Summary of the Impact on Mexico of NAFTA and the Structural Adjustment/Austerity Measures Intensified after the December, 1994 Crash of the Peso

  • Between 1994 and 1995 sales of major wholesalers dropped by 75%.

  • Food production fell by 80%.

  • Basic food prices rose faster than overall prices (by 43% in the first 7 months of 1995).

  • While cutting back on services and subsidies for the poor and taxing them more, the government increased subsidies for the rich. In 1995 it spent 13 billion (5% of the GDP) to bail out commercial banks, and 2 billion to assist private road-building contractors (who put tolls so high that few can afford to use the highways they built).

  • Over 60% of all Mexican businesses reduced their workers, and 1/3 of businesses have closed down.

  • In the first 9 months of 1995, over 2 million people fell into extreme poverty. Today over 40% of population lives in poverty.

  • Mexico's foreign debt has swollen to suffocating size. Interest payments in the first half of 1996 were almost $18 billion, nearly double that in the first half of 1994.

  • Since December, 1994 the average wage lost 54% of its purchasing power.

  • During 1995, between 1 and 2 million more workers became unemployed, raising total unemployment to 10 million (26% of the active workforce).

  • In 1996, the President's "secret budget item" (a discretionary fund for which he does not have to account) was raised to US$85 million -- 30% higher than the year before.

  • In response to growing poverty, crime has escalated. In response, Congress legalized gun ownership by private citizens. Gun-related violence, already extremely high, is predicted to increase.

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