LEAD: On the eve of a landmark loan agreement to ease Mexico's debt burden, economists and business executives here warn that the nation's fragile economic recovery is threatened by Government spending on new social programs and a scarcity of private investment funds needed for sustained growth.
On the eve of a landmark loan agreement to ease Mexico's debt burden, economists and business executives here warn that the nation's fragile economic recovery is threatened by Government spending on new social programs and a scarcity of private investment funds needed for sustained growth.
A slowdown in growth, they add, could well give Mexico trouble in meeting even its reduced debt obligations, raising the prospect that it would eventually have to go back to the banks to negotiate for new repayment terms once again.
The significance of Mexico's struggle to avoid further repayment difficulties extends well beyond the country's borders. The Mexican economy is the first testing ground for Treasury Secretary Nicholas F. Brady's plan to manage the $400 billion Latin American debt problem. With President Carlos Salinas de Gortari scheduled to sign the debt accord with Mexico's foreign lenders here on Sunday morning, the crucial Mexican test will begin in earnest.
Mexico and its 450 bank lenders agreed in principle to a debt-reduction package last July, and the announcement provided an important foreign vote of confidence in the Salinas Government's free-market program to curb inflation and put more of the economy in private hands.
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