Mexico secures loans for eco projects and real estate finance

The World Bank is to lend $800 million to Mexico to help transform public transport to reduce emissions, and other environmental programmes, it has been confirmed.

The loans include $450 million dollars for social, water and infrastructure projects and another $200 million from climate investment fund Clean Technology, will help modernise public transport across the country, said Mexican Treasury Secretary Ernesto Cordero.

Robert Zoellick, president of the World Bank, praised Mexico for its widely lauded Metrobus system of rapid buses on dedicated lanes as an example of efforts already being made toward improving the environment.

‘I think that climate change is too important to wait for one formal accord,’ Zoellick said, ahead of the December UN climate summit in Cancun, which follows last year’’ Copenhagen meeting seen by many as a failure.

‘I prefer to look at climate change as an area where we need to try to make progress where we can, when we can,’ he added.

Zoellick also praised economic recovery in Mexico, where growth is predicted to rebound to 4.5% this year after the economy shrunk 6.6% in 2009. He said it is important to involve the private sector in efforts to boost growth. ‘If you reduce the costs of doing business, if you make it easier to start a business, if you make it easier for people to get credit, you can also create the basis for growth,’ Zoellick said.

Mexico is also seeking funding to boost its real estate industry. It is in talks with a Chinese development bank for a $1 billion loan, according to the agency in charge of developing Mexico’s mortgage market. The Chinese loan may be signed as soon as September, said Javier Gavito, chief executive officer of Mexico City-based Sociedad Hipotecaria Federal (SHF).

‘The amount of funds and opportunities for investments are considerable,’ Gavito said.

SHF obtained a $1 billion loan from the World Bank in 2008, and is receiving instalments from a $2.5 billion 10 year conditional credit line from the Inter-American Development Bank. The SHF is using the funds to inject liquidity into Mexico’s mortgage market. It is also looking for another $500 million from the World Bank.

Mortgage lenders such as Hipotecaria Su Casita SA have increased their funding from SHF after a drop in the mortgage backed securities market when investors around the world shunned mortgage bonds and related securities amid rising US defaults on the underlying loans.

Mexico had a housing shortage of 8.9 million units at the end of last year, according to SHF which forecasts that 1 million mortgage loans will be signed in Mexico this year.

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Tagged as: environmental programs, Mexico, World Bank