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COUNTRY INSIGHTS

The economy continued to slow down in 2019
PANAMA · In Brief · 02 Mar 2020

GDP grew 3.0% during 2019, according to official figures released today. This number coincides with our projection made in mid-year. The fourth quarter increased by 3.3%, the better performance of the year (3.1% in the first quarter; 2.9% in the second quarter; and 2.7% in the third quarter). As ...

No surprise in recent risk evaluations: keep an eye on fiscal consolidation! …and the possible consequences of the virus in a logistics-oriented economy
PANAMA · Report · 28 Feb 2020

Two rating agencies and the IMF visited Panama at the beginning of the month. Fitch revised the outlook of the Republic to “negative” from “neutral”, concluding that public sector finances might weaken in the medium term, but the agency maintained its investment grade valuation for the Republic. ...

The Year of the Tin Rat: What can we expect?
PANAMA · Report · 30 Jan 2020

This month China celebrates “the Year of the Tin Rat,” which promises wealth and welfare for families and businesses. The outlook for 2020 for Panama is consistent with this expectation, according to most analysts. The reasons for this optimism (and its downside) are discussed in our report. Posi...

Water is critical for the Canal and the country: two new proposals
PANAMA · In Brief · 20 Jan 2020

Water is a scarce resource: it is evident for most of the citizens (and authorities) of the world, but Panamanian governments for decades were adamant, in general, to adjust the tariffs to price in that scarcity in the relevant markets. Last week two state-owned institutions stepped forward to de...

The Cabinet decided today to withdraw a controversial proposal for Constitutional reform and called for a “national debate” sponsored by the UNDP (United Nations).
PANAMA · In Brief · 23 Dec 2019

The reform was a leading campaign issue by all the parties in the recent presidential contest. Cortizo and the PRD party opted for following a long process of modifications established in the Constitution: two approvals by the Legislative Assembly plus a national referendum. The draft of the init...

Mixed news in the economy… better news in the institutional front
PANAMA · Report · 20 Dec 2019

The general feeling that the economy is doing poorly in terms of economic activity and job creation was supported by the recent data (2.7 percent growth in QIII and 2.9 percent in the year). Therefore, economic growth for 2019 will be lower than in 2018 (3.7 percent). Retail sales, free trade zon...

The first round of Constitutional reforms was a failure… but there is hope for a positive outcome next year
PANAMA · Report · 25 Nov 2019

The economy is growing slowly but steadily (3.25% through September according to the Monthly Index of Economic Activity). The 2020 budget is consistent with this pattern and therefore will not be expansive, given the limitations of the Fiscal Responsibility Law (a 2.75% deficit ratio for 2020). T...

A new fiscal ceiling is approved, the economy stalls and a dangerous Constitutional reform is underway
PANAMA · Report · 01 Nov 2019

The Legislative Assembly approved the revision of the Fiscal Responsibility Law (FRL) on October 28. The proposal approved by the Cabinet was enacted without modifications. Minister Alexander made a technical presentation in which he described the situation of the public finances and the need for...

A new fiscal deficit ceiling
PANAMA · In Brief · 03 Oct 2019

Yesterday, Héctor Alexander, the head of the Ministry of Economy and Finance (MEF) presented a bill of law at the national assembly in order to amend the deficit limit of 2.0% of GDP established by the Social Fiscal Responsibility Law (LRSF) back in October 2018. The proposed amendment would rais...

Low growth, high fiscal deficit, and mixed news in the institutional front
PANAMA · Report · 20 Sep 2019

The growth rate in the second quarter was 2.8%, the lowest since the financial crisis of 2Q-2009. For the first half of the year it was 3.0%; therefore, the 4.0% growth that MEF projects seems difficult to achieve, despite the expected boom in copper exports. From a national accounting-GDP perspe...

Our new projections reflect a slow first semester and a difficult fiscal situation
PANAMA · Forecast · 30 Aug 2019

The NFPS results for the first two quarters of 2019 showed what the new administration will have to deal with in the second half of the year: large deficits as a result of lower revenues and higher expenditures. The net position of the NFPS (-US 2,317 million) doubles the amount of the same perio...

The economic implications of Ricardo Martinelli's acquittal
PANAMA · In Brief · 10 Aug 2019

Not guilty of the accusations that the Attorney General office (Ministerio Público, MP) presented against former president Ricardo Martinelli (July 2009-July 2014): illegal wiretapping of citizens and embezzlement of public funds. This was the unanimous verdict of three judges on Friday evening, ...

Cortizo hit the ground running in economic and financial policies… while the economy continues to slide
PANAMA · Report · 06 Aug 2019

July was an active month for “Nito” Cortizo’s government. He visited international banks in New York to explain the government’s strategy to eliminate Panama from the gray list of non-cooperating countries in matters of money laundering after its inclusion (again) in June of this year. Also, the ...

The new administration will tap the market in a few weeks…and initiate a road show to remove Panama from the “gray” list of GAFI
PANAMA · In Brief · 12 Jul 2019

The new economic team announced yesterday that they will test the capital markets with a US$ 2.7 billion placement. The main objective of the transaction is to finance the expected deficit by December and the payment of a big chunk of the arrears to contractors left by the previous government. Th...

Public Sector Deficit is expected to be higher than the legal limit by the end of the year (and next)
PANAMA · In Brief · 02 Jul 2019

Héctor Alexander, new Minister of MEF beginning July 1, stated last week that that the real situation of the public finances may be worse than the figures submitted by the Varela Administration, because of the -so far- unknown amount of accounts payable to contractors and suppliers. His estimatio...

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