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BANKING

Mexico: The dithering away of the state

After months of delays, the Mexican privatization progamme has sprung back into life. In December, the government raised $1.8 billion from the sale of its northeastern railway line, by far its largest privatization deal since the devaluation of the peso in late 1994. Congress has also dropped its opposition to the sale to foreign investors of a 49% stake in the country's down-stream petrochemicals industry, raising hopes that privatization will speed up in 1997.

The tender for the northeastern line was won by a consortium of Transportacion Maritima Mexicana (TMM) and Kansas City Southern of the US. It will receive a 50-year concession to operate the line, which runs from the US border at Laredo in Texas to Mexico City. Merrill Lynch and Chase Manhattan will finance the deal.

This year, the government plans to sell the southeastern line which connects the Gulf of Mexico to the Pacific Ocean at the port of Salinas Cruz. But analysts doubt that other railway assets will raise much money. "No-one is really interested in most of the railroad lines apart from the northeastern and southeastern ones," says one analyst, adding that he would not be surprised if there are no bids in the northwestern auction.

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