Fitch Report: Transparency of Mexican Sovereign Is Sound

Business Wire, Feb 10, 2004

Business Editors

NEW YORK--(BUSINESS WIRE)--Feb. 10, 2004

Fitch Ratings, the international rating agency, published a report today, titled 'Mexico's Fiscal and Monetary Transparency,' that analyzes the level of transparency in Mexico in fiscal and monetary affairs. According to the report, broadly speaking, Mexico's public finances and monetary and exchange rate policies are transparent relative to similarly rated sovereigns and even comparable to more highly-rated sovereigns.

Mexico has made important strides to improve the transparency of its fiscal and monetary policies in recent years. Fewer data gaps remain in monetary policy compared to fiscal policy. In this regard, the government is attempting to further improve fiscal transparency. Fitch rates Mexico's foreign currency sovereign obligations 'BBB-' and local currency (Mexican Peso) obligations 'BBB'. Both ratings have a Stable Outlook.

Fitch has emphasized that this report explores only aspects of fiscal and monetary policy that are relevant to its sovereign analysts in their work providing a credit opinion on sovereign bonds to investors and other analysts. As such, the agency does not endeavor to cover the entire range of fiscal and monetary policy issues, or to make an attempt to audit Mexico's public finances or central bank operations. A fuller assessment of transparency issues relevant to the broad array of analysts who study Mexico is provided by the IMF in its assessment of 'Standards and Codes' and related reports.

In the report, Fitch has made judgments on the degree of Mexico's compliance with various fiscal and monetary policy variables, which as a rating agency it deems to be material and important for determining sovereign creditworthiness.

Transparency in the areas of fiscal and monetary policy allows market participants to assess and monitor developments effectively and efficiently, providing policymakers with an incentive to pursue sustainable economic policies. It also gives investors comfort that monetary and fiscal policies will develop in a predictable and appropriate manner in response to domestic and external shocks. This paper is based on the answers provided by the Mexican government to a questionnaire prepared by Fitch, and meetings with the officials from the Ministry of Finance and Public Credit, and Banco de Mexico.