Mexico faced a financial crisis in 1994 when the government devalued the peso, which had been overvalued against the US dollar under a fixed exchange rate. Political unrest and high deficit spending through government bonds depleted Mexico's foreign currency reserves from $27 billion in January 1994 to just $6 billion in December. The crisis stabilized when US President Bill Clinton granted Mexico a $50 billion loan package. The crisis became known as "el error de diciembre," or "The December Mistake."

1. MexicanCRisis By:- Vinay Mehta Udit Gupta

3. Crisis stabilized when president Bill Clinton granted a loan of $50 billion.

6. The ruling party’s presidential candidate, Luis Donal-doColosio, was assassinated.

7. Deficit SpendingBy selling Tesobonos.

9. During 1994, Mexico’s central bank hid the fact that its reserves were being depleted. Why? January 1994 ……………… $27 billion October 1994 …………………$17 billion November 1994 ………..…… $13 billion December 1994 ………..…… $ 6 billion

14. Financial assistance package The United States arranged currency swaps and loan guarantees with a $20 billion total value. The IMF promised an 18 month Stand-by Credit Agreement of around US $17.7 billion. The Bank for International Settlements offered a $10 billion line of credit.