A report by the International Monetary Fund suggesting that Mexican - not foreign - investors were the "primary" cause of a financial crisis earlier this year may provide fodder for congressional Republicans who have condemned a U.S.-led financial bailout for Mexico.

The report's finding could be used by U.S. lawmakers, led by Sen. Alfonse D'Amato, R-N.Y., to oppose further U.S. aid to Mexico or other countries in

financial crisis. The group has vigorously attacked the Clinton administration's ongoing $20 billion rescue program for Mexico.This also could make it less likely that Congress would consider legislation clearing the way for adding Chile to the North American Free Trade Agreement.

In a 200-page report titled "International Capital Markets," the IMF said that December's peso crisis stemmed "primarily from (Mexican) residents rather than foreign investors selling their holding of Mexican securities."

The report by IMF economists Takatoshi Ito and David Folkerts-Landau suggested that Mexican sales accounted for most of the $6.6 billion drop in Mexico's foreign reserves in December. The capital flight forced the Mexican government first to devalue the peso and then to let it fluctuate freely.

A Washington Post story Monday emphasized the conclusion that Mexican investors accounted for most of the capital flight that led to the financial crisis. It also interpreted the report as saying that U.S. officials may have exaggerated the potential of the Mexican crisis spreading to other countries.

A senior Treasury Department official sought to downplay these conclusions Tuesday. To note that more Mexican capital was involved than foreign capital does not change that fact the flight of foreign capital and the lack of any new foreign capital were crucial in exacerbating what was largely a short-term debt crisis, the official said.

Treasury officials have not at all changed their view that the U.S. bailout was vital to prevent the spread of the crisis to other emerging markets, and the fact that the crisis did not spread is merely testament to the view that the U.S. bailout was what was needed, he added.

Top officials at Mexico's Finance Ministry were meeting Monday to discuss the report and were not immediately available for comment. But the IMF's

finding was not a surprise to Jonathan Heath, an independent Mexico City economist who recently published a paper that came to similar conclusions.

Mr. Heath said the inclination for Mexican investors to sell pesos for

dollars was clear shortly after the March 23, 1994, assassination of the ruling party's presidential candidate, Luis Donaldo Colosio.

While foreign investors began converting treasury certificates known as cetes into dollar-denominated bonds called tesobonos, Mexican investors simply got out of Mexican debt instruments and converted their pesos to dollars, Mr. Heath said.

"The first thing they do is get into dollars and then ask questions," he said of Mexican investors familiar with their country's history of devaluations at the end of presidential terms.

For months leading up to the disastrous Dec. 20 devaluation, there was speculation of a change in the peso's exchange rate against the dollar. By late November, economic indicators showed a bloated current-account deficit, heavy short-term debt and a severely overvalued peso.

Both Mexican and foreign investors began heavy sales of their Mexican holdings, leaving the government unable to defend the peso, the IMF report said.

Mexico City-based economic consulting firm Macroasesoria Economica concludes that foreign investors led the flight out of Mexico and caused the currency collapse.

"At the minimum it was both, but probably foreign investors," said Sergio Martin Martin, director of macroeconomic studies for Macroasesoria Economica.

It is important to make a distinction regarding the capital that left Mexico in 1994, he said. Some $10 billion to $12 billion in foreign reserves held by nationals left Mexico following the Colosio assassination, he said.

But from September through December, he said, foreign investors fled with each political earthquake - ranging from political killings to Cabinet scandals to electoral mudslinging.