Toward Spending

Mexico's government owns a statist 40% of the nation's enterprises, and its cautiously conservative aim under the administration of President Adolfo Lopez Mateos is "to develop Mexico as fast as noninflationary investment will permit." Lopez Mateos trimmed spending last year to pay off debts left by his predecessor, kept the peso strong at 8-c-, kept the cost-of-living increase down to an insignificant 1.2% (U.S. increase: 1.8%). But gross national product, which grew a booming 5% in 1958, climbed only 4%--barely enough to keep ahead of the annual 3% population jump. Now Lopez Mateos appears ready to start spending for development--even at the cost of a few percentage points of inflation.

Last week, with the debts paid, the President announced that a record $640 million in public funds will be invested in development projects in 1960. Nearly half the cash will go to industrial growth: pipelines, refineries, absorption plants and grease factories for the government oil monopoly, Pemex; a petrochemical industry to turn out detergents, plants to make phosphorus and ammonia, power projects to produce 213,000 kw. by the end of the year, and 2,000,000 kw. eventually. The Chihuahua-Pacific Railroad will be finished, and so will the highway linking the Yucatan peninsula to the rest of the nation. Work will continue on roads to link such blossoming industrial centers as Saltillo and Guadalajara, Tampico and San Luis Potosi. The Altos Hornos steel mill at Monclova will raise annual production 42% to 850,000 tons.

The result, the government economists hope, will be a boost in G.N.P. by 5.5%, a gain in employment--and a growth in the cost-of-living index "within tolerable limits." National Chamber of Commerce Chief (and Coca-Cola Bottler) Juan Martinez del Campo believes that the government spending program will give the economy a sharp jab where it will do the most good. Private investors, he says, can expect "reasonable profits" and the nation "can expect that private enterprise as well as the government will increase its investment this year."

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