merely an additional problem or a
repetition of the 1982 crisis, but a considerable challenge ? we
have more solid bases that consist of the important advances of
nearly 4 years of constant efforts.
In the face of the drastic drop in oil revenue, we brought to
people's attention the magnitude of the problem and reaffirmed
our international responsibility. We clearly stated that, our effort
done, and faced by situations over which we had no control, we
needed the responsible and reciprocal action of the international
financial community. If times and circumstances change for us
in a proportional manner, so must they change for others.
After the problem was brought to the attention of the people, we
began the difficult process of foreign negotiations and domestic
redefinition. Abroad, we expressed the impossibility of our
absorbing the total impact of the situation. We had just under-
gone 3 years of great and constant efforts and of a' very austere
public budget. Therefore, we asked for better conditions of
payment and an effort that would equal our domestic effort; we
asked for the renewal of new loans.
Domestically, we adopted feasible measures. We established
priorities and sought new margins of action. We clearly estab-
lished that, despite the difficult foreign situation, the basic effort
to overcome the crisis was our responsibility. As long as we leave
the structural problems of our economy unresolved, we will not
be able to overcome our economic vulnerability. The debt is not
our main economic problem; it is the result of deeper matters.
Our productive system, as well as our distribution-system, must
be more efficient and more equitable. To achieve this, we
increased our actions of reorganization and structural changes.
We undertook a huge task of reorganization. -
Our economy needs to grow and needs better conditions in which
to grow. The encouragement and growth plan we recently imple-
mented, which involves the foreign and domestic fronts, is mainly
aimed at preventing a worsening of the crisis and recovering a
sustained growth. This must be done with more jobs and the
expansion of income sources based on financial stability.
Our people have not committed the mistake of upsetting work
with political excuses, nor have we harmed our rights with the
excuse of the crisis. The economic solution calls for effort and
work; politics calls for plural and responsible participation. In
this general endeavor to maintain and reinforce the current
pluralism existent within our society and to deepen the political
and democratic development, the government is opening new
spaces for consultation and participation. It did this in the face
of tragedy and is doing this to perfect electoral participation at
the national level and to improve the Federal District's govern-
ment system.
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VI. 12 Sep 86
We continue to promote the country's political development to
give real life to the republic's institutions and to achieve respect
and expand the rights of all Mexicans: the right of political
thinking, participation, and the right to vote according to one's
preference. At all times, dialogue and negotiation have been the
instruments that have allowed us to confront our problems with-
out distinction of origin or nature. We have talked with business-
men, laborers, middle class workers, peasants, intellectuals,
professionals, representatives of the people, political parties, and
media representatives. This has been a year in which our best
political traditions have been put to a test, and in this manner we
have overcome the difficulties and strengthened the democratic
nature of the institutions.
We have worked hard and with tenacity to establish the bases for
the change. We must advance as much as possible without
thinking that our history is beginning or ending now. Indepen-
dent of the many solutions presented to the sometimes simple and
sometimes complex crisis, we have found no better way to handle
it than through the path of respect for the main sectors of our
society and by acting in accordance with the Constitution and
the law. Our determination and firmness to work is based on this.
The certainty is based on the decision and legality that our society
calls for. In the respect for our constitutional values, in the
support of nationalism, and in the defense of freedom and basic
social rights, we have found, and will continue to find, our
security and the security of our families. With these attitudes we
are building a sure future for the new generations.
The state reaffirms its decision to become a full and independent
political, social, and cultural democracy, and to promote
qualitative changes to overcome the obstacles and support the
structural change. The National Development Plan guarantees
the unity and direction of the state's policy, efficiency in public
management, and the perfecting of social and political participa-
tion.
With the active participation of the society and under the imple-
mentation of the plan, it has been possible to overcome difficult
situations with full respect for democratic rights and without the
conflicts overwhelming us. During these 4 years, the institutions
have proven to be solid and flexible. The process of economic
reorganization and cultural changes have been based on this.
The respect for the constitutional guarantees, the decentraliza-
tion of the government offices through a redistribution of offices
to other states and municipalities, the strengthening of the divi-
sion of branches, the increase of electoral actions with the
creation of two new political parties, and the encouragement of
social participation in the analysis and resolution of our problems
have revamped the institutions of the republic. In the face of the
complex domestic and international situation, we have protected
social peace through dialogue and understanding. The differ-
ences have been resolved through the law and through
agreements.
We promoted a constitutional amendment to shorten the time
between the elections and the swearing in of the president of the
republic and, thanks to an initiative born within the Congress,
two ordinary congressional sessions were established and the
ordinary legislative period was increased by a month. Because of
3 SUPPLEMENT
constitutional limitations, these amendments will not be imple-
mented until 1989. In accordance with my present powers, I
proposed an extraordinary congressional period for the analysis,
discussion, and approval of various issues.
We have good and respectful communications with the legislative
branch. Various government officials appeared before the mem-
bers of Congress to explain the executive branch's initiatives or
to provide the Congress with the information it requested. At no
time have we presented a draft bill when this was not included in
the agreed upon schedule.
We have increased the budget of the judicial branch to help it
improve its work and thereby strengthen the justice system. The
number of courts has been increased and the wages of the judicial
branch personnel have been improved. The federal government
respects the decisions adopted by the judicial branch, abides by
the Constitution, enforces its jurisdictional decisions, and contri-
butes to safeguarding the constitutional order of the country.
The federal executive branch, to guarantee the right of the people
to organize politically and in accordance with the Political Orga-
nizations and Electoral Process Law, which states that the reg-
istered political parties will enjoy the rights as established in the
laws, granted the necessary elements for the development of their
activities. In the period this report includes, elections for governor
were held in Chihuahua, Durango, Michoacan, Zacatecas, and
Oaxaca States. Likewise, 1,404 town councils were chosen in 15
states throughout the country, and the local councils in Tabasco,
Jalisco, Campeche, Chihuahua, Durango, Michoacan,
Zacatecas, Baja California, and Oaxaca were renewed; 189 local
deputies were chosen ? 148 chosen by relative majority and 41
by proportional representation. These electoral processes were
held in accordance with the law. The people exercised their right
to choose their candidate within an environment of full freedom.
The media enjoyed full freedom to report to the people on these
processes. The decisions consolidated a process of ideological and
political pluralism and reaffirmed our democratic nature.
On previous occasions I have noted that our electoral processes
are (?predictable). I am aware some people have not been pleased
with some of these processes. Some people have asked me to
directly intervene in the development [calificacion] of local elec-
tioni. They are not aware that in keeping with the Constitution
and current laws, such processes are under the jurisdiction of
local electoral organizations. Thus, the president cannot and
must not intervene in them; that would constitute a serious
violation of our federal system. We are aware there are still
deficiencies in the elections that must be corrected. However, this
cannot be used as a pretext to create disturbances, intimidate
citizens, or carry out violent actions. Our people resolve differ-
ences by honest and legal means. The majorities decide, with
their votes, who will represent them, and they also demand
respect for their decisions.
I reiterate my will and determination to promote the
improvement of the electoral processes. Only in this way will we
advance along the path of democratic development and promote
a greater participation in the elections.
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The overall democratization of the society is a basic principle of
my government plan. On 17 June, I issued an order for the
Government Secretariat to convoke the political parties, the
national political associations, social organizations, academic
institutions, and citizens in general to participate in public con-
sultation meetings regarding the amendment to the electoral
policy and citizen participation within the government of the
Federal District. After 16 meetings in the Federal District and 4
regional meetings, the results are satisfactory and encouraging.
The ideas, opinions, and suggestions presented by the partici-
pants will substantially enrich the initiatives for the constitu-
tional amendments and the amendments to the Law on Political
Organizations and Electoral Processes which, at the right time,
I will present before this Honorable Congress.
The municipal amendments continue. In this period we estab-
lished the bases for municipal guidelines. Shortly, each of the
2,378 municipalities in the country will draft and approve its own
guidelines and exercise its new powers as established in Article
15 of the Constitution and in the local constitutions of each of
the states.
During the recent soccer World Cup, a security plan was imple-
mented to protect the public and offer proper protection to the
citizens and foreigners who visited us on that occasion. It was
good to see that we showed, before the international community,
the environment of peace and tranquillity that reigns in the
country and our capacity to organize. The public sector covered
the expenses of the World Cup with the income received from
the games.
Jointly with the UN High Commissioner for Refugees, we have
helped all Guatemalans who, in their condition as refugees, have
settled in our territory.
During the Guatemalan president's recent visit to our country,
we analyzed and established the criteria and mechanisms needed
to facilitate the return of these refugees to their homeland with
the guarantee that their right to live in their own territory will
be respected.
To keep the public well informed, the government has followed
a policy of social communications based on truth and a full
respect for pluralism. In this way, we are strengthening the
country's identity, sovereignty, and freedom.
The national population program has made great progress. The
demographic change needed by the country is becoming consoli-
dated in the direction we had planned. Early in this administra-
tion, the demographic growth rate was 2.6 percent. It is expected
that it will be 2 percent at the end of this year, with a population
that is higher than 80 million.
I made the commitment with the nation to preserve and perfect
the de jure system and, for this reason, I have made an effort to
make sure that social changes are reflected in the laws so that
these laws will be true means for the development of the individ-
ual and his community. Following a national poll on the admin-
istration of justice in 1983, we have thoroughly changed the laws
in this respect.
4
SUPPLEMENT
During the period this report refers to, we amended the Consti-
tution to expand possibilities for the defense of the individual
through the guarantee trial [juicio de garantia]. In an effort to
improve the administration of justice, we promoted important
amendments to various laws such as the law on habeas corpus
and the organic law of the judicial federal branch, the penal and
federal codes on penal procedures, the procedures code for the
Federal District, and the organic laws of the Attorney General's
Office and of the Federal District.
On 18 May 1968 [date as heard], the federal law to prevent and
punish torture was issued. This law was promoted by a group of
senators. With this law, we confirmed the political and juridical
will to reject practices that harm human dignity and offend
society.
Standard changes befit an institutional transformation. The
Attorney General's Office began a thorough decentralization in
line with the needs of prompt and expeditious justice and the
policy to decentralize the country's administration. The circuit
office system [sistema de delegaciones de circuito] of the Attor-
ney General's Office started in 1984 already covers the entire
territory. In addition, the penal procedures offices of the federal
prosecuting office were created in the Federal District. All
medium-sized cities in the urban planning program have been
included in this system. In addition, we began a permanent
hearings system to administer federal justice in towns where
there are no agencies of the Attorney General's Office.
The Attorney General's Office has been working in coordination
with the states of the country. This office maintains and will
continue to maintain its determination to inrease theethical and
professional level of public employees in this area. The idea that
those who serve society in this delicate mission must meet strict
standards of ability and honesty is gradually taking root.
The new appointments of agents of the federal prosecuting office
are obtained through public examination and period of 1 year,
which is a trial period to evaluate results to keep a person
permanently. This system, which is being applied in the country
for the first time, became a law during the last period of sessions
of the Congress.
Drug trafficking activities are financed and conducted by inter-
national criminals who are very well organized. At the interna-
tional level, instead of decreasing, this problem has tended to
increase considerably. Production increases as drug use
increases.
Mexico is allocating growing human resources and materiel to
fight drug trafficking. Thus, the country continues to do its share
in this bitter struggle. However, we were the target of pressures
from abroad when it was said that the actions we have been
conducting are not effective enough to fight this crime without
recognizing that the activities carried out by the government are
increasingly higher and proportionally better than those of other
countries.
The Attorney General's Office, the Army, and the Navy are
working very closely in this campaign against drug.trafficking.
At the outset of this administration, the Army and the Air Force
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only carried out an operation called "Condor" and applied the
Winner Plan [Plan Ganador] at the national level. Now, 18
special operations are carried out jointly in various parts of the
country.
The advances in our struggle against drug trafficking are evident.
Actions speak louder than words.
In this struggle, our people giving their lives. Since the "Condor"
operation started, the Army has sustained 392 casualties. In 1985
alone, 10 federal judicial policemen were killed. The sacrifice of
these compatriots is an example of honesty and courage.
Regarding the common authority of the Federal District, several
actions were implemented. These actions include the establish-
ment of a system to supervise the activities of the judicial police
and the compliance with the penal procedures' code. In addition,
a community cooperation program was started and it is already
rendering its first fruits. Representatives of the communities of
each of the 16 political delegations have joined this task.
In line with the principles to renew the moral values of the society,
the Federal District's [words indistinct] prosecuting office has
implemented several measures to improve its professional cadres.
These measures include dismissal and seizure of assets, as the
case may be, of public servants who have been proven to have
committed irregularities in their work. On the other hand, their
wages will be the same they obtained from the Attorney Gen-
eral's Office.
It has been my government's unrenounceable commitment to
keep making efforts to improve our society's moral principles.
We have not stopped making efforts to apply the instruments to
improve the quality and to guarantee the honesty of the federal
government administration.
The significant decrease in the number of illegal actions commit-
ted by public officials is due, to a large extent, to the preventive
measures applied to the state apparatus. Mechanisms have been
set up to protect the citizen, who can participate in the control
and vigilance of public administration through the complaints
and reports system.
The number of complaints received regarding state projects and
purchase contracts speaks for itself of the control there is to see
that they are legally granted with substantial savings.
Meanwhile, the program to simplify the administration is in
progress in all the departments. More than 50 organizations and
parastate entities were incorporated this year into this program.
The control and evaluation system of public administration,
which involves all dependencies and parastate entities, is in full
operation. This promotes, under a single coordinator, the imple-
mentation of uniform policies in handling administrative instru-
ments.
This system gives the means to maintain a careful vigilance in
the disbursement of public expenses. The supervision of federal
investment in the states allows us to observe the progress of works
that have been authorized, as well as the control of quality, time
of implementation, and proper plan of services for which they are
intended.
Properly audited financial reports of the main state entities have
been published. During the past period of special sessions, we sent
to Congress a parastate entities bill which was approved and
issued to provide state enterprises the legal framework to guar-
antee their autonomy of action and operational simplification.
We have managed strict control of the budget, a highly qualified
and selective reduction of public [words indistinct] and purchases,
and a strict verification of state imports, to improve quality and
prices, which has saved us currency and prevented illegal prac-
tices.
The performance of public employees has improved. The supervi-
sion and control of state properties by middle and top ranking
federal officials has also improved. The rapid and almost total
elimination of the practice of giving a gift ? which is the same
as bribery ? the suppression of nepotism, the enforcement of the
law of responsibility, and other legal actions in the case of
embezzlement duly proven, guarantee the people's will to
improve the quality of public workers.
Detailed reports of the achievements mentioned in this chapter
have been issued and we will continue doing so, so that they serve
as instruments of democratization. We continue advancing in the
modernization of public administration and in the struggle
against corruption, aware of the fact that there is still much to
be done, but highly encouraged by what we have accomplished.
By guaranteeing the country's internal security, and defending
its integrity, independence, and sovereignty, the Armed Forces
contribute to the country's development in many ways. The
Armed Forces are permanently conducting tasks of social inter-
est, civic and educational campaigns, aid to the community in
cases of disaster, struggle against drug trafficking, reforestation,
water distribution, and every sort of aid asked of our soldiers and
sailors.
These tasks have become a tradition which the people
acknowledge and appreciate.
I wish to stress the actions taken to modernize communications
systems, to improve the [words indistinct] capacity, and to better
the means of transportation and the rapid deployment of the
members of the Armed Forces.
Besides, the Army and the Air Force [words indistinct] in their
strategic plans, a task which consisted in the provision of a
military territorial division and the relocation of units and instal-
lations.
Meanwhile, the Mexican Navy has achieved a high level of
effectiveness in the vigilance and protection of the country's
sovereignty on the seas, coasts, and islands.
In its field of action, the Armed Forces continue developing their
technology to prevent dependency from abroad. The naval mili-
tary industry maintains a permanent process of research and
development. The Military Industry Department is man-
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VI. 12 Sep 86
ufacturing two prototype armored vehicles, a light one called
Lince and a medium sized one called Ocelote. A total of six DNB
armored vehicles are under construction.
The naval military industry is building four coast guard boats of
the eagle type. Two logistic boats were put into service this year,
which were built in Mexico, and which will permit an increase in
the Navy's efficiency in aiding the civilian population in case of
disaster.
I must admit that the task conducted by soldiers and sailors is of
great importance to achieve the great objectives that the people
and government have established. I appreciate and recognize
their loyalty and professionalism.
Our foreign policy is an important bastion of the country's
defense. By its own nature, the foreign doctrine we advocate is a
heritage to which all Mexicans are committed, free from partisan
differences and ideological banners.
Two persistent situations have given the country more relevance
in the efforts made by the international community to maintain
a stable and safe system: the threats to peace and the deterio-
ration of the world's economic structure. These important issues
affect all the nations on earth.
Aware of this, the government invited the presidents of Argen-
tina, Greece, India, and Sweden, and the first president of
Tanzania, which together with Mexico comprise the Group of
Six for peace and disarmament, to a meeting which was held in
Ixtapa from 5 to 7 August.
During the meeting our governments reiterated the need for the
atomic powers to stop the irrational arms race and to agree as
soon as possible to a general and irreversible nuclear disar-
mament process.
Olof Palme, a great statesman, a colleague with whom we joined
efforts, and a close friend of Mexico, tragically died at a time
when political intelligence was so necessary. We wish to honor
the memory of this great social fighter whose example we must
follow to attain his ideals of peace, harmony, and welfare among
nations.
We have maintained that authentic peace is impossible without
effective development. Thus, the government has constantly said
that the world's great economic problems cannot be handled in
an isolated or disjointed way. The nations should jointly organize
their struggle to establish a new international economic order
which includes our countries' just goals. It is necessary to reject
the prejudice that the new international economic order exclu-
sively represents a search for developing nations' demands. It
involves a rational distribution of benefits and pledges which
favor all the states, without exception, and is directed toward
productive relations with justice, harmony, and equity.
Conflicts are caused by insufficient development; world peace
will only be/possible to the extent that ancestral needs and historic
problems are resolved. We will continue to defend the importance
of resolving disputes and differences in a diplomatic way, through
a political dialogue, and not by force. Given the current Central
6
SUPPLEMENT
American conflict, the Latin American governments which are
exerting themselves to attain peace through the Contadora and
Support Groups have not ceased to advocate a dialogue and
negotiation, with the intention of safeguarding the legitimate
interests of all the nations in the region and security in the area.
Mexico believes that it is necessary to strengthen and increase
the diplomatic negotiation process as the best alternative to an
overall war. However, this basically depends on the political will
of all the parties involved in the conflict. Aware that meetings at
the highest level contribute to analyzing problems and attaining
solutions, I held meetings with heads of state or government in
Venezuela, Uruguay, the FRG, Greece, India, Guatemala, and
the United States, as well as with the president-elect of Colom-
bia. I always kept in mind the nations's interests and acted as the
representative of a dignified and sovereign nation.
My two meetings with the U.S. President were basically held to
give fluidity to our dialogue and communication, as well as to
activate and strengthen our bilateral cooperation relations. The
topics we analyzed included migratory activities, border cooper-
ation, drug trafficking, and a wide variety of commercial and
financial affairs ? as well as respect for individual, labor, and
social rights of Mexican immigrant workers.
The government recognizes the vast possibilities offered by mul-
tilateral forums, particularly the UN, to resolve international
conflicts and strengthen cooperation among nations. Thus, we
reassert our invariable solidarity with the principles and values
of this organization, and act accordingly. Within the framework
of our inter-American system, the efforts aimed at attaining
regional integration and the role of organizatios such as the
ECLA have been encouraged and supported. The ECLA's
assembly was held here this year. During the assembly I urged
everyone to analyze and renew the proposals for resolving basic
problems in Latin America and the Caribbean.
The Cartagena Agreement was signed, and it includes substan-
tial reforms to the OAS Charter and legitimizes every state's
right to choose ? without foreign intervention ? the most
convenient political, economic, and social system.
The earthquake and the drop in oil prices, late in 1985 and during
1986, made it necessary to adapt the national renewal strategy
which my government has been conducting. The strategy was
defined in the national development plan and, basically speaking,
it is aimed at changing our economic structure as a whole. The
production and distribution process must be reorganized and
social justice must be strengthened, to overcome basic insuf-
ficiencies and establish firm bases for a durable and stable
development.
Given the effects of the earthquakes on 19-20 September 1985,
the solidarity, strength, and unity of our people was over-
whelming. The government's actions alone would not have been
enough to face the emergency even though we promptly mobi-
lized the official organizations and institutions, Armed Forces,
emergency teams, and rescue teams ? both in the Federal
District and in the states of Mexico, Guerrero, Jalisco, and
Michoacan.
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Referring to Mexico City, besides the irreplaceable loss of human
lives, we lost 30 percent of our existing hospital installations;
1,658 schools were damaged; and there was a drop of 7.6 cubic
meters per second in the primary and secondary network of our
potable water system, leaving many neighborhoods without
water. Furthermore, the two long distance telephone exchange
centers we had were critically affected, interrupting our tele-
phone communications with the rest of the country and the world;
1,280,000 electric installations were damaged; thousands of peo-
ple demanded medical attention; 402 buildings were destroyed
and 5,728 were damaged. The social impact was overwhelming
because 100,000 families sustained damage to their houses. The
situation was countered with energy, imagination, and dedica-
tion; epidemic diseases were prevented; and all the services were
restored, one by one, with a quickness that, though not the best,
was surprising given the circumstances.
Only 10 days after the first quake, 3,226 people had been rescued;
281 emergency centers had been established; more than 14,000
injured people had received medical attention; 4,900 patients had
been transferred from damaged buildings in a quick and orderly
fashion; 37,300 people had been sent to 144 shelter homes and
73 camps; 99 percent of the local telephone service had been
restored, as well as 44 percent of the lines for international long
distance calls, and 47 percent of the lines for receiving calls from
outside the capital; a total of 1.146 million power lines had been
repaired; 4.7 cubic meters per second of potable water had been
recovered; and 280 water leaks had been repaired.
To resolve an emergency problem and respect the people's right
to continue living in their communities, I ordered the expro-
priation of several lots in the central neighborhoods in the Federal
District. The initial list of lots was modified based on justified
observations. The expropriation was the most just and expedi-
tious decision; it prevented serious social conflicts. The measure
will benefit a large part of our society. The state's decision had
to be based on the general interests. The houses built will become
properties of the families occupying them, through credits.
The 4 housing projects currentlly under way will directly benefit
400,000 inhabitants. As a result of an effective democratic
concerted effort, 80,000 families are being helped through cred-
its, reconstruction of their homes, or construction of dignified
homes. This effort includes the actions carried out by private
organizations and foundations.
Society generously contributed with donations for recon-
struction. To reorganize the use of resources, I decided to create
the National Fund for Reconstruction, which is handled by
public employees, as well as labor and business leaders. As of 15
August, the fund had grown to 42.898 billion pesos and $14.112
million, including donations and interest. These funds have been
used for hospitals and schools, for amounts entered in the corre-
sponding public accounts.
The government created the National Reconstruction Commis-
sion, made up of six committees as organs for consultation and
concerted effort, which received broad participation from various
sectors. The commission's specific work and proposals have been
the basis for the coordination of public and social programs
regarding reconstruction priorities, the encouragement of decen-
tralization, promotion of financial sources, and adjustment to the
government's plans and projects.
I express national recognition for their loyalty and human soli-
darity to our workers, our soldiers and Navy personnel, volun-
teers, women, international rescue teams, and above all to the
many youths who spontaneously and unselfishly helped their
brothers in distress. The fatherland will always be grateful to you.
As a result of the catastrophe, our country received gestures of
affection and support from the international community. We
received rescue teams and material donations from 43 countries.
Mexico deeply appreciates the help received, and above all,
fraternal and generous actions.
Almost 1 year after the September 1985 quakes, we have over-
come adversity, and we have confirmed once more that united we
are capable of facing the greatest challenges and difficulties.
However, with the purpose of planning, organizing, and estab-
lishing a national system for civil defense that will guarantee
adequate prevention, protection, and assistance to the population
in the event of highly collective risk or disaster, the basis for a
national civil defense system has been established. This was
possible with the broad participation of citizens, social organiza-
tions and academic and public and private institutions.
History and nature often put us through difficult tests, all of
which are painful. The nations and men who manage to resist
them emerge stronger. That, certainly, will be our destiny.
A meeting has been scheduled for 19 September to evaluate the
actions carried out within the reconstruction program. The
results obtained to that date will be reported in detail. I hope to
have representatives of the Honorable Congress of the union
present on that occasion. In addition, I will send you the cor-
responding report for your analysis and discussion.
Significant changes in the economic structures and social partici-
pation to organize a well-defined production and distribution
process within the 1983-88 National Development Plan will
enable us to rechannel our growth on the durable basis of equity
and efficiency. These changes include, among others, reducing
the size of the public sector to adequate levels, expediting the
decentralization of national life, making the national productive
system more competitive in relation to those of other countries,
promoting industrial retraining [reconversion industrial], and
strengthening public finances and domestic savings.
My government is aware of the fact that the worsening of the oil
crisis has made it necessary for us to implement those changes
more strictly. However, we have to admit that structural changes
will not occur overnight.
Regarding the efforts to improve public finances, the largest
adjustment was a reduction in public expenses. The programmed
expenditures ? for goods and services ? has continuously
dropped during the past 5 years. Thus, out of a total of 31 percent
of the 1981 budget, it dropped to approximately 22 percent in
1986. This adjustment of 9 percent in the budget in 5 years shows
the budget restraint that was achieved.
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In the international field, it has been admitted that the best way
to show the tremendous fiscal effort done during this administra-
tion is by not considering the payment of interest on the public
debt. With this perspective, the deficit becomes a surplus. The
same surplus that amounted to 3.3 percent in 1983 with respect
to the budget then grew to 5.8 percent in 1985, and will probably
amount to 4 percent in 1986, in spite of the drop in oil prices.
The reorganization process in the parastate entities continues. To
date, 205 entities have been liquidated, transferred, merged, or
sold, while 261 are in the process of reorganization. This leaves
a balance of approximately 700 entities, as compared to the 1,155
that existed in 1982.
As one of its goals, the plan established a thorough reorganization
of the subsidies system. Conasupo [National Company for Basic
Commodities] has rationalized the subsidies, concentrating
mostly on the consumption of the majority. By 1986, the only
subsidies granted are those to corn and wheat flour. This means
that between 1984 and 1986, subsidies have been reduced by over
80 percent in real terms. Meanwhile, 500 Conasupo urban stores
will be relocated as they are not located in priority areas.
Likewise, the plan also established that the public entities would
be subjected to a process of reorganization and modernization to
increase efficiency and productivity. Evidence of the greatest
efficiency in the parastate sector is the fact that between 1983
and 1986, transfers to the entities with budget controls are
estimated to have decreased by nearly 60 percent in real terms,
not counting payment of the debt service.
The current industrial reconversion has been increased in the iron
and steel area, and will continue in the other areas that have been
mentioned. In December 1982, the economy was highly pro-
tected. This resulted in inefficiencies and abuses to the detriment
of the consumer. The protection system was based on the exces-
sive use of import permits. It was noted that 65 percent of the
classification of import tariffs representing 80 percent of the
value of imports in that year were subject to that restriction, and
the levels of the import tariffs showed very wide margins.
By the end of 1985, 90 percent of the import tariff classification
was exempted from quantitative restrictions, and only strategic
goods, staples, and luxury items are still under control. In April
1986, we continued with a process that had been initiated earlier
and announced a decrease in the import tariffs. The top level of
import tariffs are now in a more adequate range, and show
significant progress as compared to the previous levels. The
highest tariff was reduced from 100 to 50 percent.
These measures are part of a structural change strategy the
results of which should translate into sustainable high-rate
growth to reduce the outside vulnerability and form an industrial
sector efficiently integrated on a national level, in harmony with
the national economy, and more competitive abroad. In sum, the
idea is that foreign trade should become the generator of more
autonomous and more balanced growth.
We knew that the most important results of our efforts would
only be completed on a medium- and long-term basis. In addition,
we were aware of the difficulties that we had to confront. We
8
SUPPLEMENT
were familiar with the force derived from an old and obsolete
standard of industrialization and the importance of the interests
that would be affected. Nevertheless, we were always fully aware
that the nation's loftiest interests are above those of groups. With
this perspective, a coordinated foreign trade and industrial devel-
opment strategy was outlined to establish the basis of a structural
change in these sectors. The foreign trade sector was assigned the
responsibility of rationalizing protection, fostering nonoil
exports, and conducting several commercial negotiations to
expand and ensure the access of our products in international
markets.
We conceive the strategy of commercial negotiations with an
overall economic and political approach. It is understood as an
instrument to support our domestic efforts in favor of develop-
ment. During the period covered by this report, intense bilateral,
regional, and multilateral negotiations were effected. Without
bias or cliches, we reviewed our multilateral policy and evaluated
the compatibility of our foreign trade policy with internationally
accepted standards.
Neither advantages nor disadvantages were ignored. Everything
was carefully examined. The negotiations on our country joining
the GATT were within this context. The GATT is the legal
instrument which regulates 85 percent of overall world trade, and
more than 90 percent of the trade of those countries we trade
with. Mexico has always sought increased multilateralism in the
solution of and attention to international problems, without
harming our bilateral relations, and has staunchly advocated that
international relations be based on respect for law and the
principles of justice and equity. In view of this, we could not
remain outside the only multilateral forum which has as its
objective the regulation of world trade; this regulation is based
on legal and negotiated norms and the application of general
principles. After consulting with the Senate, we began in Novem-
ber the procedures for our country to join the GATT. These
procedures concluded in June with the signing of the protocol of
admission. This protocol has been presented to the honorable
Senate for ratification. It specifically protects our agricultural
sector. It also recognizes the priority status that Mexico has
granted to this sector. The national development plan and the
sector and regional plans derived from it are also maintained
under the protocol.
In addition, our country's right to establish the necessary instru-
ments to execute these programs, as well as those of a fiscal and
financial nature has also been ensured. In the mentioned pro-
tocol, it is specially stipulated that Mexico will exert sovereignty
over its natural resources, particularly energy resources, in
accord with our Constitution. Finally, it is recognized that we are
a developing country and for this reason, is entitled to the special
and more favorable treatment which both the general accord and
other provisions deriving therefrom establish for developing
countries. Separately and in a special publication, the nation has
been informed in detail about the process of negotiation and its
results. However, the fact that we have joined the general accord
does not mean that an all-encompassing solution to our domestic
problems has been found.
Our inclusion does not mean a lessening of our sovereignty or that
this is an opportunity to foster outrageous (?stances) to the harm
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12 Sep 86 9 SUPPLEMENT
of the majority. In reality, an opportunity to accurately evaluate
the ability of our industry to be competitive abroad. It is an
opportunity to generate revenues and jobs. It is also an opportu-
nity to avoid excesses and squandering. Joining the GATT
implies both advantages and challenges. The most important of
the former include the possibility of participating as a full-
fledged member in GATT-sponsored multilateral commercial
negotiations. Also included is our right to better combat protec-
tionistic measures and practices and unfair trade carried out by
other countries to the detriment of our exports. The GATT is an
international accord which fosters dialogue and multilateral
negotiations. Its objective is to expand world trade and to prevent
unfair or improper commercial practices. In joining this organi-
zation, we will have better instruments to effect its economic and
commercial activities. The challenges implied in our joining the
GATT are the same that the economy has been confronting
during the past few years. These challenges are to raise the
efficiency and productivity of Mexico's industry, which had
become stagnant and was even dropping because of excessively
protectionistic policies. This unduly harmed both domestic con-
sumers and our international competitiveness.
With or without the GATT, the rationalization of our policy of
protection has been an unpostponable need with the added advan-
tage that, by belonging to the GATT, we will have better
instruments for multilateral foreign trade negotiations. We can
still make use of bilateral negotiations when this is of benefit to
the national interests. The decentralization of our national way
of life has been a genuine demand of our society. This has been
a fundamental goal of my government. The implementation of
this has required a major change in legislation, and the coordina-
tion of norms between the federation, the states, and the munici-
palities, and the federal public administration. It has also
necessitated the broad participation of society.
The policy of regional development has become an effective
instrument to correct the most important regional imbalances
and foster the modernization of the production structures of the
states. The tasks of planning, budgeting, execution, and follow-
up of public investment in the states have contributed to the
consolidation of the state planning systems. The planning com-
mittees for the development of the states have become instru-
ments through which sector investments can be harmonized with
regional, state, and municipal investments. Through these com-
mittees, social sectors participate in defining financial priorities.
From these expenditures of the federation, states and municipal-
ities have enjoyed an unprecedented amount of resources. This
has greatly improved their ability to carry out local works and
participate in determining the use and destination of federal
public investments. The generalization of public finance prob-
lems has been prevented. The decentralization efforts have
reduced the crisis throughout the national territory. The
earthquakes made evident the vulnerability of urban concen-
trations. That is why it was necessary to quicken the implementa-
tion of the federal administration decentralization program. This
program has allowed us to establish new bases to improve gov-
ernment services and bring them closer to the people. The goal
of decentralization is to take action in three areas: to move
authority and decisionmaking away from the strong federal
representations; to foster the transfer of operating centers and
services to the state governments; and to continue to relocate
personnel and offices outside of Mexico City. Administrative
decentralization cannot be conceived only as a transfer of per-
sonnel. It must be basically understood as the transfer of func-
tions and authority to where the people demand that decisions be
made.
Therefore, we are creating regional decision centers to prevent
dispersion, inefficiency, and a reoccurrence of the problems of
industrial urban concentration that the Federal District now
experiences. We have established the Jalisco Regional Center
and another will be added soon in Nuevo Leon.
Due to the magnitude and complexity of the decentralization
process, it has been implemented gradually and in an orderly
fashion. The schedules and activities have been adapted to the
specific characteristics of each organization, and the main deci-
sions have been adopted in agreement with each state's author-
ities and the public workers' organizations.
Referring to the transfer of operations and services to each state's
authorities, we have organized and decentralized the health
services in 12 states. We have installed 18 consultative commit-
tees to decentralize education and we have begun transferring
the administration and operation of local highway programs.
Likewise, the organizations that have a local or regional nature
have been turned over to each state's authorities. Decentraliza-
tion is one of the decisive structural changes which our nation
must accept. However, our society must set the pace, establish
the procedures, and define the priorities.
Our economy has faced, since early this year, one of the most
adverse situations in this century. The drop in oil prices has
severely affected many oil-exporting countries, above all those of
us which remain developing nations. Even though this seems to
offer the consumers an immediate advantage, it also has negative
repercussions in the industrialized countries. I repeat: We are
facing an international problem of extraordinary magnitude. The
collapse of the international oil market worsened a series of
structural problems which had not been properly solved. All this
took place within a 3-year period and required considerable
economic adjustment.
Early in 1986 we planned to analyze our economic policy so that
the scant progress achieved in the struggle to control inflation,
the service of our foreign debt, its impact on the public sector,
and the increase of our public sector's efficiency reached accept-
able levels: According to the latest estimates in oil prices, we have
suddenly lost revenues equivalent to almost 6 points in our
national product. The 1982 crisis was partly due to the drop in
oil revenues, which was less than a third of the current decrease.
The revenues lost this year represent an amount equal to the
public sector's payroll and exceed the amount of public invest-
ment. The country has no economic or social possibility of
internally absorbing this loss, much less in a short time.
The drop in oil prices, the drop in almost all the raw materials'
international prices, and the fact that we had no net foreign
resources available during most of 1985-86 not only worsened the
problems we had been facing but created a new crisis. Neverthe-
less, contrary to 1982, we now have a more solid basis for
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VI. 12 Sep 86
countering the situation, given the significant process achieved
in 3 years of constant efforts. From 1983 to 1985, we met
challenges with firmness and political ability. The country did
not peacefully overcome the social crisis merely by chance, even
though the worst effects were felt when the people's salaries
proved inadequate and public investment declined. Dialogue
allowed us to overcome the crisis and avoid the adoption of
authoritarian measures. Social harmony has always been a pri-
ority.
The development of our states and the mixed economy were
strengthened in 1983-85 by including the proper guidelines in our
constitution. We have encouraged the citizens' participation in
the development process through the national system for demo-
cratic planning. The bankruptcy of our production sector was
prevented and new jobs were created despite the increase in our
population. Inflation was controlled and reduced to levels lower
than those achieved in 1982. Despite the demographic explosion
in the last 3 years, medical and education services have not been
neglected. A record figure was achieved in the production of
foodstuffs and construction of housing units, thus preventing the
crisis from affecting the workers' salaries even more. We have
attained important progress in our structural changes and we
would have consolidated our efforts this year if the oil prices had
not dropped so low. The short-term program for economic reorga-
nization which we began on 1 December 1982 was adequate
considering the problems we faced at the time.
We now have a new challenge. In the face of the drop in oil
revenues, on 21 February I said the government would firmly
maintain the basic objectives for the country's development,
would consolidate the strategy that had already been established,
and would determine the margin for any additional maneuver
that could be maintained domestically.
To accomplish this, I announced that we would follow 10
guidelines for economic policy, and I noted that we did not intend
to blame others abroad for our problems. I said that we would
first increase the domestic effort far beyond that which has been
anticipated in the economic policy program for 1986.
At the same time, I stressed that it was economically, socially,
and politically impossible to fully absorb, throughout the year,
the effects of the drop in the international oil prices.
I highlighted the necessary co-responsibility of creditors in the
solution of the foreign debt problem, and I mentioned noncon-
frontation and dialogue as the main elements of the negotiation.
Based on the 10 guidelines I announced, we made new decisions
that increased, in each case, the actions that had been underway
since the beginning of this administration ? internal actions the
government has been systematically, carefully and firmly con-
ducting. However, a continued increase in the oil crisis demanded
a new effort that is different from the strategy followed in the
first 6 months of the year, when the possibilities for the policy of
restraint that had previously been used ran out.
For more than 240 days, we avoided an economic collapse and a
massive loss of international reserves. We handled the tremen-
dous impact coming from abroad, and an explosive economic
10
SUPPLEMENT
situation was prevented. However, maintaining that policy could
have implied such an accelerated exchange slide that it would
have led us to hyperinflation and, at the same time, would have
demanded a credit restraint and interest rates that were's() high
they would have prompted an acute recession. In addition, it is
clear that if production drops drastically, inflation and the loss
of sources of foreign exchange would be even greater..
Certain
Certain members of society have been making a correct diagnosis
of the problems we are currently facing. However, when they
establish the causes of these problems, it seems they are implying
these problems are caused by the policy we have adopted. This is
not right.
The main reason for the inflationary and recessive process that
we are experiencing is the drastic drop in oil revenues. For this
reason, current problems cannot be presented as mere con-
sequences of yesterday's problems or as a result of the economic
policy adopted in the first 3 years.
I reiterate that the firm actions taken then have prevented larger
problems and allow us now to more strongly face the new oil
problem.
The strategy proposed at the beginning is still valid. We must
strengthen structural changes to increase the general efficiency
of our productive apparatus and the country's savings, as well as
to strengthen the redistribution effort.
We will not abandon this strategy but we will continue to review
the tactics to face the new challenge we are experiencing.
We need to have a healthy production capacity. We need public
and private enterprises that are stronger to manage the economic
policy in an orderly fashion. Consequently, the main endeavor is
to defend production and employment that is laying the
groundwork for a sustained recovery, by controlling the inflation
caused by the new oil crisis, encouraging private investment and
the improvement of private enterprises, obtaining larger revenues
from our exports and from tourism, improving the terms of the
renegotiation of the foreign debt, making progress in the
strengthening of public finances, and clearing the way for public
investments which are indispensable to accelerate structural
changes and defend real salaries.
For this reason, we proposed the encouragement and growth
program. This program seeks development with stability, two
elements that are indispensable to give feasibility to the strategy.
The program shows a change in priorities. Regarding others
abroad, the basic objective is to demand resources for our devel-
opment that no longer permit a strict compliance with the
obligations we contracted. Regarding the domestic situation, the
priority is an active policy for economic recovery that is in line
with the anti-inflationary struggle. This is the only economic
strategy compatible with the basic principle of defending our
country's development capacity.
Regarding public expenditures, we continue to advance in var-
ious aspects such as the reorientation of investment resources; the
control of current expenditures to increase savings; the review of
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regulations to guarantee discipline, efficiency, and honesty in
their implementation; the redefinition of the allocation criteria;
the adjustment of sectorial and regional priorities at a medium
term; and the gradual and overall change in the system of
transfers.
Regarding the policy of expenditures, we reiterate our firm
intention to maintain budget discipline. The information con-
tained in the 1985 public accounting shows that the budget was
kept under control.
Last year, the federal government's programmable expenditures
were almost 5 percent below the originally scheduled amount.
The resources from transfers were 2.5 percent lower than the
authorized budget, thus decreasing its participation in the GNP
by almost 4 percent between 1982 and 1985.
Similarly, personal services decreased in the GNP during the
same period. This information confirms the discipline that we
have maintained in the budget.
Government expenses, excluding the servicing of the debt, shows
an accumulated decrease of 40 percent in real terms since 1981.
We have also advanced in the financial and administrative
rehabilitation of the government entities by tying their decisions
to the economic and social policy. To this end, we signed
agreements and took actions for the federal government to
assume the liabilities of some organizations and enterprises with
the condition that integrated financial reorganization programs
be drafted first. These programs include commitments in produc-
tivity and placing the entities on a sound footing, establishing
priorities for investment programs, decreasing subsidies, and
making rational efforts to improve efficiency at every level.
Starting with the 3d quarter of 1985, agreements were drawn up
between the federal government and the parastatal enterprises to
follow up, control, and evaluate the budget and deficit targets.
These agreements constitute a fundamental change in the rela-
tions between the central and parastatal sectors because they give
the enterprises greater administrative autonomy and promote a
greater sense of responsibility.
During the first semester of 1986, in spite of losing more than 1
trillion pesos in oil income, the total deficit decreased 8 percent
in real terms as a result of a real decrease of the federal
government's programmable expenses of 22 percent, which
reflects the maintenance and reinforcement of the budget dis-
cipline during the present year.
The growth program has required redoubling the budget efforts
and changing the emphasis to achieve moderate growth with
inflation control. This way, the novelty on the matter of expenses
is that growth will be supported with stability, and budget
expansion through the elimination of nonpriority programs to pay
for basic additional expenses such as the growth of education,
health, and security services; and implementation of justice the
people demand ? without increasing the number of government
employees. To provide the necessary funds, we have been
transferring appropriations from nonpriority to priority sectors.
We have increased the resources for agriculture for food produc-
tion, which is an indisputable priority. I have given precise
11
SUPPLEMENT
instructions for the decisive fulfillment of agriculture support
programs and for the opportune purchase of the harvests by
Conasupo [Government Basic Commodities Corporation] with-
out excluding the search for greater participation by private
individuals in these purchases at the current guaranteed prices,
and for the continued promotion for banks to provide loans for
agriculture to strengthen the national food program.
We will continue to strengthen, in an orderly and sustained
fashion, the strategic investment programs in the coming years,
principally those related to a sufficient production of crude, the
adequate generation of electric power, the modernization of
railroad tracks and locomotives, the maintenance and expansion
of highways, the efficient production of fertilizers, and the expan-
sion of telecommunications.
The government enterprise has been a basic factor of the Mexi-
can state to attain its economic and social objectives. As a priority
instrument for regional equilibrium, as a support mechanism to
attract foreign currency, and as a basic vehicle to reorganize the
economy and overcome the technological dependence, the public
enterprise has contributed to social development and the promo-
tion of productivity and employment.
At the start of my administration, we recognized the imperious
necessity to purge the parastatal sector to strengthen it. Accord-
ingly, we have carried out an intense review of its goals and
objectives to give it greater flexibility, vigor, and capacity for
action. We will continue making a detailed review of the size and
coverage of the government sector because this is an indispensa-
ble requirement to increase the efficiency of the economy and to
channel savings to cover the national priorities.
In spite of the serious budget limitation to which we are tied, it
is necessary to continue with the investment programs in areas
that have far-reaching effects on the country. We cannot post-
pone industrial reconversion, which implies the introduction of
new technology through additional investments, the closing of
obsolete production processes, and the raising of production,
employment, and productivity.
It is appropriate to state the thoughts that restrict the govern-
ment's participation in corporations. Article 28 of the Constitu-
tion determines the strategic areas in which the state has
exclusive control as representative of the nation: petroleum and
hydrocarbons, basic petrochemical industry, radioactive miner-
als and the generation of nuclear energy, electric power, rail-
roads, printing of paper currency and minting of coins, postal
service, telegraph service, radio telegraphy and satellite commu-
nications, and the public service of banks and credit. Strategic
entities are those that by explicit mandate of the law must be the
responsibility of the government and that constitute a constitu-
tional property ? that is, a basic instrument to protect the
national interest to promote development. These are principally
social service entities. The principal ones are the Mexican Social
Security Institute, the Issste [Institute of Social Security and
Services for Government Workers], the Infonavit [Institute of the
National Fund for Workers Housing], as well as the Conasupo
in the regulation of basic commodities.
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12 SUPPLEMENT
VI. 12 Sep 86
In these strategic entities, there is no room for a withdrawal by
the government sector, but only for its reinforcement and effi-
cient expansion.
Because of varying circumstances, the state intervenes as owner
and holds a majority of stocks in enterprises considered to be
priority and that produce goods and services for the market. They
include the steel industry, the production of fertilizers andsugar,
and the shipyards, among others. Private companies also partici-
pate in these areas.
The national development plan indicates that to strengthen the
strategic and priority enterprises considering the shortage of
resources, it is necessary to prevent the nonstrategic and non-
priority enterprises from cutting into the budget. For this reason,
we have determined what are the state's strategic and priority
enterprises. The rest of them will be separated from the public
sector in an orderly manner through their sale, liquidation,
merger, or transfer to the federal agencies. We will reinforce
what is strategic and priority.
We will particularly stress the higher productivity of the basic
public enterprises. We will stimulate their finances, introduce
new technologies, and make their management more efficient.
It is essential to generate sufficient revenues to reorganize
finances and reduce public expenditures. A fundamental objec-
tive of the fiscal policy is to make the tax system more equitable
to make up for the distortion brought about by inflation, to
protect the true fiscal revenues [words indistinct] and fair, and
foster investment and jobs. No tax rates were raised during 1984
and 1985. Quite the contrary, some taxes were eliminated in the
1986 fiscal budget. These taxes had proved sensible with regard
to the unfavorable effects of inflation.
The unproductive [words indistinct] and the consumption of
dispensable, articles, such as tobacco and alcoholic beverages, are
borne only by middle- and upper-class people. In addition, the
fiscal measures approved in May, which reduced the deadlines
for the payment of some taxes to avoid a fiscal budget reduction,
will generate additional revenues worth approximately 200 mil-
lion pesos. We have continued to strengthen the finances of
creative and municipal organizations, as well as the tax system,
through the decentralization of fiscal collection functions toward
the, interior of the country. Regarding income tax, we have
established additional taxes of a progressive and temporary
nature on medium- and high-income taxpayers so those who pay
more taxes can contribute toward the reconstruction tasks. ,The
amendments introduced into the state's fiscal code show that, in
addition to better defining taxes, control and vigilance
mechanisms for the payment of taxes.are improved,penalizing
instruments are adjusted, and administrative procedures are
improved.
As for fiscal stimuli, a temporary incentive for new investments
was approved. For the first time, a fiscal incentive was approved
to encourage technological investment and scientific develop-
ment. Finally, the support of export consortiums and the sales of
these enterprises already enjoy the zero rate regime of the (?IDA)
[not further expanded]. Such sales have been regarded as compa-
rable to exports.
The financial realization of the parastate sector, the drastic
reduction of the subsidies implicit in the economy, and the
rationalization and nonutilization of the explicit subsidies con-
tinue to be the fundamental objectives of the prices and rates
policy. Simultaneously, to stabilize the public sector's relative
prices and lessen the effect of inflation, additional adjustments
have been made to a considerable number of prices and rates of
the public sector's productive services. These adjustments are
grievous, yet necessary to avoid new imbalances in public
finances.
For instance, adjustments on public prices, like the one on oil
products recently established, cause a genuine concern in various
community groups. It is frequently asked why the price of oil and
consequently that of gasoline must be raised while these prices
are going down elsewhere in the world. It sounds paradoxical that
the price of oil goes up here while it goes down in other countries.
To understand this situation, we must take into consideration
that in our country the export of oil represents an extremely
important source of revenues for the public sector. To a large
extent, these revenues allow the country to execute works that
the people justly demand, such as schools, hospitals, roads, and
potable water networks. These works also include making food
available at a faster rate and, in general, to contribute toward
basic services required for daily living. Substantial revenues were
lost when the international oil price dropped. To continue to
execute the fundamental works the community needs without
these resources would have required financing them with the
printing of currency. To have reduced the budget even further
would have implied the feeding of recessive trends already pre-
sent in the economy. In view of this situation, the government
decided to reject these alternatives and adjust the price of oil
products to be able to continue the scheduled public expenses
originated in tax collections without increasing the fiscal deficit.
This measure immediately affected the people's purchasing
power, yet prevents inflation from increasing and lasting longer
and recession from worsening.
One of the current administration's fundamental objectives
regarding finances is to increase national savings. For this reason,
a realistic policy of interest rates has been implemented to hold
and protect the people's savings. The inflation process and the
decreasing exchange rate have determined a structure of high
nominal interest rates.
To promote financial savings, new instruments to collect rev-
enues have been created which will give savers greater protection
against inflation, increase domestic savings, and foster the return
of capital from abroad. The promissory.notes of the federation's
treasury are a case in point. In July, measures to provide credit
assistance to private citizens were adopted and credit resources
which the national banks received since October of 1984 were
deregulated by 25 percent totalling 100 billion pesos. And 40
percent of this amount will be funneled to agriculture, exports,
low-income housing, and small and medium enterprises; the
remaining 60 percent will be used to give credit assistance to
private citizens.
Regarding interest rates, the foreign resources which we are
negotiating will gradually allow them to drop and then there can
be an expansion of credit to the private sector.
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VI. 12 Sep 86 13 SUPPLEMENT
These measures are a frank and decisive encouragement to
private investment. First of all, we will protect productive plants
and existing jobs. From that point on, we will broadly encourage
private investment.
The foreign exchange policy has maintained its fundamental
purpose of avoiding abrupt short-term movements of capital
while easing existing imbalances with foreign countries through
the implementation of a flexible and realistic exchange rate,
which gives competitiveness to exports and tourism and encour-
ages the efficient replacement of imports. Thus, we continued
with the dual foreign exchange market. Operational changes we
made were solely to improve efficiency. The pattern of regulated
fluctuations in the controlled market has gradually permitted
adapting the level of the rate of foreign exchange to internal and
external circumstances. Likewise, it has favored the development
of nonoil exports and decreased the impact of the costs of
importing component parts and servicing the foreign debt. More-
over, the free rate of exchange has prevented speculative move-
ments of capital from affecting the Bank of Mexico's
international reserves. Yesterday, the Bank of Mexico's interna-
tional reserves totalled $4.525 billion, that is, 1.281 billion fewer
dollars than at the end of 1985. The drop in reserves during the
current year is largely due to the net payment of foreign credit
of $900 million; the rest was caused by payments of commercial
transactions.
In January, the law regulating foreign trade went into effect.
This law establishes an updated legal framework to regulate and
protect this activity. Measures banning disloyal practices in
foreign trade were included in this law. It updated and improved
the system of refunding import taxes. Also, based on the overall
program to promote exports, measures to promote them, espe-
cially in the manufacturing field, were reinforced. The financial
sector has supported with credit the country's export activities at
the right time. Domestic letters of credit to promote the work by
indirect exports and the program of temporary imports for
exports are the most outstanding of these measures.
The behavior of the balance of payments for the first months of
the year, on the one hand, shows a sensible deterioration in the
current account as a result of the abrupt drop in oil revenues,
which cannot be compensated by increases in exports and tour-
ism. On the other hand, we note an improvement in the capital
account. For the first time in many years, it shows capital flowing
from the private sector as a reaction to credit restrictions and
high real interest rates in the country.
In the postwar years, our foreign debt constituted an instrument
that complemented domestic financial endeavors for the sake of
the development of the country. Thus, with these resources it was
possible to accelerate the pace of investments and reach high
economic growth. Since then, we have counted on institutions
such as World Bank and the Inter-American Development Bank,
as well as on official bilateral credits destined to finance import-
ing of equipment from industrialized nations. Mexico had broad
access to world money markets, and credits from international
commercial banks greatly increased in the past 15 years. In 1970,
the public foreign debt amounted to 12 percent of the national
product. From 1971 to 1976, the foreign debt began to be used
more to finance growing public expenditures until it reached 20
percent of the national product. Starting in the second half of the
seventies, discovery of vast oil fields in the country, within the
framework of an oil market thirsty for hydrocarbons and with
constant high prices, and the huge resources the international
financial system had at its disposal, the country turned into a
particularly attractive credit target. Therefore, oil and the for-
eign debt permitted financing spectacular increases in public and
private investments. These exceeded 25 percent of the GNP.
However, since 1981, the international situation has radically
changed. Interest rates rose to unprecedented levels.
The price of oil and other raw materials went down. In the
meantime, the world's economy experienced a recession in view
of the application of anti-inflationary policies in the developed
countries.
Between 1977 and 1982, the public foreign debt increased by 156
percent. Of the total registered this past year, 17 percent had
short-term maturities. In that period, most resources from the
foreign debt were used to finance public and private investments,
which allowed us to reach high levels of growth and to signif-
icantly expand the country's industrial capacity. This was
directly shown in public projects, the exploration and exploitation
of oil, the generation of electric energy, the expansion of the iron
and steel industry, and the production of fertilizers, among other
aspects.
Something similar occurred with the foreign debt of the private
sector. It was used to increase the plant capacity of almost all the
areas of production of the economy.
To the current administration, the policy of the public debt is
based on contracting foreign financing only for the amount
strictly necessary to complement domestic savings and cover the
economy's foreign exchange requirements, within the context of
rational use and moderate growth.
From 1983 to 1985, significant advances were made in reducing
the relative value of the public debt. After increasing 60 percent
in real terms front 1981 to 1982, the domestic debt has been
reduced 30 percent in the past 3 years. As for the foreign debt,
its growth has been particularly slow. Net indebtedness, which
represented 7 percent of GNP in 1981, dropped to 0.5 percent in
1985. In sum, during the current administration, a strict policy
has been implemented for the restructuring and reduction of the
public sector's domestic and foreign net indebtedness.
For 1986, the economic program contemplated moderate growth,
a public deficit that amounted to half of the 1985 deficit, and a
foreign debt of up to $4 billion. This program was based on the
assumption that theaverage price of Mexican oil would be $22.50
per barrel. However, the drastic drop in oil prices has forced us
to review the foreign debt policy.
We must stress that the first half of 1986 went by without any
foreign financial support and, at the same time, we met our
obligations on time. In other words, in addition to covering the
service on the debt, we made net payments on the principal of the
public and private foreign debts. Such a situation became prac-
tically unbearable.
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VI. 12 Sep 86
The increasing deterioration of the oil market forced us to review
the relations with our creditors. First, we negotiated a new
agreement with the IMF. In contrast to traditional agreements,
we were able to impose the need to boost growth as a basic
criteria. In addition, we were able to protect our economy from
the fluctuations of international oil prices through a mechanism
that permits the availability of sufficient foreign resources to
maintain the imports demanded by an economic growth of
between 3 and 4 percent. We also got support for new public
investments in the event that the economic recovery for the first
quarter of 1987 becomes insufficient. Last, we specifically rec-
ognized the important advances made in previous years, avoiding
strict commitments above the nominal deficit, opening possibili-
ties for productive investments, and rejecting any discussion
about the strategic enterprises or the legislation on foreign invest-
ments.
In this way, we met the demand that I made in my 21 February
speech. We are now in the phase of negotiating with creditor
banks the concessions on the current debt and the new debt that
we require. It is a difficult stage, but we trust the fairness of our
arguments, the ability of our negotiators, and the support sug-
gested by the seriousness and responsibility with which the
country has acted to meet its obligations.
Uncertainty abroad and new problems demand congruence and
perspective in our actions. For this reason, the national develop-
ment plan is in force, both in regard to the national goals, as well
as in the general development strategy.
In the face Of the adverse conditions that prevailed in the past
year, the flexibility of the national democratic planning system
allowed us to update goals, increase actions, and adjust tactics.
Thus, when we presented to 'Congress the document with the
views on the 1986 economic policies, we downgraded the goals
for 1986, 1987, and 1988; we further defined our priorities; we
reviewed the objectives and goals in the strategic programs; and
we reassigned resources in a more efficient and equitable 'way.
This was ratified in the report for the implementation of the Plan
which I sent to this honorable Congress.
Regarding social policy, the actions were aimed at counteracting
the effects of the economic crisis on the people's well-being and
at making structural changes that permit the expansion of ser-
vices and an improvement in their quality.
The biggest efforts have bee'n aimed at preventing a drop in the
rate of employment. The services in the fields of education and
health have increased their-coverage and number of benefits. We
promoted the production Of basic foods and implemented plans
for the processing, distribution, and sale of these foods.
Regarding the field of productive employment, my government
has been faced with two negative aspects. We had to face, on the
one hand, the strong pressures exerted by the unemployment
crisis, and, on the other hand, the demographic phenomenon we
tend to forget. In the past decades, Mexican society recorded the
highest rates of population growth. Those who were born in those
days are today youths who are searching for employment; this
translates into additional pressures on the job market.
14
SUPPLEMENT
We must admit that the employees and employers have acted
with the necessary responsibility to overcome problems and
prevent the closure of job sources. In several cases, the govern-
ment has implemented special plans, such as the plan for the
protection of the productive system and employment, and has
also made flexible the policy that encourages investment, espe-
cially to encourage the assembly industry.
The job market has yet to show the negative impact of the
decrease in the productive activity and the levels of sale caused
by the drop in the oil prices. This year the rate of employment in
the urban areas registered a drop when compared to last year.
However, the monthly industrial poll showed that employment
in the manufacturing field dropped 1.5 percent in May when
compared to May 1985, and, even though the total number of
people permanently insured by the Mexican Social Security
Institute grew, we have observed a loss in dynamism since the
yearly average increase which was 3.9 percent during the first 3
months, has dropped to 2.3 percent in July. We will continue to
closely follow the development of employment because there is
justified concern on the Part of the people who feel that the
recessive tendencies of the economy will hinder the field of
employment.
In the area of employer-employee relations, we have proven that
conciliation is the best and most effective way to resolve the
conflicts. By acting in this manner, the two parties have reiter-
ated their maturity and their trust in the institutions responsible
for labor justice.
The Conciliation and Arbitration Federal Board's commitment
to offer a just resolution of the disputes and handle each individ-
ual or group conflict quickly to prevent undue delays has resulted
in the timely resolution of almost 85,000 complaints. In May,
only 9,000 complaints remained to be resolved. We can also
mention that the conciliation process has resulted in a drop in the
number of strikes. Between January and July 1982, we saw 586
strikes, whereas during the first 7 months of 1986, we only saw
224. This number of strikes includes some private enterprises.
As part of the sole development agreement [convenio unico de
desarrollo], we expanded and increased the actions of the state's
employment services. By August, this system was operating in 64
cities and in the 16 delegations of the Federal District. This year,
through the sole development agreement, we have received
105,000 applications and filled 94,735 job vacancies, and placed
65,840 people in jobs or training positions. The National Employ-
ment Service, through its scholarships for unemployed workers,
expects to attend to 10,088 unemployed people during 1986.
During the Period covered by this report, the minimum wages
have increased twice; 33.1 percent in January, and 25.1 percent
in June. In this manner, the current minimum wage in August
1986 represented a nominal accumulated increase of 66.5
percent. Between January and August 1986, six contract laws
[contrato ley] were revised as their expiration date drew near. The
average wage increase specified in these contracts was 34
percent. In the common contractual negotiations, a moderate
tendency to increase has been observed. The average value of the
increase for the January to May 1986 period was 35 percent.
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VI. 12 Sep 86
As a result of the joint declaration issued by the Economic
Cabinet and the Labor Congress, in 1986 the National Fund for
Development and Guarantee of the Consumption by Workers,
among other actions, decreased its rate of interest between 6 and
7 percentage points, thereby helping the members with lower
incomes. The maximum amount granted in loans this year was
249.715 pesos. It also increased its list of basic services Ecuadros
basicos] and the number of its subsidiaries.
We know that in the short term, it is not possible to completely
achieve the objectives of the educational revolution, but we also
know that we must tackle this task and advance quickly to
confront the challenges of a society that is growing daily. The
national community would not like to welcome the 21st century
with Mexicans who do not have an education and an adequate
educational system.
We have said this, and today we reiterate it; eadh new boost to
the quality of education is essentially based on better trained
teachers. The teacher is the main character in the field of
education. Aware of this, we are working to improve the con-
ditions under which the teachers have to work, and we are
introducing mechanisms to give these professionals their
deserved recognition.
Despite the economic difficulties, we have expanded educational
services, we have protected the historic tendencies, and in some
cases we have improved them. During the 1985-86 school year,
25.3 million people attended the schools in the educational
system. This represents almost one third of the country's pop-
ulation and a sustained growth of 2.2 percent per year for this
6-year period. Two million students attended the preschool sys-
tem.
We have advanced in various areas, and our index has improved
noticeably. In 1970, the average education for a person 15 years
old and above was just over third grade; in 1985 it was closer to
sixth grade. Preschool education has expanded noticeably. Last
year, 2.2 million students attended preschool, and this now
includes 60 percent of the children under 5 years of age. We have
met 100 percent of the demands of primary school education.
However, the percentage of students graduating at this level is
not satisfactory. Slightly more than half the number of students
who begin their primary education complete their sixth year. We
are working to improve this average.
The development of the primary education system calls for free
textbooks. This is a goal that would guarantee the indispensable
national unity in the formation of the citizen and true equality of
the educational opportunities at this level of study. As in all pieces
of work, textbooks should be revised, but we flatly reject the
proposals calling for their elimination. In this new school year,
85.79 million textbooks will be distributed.
For many years, 14 percent of the population older than 15 was
illiterate. We have reduced this rate to 9.2 percent, and we hope
to teach 1 million more of our students to read and write this year.
Last school year, we improved adult education programs. At the
high school level, we maintained an appropriate rate of growth
according to demand. High school education had a growth rate
above 5 percent, college education had a 5 percent growth rate,
15
SUPPLEMENT
and technical schools had a 13 percent growth rate. This last
increase shows the special interest we have in technological
education because it effectively contributes to promoting our
development. Next school year we will build 47 new technical
schools. During 1985, we built 52,040 schools to keep up with
demand.
The national research system has been expanded to include
engineering and technological research. We also created the
education and research system of agricultural technology.
We must also mention the public library program. This year we
have built 534 new libraries. State and municipal governments
worked together to achieve this. We also built five new regional
museums and one plastic arts museum in Mexico City. We have
allocated funds to install security equipment in museums to
prevent thefts.
Among the numerous programs to promote fine arts, I can
mention the cultural programs of the borders that were created
during my administration. They are intended to promote the
creativity and cultural identity of those important regions of the
country.
To expand and improve physical education programs in the
country, we have adopted them at the elementary and high school
levels; we have also restructured the national sports council.
In the social field, we will seek to meet our commitments in
matters of nutrition. The progress we have made in nutrition by
means of the national food program is a result of the hard work
of federal and state governments. Our main goal of strengthening
nutrition programs has been achieved due to the increase in
agriculture and fish production, the reduction of import of basic
foodstuffs, and the increase of food reserves. We have also
improved our systems of reserves, and we have paid close atten-
tion to social welfare programs that benefit the poor.
Proper weather conditions, new procedures guaranteeing prices
and land ownership, and credit support have allowed us to
become self-sufficient in wheat, rice, and sugar. We estimate that
in 1986, production of the 10 basic crops will reach 27 million
tons. Food imports will have decreased for the 4th year in a row.
Since the beginning of this administration, food imports have
decreased by 4 million tons. During my administration, food
production has been higher than the demographic growth. We
have been able to export wheat and sugar, and we are making
progress in increasing production of other basic foodstuffs. We
have observed progress in the fishing sector, which has helped
increase revenue and has been a source of nutrition for the
masses. The food industry has strengthened its productive capac-
ity despite all the economic difficulties, and we have guaranteed
the supply of basic foods for the population.
The rationalization of subsidies has allowed the government to
concentrate on the needy groups and has allowed us to increase
the supply of food and medical equipment for the poor.
As a result of the efforts made by food industries, state companies
have been able to increase the-production of bread, cooking oil,
and milk ? which are n'ow sold at cheaper prices and are
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VL 12 Sep 86 16 SUPPLEMENT
benefiting low-income families in urban and rural areas. In the
marketing Of produce, we have been able to channel basic pro-
ducts worth 555 billion pesos to guarantee local supply' and to
prevent increases in prices because of scarcity.
? '
?
In 'the field of food and nutrition, the government has acted to
prevent a decrease in the level of consumption. Through health
arid social welfare institutions; We-hope to distribute'122 million
school breakfasts, 146 million portions OfPowdere,r1 milk, and 164
million Portions of 'food: But this is not'enotigh:''We need the
participation of all sectOra of the'country:The Struggle for Our
food sovereignty will be endless because it is one of the best ways
to overcome the criais and a way of consolidating' the'progress we'
have made as a nation: *
. ,
Since the beginning of this achniniatration,. vie agreed thecanioli=*
dation of the national 'health system was'the basic instrument' to
improve the general health. we have decreaSed the. number of
persons not Covered by permanent social security services from
14.million in 1982 to 10 million, despite the growth in Poptilation.
This'expanded coverage- is 'due to an increilse in 'productivity of*
health institutions and the 'improvement of social security pro--
graina. Over 24 million polio vaccination doses 'fiaVe been diatrib-.
uted during national vaccination drives, and We have covered 96
percent of the population needing protection: Volunteers from the
public, private and military sectors participated in this drive:
Among the mechanisms implemented to improve the qualitr and
extent of the services is' 'the[word. indistinct] for the
medical and paramedical Workers in the health sector '
?". .
The National Social Assistance System' Law, approved on 19
December 1985, 'granted faculties for the DIF [System for Com-'plete Family Development] to coordinate this' sector and to
regulate this field, to handle systematically the problem of the
family, the child, the elderly, and the handicapped. Because of
this law, great progress' has been niadein Consolidating the
National Social Assistance System at the' stile and' municipal
levels: The DIFs priority 'programs include social and family
integration, social assistance' to homeless, educational .assia,
tame, rehabilitation, social nutritional assistance, promotion of
community development, *legal assistance., -civil, artistie, and'
cultural 'development, 'and the Creation and development Of
human resources and research'. ?
The mortality *rate has dropped considerably in the past few
years: Life expectancy in 1985 Was estimated at18.2 years; which
is almost 30 months higheethan.the 1980 averale:. ?
As part Of 'its social solidarity 'aCtions,' the MexiCan Soda!
Security Institnte [IMSS] extendedM 6 Months the period during
which 'a :worker -aid family are' entitled to, the-righta and
medical services 'after the Worker losei ti.job: In. addition,' the'
IMSS paid more than I million bills for niediegand pharmaceu-
tical services; agreed to .give emergency 'attention to the Pop
ulation as required, increased the amounts giVeit is 'subsidies, and
condoned employer-worker Contributions tothpie who worked itt
their own homes': ?
...?
We are committed to broadening the benefits' and improving the
quality of the services rendered by the Iisste [Institute of Social.
. . .
Security and Services for Government Workers] to guarantee the .
well-being of government employees arid preserv'etheir pifichas-
ing. power.
?
Since January of this year, the minimum pension is the same as .
the current minimum- wage: The commerbial'infrastructure Of
the store system was broadened by improving the quality, quan-
tity, and availability of the atipPlies. In an 'effort, to inorease the,
institute's medical seivices this year, it was aSailited the highest '
allotment for this purpose since (?1975). 'Altogether, theinsti-
tute's -benefits and services currently represent a transfer to the
salaries Of thestate workers a sum equivalent'M 56 percent Of the ?
current minimum wage. ' ' ?
?
? ?
The IMSS and the Secretariat of Laborand Social Welfare, -
together with the 'Labor ?C,OiiireSiaiiii the busirieSiSeetor'haVe.' -
implemented the labor 'health and 'security. program: A 'total of
2,000 enterprises with the highest incidence of accidents were
selected-for this program, and' 5;500 small and medium enter=
prises were evaluated. The prograni is helpfulin reducing ..the -
incidence of industrial accidents.
The'great Problems MO unbalanced conditions in our cities are:
being handled- actiOna..that reaolVe, one by' one, the cases 'Of: '
greater social' impact: Coordination between institutioria',' the
obtaining of credits, and new processes of adjusting [concer-
tacion] with society have been Put together. With a 'clear social"
purpose, territorial reserves have been established; basins 'and'
lagoons have been cleaned; potable water and sewage Systems
have been inaugurated; and progressive housing programa are
underway for the most needy population. More places are being' ?
Subject' to profound-urban and' ecological .restructUring.
plea'of this are the Manzanillo lake dWellingi,.the (Cazatualeo)
swamps, the marshlands inPuerto?PrOgreso, 'Yucatan, and the ?
Infiernillo neighborhoods in Mazatlan. The distribution of pow.-
ble water is being given the highest priority. Potable water and
sewer beingbuiit in the 22. Cities With more serioua
difficiencies, Ciidad ..Inarez; Susana,' HermoaillO;''
Mazatlan, Tampico, Acapulco, Toluca, -Monterrey; and Morelia:. '
With these work's, almost 3' million 'More Mexicans will' haVe a
permanent supply of this vital liquid. ...
In in effort to cotrecetheptierionioni of urban irregularities, we
are iinplementingan 'active POlicYof creating territorial reserves - ?
to prevent the dispersion of investments and infrastructure, sPee-' ?
ulations, and irregularities.
Durihg' the current year, twice the number Of territorial reserves
built during the privious.3 years are underway in Cities including
Merida, Nogales, Monterrey; Quer?ro, arid *Coatzacoalcda. =
For'the first time, reserves cortesPond tO the anntial. iioPUlation
growth in the cities
Actions to prote,Cf historical 'monuments have not been neglected. **
The (Franz Mayers) Museum was built, and other mtiseuma to
be finished this year will be Estampas, the museum at the
entrance to the Cathedral, and the museum at the site of the
Grand Temple. Important actions for the protection 'Of cultural
heritage have been implemented in Puebla, Tliscala, Zacateeaa,
Merida,'Colima, and Queretaro.
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VI. 12 Sep 86
As a final step in the reconstruction process, there are projects
for the utilization and revitalization of zones and historical
monuments that will strengthen our identity and community life.
Despite the implementation and unprecedented magnitude of the
housing reconstruction programs already underway, the normal
programs and their financing continued without interruption.
The number of houses built in the past 3 years was 30 percent
higher than the previous 6 years.
With the experience we have acquired through the reconstruction
program, we will carry out a broad and effective harmonizing
[concertacion] in 1987 between the main industrial sectors, the
labor movement, the organized peasants, and the middle-class
sector. to implement a special housing program that will encour-
age economic growth and create a large number of jobs.
During the 1985-86 winter, pollution in the Valley. of Mexico
reached unprecedented levels.
I ordered state secretariats to carry out 21 actions to improve the
quality of the environment. I can report that the most important
of- these actions have already been carried out. It is up to the
government and to society to expand their effects.
Noncontaminating transport services have been expanded. This
is the case for the subway, the trolley bus and buses which have
anticontamination devices.
Based on plans, gas has replaced [word indistinct] in the Mexico
City Valley Thermoelectric Plant. Also, gasoline ? which
reduces the emanation of carbon monoxide, hydrocarbon waste,
and lead,? and special diesel for the public transportation sector,
are now being sold.
Restrictions have been placed on suburban bus traffic. Ecological
subjects are being included in study plans and environment
health education programs are being promoted. There are also
educational programs on prevention and on the importance of the
environment.
Since the closing of the cellulose plants in Loreto and Pena Pobre,
efforts have begun, as a complementary measure, to either
strictly regulate the environment upsetting effect of industries or
to promote their dispersion.
The first agreements have been reached with a positive response
from the most important industrial sectors. This winter we will
be adopting measures in addition to the already listed 21 points
and an environmental contingency plan will go into effect so that,
making use of the information made available by the monitoring
system, we may be able to foresee risky situations and adopt
corrective measures in a coordinated fashion and with the inten-
sity the matter may require.
Rehabilitation work is being carried out in river areas and deltas.
The work for the recovery of the Saguapa River is almost over.
Work for the recovery of the (Cuatacualco) River has been
initiated. The selector that will reduce the contamination of the
San Juan River in Queretaro is being built. Drainage work, water
17
SUPPLEMENT
treatment and redirecting [desviacion] residual waters in Tijuana
continues.
In Mexicali the Nuevo River is being cleaned and work will begin
to clean the (Lerma-Santiago) River and to protect lake Chapala.
In the rural area of the (Lagunera) region, a [word indistinct]
plant was installed to eliminate arsenic in the water used for
human consumption, and work has been initiated to provide
water to the suburban areas of Torreon and Gomez Palacio
Lerdo, thereby coping with one of the most serious health prob-
lems in the region. The level of sulphur dioxide in the Caridad
steel plant at (Acozal) will be checked with an investment of 35
billion pesos. Investments for the first solid waste disposal system
will begin to be made in Monterrey's metropolitan zone. The
reserve of [words indistinct] has been created in Quintana Roo
State for the preservation of tropical jungles by the National
Forest Commission. With full strength, the decisions to ensure
the protection of the Lacandon Jungle will continue to be
adopted, offering productive opportunities to its inhabitants.
Special attention will be given to the protection of forest areas in
the south of the Mexico City valley. An agreement has been
reached in principle with the United States for the definitive
control of transportation of waste across the border, which par-
ticularly affects the border cities. For the preservation of the flora
and fauna, the sanctuaries of the Monarch butterfly have been
protected; turtles, flamingos, and grey whales have been pro-
tected; regulations have been established against hunting endan-
gered species, and illegal export of such specimens have been
prohibited. The sector strategy contributes toward changes in the
operation of production, distribution, and commercialization
processes in accordance with the national development plan and
the corresponding programs.
The overall rural development is a strategy of structural change
directed toward the redefinition of productive processes, improv-
ing the peasants' social well-being, and modifying economic
relations for their good. Through the execution of the overall
rural development national program, during 1985 the agricul-
tural, livestock, and forest sector showed a 2.2 percent growth
rate above that of the population for the third consecutive year.
This growth can be explained by our peasants' exemplary efforts
and the support given to the production of basic grains, oilseeds,
and fodder. Taken together, these contributed a total of
29,400,000 tons, most of which consisted of corn, beans, wheat,
and rice. Forecasts for 1986 are encouraging, and positive results
have already been achieved in the production of corn, wheat, and
beans. This allows us to anticipate an additional decrease in the
import of basic grains. In 1985, 60,303 irrigated hectares were
incorporated into production; 42,563 hectares were rehabilitated,
and infrastructure works were done in 151,329 hectares of sea-
sonal products. All of these actions benefited more than 40,000
producers, Regarding credit, [words indistinct] and commercial
banks in 1985 financed productive activities in 11,600,000 hect-
ares. This financing was worth 1 trillion 200 billion pesos. In
1986, financing will be provided for a total of 15,700,000 hectares
and 3,800,000 heads of cattle will be ensured. The direct benefit
will reach more than 4 million peasants. During the past term,
the production of fertilizers was 15 percent higher than that of
the previous term. This permitted us to supply our agricultural
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VI. 12 Sep 86
industry with 1.9 million tons of nitrogen, phosphorous, and
potassium.
The producers of basic and seasonal products benefited from
lower prices of these chemicals. Realistic levels were established
for those producers engaged in the production of highly profitable
produce.
During the first 5 months of 1986, the trade balances of the
agricultural, livestock, and timber sectors showed a positive
balance; exports of coffee, tomatoes, fresh fruits, cattle, and
honey stood out. However, although the livestock sector grew in
relation to 1984, a contraction in national demand has slowed
down production.
[Word indistinct] production registered increases in 1985 and
1986. This will help reduce the shortages of cellulose and paper
that are adversely affecting our trade balance. During the past 3
years, projects capable of supplying 20,000 liters of water per
second were built to supply population centers and industrial
areas.
The government has provided legal security to thousands of
peaseants and genuine small landowners to allow them to work
their land in peace and without fear. In the period covered by this
report alone, individual agrarian rights in 8,178 ejidos [small
farms] and communities were registered. We also distributed
more than 70,000 certificates in agricultural and livestock [word
indistinct] to small landowners. The rural land register has been
very useful in this task.
We acknowledge that there is increasingly less land to distribute.
That is why the 3 million hectares distributed to date in this
administration take on greater importance. During the period
covered by this report alone, we published 339 resolutions that
benefited 32,763 peasants with 1,010,688 hectares of land.
During the same period, the fish catch grew by 12.7 percent over
the previous year. To support the repair, replacement, main-
tenance, and (?adaptation) programs of our fishing fleet, and
further develop our industrial plant we funneled credits totalling
more than 60 billion pesos. As part of a restructuring of the
Mexican (?perishable) products industry, we arranged the fleet
and industrial plant assets in enterprises specializing in those
processes and kinds of products.
In the case of tuna fishing, we began a special program that
allows our fleet to operate efficiently. We successfully obtained
the lifting of the U.S. Government embargo on our tuna.
We have continued to promote fish breeding, because it is an
additional food source for fishing and agrarian communities,
increases supply and demand in landlocked states, and improves
the production of exportable species, which brings foreign cur-
rency. Fish breeding accounts for 10 percent of the national
production of fish products.
The financial support program for small, medium and tiny
industries has (?funneled) more than 220 billion pesos. Fiscal
incentives for investments, the creation of jobs, and the relocation
of this kind of [word indistinct] have also been broadened. We
18
SUPPLEMENT'
have successfully turned around the centralization focus of indus-
try through decrees issued in January 1986 to support job-
creating investments and industrial decentralization.
We also broadened the industrial parts plant. We now have
approximately 100 throughout the national territory. We are
continuing to carry out programs in strategic sectors. Among
them are the rationalization of the automobile industry, promo-
tion of the pharmaceutical industry, and integral industrial
development programs in the electronics, textile, and petro-
chemical industries.
The encouragement of foreign investment has made possible the
continuation of the active, systematic, and selective collection of
foreign capital. Better facilities are being given to those who
promote exports, substitute imports, generate employment, and
promote technological development.
The priority given by the Federal Government to the promotion
of exports is validated by progress in the trade balance, which
between 1983 and the first half of 1986 registered an accu-
mulated surplus of more than $35 billion. We must note that
exports in the manufacturing sector were equivalent to 2/3 of its
imports. This surpassed the 1986 goal.
In the short run, there are no means to fully compensate for the
drop in international oil prices. However, the market behavior so
far allows us to predict that in 1986, we will bring in more than
$9.5 billion in foreign currency from nonpetroleum exports.
Those revenues will account for approximately 80 percent of our
exports.
To turn border markets and free zones into export platforms, we
have tried to ensure the timely supply of goods through the
promotion of a national consensus. We have established {?export)
quotas to complement the supply of basic consumer goods and
industrial inputs and promote tourism, especially at the northern
border.
In an effort to defend our interests in the international oil market,
in late January, I met in Cancun with the president of the
Republic of Venezuela. With determination, we urged all oil-
producing countries to join efforts to ensure market stability.
However, short term special interests of some producing and
consuming countries prevailed.
In December ,1985, several OPEC members gave up the high
discipline that prevailed in exports and the policy of official
prices, and in their search for new markets, sacrificed price -
stability. Producing countries have felt the consequences,
because international oil prices dropped from $29 per barrel in
November 1985 to less than $10 a few weeks ago.
The OPEC countries recently adopted measures to help increase
[oil] prices. We hope this trend will continue. To contribute to it,
we have temporarily reduced oil exports by 150,000 barrels per
day. Meanwhile, consuming countries must understand that
price deterioration will benefit nobody over the medium term,
because they will discourage industrial investments, and sooner
or later, there will be a shortage again.
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VI. 12 Sep 86
The collapse of the petroleum market demanded the intensifica-
tion of efforts for structural change and the increase of productiv-
ity in Pemex. It has particularly reduced the burning and venting
of gas from 15 percent of the production in 1981 to only 3 percent
in May 1986. It has saved in its internal consumption of fuel and
has reduced its imports from 66 perecent in 1981 to 17 percent
at this time.
Pemex allocates the greatest part of its investment budget to
purchases from national suppliers and in this way strengthens the
country's industry, especially that of capital goods.
Progress has been achieved in the Mexicanization of the petro-
leum merchant fleet. We have supported Pemex in its production
programs to protect our domestic supply and export capabilities.
Despite the decrease in its resources, this is one of the sectors with
greater dynamism in public investment. The productivity and
efficiency programs have continued in the enterprise which con-
tinues to maintain a solid financial position and standing as the
main contributor to the Federal Treasury.
In the electricity industry, 965 megawatts per man hour were
marketed in 1985. This represented a 1.4 percent increase com-
pared to the previous year. In 1986, a 7.9 percent increase has
been observed. The average annual outage time per customer
continues to decrease. The installed capacity this year will be
more than 10 percent higher than last year. This shows the
positive results of the expansion and efficiency programs.
Thirteen new power plants will become operational this year.
This will mean an addition of 2,106 megawatts to the national
electricity system. It must be noted that of this amount, 57
percent will come from other than hydrocarbon power such as
the hydroelectric plants of Penitas in Chiapas and El Caracol in
Guerrero. The first unit of the Laguna Verde nuclear electricity
plant will enter into commercial operation next year. We know
that there are social gi mob that have expressed their concern-
about this project. We understand their concern. We will spare
no efforts or expenditures for security measures.
During the period about which I am reporting, the mining-
metallurgic sector employed 226,000 people and participated
with 11.4 percent of the nonpetroleum exports and with 4.2
percent of the total exports, even though the international prices
had dropped. This has been possible because the volume exported
has increased and because of the diversification of the markets.
Our country continues to be a prominent world mining producer.
The parastate mining sector has acted in line with both the
measures for austerity and Winne lintixtn of expenditures as well
as the priorities established in the national mining program for
its investments. It has achieved a high degree of self-sufficiency
in the investment programs, 66 percent of which are covered by
the operation surplus while at the beginning of this administra-
tion it covered only 3.5 percent.
Despite the limited resources as a result of the crisis, the country
has been able to continue to advance in the construction of the
main national projects. We were able to fulfill the plans we
announced a year ago. We installed 7 million telephones even
though vital parts of our communications were destroyed by the
19
SUPPLEMENT
September earthquakes, and we considerably expanded our tele-
communications capacity by placing into orbit the second
Morelos satellite. In this way, we have incorporated 500 more
rural towns into the telephone service, benefiting a little over
600,000 people.
We also installed 40 ground stations for communications via
satellite. As a result, we now have 240 nationwide.
We continue to modernize and simplify the postal and telegraph
services. We have created two decentralized institutions to pro-
vide a more efficient service.
We have expanded and modernized the stretches of highways of
greatest value. We carried out maintenance work on 226,000 km
of our road network. We built more than 1,300 km of new trunk
roads, urban roads, and freeways.
We worked on modernizing the port infrastructure. We created
the decentralized dredging system, and we registered ships that
increase our available national fleet by more than 350,000 tons.
We have sought to rescue the railway system as an important
basis of our transportation system. We worked on the construc-
tion of new railroad connections, especially in the transversal
strip that joins Manzanillo, Guadalajara, and Monterrey. In this
manner we will no longer have to cross the central area of the
country. We also modernized the Huatecalco, Salinas, Cruz
connection. We recently opened the new two lane system between
Queretaro and Mexico City. This will help relieve congestion in
this most difficult stretch of our national railway system. This is
also proof of the changes being done to the system. We also
opened part the Mexico-Veracruz stretch. This new stretch will
bypass the most difficult part of this route where most of the
accidents occurred.
We incorporated the Puebla, Puerto Escondido, and Tlaxcala
airports to our national airport system. The national airlines
transported almost 23 million passengers on domestic flights and
more than 7 million passengers on international flights. This has
been possible due to the proper use of our resources, the organiza-
tion and work of our technicians, and because we have sought a
financial balance for our enterprises by adjusting the rates to
reduce the subsidies.
During the period included in this report, we carried out several
actions aimed at promoting the production of basic consumer
goods and improving the purchasing power of the real wages.
Likewise, we advanced in the structural changes aimed at mod-
ernizing the infrastructure of the services linked to supply and to
consolidate Conasupo's [National Company for Basic Commod-
ities] regulating functions. We must underscore that this year we
will import only half of what we imported 3 years ago. The
subsidies have been rationalized within Conasupo. This has
represented a transfer of these subsidies to the field of final
products and this has directly benefited the consumer. The
subsidies had increased in an outrageous manner; they did not
always help the low income population. On many occasions, these
subsidies only served to unjustifiably increase the utilities of
private companies.
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VI. 12 Sep 86 20 SUPPLEMENT
The drop in the purchasing power of the workes is a matter of
constant concern for the government. To counteract as much as
possible the effects of inflation on the wages, we signed an
agreement with the Labor Congress that formalized the commit-
ment to develop mechanisms for the supply of enough basic
products, to protect the worker's purchasing power, and to
improve the general welfare.
As part of the policy aimed at defending the family economy, we
consolidated the plan for the distribution of powdered milk; we
implemented a plan for the distribution of coupons for tortillas.
This plan has helped more than 6 million people. We also
continued to strengthen the marketing of basic products and
other basic consumer goods in the urban and rural areas that
because of their low purchasing nature are not handled properly
by the private business sector.
In a parallel manner, we have advanced in the consolidation of
the national supply system and in promoting the modernization
of marketing system. By doing this, we are attempting to improve
the link between the new basic structures of collection, storage,
and distribution and the modernization of the already existing
system. At the same time we are trying to incorporate a new
system of packing oleaginous grains into the special storage
system and into the national system of marketing information.
This system is now functioning in six cities and is aimed at
showing the price of the orchard grown products.
To increase the revenue received from tourism, we implemented
an immediate action plan to promote tourism. This plan includes
measures aimed at (?regionalizing) transportation, promoting
investment, and supporting the promotion, publicity, and mar-
keting of our tourist attractions. These measures allowed us to
add, to the $1.720 million we received in 1985 for tourism, 1
billion [currency not specified] during the first 6 months of this
year. As part of this plan we set our air fares and promotion
packages; we extended permits for charter flights; we gave
facilities for the supply of fuel, promoting land tourism; we
started a tourist train to cover the Chihuahua-Los Mochis route;
we promoted maritime tourism; we improved the tourist attrac-
tions in various ports throughout the country; we promoted
conventions. fairs, and exhibits; we improved the financial con-
ditions for tourist investments; we gave facilities for the building
of sports marinas; we improved our immigration and customs
services; we encouraged promotion and publicity as well as tourist
marketing programs. All this was reinforced by security mea-
sures that were coordinated among the various institutions.
During the first 6 months of this year, and by hosting soccer's
World Cup, we received a net $780 million from tourism. This
amount equaled last year's income despite the fact that during
the first months of 1986 we observed a drop in tourism because
of the earthquakes.
The publicity we received from the World Cup will bring in a
larger flow of tourists in the next few months. This will be
reinforced with additional campaigns.
The plan to help finance the southern area was aimed at helping
the hotel industry 'build an additional 5,000 rooms and remodel
an equal number of rooms. To do this, loans in the amount of
46.213 billion pesos were granted during 1985. During the first
6 months of this year, Conatur [not further identified] approved
62.658 billion pesos in loans. The level of investment in Cancun
and Ixtapa was maintained; we accelerated the development of
Loreto and San Jose del Cabo, in southern Baja California, and
of Puerto Escondido in Oaxaca; we also continued with the work
of the new tourist center in Acapulco Bay.
Likewise, to give a larger number of people greater access to
recreation and to strengthen our national identity, we increased
the actions to promote our historical and cultural sites. We
offered better and more travel alternatives through various econ-
omy packages, especially the packages offered by the Trusteeship
for Worker's Tourism [Fideicomiso para el Turismo Obrero].
The capacity to create, teach, learn, and adapt scientific and
technological knowledge represents an important factor in the
development of a country. It is also an efficient measure to
promote structural changes. We must increase the efficiency of
scientific research and the technological development in our
country. The activities conducted out during the period included
in this report, have allowed us to advance toward our goals
established in the National Plan for Techonologic and Scientific
Development as well as to strenghten and consolidate the Science
and Techonology National System.
In accordance with the law that establishes the guidelines for this
system, the commission responsible for planning scientific and
technological development was created. This commission's goal
is to follow closely the work being done, thereby, avoiding duplic-
ity.
Regarding the training of human resources, we supported post-
graduate work in priority areas. We gave preference to the
national institutions of higher education and requested help from
abroad in only a complementary manner. Significant progress
was achieved in the promotion of scientific research and techno-
logical development in the fields of agriculture, forestry, energy,
fishery, poultry, nutrition, health, capital goods, agroindustry,
construction, and ecology. Likewise, we sought stronger ties
between the scientific and technological research and the produc-
tive system.
Mexico City is facing serious problems. It must tackle a difficult
situation in the harmonious development of the community due
to the excessive and irrational growth as well as the earthquakes.
For this reason, several alternatives for the process of recon-
struction have been suggested. These alternatives are not aimed
at simply achieving immediate results but are also aimed at
dignifying social coexistence and preventing future disasters.
Within a framework of austerity, the capital city government's
main actions have been aimed at attending the basic needs of the
masses. The supply of drinking water for the metropolitan area
has been increased and the distribution network has been
expanded. Currently, the whole population of the capital city can
be served. However, we must admit that the outskirts of the city,
where 3 percent of the people live, receive their water through
tank trucks.
The work begun in 1983 to resolve the problem of floods has
continued. These floods occur mainly in the southeastern sector
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VI. 12 Sep 86
of the city where the population growth has been so enormous
that it is impossible to provide the area with the necessary sewer
system. We have continued to build the main interceptor of the
deep sewage system and the Tapalapa collection pond.
Important work has been done to strengthen the transportation
service that 10 million Mexico City residents use on a daily basis.
We extended the subway system by 9.7 km. The system now links
highly populated areas with the work centers. We purchased 806
new buses to reinforce the urban transportation system, Route
100 [as heard], and the number of other buses was increased by
41 percent.
To improve the public security system we promoted the profes-
sionalism of the police corps; 1,464 graduates of the Police
Academy joined the ranks of these police corps. The purging of
the security corps is a permanent task.
The Federal District has adopted several actions to prevent and
control contamination. The installation of new contaminating
industries is being restricted; equipment has been approved to
measure and check contamination caused by vehicles; refores-
tation and building of recreation parks. We also closed down
3,400 open or clandestine garbage dumps.
In the field of supply and marketing of products for daily use, we
have guaranteed that the population will be supplied with meat
and basic products. Noteworthy is the building of new dairy
plants and the modernization of public markets where basic
products are purchased with bonds that are promoted among
organized sectors of the population. We also signed agreements
with the producers to guarantee the timely distribution of these
products.
Honorable Congress, this year has been one in which the people,
despite adversity, have been able to strengthen their desire to
continue waging a brave struggle in the nation's favor. Mexico is
indomitable. We have proven that we are a strong nation capable
of confronting our problems, no matter how unfortunate or
difficult. In response to continuous problems we have not fallen
prey to the burden of desperation. We have demonstrated our
capacity to respond to challenges, to use strategy and tactics, and
to turn decisions into actions. Our people have demonstrated
their maturity and character, and in response to uncertainty and
misfortune, have not lost their courage.
The basic strength sustaining us is our nationalism, our persever-
ing desire to maintain our position as a united and sovereign
people. Right now we are struggling against the crisis, not in a
spirit of mere survival, but with the conviction that there will be
a renewal. We are promoting the structural and qualitative
changes that will allow us to continue our historic plan and arrive
at the higher phases of our development. We are aware of the
fact that these are times of transformation and change, and we
are determined to continue building our future in an organized
and peaceful manner through our institutions and laws, without
incurring in authoritarianism or anarchy.
Most Mexicans know very well that our problems can only be
overcome through a progressive renovation and not through a
historical retrogression. We must continue consolidating the
21
SUPPLEMENT
institutions and values of independence, reform, and revolution.
We do not only aspire to maintain our historical legacy ? a
valuable goal in itself in times of crisis ? when reactionary
forces, both domestic and abroad are thinking of destroying our
liberal and revolutionary institutions. We are seeking continuity
and the historical development of our national plan, which calls
for a deliberate process of change and permanent adaptation in
a progressive sense. We cannot overcome our problems with
inactivity. We need innovation and change. It is essential that we
renew our attitudes and change our behavior. We must execute
this great task with faith. We are a capable and sovereign nation
with vigorous and dynamic people. We are determined to con-
tinue being an independent and free community, capable of
overcoming the obstacles that may emerge. We have an institu-
tional ideological store that allows us to consoidate our values
and at the same time head the transformations our state and
society need in an organized and firm manner.
Our new awareness of our social transformations are added to
the complex problems we face in our effort to establish a clear
path and persevering firmness in our actions. There is no room
for dismay at this time in our vitality as a modern nation, and
despite adverse external circumstances, today we can look back
at the lasting progress we have made while achieving our estab-
lished goals. We have strengthened our revolutionary national-
ism, increased our democratization, moved toward a more
egalitarian society, persevered in seeking a moral renewal, made
unprecedented progress in the decentralization of national life,
made efforts to establish more firm bases for a recovery in the
generation of jobs, struggled against inflation, and established
the orderly and participatory process that has allowed us to make
democratic plans. We have a plan, we know where we want to
go, and we have already established important elements for the
achievement of our goals.
To overcome our problems during the past 4 years, we have
strengthened the country. During the remainder of this adminis-
tration, during the next 2 years, we must maintain our basic
objectives, consolidate those that have already been achieved,
begin new tasks, and open more clear and more promising
perspectives. We have transformed our political processes and
will continue to do so. We intend to broaden society's participa-
tion, perfect the mechanisms of electoral legislation and Federal
District government as of the present elections; we will increase
our democratic renewal so our electoral processes will
increasingly, reflect the people's will as expressed by their votes,
so these results will enjoy broad social credibility, and we will
maintain order and tranquillity. The government is taking the
initiative, but the citizens, political parties, and groups share the
responsibility of finding adquate solutions that will indicate a
path that will allow us to improve our democratic way of life and
politics in an orderly manner.
Even though they are perceptible, we count on political and legal
procedures that allow us to iron out our differences through
admittedly imperfect [perfectibles] political and legal procedures.
Democracy begins as a political exercise in dialogues, nego-
tiations, and in the orderly solution to conflicts. It is based on
political parties, and it must prevail in our social organization.
Both the government and our society have the duty to serve
democracy. We do not want any rights without democracy, and
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VI. 12 Sep 86 22 SUPPLEMENT
we do not want democracy without laws. We must continue to
improve our political system by respecting the consensus of the
majority and by guaranteeing liberties and a just social order to
benefit the people.
During the next 2 years, we will make progress in the area of
municipal reforms which are already under way and are allowing
for a reorganization in our government. We will strengthen the
equilibrium among the branches of government just as the Con-
stitution states.
In view of changes in our society, we will continue to exercise
presidential powers in daily contact with different social groups.
Problems cannot be solved by authority alone. The executive
branch will continue to fulfill its obligations, and it will always
take into consideration the people's needs and desires through
their representatives in the legislature and social and political
organizations.
We will maintain a moral renovation, as the permanent duty of
the government to raise our levels of conscience and responsibil-
ity. We will continue to modernize the control mechanisms of our
public resources by reorganizing the public resources administra-
tion systems and by improving on their evaluation. We will
continue to renovate the administration of justice by establishing
channels for the participation of all citizens and by raising the
professionalism of those who participate in such activities. We
will simplify judicial and administrative procedures, and we will
improve the professional and ethical levels of our security forces.
We will continue to promote the campaign against drug traffick-
ing and drug addiction.
Our international relations will be conducted within the
framework of [1 minute break in transmission] links with our
Latin American brothers.
With the United States, we will maintain a dignified and positive
dialogue that respects our cultural and historical differences and
which takes advantage of our commercial and financial (?ties).
In the next 2 years, we will continue to maintain a relationship
beneficial to our country, with dignity and without confrontation.
In the economic field, we intend to follow the path of growth in
a context of stability. We will organize ourselves to achieve a
growth rate between 3 and 4 percent during 1987-1988. For this
growth to be a permanent one, we will consolidate our most
important accomplishments in matters of economic reorganiza-
tion and structural change. In the area of production, there are
the bases to generate more employment and to protect the
already existing ones.
We will not avoid the fight against inflation. Its structural roots
and dynamics force us to redouble our efforts. Inflation adversely
affects housewives, workers, and students. It promotes spec-
ulation, and it discourages productive investments. It also pre-
vents resources from being allocated properly. The increase in
prices can only be stopped by correcting its fundamental causes.
In the fight against inflation, we will not rule out any consistent
and viable option, as long as it is not an illusion of temporary
progress. The basis to recover growth and to face inflation during
the next 2 years has been partly the result of the process of
renegotiating our foreign debt.
No developing country can have sustained and stable growth
without complementing its internal savings efforts with resources
from abroad, much less if the prices of its exports drop and large
amounts of resourtes are transferred abroad. We have followed
and will maintain the path of nonconfrontation that recognizes
shared responsibility for the debt problem and payment accord-
ing to capacity for growth.
We have taken an important step by achieving an agreement with
the international financial community, which recognizes the
need for growth and the need to strengthen the stability endan-
gered by the drop in oil prices.
We are now in the difficult process of negotiating with our
creditors. The result should be an additional benefit to our
country regarding the cost of the debt's interest. My government
will continue the policy of obtaining resources from abroad
through new loans and concessions on the existing debt, to
increase production and employment. The amount does not
represent a burden for future generations if it is used to create
productive resources to meet their demands.
The definite solution to the debt problem depends on the growth
of our economy and on producing and exporting more, so the
weight of the debt is reduced in relation to domestic production
and the country's exporting capacity. This is the responsible way
to handle the payment process.
In the next 2 years, we will increase with firm determination and
perseverance the strategy of the structural transformation in
progress. We must organize our economic system to adapt it to
the new international conditions and to the nation's new sit-
uation.
The changes conducted during the past 3 years have turned us in
the right direction. Structural changes are being modernized in
the public sector, the productive apparatus, and in an efficient
relation with the world market, which has contributed to improv-
ing our economy and making it more efficient and equitable.
Public expenditures will undergo a fast change during the next 2
years, as part of the national system of democratic planning. This
will be accomplished by improving their efficiency and productiv-
ity, increasing discipline and control, and by simplifying for-
malities procedures.
In the internal revenue, we are going to try to make tax collection
more effective and more equitable, to protect the taxpayer's
income. At the same time we are going to promote work, savings,
and productive investment. We will also try to prevent public
sector credits and tariffs from being affected by inflation.
We are going to continue with the liquidation process of public
enterprises which are neither of strategic nor priority interest, to
strengthen those that are of strategic or priority interest.
We will intensify the strategy of reconverting the parastate
sector, to regulate its operation, modernize its technology,
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VI. 12 Sep 86
strengthen its productivity, and increase the quality of the goods
and services it provides.
The instruments for handling banking and financing policies will
be made more efficient and functional, so as to promote and
strengthen the country's savings and investment process. In the
field of agriculture, private lands, national land currently in the
possession of individuals, and the neighborhoods will be identi-
fied, and property titles will be distributed. The basic documents
needed in the case of the ejidos will be completed. Also, the
organization of the productive area will be intensified so that the
handling, processing, and marketing of the products will make it
possible to absorb the labor of those peasants who can no longer
be provided with land.
In the forestry and fishery fields we will continue supporting
production, promoting the most practical organizations systems,
guaranteeing the supply of materials and loans, making invest-
ments in infrastructures of priority interest, and protecting pro-
ducers in the lowest income bracket.
The main objective continues to be the improvement of the rural
population welfare, through their organized participation and the
rational use of natural and financial resources, based on social
interests, efficient production, justice, and supporting its integra-
tion with the rest of the nation.
The simplification of administrative procedures, the rationaliza-
tion of commercial protection, according to clear and stable rules,
the selection of industrial fields to implement reconversion mea-
sures and industrial modernization, suitable development pro-
grams for small and medium-sized industry, and the promotion
to create development centers in strategic zones will contribute
to encouraging business interest and promote exports other than
oil.
We are going to consolidate the integration of the communica-
tions and transportation system through the modernization,
expansion, and access to its services to the largest geographic
sectors of the country. We are going to establish a new and more
reliable telephone technology. The Morelos system will be func-
tioning at its full capacity. We are going to promote the railway
system. We are going to continue the maintenance of highway,
port, and airfield infrastructures, which will be modernized to
meet the demands of the economic growth.
The national supply system will be consolidated, through the
regulation of subsidies to production, transferring them to man-
ufactured goods when it is justified, through social comsumption
mechanisms.
In the next 2 years, we are going to increase the government's
social activities, which gives meaning and content to the new
economic activities.
We will redouble attention to the social rights enshrined in the
Constitution. We will continue to work for food self-sufficiency,
vying to improve the nutritional standards of the low income
segments of the population and of particularly underprivileged
regions and groups. We will promote a more equitable distribu-
tion of foodstuffs.
23
SUPPLEMENT
Actions within the educational revolution will be strengthened to
reduce illiteracy, to improve the training and qualification of
teachers, to revise basic education programs and curricula, to
improve the free-of-charge textbook program, to expand the use
of television and radio in primary and secondary education and
in the dissemination of the national culture, to raise the academic
level of universities and technical schools, to strengthen the
national research system, to standardize the quality of education
in the rural and urban areas, to protect and to promote the
popular arts and crafts and culture, to expand the national library
network, to promote the nonscholastic open education, to decen-
tralize the education of and attention to Indian groups, and to
reaffirm the national culture at the borders.
We will continue expanding the access to educational, cultural,
athletic, and recreational opportunities, improving services and
increasing the quality of the educational system to promote the
overall development of individuals and society. We will improve
the basic health services and will extend coverage to sparsely
populated rural areas. We will liberalize the family planning
program and the programs against addiction, particularly those
against drug abuse and alcoholism.
We will complete the program of reconstruction of installations
damaged by the quakes. We will coordinate decisions on urban
development and housing, centering efforts and resources on
reducing the largest gaps and placing emphasis on the medium
sized cities undergoing decentralization. We will link the creation
of reserves to the use of the infrastructure and will set a clear cut
system of priorities. We will continue stepping up actions for the
protection of the environment in the Valley of Mexico, for the
regeneration of rivers, and for a sanitary handling of solid wastes,
placing utmost emphasis on the protection of the country's
natural resources.
In the Federal District we will continue improving and expanding
public transportation and will build new subway lines. We will
increase the number of buses producing the least possible level of
pollution and will increase the number of trolley buses and
highways connected with those systems.
We will add more sufficiently trained personnel to the police
corps so as to enhance their image as honest and efficient public
servants who provide surveillance and protection to the pop-
ulation. We will bolster the district health councils. The 97-
percent coverage of water services for the people will be
maintained and we will try, to the extent possible, to prevent the
flooding we frequently experience, particularly in the
southeastern section of the city. The supply systems will continue
to be increased and we will improve public services.
We will consolidate the national democratic planning system,
strengthening its conceptual framework and the interrelationship
of its components. We will update the national development plan
in light of the new conditions faced by our country and will make
an in depth evaluation of the results of the plan by sectors to
adjust the respective national programs.
During the next 2 years we will maintain our seriousness, but will
avoid pessimism in our attitudes. The austerity effort is perma-
nent but entails a positive outlook of stimulus and growth. The
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VI. 12 Sep 86
consolidation of our reorganization efforts will guarantee the
continuity of our development process. The new impetus in the
strategy for structural change will make it possible for us to build
up the overall productivity of our economy, and to lay the
groundwork for a gradual improvement in the levels of social
wellbeing, and to brighten our outlook for a more promising
future.
Mexicans: In my pledge as constitutional president of the
United States of Mexico, I assumed the political and moral
commitment of making the conduct of my administration adhere
to our laws, to exercise my duties with loyalty and patriotism,
and to look always and in every case after the republic's good and
prosperity. During these almost 4 years we have waged a harsh
battle for our nation. We have struggled to strengthen our
institutions, to enforce our laws, to perfect our democracy, and
to securely return to the path of growth and development.
This has not been an easy situation. It has been fraught with risks
and adversity but, loyal to my commitment, I have acted with
responsibility and calm.
I have weighed the advantages and disadvantages when making
every decision and have always placed the good and prosperity of
the nation over and above spectacularity.
Today our people must be proud of being a mature and respon-
sible people. Faced with the greatest crisis in our contemporary
history, we claimed that the fundamental solutions to our prob-
lems lay within ourselves and consequently we acted. In times of
crisis and during the construction of nations, each action has its
proper time and place. The effects of actions subside and new
actions are required. It is not possible to resort to ideas and
methods that have been surpassed to address new realities. The
job of a head of state is to adopt adequate measures in favor of
his people at the proper times.
We are faced with the challenge of modern times. The profile we
will have as a nation during the next century is being defined
now, during these years. We aspire to be modern but only on the
basis of the values and principles consecrated by our history, on
the basis of an economy that is rational, productive, balanced,
and capable of meeting the basic needs of the population; and on
the basis of guaranteeing rights and freedoms within the
famework of a democratic state of legality. We want to be a
modern nation recognized and respected because of its serious-
ness and spirit of work.
Let us be fully conscious of what must motivate our conduct
today. Let us give the proper dimension to the fear of the
unexpected and let us base our unified actions not on the decisions
of authorities but on Mexicans' confidence in Mexico. Let us
wage this battle for our homeland because we want to see it
strong, developed, and modern. Let us wage this battle daily by
fulfilling our respective duties to ourselves and to Mexico. These
major tasks necessitate a daily and concerted effort by all Mexi-
cans. No one must shirk this commitment and action.
We who are public servants have the first obligation. Let us work
loyally and with internal cohesion. The government will continue
working intensely up to the last day of its mandate. It behooves
24 SUPPLEMENT
the workers to increase the efficiency and productivity of their
sources of employment, to preserve them, and to defend their real
wages. They must participate in the work of industrial reconver-
sion and to undertake the modernization of our production
machinery with courage and vigor.
It is the duty of peasants and rural producers to continue the
effort to increase our self-sufficiency in food through optimal use
of land and water and efficient use of credits, fertilizers, insur-
ance, improved seeds, and technical assistance. The moderniza-
tion of the various modes of production is of fundamental
importance for the country's rural area.
Businessmen have the important responsibility of organizing the
various sectors to generate the production of goods and services
demanded by our nation. Their challenge is to enhance the
efficiency and productivity of business concerns to reduce costs
and to be more competitive in the international market. Techno-
logical innovation and great effort are indispensable to do so, as
is increasing our nonoil exports and tourism. To do so, they
depend on the government's support and encouragement.
The middle class has the responsibility of continuing to work for
the process of national modernization. We understand its con-
cerns about the economic crisis, but we remind it that we continue
living in peace and freedom and we have a -country which will
resolve its problems with its effort and talent.
The teachers, who have been and remain pillars of our sover-
eignty and upholders of our identity and culture, have a fun-
damental responsibility: to instill among children and youth
patriotism and an indomitable determination to build a free,
sovereign, democratic, and just society. Increasing the quality of
education is essential for this task.
The people, on the basis of their inexhaustible vitality and social
solidarity, will continue to expand their productive work and
struggle to improve their living conditions. The government is
with them in the fight against inflation, in consumer protection,
in housing construction, in the expansion of health services, and
in everything that contributes to their economic and social
improvement.
I ask women to increase their participation and to strengthen
their social work in benefit of the homeland. The government
opens the possibilities and your presence in all areas of national
development will increase irreversibly.
I ask the youth to prepare for the future, to contribute your
vitality and idealism to improve your education, and your under-
standing of our country's reality. You will live in a competitive
world, the site of a revolution in technology and production
means, and even changes in the forms of social coexistence. The
youths must prepare for the country to act aggressively in this
changing world.
I ask the artists, intellectuals, journalists, and shapers of opinion
to work for the expansion and protection of our national and
regional cultures. You have the task of preserving them. I urge
you to undertake constructive criticism that encourages and
stimulates the tasks of society. You and the government have the
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VI. 12 Sep 86
commitment to maintain freedoms, respect ideological pluralism,
and to abolish intolerance and dogmatism from our social life.
I urge the political parties to strengthen our climate of freedom
and to expand our democratic life. Each party must maintain its
independence and fulfill its constitutional duty of defending
democracy, pluralism, and sovereignty of the nation within the
state of law.
I urge the Armed Forces to continue their devotion to the
constitutional principles, their respect for the institutions of the
revolution to which they belong, and above all their fervent and
unyielding defense of the national sovereignty.
I ask the governors of the states for their most resolute cooper-
ation with the federation. We are going to strengthen our regional
development and expand the participation of the municipal insti-
tutions. We need to adjust and define the priorities of each state
along with those of the nation. We need to intensify dialogue and
negotiation with the various sectors and guarantee that the
resources will be used to benefit the development and well-being
of society.
We have a historic responsibility today: to overcome the cur-
rent difficulties, maintain our national projects and efficiently
carry out the changes needed by a dynamic and vital society.
25
SUPPLEMENT
As president of the Mexicans I assume my responsibility. I must
tell my people with frankness and sometimes with sorrow that
the path is not easy, and the task is hard; everyday it requires
more personal commitment and more effort from each of us. It
is everyone's battle. No one can be excluded. Unity is Mexico's
strength. The future will be promising if we are united to over-
come the current circumstances. The challenge does not over-
whelm us. Pessimism is not our motto. Here and now, courage
and optimism lead our efforts. We base our expectations and
development on firm and possitive foundations. We will continue
to be vigorous and opportune in our decisions. I will maintain
discipline and order in the government. I will encourage the work
and courage of our peoples. I will strengthen the state of law by
promoting concerted action as a means of resolving differences.
I will exercise the authority that the Constitution establishes and
the legitimate mandate that the people have given me to support
and encourage the sectors and organizations which participate in
these changes, and in this way guarantee the possibilities for our
social and economic development. I will defend nationalism and
our institutions, and with the support of my compatriots, the
national sovereignty will continue to be strengthened every day.
Mexico will move forward, stronger, more democratic and with
more freedom. There will be no obstacle, no matter how great,
to prevent us from making the nation great. Viva Mexico! [crowd
shouts: "Viva," applause]
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