Moderators Moderator_02 Posted February 6, 2021 Author Moderators Share Posted February 6, 2021 Quote Fitch Ratings: Negative Outlook for Panama Arguing that the pandemic has had a negative effect on the local economy and Panamanian public finances, Fitch Ratings downgraded the country's sovereign rating from BBB to BBB-. Thursday, February 4, 2021 Regarding forecasts for 2021, the rating agency expects Panama to experience an economic recovery with a real growth of 9.2%, driven by the economic opening, public investment projects such as the construction of Metro Line 3, exports from the copper mine, and the recovery of domestic consumption. This growth trend is expected to be maintained by 2022, informed the Ministry of Economy and Finance of Panama (MEF).The statement dated February 4, 2021 states that "... this rating, although it affects us, does not alter the investment grade that we maintain. Fitch indicates that Panama's investment grade is supported by its high per capita income, product of a history of solid and stable macroeconomic performance that exploits a strategic location and asset (the Panama Canal)."For Hector Alexander, Minister of Economy and Finance, "it is necessary to highlight that in 2019 the country was going through a difficult situation of public finances and economic activity, in addition to the above, the COVID-19 crisis was added."The official continued that "... there is no doubt that we are facing a huge challenge as a country and the government is analyzing a series of initiatives regarding the issue of income and expenditure, and the cost-benefit ratio of them. The National Government obtained additional resources to those originally budgeted in the financial markets to address the crisis caused by the pandemic, however, we are aware that new measures will be required to continue addressing the health situation, support for those most affected and those measures that boost economic activity." https://www.centralamericadata.com/en/article/main/Fitch_Ratings_Negative_Outlook_for_Panama Quote Link to comment Share on other sites More sharing options...
Moderators Moderator_02 Posted February 8, 2021 Author Moderators Share Posted February 8, 2021 Quote Negative ratings bracket Panama with Macao and Lebanon Posted 07/02/2021 The negative Fitch and Moody ratings reveal the “questionable handling “ of the pandemic with one of the “the worst performances in the world, next to economies such as Macao, the Maldives and Lebanon said Panama’s Chamber of Commerce, Industries and Agriculture (Cciap) on Sunday, February 7 . According to the Cciap, “This is reflected in the loss of thousands of jobs and companies that we now Chamber to recover without first reiterating the support that the Government must show us. It is time to open the economy in a sustained way, "added the Chamber. It indicated that we are all called to understand the impact of the reduction of the risk rating and to take the measures "to move Panama forward." “During the last few years, by maintaining investment grade, we have enjoyed as a country high foreign investment and unprecedented access to financial markets, which has allowed significant economic growth leveraged in infrastructure works, commercial and residential construction. ; as well as the development of our connectivity hub that boosted tourism, creating thousands of jobs,” said Cciap According to the union, when an increase in indebtedness is not accompanied by an increase in productivity to sustain its growth, the risk rating immediately deteriorates, access to credit becomes difficult and more expensive for the country, as well as for companies and citizens. "When countries lose their investment grade, eventually, they can lose access to credit and foreign investment," it added. https://www.newsroompanama.com/business/negative-ratings-bracket-panama-with-macao-and-lebanon Quote Link to comment Share on other sites More sharing options...
Moderators Moderator_02 Posted March 19, 2021 Author Moderators Share Posted March 19, 2021 Quote A crisis ignored Posted 18/03/2021 The three risk rating agencies: S&P Global Ratings, Fitch Ratings and Moody's have completed their round on Panama, and all have lowered the country's risk rating. In the case of Fitch, one more downgrade means the loss of the rating. What is this about? On the one hand, tax revenues plummeted, and this implies the loss of Panama's ability to pay its debt. The 2020 economic contraction was 18%, causing public sector revenues to plummet by more than 20%. This is quite serious, since the consequence was that the fiscal deficit –that is, expenses without payment sources– went from 3.1% in 2019 to 10.1% in 2020. All this caused, in turn, that the GDP / debt ratio will go from 46% in 2019 to 69% in 2020. This outlook is very serious, Well, we have already far exceeded the reasonable limit between what the country produces and its ability to borrow. Thus, it is difficult for Panama to obtain more credits, since it faces the possibility of not being able to pay them. That is what we are up against. And this year may be worse, but in the Government no one is thinking of saving, only of continuing to spend hands full, completely ignoring this serious crisis. – LA PRENSA Mar.18 https://www.newsroompanama.com/opinion/a-crisis-ignored Quote Link to comment Share on other sites More sharing options...
Moderators Moderator_02 Posted March 20, 2021 Author Moderators Share Posted March 20, 2021 Quote Moody’s lowers Panama rating, expects 8% rebound Posted 19/03/2021 The fiscal deterioration in Panama last year was "unusually large" when compared to countries with a similar rating, says Moody’s risk rating agency but it predicts an 8% rebound in the economy this year. The 17.9% drop in the gross domestic product (GDP), the increase in debt to 69.8% of GDP, and an interest burden on income of 14.5%, are some of the indicators that were highlighted by the agency after lowering the sovereign rating from Baa1 to Baa2. Renzo Merino, the analyst of Panama's sovereign rating at the agency, said that the contraction of the economy was one of the largest among the countries in that rating range and that while in Panama the relationship between debt and GDP rose 23 percentage points , the average of the pairs was 13 points. After S&P Global Ratings and Fitch Ratings, Moody's completes the group of risk rating agencies that have downgraded Panama in recent months. Although there is still uncertainty about the pandemic, the agency expects an 8% rebound in the economy this year. The effective recovery of the economy in the medium term and a reduction in the deficit that stabilizes the debt will be key factors to maintain the rating. https://www.newsroompanama.com/business/moodys-lowers-panama-rating-expects-8-rebound Quote Link to comment Share on other sites More sharing options...
Moderators Moderator_02 Posted March 20, 2021 Author Moderators Share Posted March 20, 2021 Quote Canal risk rating lowered Posted 19/03/2021 Moody's Investors Service has lowered the risk rating of the Panama Canal Authority (ACP) from A1 to A2. The action is a consequence of the reduction in the rating of the Government of Panama , which went from Baa1 to Baa2 due to the strong fiscal deterioration in 2020. The ACP's rating remains three levels above that of the sovereign. Moody's pointed out that the ACP's credit quality is underpinned by a robust institutional framework, corporate governance and international treaties that ensure its operation without interference. However, the action on the rating reflects that the solvency of the ACP is not completely unrelated to the current situation that the Government, the economy and the population of Panama are going through. The agency noted that despite the new coronavirus pandemic and trade tensions between the United States and China, the ACP's operational and financial performance has been strong, supported by the expansion of the waterway and a new tariff scheme. https://www.newsroompanama.com/business/canal-risk-rating-lowered Quote Link to comment Share on other sites More sharing options...
Moderators Moderator_02 Posted March 24, 2021 Author Moderators Share Posted March 24, 2021 Quote Panama Canal Rating Downgrade Due to the deterioration of fiscal indicators resulting from the severe economic impact of the pandemic, Moody's downgraded the Panama Canal Authority's senior unsecured debt rating from A1 to A2. Monday, March 22, 2021 Given that the A2 rating is three notches above Panama's Baa2 sovereign rating, a rating upgrade is unlikely in the near term. An upgrade would require the ACP to continue to strengthen independently and Panama's sovereign rating to be upgraded, the rating agency said. Check out the "System for monitoring markets and the economic situation in Central American countries", prepared by CentralAmericaData.From Moody's report:New York, March 18, 2021 -- Moody's Investors Service, ("Moody's") downgraded to A2 from A1 the senior unsecured debt rating assigned to Panama Canal Authority ("ACP"). Moody's also changed the rating outlook to stable from negative and lowered the Baseline Credit Assessment, a measure of ACP's standalone creditworthiness, to a2 from a1.The ACP credit quality is underpinned by the robust institutional framework, corporate governance and international treaties that ensure its operation without interference. The A2 rating is three notches above the Government of Panama's (GOP) sovereign rating (Baa2 stable). The rating reflects a long history of operations free of political interference; its solid corporate governance; and rules that ensure the maintenance of prudent business management. Notwithstanding, Moody's rating action reflects that ACP's creditworthiness cannot be completely de-linked from the current stresses facing the government, economy and population of Panama.The credit quality of the ACP reflects the distinctive position of the Panama Canal as an infrastructure asset with a unique geographic advantage and business model. Despite the coronavirus pandemic and US-China trade tensions, the ACP's operational and financial performance has been strong, supported by the recent expansion and a new tariff scheme.For fiscal year 2020 (October 2019 -- September 2020), the Panama Canal registered slight growth relative to the previous fiscal year of 2.6% in transits, 1.1% in PC/UMS (Panama Canal/Universal Measurement System) tonnage and 0.7% in cargo tonnage. For fiscal year 2021, we expect continued growth, but operating performance will still be lower than 2019 levels. Nonetheless, Moody's projects that financial performance will remain very strong, with ACP recording Funds from Operations (FFO) to Debt ratio above 60% and Cash Interest Coverage above 14x for 2021.Given that the A2 rating is three notches above the Baa2 sovereign rating of Panama, an upgrade of the rating is unlikely in the near term. An upgrade would require that the ACP continues to strengthen on a standalone basis and that the sovereign rating for Panama is upgraded.The rating could be downgraded as a result of a similar action on the sovereign rating. The rating could also face downward pressure if weaker operational performance leads to a deterioration of key financials, such that the ACP reports cash interest coverage below 8.0x or funds from operations/debt below 30%. Any changes to the ACP's legal status that affect its autonomy or any weakening of its corporate governance practices could also strain the ratings. https://www.centralamericadata.com/en/article/main/Panama_Canal_Rating_Downgrade Quote Link to comment Share on other sites More sharing options...
Moderators Moderator_02 Posted April 17, 2021 Author Moderators Share Posted April 17, 2021 Quote Moody's ups Panama banking outlook Posted 16/04/2021 The risk rating agency Moody's Investors Service has changed the outlook for the Panamanian banking system from negative to stable. The agency forecasts a certain recovery of the economy after a "severe contraction" in 2020 amid the pandemic and also highlights the robust levels of capitalization and liquidity of the system as factors for the change in perspective. After a contraction of 17.9% in 2020, the rating agency's forecast points to a growth of 8% this year, although the pre-crisis production level would not recover until 2023. The agency expects further deterioration in asset quality in the second half of the year, once loan deferral measures expire. A relatively high concentration of the system in consumer loans will continue to be exposed to lower economic activity and higher unemployment. Furthermore, as happened in 2020, the profitability of banks will be pressured by higher spending on provisions. High capitalization levels will mitigate weak asset quality. Moody's recalls that as a consequence of being a dollarized economy and having no lender of last resort, Panamanian banks tend to have higher levels of capital compared to their regional peers. The agency also refers to stable funding and liquidity conditions, highlighting the increase in deposits experienced in 2020. Thus, among the factors that Moody's analyzes to determine the outlook for the system, the operating environment went from deteriorating to stable; capital, funding, and liquidity, and government support remain stable; while asset quality and profitability would be deteriorating. https://www.newsroompanama.com/business/moodys-ups-panama-banking-outlook Quote Link to comment Share on other sites More sharing options...
Moderators Moderator_02 Posted May 15, 2021 Author Moderators Share Posted May 15, 2021 Quote OPINION: Government belt needs more tightening Posted 14/05/2021 The Government's announcement to contain spending of $125 million is an effort, but it is very, very far from being what is needed to face the current fiscal crisis. There are billions of dollars that will not go into the National Treasury, and the savings only add up to just over $100 million. Meanwhile, the payroll grows and the subsidies remain intact, despite the fact that experts indicate that the money destined to pay salaries can be reduced, at least, by 25%, while it is necessary to review the subsidies, some of them created for openly clientelist. Only in subsidies, last year more than $2.415 billion were allocated - in the middle of the pandemic - and surely for this year it will be around the same amount. Meanwhile, the annual spending on payroll in the Government is higher than $4. 441 billion, and we all know that it is ostensibly bulky, that it is abused, because the personnel employed in the governmental ranks constitute an important political capital when the elections arrive. In fact, we have witnessed the work claims made by leaders and activists of the parties in power. Definitely, the belt will need to be tightened a lot more-LA PRENSA,May 14 https://www.newsroompanama.com/opinion/opinion-government-belt-needs-more-tightening-1 Quote Link to comment Share on other sites More sharing options...
Moderators Moderator_02 Posted August 16, 2021 Author Moderators Share Posted August 16, 2021 Quote A disconnect from reality Posted 15/08/2021 In 2012, in the administration of Ricardo Martinelli, Panama received a donation from Taiwan of an airplane for the use of the Presidency of the Republic. The cost of the aircraft was $22 million and since then, the governments that have used it have had to make use of funds for its maintenance that until now total $6.4 million, the equivalent of 75% of the value of the aircraft. The $6.4 million maintenance includes a new $6.4 million contract that will cover the next five years. Under other circumstances, this contract would not be widely questioned, but Panama is going through difficult economic times, and having an airplane with these expenses –without counting fuel, use of airports, pilots, etc.– constitutes a luxury that is difficult to justify. Citizens are surprised, since there is not a single initiative in the Government to make savings, in contrast to the rest of the country, which has had to adjust its budget; Many others have seen their working hours reduced or have lost their jobs or sources of income, and many more have gone informal, with which debts accumulate, but that does not happen in the Government because it is simply disconnected from our reality. - LA PRENSA, Aug.15 https://www.newsroompanama.com/opinion/a-disconnect-from-reality Quote Link to comment Share on other sites More sharing options...
Moderators Moderator_02 Posted August 30, 2021 Author Moderators Share Posted August 30, 2021 Quote Business Chamber slams Assembly budget increase Posted 29/08/2021 Panama’s Chamber of Commerce, Industries, and Agriculture has questioned the $29 million increase in the budget of the National Assembly at a time when the Legislature is expected to tighten its purse strings and manage resources efficiently. "The allocation of budgets to political payroll and/or influencers is frustrating for the productive sectors that make enormous efforts to maintain jobs and reactivate the economy. It is time to finally invest in basic public infrastructures, such as water, sanitation, and waste disposal, that affects all the inhabitants of the country " said a statement from the business union on Sunday, August 29. For the Chamber, it is crucial that the General State Budget for fiscal 2022 is limited to an anti-cyclical fiscal policy, generating a significant reduction in operating expenses, in order to increase current savings, to finance a reasonable percentage of prioritized public investment According to analyzes carried out by the Chamber's Center for Economic Studies, the budget allocates more resources to the areas of health, education, and security, but mainly destined to operating expenses and payroll. The Ministry of Education’s capital spending is cut by $8 million, in a year in which the educational system will require large investments to maintain biosecurity measures that guarantee presence in classrooms. Another point that is imperative to review is the special laws that grant automatic increases. In the last three years, these have caused expenditures of $906 million, a great limitation for public investment. "At a time when the country must bet on the reactivation of key sectors for the economy, it is critical to invest in these areas. However, the cuts made in tourism that impede the equipping of the new Convention Center and tourism promotion. https://www.newsroompanama.com/business/business-chamber-slams-assembly-budget-increase Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.