Two important events to follow in February: the GAFI evaluation and the nomination of board directors to the Panama Canal Authority. Contagions increase but pension reform stalls.
We expect in February the decision regarding the evaluation of the country's advance (or lack thereof) in matters related to the prevention of money laundering. In a face-to-face preliminary meeting, Panama will present what the government considers to be its recent improvements in legislation regarding these issues. The conclusions of the report are important for the financial sector and for future country risk evaluations. We anticipate that the Republic of Panama will remain on the "gray list" of non-cooperating jurisdictions but will not fall to the so-called "black list".
February's nominations of three ACP Board members are relevant for the economy. The new team must appoint the General Administrator of the ACP to replace Ricaurte Vasquez, whose term expires in 2026. However, he could be re-hired for a second seven-year period, an outcome that is likely to occur then. The message that the appointments of these new directors conveys to the rating agencies is crucial. ACP debt has a rating of A- (negative perspective) issued by Fitch in July 2021 and an investment grade from Moody's; both are above the country's sovereign risk rating. The new Board must discuss and propose the 2023 budget to the Cabinet, which legislators can reject or approve without the possibility of a line-item veto. The most important project for the next decade is the study and conclusion of the water management project, which is key to the ecological and financial survival of the canal operations. The ACP signed a service agreement with the Engineering Corps of the US Army to design the conceptual framework for the options that the ACP (and the country) may have to guarantee the supply of fresh water for the long term.
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