Mexico To Receive World Bank Loans To Deal With Swine Flu Crisis

The World Bank is providing Mexico with more than $200 million in loans to help it deal with an outbreak of a new strain of swine flu.

Mexican health officials say swine flu has killed up to 86 people and likely sickened about 1,400 in the country since April 13.

Mexican Finance Minister Agustin Carstens says $25 million will be used to address immediate needs. He says the remaining $180 million in loans will deal with long-term needs.

World Bank chief Robert Zoellick says the bank is providing Mexican officials with information about how other nations have dealt with similar outbreaks of disease.

The bank held its spring meetings this weekend in Washington

Mexican Finance Minister Agustin Carstens said on Sunday the outbreak of swine flu could have a big impact on Mexico's economy, although it was too soon to say how significant the effect might be.

"This issue can have an important impact on the economy, although the most important impact is the one on human life and human well being," Finance Minister Agustin Carstens told reporters.

"At this stage, without ignoring that this is a very serious matter and that it has a high potential for disruption, I would say that it's early to give a more concrete opinion," he said.

Carstens spoke at a news conference after a meeting of the IMF and World Bank's joint Development Committee. (Reporting by Lesley Wroughton; Writing by Tim Ahmann)

Mexico requested the closure of bars, movie theaters and churches in the capital to fight an outbreak of deadly swine flu while stopping short of ordering workplaces shut on concern about the economic impact.

“By agreement of the members of the economic cabinet and submitted for consideration by the president, economic activities won’t be suspended because of the epidemic,” Economy Minister Gerardo Ruiz said in a news conference last night. The government opted instead for actions that “mitigate the impact on the economy and on the functioning of society in general.”

The epidemic, which has claimed as many as 81 lives, threatens to deepen the country’s economic decline after U.S. demand for Mexican exports including cars and home appliances plummeted. The Mexican economy shrank 1.6 percent in the fourth quarter and probably contracted another 4.2 percent in the first three months of this year, according to a central bank survey of 32 economists published April 1.

Isidro Reyes, who was selling cheeses and fruits from the back of his pickup truck in Mexico City’s Roma neighborhood, said business had fallen 50 percent since April 24, when the government first shut schools.

Empty Streets

“People are scared,” said Reyes, 29. “We’re alone on the streets.”

Raul Sanchez, a 49-year-old taxi driver in Mexico City, said business has dropped by half since April 24.

“People don’t even want to leave their houses,” he said. “It was bad enough with the economic situation, and now it’s even worse.”

The Finance Ministry said the government has 6 billion pesos ($450 million) from an emergency fund to fight the virus and will help state governments cover the costs by advancing budget transfer payments.

No foreign government has banned travel to Mexico, Economy Minister Ruiz said yesterday. Foreign tourism, which added $13.3 billion to the economy in 2008, is Mexico’s third-largest source of foreign currency behind oil exports and remittances from Mexicans who live abroad.