Vaccination is improving, the economy remains on a slow path to recovery, and the dialogue on public pension reform is going nowhere

PANAMA - Report 29 Jul 2021 by Marco Fernandez

The total number of vaccines already shipped to the country is 3 million (for a population of 4.3 million inhabitants) and will reach 9.3 million before the end of the year (7.1 million Pfizer, 1.1 million Astra Zeneca, and 1.1 million the Covax system). This new environment may help the health authorities ease mobility restrictions in large cities, which restaurant owners and other groups have been requesting since the beginning of the year.

After a three-month delay, INEC published in mid-July the GDP information for the first quarter of 2021 compared with the first quarter of 2020, -8.5%. This was no surprise (we anticipated -10%) because Q1 2020 included almost three months of regular economic activity, and Q1 2021 was practically shut down by the health authorities, particularly in construction, retail, and tourism (hotels and hotels restaurants). In general, the sectors linked to the world markets (the Canal, ports, and copper exports), except for air transportation, showed positive numbers. In contrast, the sectors producing for the local market, except for government services, decreased.

The Dialogue on the CSS (really on the national pension program) is not moving forward. On August 8, the process will be six months old, with 23 representatives of 20 different (and sometimes conflicting) groups. The original sin of the mechanism was the absence of a government proposal as the basis for a compelling discussion. The topics under debate in this new round of discussions are minor compared with the size of the financial deficit (more than US 715 million in 2024). These topics include improvements in the administration of the pension program and the incorporation of informal workers into the pension plan. None will go to the root cause of the problem: the deficiency in the system's parameters, including the retirement ages for men and women; however, Cortizo rejected "parametric changes" since Day One, leaving very little room for maneuver.

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