Panama's Economy Remains Stable

[Keith Woolford]

Deputy Minister of Finance Eyda Varela de Chinchilla said Panama's economy remains stable.

Similarly the official indicated that, to date, there have not been reports of "negative effects" in deposits in banks and on securities ratings due to the investigation into the firm Mossack Fonseca by the International Consortium of Investigative Journalists (ICIJ).

Therefore, the deputy minister said that the publications have not had a major impact on the local financial system.

Varela de Chinchilla made these remarks while participating in the third Latin America-Europe Investor Forum in London. At the event, the official reiterated "the commitment of Panama to transparency in its financial system."

The deputy minister highlighted the country's projected growth of 6 percent for 2016 and identified potential investment in sectors such as energy, logistics, shipping and construction, among others.

Varela de Chinchilla reiterated that Panama will continue to cooperate with other countries and international organizations in the fight against money laundering, terrorist financing and tax evasion.

- See more at: http://www.prensa.com/in_english/Viceministra-Finanzas-economia-Panama-mantiene_21_4489261034.html#sthash.o4S2fvse.dpuf

 

[Keith Woolford]

This press release from the IMF confirming continued economic growth in Panama was published in late March.

http://www.centralamericadata.com/en/article/home/IMF_Confirms_Panamas_High_Growth

[MarieElaine]

Economic growth may be stable for the time being but the major points of concern later in the article over transparency, liquidity of banks, weak education standards and (this sounds familiar) the eventual depletion of existing social security funds makes long term stability "iffy" at best.  While Verela's policies to remedy these problems definitely looks good on paper, enforcement of same seems to be slow in coming.  As with most developing countries, Panama's governmental infrastructure is not keeping up with the rate of growth.  To me this is the real challenge for Panama's future.  I could go on and on but this is pretty boring stuff for most.  LOL

[Keith Woolford]

Marie, your points are well taken. The IMF says prospects for continued economic growth look rosy in Panama but people are still hurting at the lower end of the food chain all over Latin America.

Poverty threatens region

Some 30 million people in the region are considered to be vulnerable.

One of every three people in the region who emerged from poverty more than one decade ago is in danger of returning to th at condition, according to a report from theUnited Nations Program for Development.

The document refers to 30 million people in the region, considered "ultra vulnerable" because they came out of poverty but they did not reach economic levels of the middle class.

This group would not be prepared to resist the effects of a financial crisis or a natural disaster.

U.N. Regional Director Jessica Faitea explained that, to prevent this setback, it is important to begin to protect the gains achieved in recent years.

For this, she suggested promoting comprehensive, and inclusive policies to support populations that suffer discrimination, such as women, people of African descent and homosexuals.

Minister of Social Development Alcibiades Vásquez acknowledged that Panama does not escape from this reality, so the government is seeking to reduce the informal economy and implement better educational programs.

 

 

http://www.prensa.com/in_english/pnud_-programa_de_las_naciones_unidas_para_el_desarrollo-poblacion-pobreza_21_4506509305.html

 

Edited June 14, 2016 by Keith Woolford

[Bud]

I had toyed previously with posting the following World Bank article (and document), but backed away because it seemed too remote from life in Chiriquí. Given the above posts, I am going to post it here. It is not specifically banking related, but it is part of the population changes that are going to be impacting our lives and the lives of future generations in the long term.

To my way of thinking, the population trends are a destabilizing factor. I say that because there will be changing and increasingly larger demands for capital investments (schools, roadways, hospitals, housing, commercial outlets, etc.) as well as waning natural resources to support the population, along with shrinking green space for parks, recreation, etc.

Remember that this report is about Central America, not just Panama. The term Central America normally includes seven countries:

• Belize
• Guatemala
• El Salvador
• Honduras
• Nicaragua
• Costa Rica
• Panama

However, in reviewing the full report (see the PDF attached below) it appears that the World Bank does not include Belize in its list of countries comprising Central America. On page xii and again on page 8 (and subsequent pages) the report specifically mentions six capital cities of Central America (less Belize), and so by inference the World Bank considers only those six countries to comprise Central America. This should be explicitly specified (my opinion here).

An interesting quote from page viii of the document: "Central America is the second fastest urbanizing region in the world, second only to Africa."

I question some of their numbers (see the highlighted text below). As the article says: challenges and opportunities.

A really interesting report, with lots of food for thought.

 

Quote

6C : Central America urbanization review – making cities work for Central America (Vol. 2) : final report (English)

ABSTRACT

Central America is undergoing an important transition, with urban populations increasing at accelerated speeds, bringing pressing challenges as well as opportunities to boost sustained, inclusive and resilient growth. Today, 59 percent of Central America's population lives in urban areas, but it is expected that within the next generation 7 out of 10 people will live in cities, equivalent to adding 700,000 new urban residents every year. At current rates of urbanization, the region’s urban population will double in size by 2050, welcoming over 25 million new urban dwellers, calling for better infrastructure, higher coverage and quality of urban services and greater employment opportunities. As larger numbers of people concentrate in urban areas, Central American governments at the national and local levels face both opportunities and challenges to ensure the prosperity of their country's present and future generations.

Here is the URL for the above World Bank article: http://documents.worldbank.org/curated/en/2016/06/26449092/6c-central-america-urbanization-review-making-cities-work-central-america-vol-2-final-report

And finally, here is the full 181 page English language report in PDF format:
World Bank Report - Project P152713.pdf

 

[Bud]

On May 23, 2016 at 6:42 PM, MarieElaine said:

... this is pretty boring stuff for most. ...

Oh so true, unfortunately.

[Keith Woolford]

Possibly boring but it's good to know that we're living in an economically stable country.

The reports by the World Bank which foresee increasing urbanization in the region jive with the growth we see in Panama City, Santiago, and David.

What's discouraging is the continued financial oppression of the lowest classes.

Edited June 14, 2016 by Keith Woolford

[Roger B]

Politics and economy are two subjects that seems boring for some people but they have a very high impact in our daily lives.  Even that we are not engaged in a job or situation that actively do something in those two subjects we should take once in a while a peek to know where are we heading to.

 

 

[MarieElaine]

As an accountant/controller in my former life it intrigues me and I am all about rooting for Panama's economic growth, however I agree with Keith's comment about equality.  We need more of it.

Edited June 15, 2016 by MarieElaine

[Bud]

Quote

Panama gets IMF thumbs up

Posted on June 14, 2016 in Panama

Post Views: 231

THE GROWTH of Panama’s economy in the last decade has been the highest in Latin America and with the expanded canal the country’s future will continue to be vibrant  says the International Monetary Fund (IMF)

In its most recent report on the Isthmus the IMF  said it expected that it will continue to have one of the highest rates in the region in the medium term, with low inflation, a stable financial system and a decreasing trade deficit.

In the report, published as a result of a mission to Panama, the country’s projected growth was 6 percent for 2016 and in the medium-term.

The projections of the IMF for this year are similar to those of the government, the World Bank and the Economic Commission for Latin America and the Caribbean.

Growth in the first quarter of the year was 5.7 percent according to unofficial data from the Ministry of Economy and Finance.

According to the IMF, in the medium term the economy will be driven by the start of operations of the expanded Panama Canal and low fuel prices, which will compensate for the slowdown of the global economy and the appreciation of the dollar, which hurts the country’s tourism sector.

THE CANAL
The increase of transits through the Panama Canal and investments in energy and logistics will help to maintain a “vibrant” growth, the agency said.

The Canal expansion locks have already been successfully tested and the first mega vessel to officially transit the canal during the opening ceremonies, that will be broadcast around the world has already left Greece on its 14-day voyage to Panama.

Over 21,000 people will attend the ceremony, including heads of state and foreign dignitaries,

The Panama Canal Authority (ACP)  has distributed 20,000 tickets to local citizens. The celebrations will cost the Authority $3 million and the Foreign Affairs Ministry has chipped in with an additional $1 million.

http://www.newsroompanama.com/business/panama-4/panama-gets-thumbs-imf

[Moderator_02]

Quote

Panama faces OECD financial transparency test

Posted on September 26, 2016 in Panama

OECD HQ in Paris

 Post Views: 41

 

PANAMA CONTINUES  to struggle to convince  world organizations  that it is making good on promises to make the financial sector more transparent. 

On Tuesday, September  26  the Organization for Economic Cooperation and Development (OECD) will analyze its financial transparency and its capacity to exchange tax information.

The group will determine if Panama has followed through on making  changes to its financial system to comply with international standards.

In October of last year, Panama passed the first phase of the review process.

The review is necessary so that Panama can be removed from a sanction list compiled by the OECD.

Panama was added to the list after the OECD detected a number of shortcomings in its financial system, such as the inability to provide accounting information about Panamanian entities that do not have local operations and the lack of effective responses to requests for tax information.

The country recently agreed to implement the common reporting standards that are being promoted by the OECD to lead to greater fiscal transparency, and the Cabinet Council has approved a draft law that addresses other shortcomings identified by the agency.

The review process is completely confidential.

The result of the examination will be made public November 4 at the plenary of the Global Forum of the OECD which will take place in Tbilisi, Georgia.

http://www.newsroompanama.com/business/panama-4/anama-faces-oecd-financial-transparency-test