Mexico

This Selected Issues paper analyzes reserve adequacy in Mexico. Reserve adequacy has been of renewed interest, as the authorities have introduced a new rules-based mechanism of U.S. dollar sales to reduce the rate of reserve accumulation. The paper examines the recent experience with Mexico’s fiscal management tools in light of the need for further consolidation. It reviews evidence on the cyclical behavior of fiscal policy in Mexico, finding that it has generally been procyclical since the early 1990s. The paper also examines the determinants of inflation in Mexico since 1997.Article IV consultations;Selected issues;reserve accumulation, short-term debt, external debt, capital markets, external financing, access to international capital markets, access to international capital, international capital markets, central bank, international capital, balance of payments, external borrowing, domestic currency, capital outflow, access to capital markets, debt securities, investor confidence, loss of confidence, put options, balance of payment crisis, domestic investors, balance of payment