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Panama Canal's Economic Performance, and Funds Transfers to the Government

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Canal gives record $1.703 billion to State

Jorge Luis Quijano
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A record  $1.703 billion contribution to the State, by  The  Panama Canal Authority (ACP), was approved by the Board of Directors on Thursday, December 13.

“It was a year of many challenges that could be overcome with a growth in tonnage,” said administrator Jorge Luis Quijano,

The contribution comes from  $1.199 billion of surplus for the fiscal year 2018, which closed on September 30, plus  $502  million of transit tonnage and more than  $2 million for services rendered to the Canal.

The figure represents an increase of $44 million compared to the budgeted contribution and was an increase of  $53 million on the previous contribution.


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Panama Canal revenues up 9.1%

Postpanamax ships using new locks
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Panama Canal revenues climbed 9.1 percent to $2.082 billion between January and October, up from  $1.908 billion in the same period of 2017, according to official statistics released Monday. 

October was the month with the best performance in the period, with revenues of $217.68 million2.74% more than the $211.76 million in September

In the first 10 months of this year the Canal, which accounts for around 6% of world trade, recorded a total of 11,504 transits, 0.89% more than the 11,401 of the same period of 2017.

Between January and October, 2,160 transits were made by Neopanamax vessels through the new Canal locks, 31.2% more than the 1,646 in the same period of 2017.


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Panama Canal revenues grow 8.5% in 2018

Wed, 02/06/2019 - 16:39

Diseño sin título (14)_0.jpg

Panama Canal revenues totaled 2,513.2 million dollars in 2018, 8.5% more than the 2,316.3 million of the previous year, according to figures from the Institute National Statistics and Census (Inec) released on Wednesday.

The revenue increase of 2018 is less than the 17.6% of the previous year, a performance deemed extraordinary by the Panama Canal Authority (ACP), which was the product of the full operation of the extension of the road, which entered service to mid 2016

Regarding the results of 2018, the preliminary figures of the statistical entity specify that last December was the month with the highest revenues for the interoceanic route, with 220.8 million dollars, 2.8% more than in the same period of 2017.

But the biggest monthly rise was recorded in May, with 16.1% of total revenues of 216.5 million dollars compared to 186.5 million dollars in the same month of 2017, said the Inec.

The transit of ships through the Canal, where about 6% of world trade passes, came in 2018 at 13,692, 0.2 percent more than the 13,666 the previous year, indicated preliminary official data.

For the new interoceanic canal locks, which give way to ships with triple the load that crosses them through the centennial canal, a total of 2,643 high-draft transits were recorded, above the 2,025 of the previous year.

The ACP approved last December to deliver to the Panamanian State 1,703 million dollars corresponding to fiscal year 2018, a "historic" contribution for the public coffers, and 53 million dollars higher than the one granted the previous year.

The administrator of the channel, Jorge Luis Quijano, explained then that it was foreseen to deliver to the National Treasury 1.659 million dollars, but that another 44 million were added due to the "spectacular" performance of the interoceanic route during fiscal year 2018.

"This year is a record year and for the first time we passed the barrier of 1,700 million dollars in contributions to the State", said the top manager of the interoceanic highway, which connects more than 140 sea routes and 1,700 ports in 160 countries.

The Panama Canal reported Wednesday that it has been applying water saving measures for several months in the face of the possibility of the dry season lengthening and aggravating the El Niño weather phenomenon, which causes severe droughts and whose effects in Central America were especially serious in 2016.

"The Panama Canal Authority, since before (the beginning of) the phenomenon of El Niño in November, implemented a program of water conservation in the locks", said the Executive Vice President of Environment, Water and Energy of the interoceanic route, Carlos Vargas.

The program, the executive explained, includes "cross-flooding of locks", "intensive use of tubs" and the temporary closure of a hydroelectric plant in the canal "to prevent that water leave the system".

The interoceanic road, through which passes about 6% of world trade, operates with lock systems at different levels, which require 202,000 cubic meters of water each time a ship passes.



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Third Canal locks produce 50% of toll income


Posted 19/05/2019

Income from the third set of locks is living up to predictions and is already generating almost half of the Canal toll revenue with the transit of postpanamax ships.

According to the Panama Canal Authority (ACP) , in the first seven months of fiscal year 2019 (ie, from October 1, 2018 to April 30, 2019) the tolls collected by the old structures, which allow the Panamax step, added $802.2 million or 52.5%, while the new locks have produced $723.7 million or 47.4%.

The trend is that the third locks opened in 2016, will become a bigger income generator.



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Panama Savings Fund heading for record


US-China trade war the only cloud

Posted 20/05/2019

The returns accumulated by The  Panama Savings Fund (FAP) returns will be capitalized, at the end of the year  and should set an historical record if canal transit is not seriously damaged by the US-China trade war

The capitalization follows s the legal reform approved in October 2018. Before this legislation, the yields of the FAP were delivered to the National Treasury. The measure of capitalizing the fund with the profits it generates will allow its organic growth reports La Prensa.

The accumulation rule was also reformed to allow part of the surpluses generated by the  Panama Canal to reach the FAP, which is why it was created.

Taking into account the figures of the 2018 GDP  and the contributions of the Canal to the Treasury and applying the new accumulation rule, the FAP should receive $38 million this year.

The  Ministry of Economy and Finance has indicated that its  intention is to make the  transfer before the end of the current administration on June 30, but  so far the FAP has not received the contribution

Increasing yield
The difference in the profit obtained by the FAP during the first quarter compared to the same period of the previous year is considerable. Between January and March 2018, the fund obtained a slightly negative return of -0.22%, which resulted in a loss of $3.9 million.

During the first three months of this year, the fund achieved a yield of 3.84%, which translates into a profit after administrative expenses of $47.8 million.

The FAP, formerly the Trust Fund for Development, was set up with funds obtained from the sale of part of the shares of public companies at the end of the 1990s, including IRHE and Intel. It currently has a portfolio of one thousand $1.322 billion in net assets.

The investments are mainly aimed at fixed-income assets such as sovereign or corporate bonds (61% of the portfolio is invested in this type of assets), while 25% consists of liquid assets and 14% in shares or variable income securities.

This last group of investments was the one that had a better performance in the first quarter, generating a yield of 12.06%, against  the negative yield of -0.55% in the same period in  2018

Investments in fixed income, on the other hand, recorded a positive return of 3.33%, compared to -0.15% obtained in the first quarter of 2018.

The positive result this year is the result of a more moderate policy of the Federal Reserve (FED) of the United States, which has been more patient in the face of possible increases in interest rates compared to the four increases approved in 2018.

"This measure of pausing in the rise in interest rates is well regarded by investors, resulting in the S & P 500 recording its best quarter in more than 20 years, yielding 13.65%," the FAP said in a report.

In addition to monetary policy movements, listed companies have had good results. This makes their actions more attractive to investors and increases their value, explained Abdiel Santiago , technical secretary of the FAP.

Trade war
If the current situation in the markets is maintained, yields at the end of the year could set a  record. The main source of uncertainty today is the trade war between the United States and China, which are applying tariffs to imports, weakening the prospects for trade.

"The actions of the FED will be framed in the economic situation of the country and if an agreement on the commercial dispute is not reached, this factor would incorporate it in the decision to raise or maintain the rates," Santiago said.



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