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Panama gets 2nd rating boost


Posted 30/04/2019

Panama got another rating boost on Monday, April 29 from The rating agency  Standard & Poor's Global Rating which improved the country’s sovereign rating from BBB to BBB +.

This is the second improvement received so far this year, after the Moody's agency made a similar move in March, raising the Baa2 rating to Baa1.

With this jump, Panama is at the level of countries such as Mexico and Peru and is only below Chile (A +) in the region

The rating of risk is an opinion of the agencies on the ability and willingness to pay the debt that a country or a company has.

S & P said the improvement is a consequence of years of growth, which raised per capita income, the diversification of the economy and a relatively low level of public debt.



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Panama's Risk Rating Improves

Arguing that the country has a diversified economy which has contributed to sustained GDP growth, Standard and Poor´s raised the rating from BBB to BBB+, with a stable outlook.

Tuesday, April 30, 2019

Economic diversification has also allowed per capita income to double in the last decade, one of Standard and Poor's arguments for raising the rating.

You may be interested "Positive Outlook for Panama's Debt"

From the Ministry of Finance of Panama statement:

- Standard and Poors considers the diversification of the economy to be positive, which has contributed to double the GDP per capita.

- The country's trajectory in terms of orderly change of administration, continuous pro-investment economic policies and economic growth has been valued.

- Panama stands out with a sustainable growth of the economy above the peer countries with investment grade.

- The rating agency expects the next administration to continue recent efforts to strengthen regulation, fiscal policy and transparency.

- Since 2012, it is the second time that Panama manages to improve the investment grade rating this year, Moody's did it first.

The rating agency Standard and Poor´s has improved the rating of the Republic of Panama from BBB to BBB+ with a stable outlook. "This rating is the result of the sustainable economic growth in recent years that Panama has experienced, above peer countries; the diversification of the economy, doubling the GDP per capita; stability in the changes of administration; and efforts to strengthen the transparency and regulations of the financial system," announced Minister Eyda Varela de Chinchilla, Minister of Economy and Finance.

Read full article (In Spanish).



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Panama: The Most Dynamic Economy

According to the IMF, the Central American country has been the most dynamic economy in Latin America in the last three decades, reaching one of the highest per capita incomes in the region.

Monday, May 13, 2019

A report published by the International Monetary Fund (IMF), and signed by Alejandro Santos, Panama's mission chief, and Metodij Hadzi-Vaskov, chief economist in the Western Hemisphere Department, explains that the country's growth is important, since the economy has grown at around 6% per year for a quarter of a century, well above other countries with traditionally strong growth such as Chile, the Dominican Republic and Peru, as well as twice the growth rate of Latin America as a whole.

Panama also achieved one of the highest levels of per capita income in the region, surpassing other countries such as Argentina, Mexico and Uruguay.

In the last thirty years, GDP per capita quintupled from about $5,000 in 1990 to over $25,000 in 2018, foreign trade and the financial system prospered, and public debt contracted in proportion to GDP. In addition, poverty was greatly reduced, while investment reached levels similar to those of the Asian tigers.

One of the recommendations for the country is to improve financial transparency, the exchange of tax information and the investment climate. By further strengthening financial transparency and integrity, Panama could benefit even more from its exceptional geographical location and regional financial center to support investments in international logistics, transport and trade and in a financial core.

See full report.



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IMF predicts Panama 6%  rebound


Posted 16/05/2019

Members of the Executive Board of the  International Monetary Fund (IMF) met with  President Juan Carlos Varela , the Minister of Economy and Finance, Eyda Varela de Chinchilla, and representatives of Panama’s financial and business community during  a three-day official visit that ended on Thursday, May 15 .

At the end of the mission, the directors issued a statement that Panama's economic model as a logistic, trade and financial center has positioned the country as one of the most dynamic economies in the region.

"Successful policy frameworks, free trade, high investment, the emergence of a vibrant service sector and the expansion of the Panama Canal" are highlighted as a reflection of the "solid economic foundations of the country,"said the bulletin.

The IMF projects that Panama will grow 6% in 2019  in what would be a considerable rebound from 3.7% in 2018.

To settle the "good economic prospects", the agency expects fiscal discipline to be maintained, as well as efforts to improve the fight against money laundering and financing of terrorism and tax transparency.

The Executive Board of the IMF is the body in charge of the daily management of the body. It consists of 24 members, who in turn represent several countries.

The delegation consists of Alexandre Tombini, executive director for Panama, Brazil and nine other countries; Zhongxia Jin, director for China; Thomas Ostros, director for Sweden; Maher Hamed Mouminah, director for Saudi Arabia; Sami Geadah, deputy director for Lebanon, and Piotr Trabinski, deputy director for Poland.

Panama does not have any financial assistance or support program with the IMF reports La Prensa, . However, the agency has collaborated with the country by providing technical assistance and capacity development in order to strengthen the supervisory capacity of economic authorities and modernize the administration and control of income.


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Panama economy up 3.41% in first quarter


Posted 21/05/2019

The Panamanian economy grew 3.41%  in the first quarter of the year when compared to the same period of 2018. according to the Monthly Index of Economic Activity (IMAE) from the office of the Comptroller General

According to the official report, transport, storage, and communications, electricity and water, public administration and financial intermediation were the segments of the economy that recorded a favorable performance from January to March.

The electricity and water supply category, in its production, showed a positive result due to the greater generation of thermal energy and the contribution of the new generation of energy from natural gas.

Activities that showed growth at a slower pace were construction, mining and quarrying, agriculture and livestock, and the provision of amusement and leisure services.



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Less Economic Growth, More Fiscal Deficit

The low dynamism in the commercial activity and in the construction, will influence so that in 2019 the growth of the Panamanian economy is of 4.5% and not 5%, which would result in a rise in the fiscal deficit.

Monday, May 27, 2019

The Chamber of Commerce, Industry and Agriculture of Panama (Cciap) expects that by 2019 the country's economy will grow 4.5%, an estimate that is lower than that of the Ministry of Economy and Finance (MEF) which forecasts that economic growth will reach 5%.

See "Panama: Slight Economic Slowdown"

Manuel Ferreira, director of the Center for Economic Studies of the Chamber of Commerce Industries and Agriculture of Panama (Ceecam), explained to Elcapitalfinanciero.com that "... among the sectors which have maintained a greater dynamism are..: The Canal, the ports, the air hub, telecommunications services and the financial sector. Meanwhile, there was less favorable behavior in the activities of the domestic economy, in the areas of trade, construction and real estate activities, among others."

Ferreira added that "... even though economic growth for 2019 will be around 4.5%, surpassing 3.9% in 2018, this presents a serious problem for the next government to fulfill its promise to pay the debt of the State with its suppliers of goods and services and to give continuity to the public investment program contemplated in the State Budget in order to reactivate the economy."

Also see "Panamanian Public Debt Grows at 9%

If the business sector forecasts are fulfilled, the fiscal deficit will be greater than that projected by the government, since the official estimates for 2019 were made on the basis that the economy will grow 5%.



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Approved construction projects plunge 25%


Posted 06/06/2019

The value of approved construction permits in the principal areas  of Panama fell to  $242.5 million in the first quarter of the year,  a fall of 25.5% over the $ 325 million  in the same period of the previous year.

The decline, however, is  more moderate than that registered the previous year, when in the first quarter the declared value fell by 39.9% when compared to 2017.

The report of the  Comptroller General includes residential and non-residential projects (hotels, offices, industrial) of the main districts of the country, except San Miguelito, and does not include public works.



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Registration of New Companies Keep Falling

In Panama, during the first four months of 2019, 4,314 corporations were registered in the country, 8% less than those reported in the first quarter of 2018.

Monday, June 10, 2019

The latest report of the General Comptroller of the Republic details that between the first quarter of last year and the same period of 2019, the number of corporations registered in the country went from 4,692 to 4,314.

Regarding dissolved corporations, a decrease was also reported for the periods concerned, from 2,693 in 2018 to 2,138 in 2019, equivalent to a reduction of 21%.

In the case of merged corporations also recorded a decline, in this area was 34%, down from 140 in the first quarter of 2018 to 93 in the same period this year.

See full statistics.



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PPPs to Boost the Economy

For Panama's business sector, public-private partnerships are contracts that, if properly implemented, could promote the dynamism of the economy and at the same time diminish the fiscal pressure on the State budget.

Monday, June 10, 2019

The Chamber of Commerce, Industries and Agriculture of Panama has promoted since the beginning of the current government administration, a draft bill that creates the Public-Private Partnership Regime (PPP), given that this document would promote the development of the country, explained the business guild through a statement.

You may be interested in "Public-Private Partnerships: Where Would They Work Better?

The implementation of PPPs in the country is one of the initiatives that we have been proposing some time ago to promote the reactivation of the economy, which was a reason for satisfaction when this guild was invited to participate, along with other private sector groups, a meeting at the Inter-American Development Bank (IDB) with the designated head of Public Works, to review the draft and the observations that were presented at the time to the current administration of government, the document states.

The statement concludes that "... Our union considers that the APP scheme offers great opportunities for the country to attract foreign capital investment that will allow it to generate greater sources of employment, and thereby reduce the fiscal pressure on the State coffers.

In addition, it would promote the participation of local capital in works of public interest in all the national geography, in order to boost even more vigorously the performance of the Panamanian economy."



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Panama growth slowed  but rebound forecast


Canal revenue continues to grow

Posted 18/06/2019

As Panama’s outgoing administration prepares to hand over the reins to President-elect Cortizo a report from the Comptroller’s Statistics and Census o revealed that in the first quarter of the year the real gross domestic product (GDP) was 3.1%., down from 4% in the last two quarters of 2018.

The GDP is an indicator that measures the added value of the products and services generated in the country. To eliminate the distorting effect that inflation could generate, prices are brought to a constant value (in this case to the value of 2007).

After having registered a rebound in the last two quarters of 2018 following  the construction strike in  April and May, the period January-March 2019 shows a slower growth of activity

The sector that grew most in the quarter was the supply of electricity, gas, and water, with a rate of 5.6%, explained by a thermal generation that increased by 161%.

Financial intermediation grew by 4.7% due to the performance of the international banking center, which recorded a growth of 4.3% with an increase in the portfolio of internal loans to the private sector, especially the mortgage portfolio and personal consumption. In addition, the activity of insurance companies reported an increase of 8.2%, due to the increase in net premiums.

The transport, storage and communications group recorded an increase of 4.3%.

The transport, storage and communications group recorded an increase of 4.3%.

Construction grew 4.5% due to public and private infrastructure works, mainly roads, ports, mining and natural gas projects, among others, said the entity of the Comptroller General of the Republic.

Real estate activity grew 3% due to the sale of homes built in previous periods.

Canal Operations
The operations of the Panama Canal reported an increase of 6.3%, as a result of higher revenues from tolls and the services provided by the Canal to the ships. In addition, the port system increased its added value by 4.2% due to the greater movement of containers (3.8%), general cargo (51.9%) and bulk cargo (3.2%).

On the negative side, the weak performance of manufacturing industries stand out (with a fall of -0.9% with respect to the same period of 2018); community activity, where the performance of games of chance and casinos (-2.6%) and fishing, which records a fall of 39.9%, is computed.

The Ministry of Economy and Finance (MEF) prepared the general budget of the State for this 2019 based on a projection of economic growth of 5.9%. As expectations have not been met, the MEF lowered the projection to 5.3%.

 A  rebound is expected,  in the second half of the year with  as there will be more activity in large-scale works such as the construction of the fourth bridge over the Panama Canal, the expansion of the Inter-American Highway between the Bridge of the Americas and San Carlos, the start of the export of the Donoso copper mine  the construction of the new children’s hospital. and the greater capacity for air transport of the Tocumen international airport.



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Bank Credit: Positive Outlook for Panama

For Moody's, the expansion of the Panamanian economy forecast for the next few years would allow bank credit to grow 8% in 2019 and 9% in 2020.

Monday, June 17, 2019

According to estimates by analysts of the rating agency Moody´s Investors Service is that for the 2019-2014 five-year period is that the Panamanian economy will achieve growth between 5% and 5.5%, behavior that will favor the dynamism of the banking sector.

See "IMF: Panama will Grow 6% in 2019

José Montaño, vice president and senior analyst of Financial Institutions Group Moody´s, explained to Elcapitalfinanciero.com that "... the expectation of higher growth of the Panamanian economy will contribute to expand bank credit by 8% in 2019 and 9% in 2020. Banking is well positioned in terms of capital, profitability, asset quality and overall to continue growing."

Ana Lorena Carrizo, head of risk analysis of Equilibrium, associated to Moody´s, stated that for the Panamanian banking sector the "... main challenges are...: Control levels of delinquency, increase deposit taking, improve profitability levels, maintain a robust capital adequacy and adequate liquidity indices and adjust to new regulatory standards."

You may be interested in "Panama: Bank Credit Keeps Rising

Regarding the current performance of bank credit, the latest reports of the Superintendence of Banks of Panama specify that up to March 2019 the credit portfolio of banks in the national system totaled $54,857 million, 5% more than in the same month of 2018, and the rise was again explained by mortgage and personal loans.



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