Fitch reaffirms BBB rating with stable outlook for Panama

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  • Thu, 02/14/2019 - 16:48
Fitch reaffirms BBB rating with stable outlook for Panama
  • EFE

The agency Fitch Ratings has ratified Panama's investment grade in BBB with a stable outlook for the country's "solid and sustainable macroeconomic performance", the Economy and Finance Ministry (EFM) reported on Thursday.

This performance "has driven a continuous increase in per capita income, a reflection of its public policies, a strategic location and an asset such as the Panama Canal, which support a high rate of investment", the rating agency explained, according to a press release of the Panamanian Ministry of Economy.

The ministry said that Fitch predicts in its report that Panama's gross domestic product (GDP) growth will be "5.8% in 2019 and 5.5% in 2020, above countries with a similar rating".

"The rating agency considers that the copper mine Minera Panama, scheduled to start operations in February, will be a key factor in this year's economic recovery, along with infrastructure projects such as line 3 of the Metro and the fourth bridge over the Canal", said the Ministry of Economy and Finance.

The mine, with an investment of at least 6,300 million dollars, is expected to export more than 320,000 metric tons of copper per year, equivalent to approximately 2,000 million dollars, according to data from the Canadian First Quantum, the owner of the mine.

The Fitch report also refers to the deceleration of GDP growth "to 4% in 2018", and indicated that it reflects a weakening of construction due to the strike sustained for a month by the sector's union, the powerful Suntracs.

"This slowdown was mitigated, in part, by a recovery in the re-export activity in the Colon Free Zone and the transit performance in the recently expanded Panama Canal", the rating agency added.

The International Monetary Fund (IMF) had obtained a growth of 5.6% for Panama in 2018 but was reduced at a time due to the construction strike and the weakening of economic activity in the first quarter of the year.

The Minister of Economy and Finance, Eyda Varela, said on February 8 that her office calculated that Panama's GDP will close in 2018 with an expansion of 4.2%.

In its statement, the Ministry of Economy said that the Panamanian government "has made substantial progress in strengthening the fight against money laundering and financing of terrorism", and that the fiscal deficit was 2% of GDP in 2018, "in line with the modified deficit limit".

"The fiscal performance had deteriorated at the beginning of the year due to low income performance, but this trend was reversed at the end of the year thanks to the tax collection resulting from the property tax moratorium. Fitch expects the SPNF deficit remain at 2% of GDP in 2019 and go in line with the new percentages of fiscal deficit", said the official letter. 


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