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Panama deficit down, rosy GDP projections

Posted on August 5, 2016 in Panama

Public infrastructure projects like Metro 2 are helping fuel the economy
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PANAMA’S deficit in the non-financial public sector in the first half of the year was fell to  $519 million compared with the $647 million deficit in the first half of last year and GDP projections coninue to be  the envy of most countries.

The deficit represents 0.2 percent of the country’s gross domestic product (GDP), while in the same period of last year was 1.2 percent of GDP, said Minister of Economy and Finance Dulcidio de la Guardia.

Revenues were $5.6 billion in the first six months, an increase of $595 million (11.8 percent).
Tax  revenues in the first six months were up  12.3 percent or $304 million more than the same period last year.

Better tax collection methods played  a role in  the improved figures

Public investment spending  rose to $1 .589 billion in this period, representing 3% of GDP, to give greater impetus to the flagship projects of the Government in progress such as Metro Line 2, Road construction projects , urban renewal in Colon and the ,Amador Convention Center, among others

The latest projection of the growth of the GDP of Panama for 2016, according to the International Monetary Fund, is 5.7 percent, while the Economic Commission for Latin America and the Caribbean (ECLAC) projected an increase of 5.9 percent. Either figure would be gladly welcome by ny of the world’s major economies.


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But then there have been concerns about Panama's financial sector, and so a select team of experts was assembled to research and document the financial sector. Unfortunately that is not working out too well.



Varela committee stars quit

Posted on August 5, 2016 in Panama

Nobel laureate Joseph Stiglitz
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THE TWO STAR  members of a  committee set up by President Juan Carlos Varela  to review Panama’s financial industry have resigned after  only three months, over  the “lack of transparency and independence”

They are  American Nobel Prize winner Joseph Stiglitz, and Swiss citizen Mark Pieth, a professor of criminal law at the University of Basel.

The committee was set up in the wake of the Panama Papers reports exposing  the activities of Panama law firm Mossack Fonseca, whose founders served as advisors to the Varela administration,

Stiglitz and Pieth issued a joint release on Friday, August 5.

After the resignation, the Foreign Ministry reacted to the latest blow to Panama’s image  with  a statement that it regretted the decision, and said that it was due to internal differences between members of the group.

“We regret the departure of Joseph Stiglitz and Mark Pieth. The Panamanian government understands both resignations are due to internal differences over which it is not going to intervene. Even so, it is thankful for the work and recommendations made by them. The government reiterates its firm and real commitment to transparency and international cooperation, demonstrated with clear actions that have been recognized by the international community,” the Ministry said.

The committee was installed April 29 by President Varela


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Minister knocks invited experts

Posted on August 8, 2016 in Panama

Happier times, Varela welcomes Stiglitz and Pieth
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PRESIDENCY MINISTER  Alvaro Aleman  claimed on Monday Aug.8, that  the two high profile international experts brought in serve on a committee to review the practices of Panama’s  financial industry “wanted to use their appointment for a personal agenda.”.

He was referring to American Nobel Economics laurate Joseph Stiglitz and internationally renowned  Swiss law professor at Basel University Mark Pieth,who  both resigned on the weekend claiming “lack of transparency”

the committee was convened by the Panamanian Government in the wake of the Mossack Fonseca ,Panama Papers scandal.
Aleman’s comments  were released  as part of the installation of the National Assembly  Budget Committee He said that the resignation of the  two experts was due to ”internal differences.”
“They wanted us out of the parameters. They wanted to use their appointment to the commission for a personal agenda”  said Aleman indicating that the remaining members of the commission, largely Panamanian,  will continue to work to deliver a revised financial practices plan to the government
The committee had been set on  April 29 , in a highly promoted ceremony headed by  President Juan Carlos Varela, shortly after an investigation led by the International Consortium of Investigative Journalists on the practices of Panama law firm Mossack Fonseca, which created complex networks of offshore companies to help political leaders, athletes and entrepreneurs conceal their wealth. Both principals of the firm were advisers to the Panama government.
The committee is now  Roberto Artavia, ex-rector of INCAE Business School; Gisela Alvarez de Porras, former Director General of Revenue and former Minister of Commerce and Industry; Alberto Aleman Zubieta, ex Panama Canal administrator; Domingo Latorraca, director of Deloitte, and Nicolas Ardito Barletta, former Panama president and head of the Centre for the Development of Competitiveness.
Last week, Stiglitz and Pieth justified their  resignation because of  lack of independence and transparency to perform the task at hand.
Aleman   denied that the executive exerted pressure on the international experts.
“The government has not he meddled in the work of the commission,” he said
Costa Rican Roberto Artavia, third international member of the committee, sent a statement to the President saying  Stiglitz and Pieth disagreed with the way of work since the first committee meeting on June 4-5  at Columbia University in New York .
Alberto Zubieta, , said that, the two experts had a different vision from the rest of the squad. Zubieta, said that the preliminary report to the Presidency was 75% advanced.Pieth and Stiglitz claimed that the work was wider: “That  observations were applicable not only to Panama, but the whole world. And we we argued that it  refers only to Panama,” he said.


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If Panama's scandal involving Moassack Fonseca involved money being moved to other countries why is the investigation and recommendations centering on only Panama?  Full disclosure would include these other countries used to launder/hide money originating with firms in Panama.  Am I wrong?

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18 hours ago, MarieElaine said:

If Panama's scandal involving Moassack Fonseca involved money being moved to other countries why is the investigation and recommendations centering on only Panama?  Full disclosure would include these other countries used to launder/hide money originating with firms in Panama.  Am I wrong?

"All the flies usually stick to the skinny dog".   It is an old saying we have in Panama.   "Al perro mas flaco se le pegan las pulgas".  It could be used to explain why it is only centering in only on Panama.

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59 minutes ago, Roger B said:


"All the flies usually stick to the skinny dog".   It is an old saying we have in Panama.   "Al perro mas flaco se le pegan las pulgas".  It could be used to explain why it is only centering in only on Panama.

"Hell hath no fury like" ..a nation scorned over a Canal expansion contract.

I find it interesting that the Mossack Fonseca leaks, the Waked family scandal, and considerable negative press in the U.S. about the Canal expansion design all came within a few months of the inauguration of the new locks.

Edited by Keith Woolford
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7 hours ago, Roger B said:

"All the flies usually stick to the skinny dog".   It is an old saying we have in Panama.   "Al perro mas flaco se le pegan las pulgas".  It could be used to explain why it is only centering in only on Panama.


i really like your postings that include Panamanian "sayings" because they give insight into the local culture.

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Panamanian Slip Up Over Financial Transparency

Regardless of who is right about the motives, the resignations from an international committee set up to review practices in Panama's financial industry, and the ensuing squabbling, has only aggravated the bad perception of these practices.

Friday, August 12, 2016


The presence of the Nobel laureate Joseph Stiglitz and the notorious Swiss criminologist Mark Pieth along with Panamanian and regional personalities, in a commission to review the practices of the local financial industry, had the obvious good intention of communicating to the world Panama's also good intentions of reversing the country's image as a tax haven.

But confusion or lack of clarity on how the results of that review would be released, led to the resignation of Stiglitz and Pieth, who understand that this dissemination should be global and not restricted to the Presidency of Panama, where it will be decided what and how much of the report will transcend to the public domain.

Beyond whether there was any confusion or not, whether it was clear that the report was only for the eyes of President Varela or would serve as an exemplary case for the global financial industry, the concrete result is a big fiasco in terms of image for Panama's financial center, already prejudiced by cases such as the so-called Panama Papers.

In an article on Time.com entitled "Why we left the Panama Commission", Stiglitz emphasised that after the Committee of Experts was set up under great publicity, some communications among its members led him to understand that there would not be complete transparency in the dissemination of the Committee's final report, which led him, along with Pieth, to demand a clear definition from the Panamanian government regarding the global publication of the report, no matter what its findings and conclusions. When the answer came that the report would be delivered to President Varela, Stiglitz and Pieth resigned.

Stiglitz also pointed out that the Panamanian members of the Committee were against recommending a registry of the latest beneficiaries of corporations who are customers in the Panamanian financial center, which would have jeopardized that center's current business model. The Nobel laureate emphasized that Panama has failed to ensure transparency.

Panama is making great efforts to avoid being considered a tax haven where money laundering and tax evasion are available options. On this occasion it backfired on them. And among the chain of mistakes made, perhaps the biggest was the Committee choosing the high profile Joseph Stiglitz.


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Panama 2nd quarter GDP at 5.2%

Posted on September 17, 2016 in Panama

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PANAMA’S  gross domestic product (GDP) increased 5.2% in the second quarter  representing $450.7 million compared to the same period last year.

According to the Comptroller, activities in the construction industry, mining and quarrying, electricity supply, communications, real estate and business services, private healthcare, government services, local businesses and area franchises performed well during the  quarter.

One of the most notable increases were financial intermediation with 9.0% due to the performance recorded in the International Banking Center, followed by mining activity and construction which both grew by 8.8% Construction

Meanwhile, the activities related to the external sector showed a slight increase as the livestock sector, which grew 1.4% and tourism, reflected in the outcome of hotels and restaurants, recorded a growth of 1.5%.

Canal decrease
Transport, storage and communications, recorded a decrease of 0.7% in the quarter, explained by the decline of the operations of the Panama Canal which revealed negative results at 9.7%, since during the period revenue from tolls decreased 8.7% and the services provided by the Canal  to ships in transit by 13.1% due to the impact of decreasing  trade worldwide.


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Panama GDP up 4.9% in first 6 months

Posted on September 16, 2016 in Panama, Panama

Away from the gleaming towers Panama lags
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PANAMA’S GROSS  domestic product (GDP) grew 4.9 percent in the first six months of the year compared with data from the first half of 2015, said the Comptroller General on  Thursday, September 15.

The construction, financial services and real estate sectors  boosted the economy in the while transport, storage and telecommunications recorded a slight fall.

Growth was 5.2 percent in the period from April to June, while it was 4.6 percent in the first three months of the year.

The comptroller also reported that the deficit was $21.6 billion, an increase of $1.7 billion over the past year.


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Given these GDP numbers, coupled with other information, such as the significant increases in new vehicle purchases and residential projects of large scale, etc., it seems certain that Panama's economy is strong and that the middle class is increasing in size and purchasing power. One implication is a rising cost-of-living.

One interpretation of this information might be: "paradise has been discovered".

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Panama moving to head Latin America GDP list

Panama heading for top slot

PANAMA will   have the highest gross domestic product per capita in Latin America by 2018 says a  report by the International Monetary Fund (IMF)

The Chilean daily La Tercera reports that this would mean that, after 16 years, Chile would  yield the scepter as the nation with the highest  level of wealth per inhabitant within Latin America, according to the IMF.

The update of the database of the agency shows that, in two years, Panama will edge past  Chile as the territory with the highest per capita GDP adjusted for purchasing power parity (PPP) with $25,712, against $25,710 of Chile. The initial gap Of just $2 would increase to $1,681 by 2021, the paper said.

The loss of regional leadership is explained by differences in growth. Between 2010 and 2015, Chile recorded an average expansion of 4.2%, compared with  7.5% by Panama.



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Scandals continue as IMF lowers Panama growth forecast


CORRUPTION   scandals and  “ reputational risks” have  played a role  in  The International Monetary Fund (IMF) lowering  its forecast for growth in the Panamanian economy from 5.8 to 5.1 this year.

But in the midst of ongoing revelations the body  continues to see the country’s  economy as one of the  most dynamic in the region.

An IMF mission, which ended  an on-site visit on Thursday, March 16 blamed the downgrade on increased international uncertainty, but forecasted a 5.5% expansion in the following years.

The mission took into account the reputational risks of the country, which has been implicated in recent international corruption scandals, and has considered as “critical” that Panama continues to advance in terms of tax transparency and financial integrity.

Expanded Panama Canal activity, new investment projects, stable and low inflation, the reduction of the current account deficit and a sustainable public debt were included as factors that complement the growth of the economy.

Until 2015, Panama lived a decade with an average growth of 8% in gross domestic product (GDP), and last year it reached 4.9%, down from 5.2% expected by the IMF.

The end of the construction of the Canal expansion and an unfavorable international environment put an end to the accelerated growth registered in the last ten years.

The mission chief, Valerie Cerra, told a news conference that the country’s expansion model depends on its ability to remain competitive and attractive in financial, business and transportation services.

Disclosure of corruption scandals affecting Panama may be a disadvantage in this area, depending on how they are addressed, but information on these issues is still preliminary and cannot be expected to have a significant impact, he said.



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Panama has a number of issues to fix if it is going to become a world player in world economics.

Best countries for doing business

Economies are ranked on their ease of doing business. A high ease of doing business ranking means the regulatory environment is more conducive to the starting and operation of a local firm.

Overall ranking: 70 out of 190 countries (2017)


Starting a business: 43 out of 190 countries

Enforcing Contracts: 145 out of 190 countries

Registering Property: 84 out of 190 countries

Getting Credit: 20 out of 190 countries

Protecting Minority Investors: 70 out of 190 countries

Trading Across Borders: 53 out of 190 countries

Paying Taxes: 170 out of 190 countries

Dealing with Construction Permits: 73 out of 190 countries

Getting Electricity: 23 out of 190 countries

Resolving Insolvency: 133 out of 190 countries

Source: https://www.gfmag.com/global-data/country-data/panama-gdp-country-report

Many expats have personal experience with several of these subcategories.


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I have to agree with you in principal Jim however, I came here to retire and, while doing business here is a nightmare (I have a friend who started a business in David and after 1.5 years, still does not have a bank account) it is impossible to be here as a retiree these days as well.  We don't work so we are not taking jobs, we contribute millions to the Chiriqui economy monthly and we are responsible for many charitable organizations that help so many groups but we are still caught up in the recent legislation.  If they are doing this to retirees I can only imagine how much harder it will be in the future for people wanting to start businesses here.  

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20 hours ago, MarieElaine said:

I have to agree with you in principal Jim however, I came here to retire and, while doing business here is a nightmare (I have a friend who started a business in David and after 1.5 years, still does not have a bank account) it is impossible to be here as a retiree these days as well.  We don't work so we are not taking jobs, we contribute millions to the Chiriqui economy monthly and we are responsible for many charitable organizations that help so many groups but we are still caught up in the recent legislation.  If they are doing this to retirees I can only imagine how much harder it will be in the future for people wanting to start businesses here.  

Very true, MarieElaine.  During Martín's presidency, he extended visa time in part because the paperwork to get residency was taking longer than the tourist visa time.  People who wished to do business with Panama had the same problem getting accounts set up, etc.  Panama has shortened the time it takes to get residency paperwork processed, we will have to wait to see if that actually works.  The big test will be following the next election when all the government offices get scrambled with the new administration.

I don't know about "millions" to the economy from retirees, several retirees choose Panama based on cost of living issues.  A thousand retirees spending $1,000/month would work out providing the rent money was going to a Panamanian and not another expat.  The payouts from the charitable organizations was often paid to expat organizations which may or may not have benefited Panamanians directly.  Boquete's lack of activities requires the expat retiree to create something to do; it is still basically just a rural, mountain farming village.


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18 minutes ago, MarieElaine said:

Per the U.S. ambassador, there are 4500 expats (mostly all retirees)  in the Boquete area.  If each spends $1,000 per month that is 4.5 million going into the local economy monthly.


3 minutes ago, JohnF13 said:

But not all of those 4500 are border hoppers.  That makes the impact of the new regulations much less extreme than you are suggesting.

I was in the meeting with the ambassador last week. Actually what he was said about 4,500 US expatriates in the Chiriqui province, not Boquete. Not a big deal here, but he was trying to make a point that only 297 of them have registered for the Step program. Nothing wrong with using the same number for Marie Elaine's purpose. But on the other hand, JohnF makes a good point. I go further to sugtgest that if someone is a border hopper then they likely are on a smaller budget and they would be onthe low end of spending money here.

To my way of thinking, this issue is not so much about the financial impoact on Panama, but rather the country has a right to determine its policies. As a guest in their country (you are a guest if you are not a citizen, be you a resident or a tourist), then we should respect their right to determine their policies.

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Panama incentive for industrial investment


A new bill, agreed between the government and the private sector, expands tax incentives granted to companies in the sector through the Certificate of Industrial Promotion (CFI).

The text was drafted after the government and the private sector reached consensus on how to define tax incentives which companies in the sector are entitled to . The project will be submitted to the Cabinet this month and will be discussed in the current legislative period.

Prensa.com reports that “… it was agreed to increase the CFI  from 25% to 40%, in order to specifically support investment into research and development, personnel training, investment and reinvestment, environmental management and increased employment associated with increased production. The intention is that the IFC be issued within 90 days instead of the average timespan of two years, as it is at present.”

“… Melissa Miranda, executive director of the Union of Industrialists of Panama believes that the IFC, which is deductible from income tax, is “a tool attractive enough to promote investment in the industrial sector.”



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Sorry, I thought Mr. Feeley said in the Boquete area there were 4500 expats.  Thanks for the correction.  My point is not that all these people will up and leave but that we make a distinct contribution to the economy in Panama.  Why don't we have representation or at least a lobby group bringing up points that concern us?  Money talks, BS walks.  A lot of us came here (especially those without finger prints) because we had the option to border hop to reset our passports.  Now we are stuck between a rock and a hard place.  While I respect every countries right to make their own rules i would expect that a grace period for those select few per law 591 (Americans, Brits, Canadians and Australians) would be in order.  

I spend over $1,000 per month and I rent from a Panamanian who lives in David.  Most who rent here are spending over $1k per month and those that can afford a home here are supporting retail, trades people and utilities to an amount more than $1k per month I would guess. 

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Panama As Seen by the IMF in March 2017

It is expected that economic growth will increase slightly to 5.1% in 2017, and about 5.5% in the medium term, supported by the expanded Canal and developing investment projects.

Friday, March 17, 2017

From a press release issued by the IMF:

Panama’s economy is expected to remain among the most dynamic in the region. The economic outlook is favorable, albeit set against the backdrop of heightened external uncertainty. Panama’s growth model relies on its ability to remain a competitive and attractive destination for international financial, business, and transportation services. Continued progress with tax transparency and financial integrity are essential to preserve this growth model. Commitment to fiscal discipline and efforts to strengthen the fiscal framework and enhance institutional capacities contribute to ensuring sustainability, and need to be complemented by a comprehensive monitoring of fiscal risks. As a regional financial center, the comprehensive monitoring of systemic risks and a strong macroprudential and crisis management framework are important to safeguard financial stability.

The economic outlook remains favorable
Growth is expected to remain among the highest in the region, with stable and low inflation, sustainable public debt, and a declining current account deficit:

  • Economic growth is projected to pick up slightly to 5.1 percent in 2017 and about 5.5 percent over the medium term, supported by the expanded Canal and the wide range of investment projects.
  • Inflation is projected to pick up to about 2 percent in 2017 from 0.7 percent in 2016 as fuel prices continue to normalize and economic activity strengthens somewhat.
  • Fiscal consolidation is projected to continue in line with the Social Fiscal Responsibility Law (SFRL) deficit targets, which would imply a gradual reduction of the non-financial public sector (NFPS) deficit over the medium term and would place NFPS debt as a share of GDP on a downward trajectory.
  • The current account deficit is projected to further narrow to about 3 percent of GDP over the medium term, driven by a diversification of exports into primary commodities, and to continue to be financed by broad-based foreign direct investment.

Key risks relate to the external environment and progress in strengthening tax transparency and measures for anti-money laundering and combatting the financing of terrorism (AML/CFT). Weaker-than-expected global growth or a shift toward increasing trade restrictions could lead to a slowdown in Canal activity, which could dampen Panama’s growth and government revenue. A faster-than-expected tightening of U.S. monetary policy and continued appreciation of the U.S. dollar could put continued appreciation pressure on Panama’s REER and erode external competitiveness. Panama needs to address deficiencies in tax transparency, exchange of tax information, and AML/CFT to preserve its role as an international financial and business center. Pressures on correspondent banking relations could adversely affect Panama’s international financial center.

Strengthening tax transparency and financial integrity should remain at the top of the policy agenda
Progress needs to continue to ensure compliance with international requirements on tax transparency and exchange of tax information. The authorities completed several important policy actions over the past year. Panama committed to implement automatic exchange of tax information by 2018, ratified the OECD’s Multilateral Convention on Tax Matters, and adopted key pieces of domestic legislation that form the legal basis for automatic exchange of tax information, strengthen the revenue administration’s powers, and reinforce the accounting requirements for companies and foundations registered in Panama. To obtain a positive assessment under the Global Forum’s fast-track procedure in mid-2017 it is essential to address the remaining deficiencies, including strengthening the revenue administration’s human, procedural, and ICT capacities to ensure effective exchange of tax information.

Effective implementation of the AML/CFT framework to enhance financial integrity is a critical complement to strengthening tax transparency. The AML/CFT framework has been strengthened, but it will be important to address remaining gaps, of which the most critical is to make tax crimes a predicate offence to money laundering. The completion of the national risk assessment in January 2017 is an important milestone to advancing further reforms and its findings should be addressed in the national AML/CFT strategy being developed. Panama will also need to demonstrate effective implementation of the framework to receive a positive assessment in the Financial Action Task Force’s assessment later this year.

Support fiscal sustainability with a stronger fiscal framework
The planned medium-term consolidation path, that is in line with the Social Fiscal Responsibility Law’s fiscal rule, is needed. The consolidation efforts amid slower growth demonstrate the authorities’ commitment to fiscal discipline and help strengthen the credibility of the fiscal framework, which was negatively affected by a series of waivers and amendments several years ago. Such an approach should put the NFPS debt-to-GDP ratio on a downward path, and help build buffers in light of possible fiscal risks.

Public sector fiscal risks and contingent liabilities need to be better monitored.Publishing additional information in the fiscal accounts about the different stages and accrued obligations for turnkey projects would enhance transparency and accountability. In addition, the reserves of the exclusively defined-benefit pension subsystem are expected to be depleted in a decade. Without a parametric reform (e.g. to the retirement age or replacement rate), these shortfalls would put expenditure pressures in subsequent years and crowd out other components of public spending. A comprehensive assessment of all contingent liabilities of the consolidated public sector is necessary to be assured that the Social Fiscal Responsibility Law’s debt target results in adequate buffers to face fiscal risks.

Establishing a fiscal council could strengthen the fiscal framework. By publicly assessing and monitoring fiscal assumptions and results, including performance under the fiscal rule, such a body could improve transparency, promote accountability of the fiscal framework, and encourage an informed public debate. Ensuring legal and operational independence of the fiscal council, and endowing it with adequate resources, are indispensable for its role as a candid assessor of fiscal assumptions and results.

Continued progress in strengthening revenue administration would help generate resources to finance strategic public investments. Recent improvements in tax administration, enhancement of human resources, the introduction of partial VAT withholding and an upgraded tax filing system contributed to the strongest tax performance over the last three years. Building on this progress, further measures should aim to strengthen the tax administration’s institutional capacity, upgrade its IT system, and strengthen incentives for tax compliance. In addition, the customs administration needs to address weaknesses in institutional capacity, advance trade facilitation, reform control processes, and improve its data collection and management. Measures to strengthen the capacity of the revenue administration agencies need to be complemented by policy actions to review and streamline the complicated scheme of tax incentives and exemptions, starting by publishing a list of the estimated fiscal cost of each of these measures.

Financial sector oversight, macroprudential policy and crisis management should be strengthened to build resilience

Monitoring of systemic risk should be strengthened. The Financial Coordination Council has taken steps to enhance oversight of financial conglomerates and deepen information exchange across financial supervisors. Nevertheless, given the decentralized nature of financial supervision in Panama, it will be desirable to further expand coordination to monitor system risk of the overall financial system. Enhanced data is also needed to appropriately assess systemic risk, particularly on household and corporate balance sheet vulnerabilities, as well as on residential and commercial property prices. The recent efforts of the Superintendencia de Bancos de Panamá along these lines are welcome. Increased information exchange with home supervisors of foreign institutions remains imperative to help monitor systemic risks from the regional financial center’s cross-border exposures. Improved supervision of non-bank financial institutions will be critical to assessing systemic risk within this segment of the financial sector.

A framework for macroprudential policy should be established. Macroprudential policy can be an important policy tool to address identified emerging risks to financial stability, especially since Panama does not have a central bank or lender of last resort. As a priority, macroprudential policy tools applicable to the Panamanian context should be developed. Given the importance of financial conglomerates with international presence, additional capital buffers could also be considered. At the sectoral level, the build-up of household credit appears to present the most pressing macrofinancial risk and the priority should be to develop macroprudential policy tools targeted at the household sector to address this risk. Based on enhanced data collection and monitoring, limits on loan-to-value ratios, maximum debt-to-income and debt service-to-income ratios could be introduced.

As a regional financial center, Panama needs a robust crisis management framework. While the liquidity of Panama’s banking system appears high according to the official definition, it appears low relative to comparable countries and Basel III requirements. Financial regulations should be aligned with Basel III to ensure banks maintain sufficient liquidity. A temporary liquidity facility for banks to address systemic shocks should be established as a complement to the facility recently put in place by the Banco Nacional de Panamá. The coverage of that system appears inadequate to handle systemic shocks. The bank resolution framework should be upgraded to provide the bank superintendency with sufficient powers to effectively resolve financial institutions. Deposit insurance remains an important gap in the financial safety net and could be considered to provide protection to depositors in the event of a financial crisis. Finally, a crisis management plan should be elaborated to coordinate the response of supervisory agencies. The Financial Coordination Council should be tasked with preparing and maintaining such a plan, including through undertaking hypothetical simulation exercises.

Education reforms and effective social safety nets are essential for making growth more inclusive

Continued focus on education reform is essential for promoting inclusive growth.

In line with the authorities’ priorities stipulated in the Government Strategic Plan, measures to strengthen technical education, upgrade vocational skills, revamp language training, and improve qualifications of teachers have the potential to address skill shortages, improve competitiveness, and put growth on a more inclusive trajectory. Enhanced assessment and accountability at different stages of the education process is needed to help translate reform priorities into outcomes. Efforts to strengthen the targeting and effectiveness of social assistance programs will also be important. A continued focus on public services that aim to tackle the specific needs of indigenous groups can strengthen their economic inclusion. Finally, public investment toward projects with high social returns that raise productivity, enhance competitiveness, and open new growth opportunities should be prioritized.




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  • Moderator_02 changed the title to Panama's Economy, Investment Incentives, GDP, and Future Economic Growth Outlook

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