Several economists and historians have analyzed some of the events and policy mistakes that precipitated the crisis of December 1994.Hufbauer and Schoot, (2005) In keeping with the PRI election-year practices, Salinas launched a spending spree to finance popular projects, which translated into a historically high deficit. This budget deficit was coupled with a current account deficit, fueled by excessive consumer spending as allowed by the overvalued peso. In order to finance this deficit, the Salinas administration issued tesobonos, an attractive debt instrument that insured payment in dollars instead of pesos.
Several economists and historians have analyz,ed some of the events and policy mistakes that precipitated the crisis of December 1994.Hufbauer and Schoot, (200.5) In keeping with the PRI election-year practices Salinas launched a spending spree to finance popular projects, which translated into a historically high deficit. This budget deficit was coupled with a current account deficit, fueled by excessive consumer spending as allowed by the overvalued peso. In order to finance this deficit, the Salinas administration issued tesobonos, an attractive debt instrument that insured payment in dollars instead of pesos