(Adds Carstens' comments on markets, peso weakening)
By Walter Brandimarte and Lesley Wroughton
WASHINGTON, April 26 (Reuters) - Mexican Finance Minister Agustin Carstens on Sunday tried to calm investors scared by a national outbreak of swine flu, saying its impact on the economy will be "transitory."
Carstens told a news conference in Washington that Mexican banks have contingency plans in place to avoid disruptions and offered assurances that the government will be watching markets "very carefully."
"We will be on top of the situation," the minister said after attending the Spring meetings of the International Monetary Fund and World Bank.
"This issue does not in a fundamental way affect the Mexican economy. It is mostly a transitory problem," he added, arguing that international experience shows markets usually recover vigorously and quickly once the situation is brought under control.
In an earlier press conference on Sunday, Carstens said the flu outbreak could have a big impact on Mexico's economy, although it was too soon to say how significant it might be.
The Mexican peso
Carstens said he held a meeting on Friday with the Mexican banks' association, the central bank, the national banking commission and the insurance commission to assess the situation. "The payment system will be working well. The banks are well organized in this respect and they are prepared to operate in this type of circumstance. We shouldn't have any major issue in the market," he said.
The World Bank is giving Mexico an immediate loan of $25 million to help with medicine and medical equipment, according to Carstens. In addition, he said the Bank would provide a further $180 million to help Mexico set up operations to deal with the outbreak.
The flu has killed 81 people in Mexico. In the country's normally chaotic capital, millions of residents stayed at home, professional soccer games were played in empty stadiums, and bars were closed.
Twenty cases of flu have also appeared in the United States and six in Canada, with other possible cases as far afield as Europe and New Zealand.
Carstens said the World Bank would help Mexico try to better gauge what the economic fallout might be.
World Bank President Robert Zoellick said the focus right now was on the human toll. "For now the focus is to try to take care of people's lives," he said. (Editing by Todd Eastham)