The political economy of megaprojects in Panama: two recent examples

PANAMA - Report 29 Jun 2021 by Marco Fernandez and Alex Diamond

Economic policy analyses must consider the political forces behind the technical decisions. This fact is relevant in the adjudication of large infrastructure projects, where money and power mingle. Roads, metro rails, and similar large public projects are notable cases. We examine two seminal issues that grabbed the past month's economic headlines: Panama Ports and NG Power.

Regarding the pandemic, the third wave of contagions (milder than previous peaks) is at the door. We shall follow the recommendations of the health authorities regarding further closing of some economic activities.

The national dialogue on the reform of the pension fund of the Social Security is at a stalemate. The more center-leaning national labor union, which left the discussions in March, proposed a suspension of the conversations until some conditions are met. In this report, we present some options for the fund.

July 1 was the date that would end the payment moratorium of bank debt by households and companies, but the government extended the benefits until December 31. Also on July 1, the new Directorate of the Legislative Assembly will begin its one-year term. We discuss the current political environment in this report. Also in politics, next month two Supreme Court judges will be appointed, giving Cortizo a 5-4 potential majority. Next year another seat will open.

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