HConsumer Credit Card Debt Chilling the Mexican Economy Frontera NorteSur

Monday, June 23, 2008

Consumer Credit Card Debt Chilling the Mexican Economy Frontera NorteSur

In repeated statements during the last few months, high-ranking members of the Felipe Calderon administration, including the president himself, have assured the public that Mexico is well-positioned to resist the economic storm that's lashing the United States. But different factors, ranging from steep commodity price hikes to some lay-offs in the maquiladora export sector, are putting chinks in the armor.

A serious trouble zone is emerging in the consumer credit sector, which has helped drive the Mexican economy during the last four to five years.

New numbers from the federal government's National Commission for the Protection and Defense of Financial Services Users (Condusef) report that the percentage of bank issued credit card debts in arrears reached 7.6 percent in April of this year. The figure follows a steady rise in bad credit card debts from June 2005, when only 3 percent of such loans were overdue.

Mexican officials have issued mixed messages about the slide of many consumers into unmanageable debt. In 2007, Condusef President Luis Pazos predicted bad credit card debts would reach the 7.1 percent threshold in June 2008, a number that was surpassed two months ago. Speaking last year, Pazos warned that a 7.1 percent bad debt load would be dangerous to the health of the Mexican banking system.

In an interview with Frontera NorteSur earlier this year, Jorge Aceves, assistant director for Condusef in the state of Guerrero, said the credit card debt load was still not a major problem. "It's not at a critical stage," Aceves affirmed. Commercial banks, he said, were working with credit card holders to restructure debts...

Source

http://www.mexidata.info/id1885.html