Panama’s economy will see the light at the end of the tunnel in 2019

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  • Wed, 01/02/2019 - 17:44
Panama’s economy will see the light at the end of the tunnel in 2019
  • EFE - Archivo

By Luis Miguel Blanco

Panama began in 2019 the twentieth year of absolute control of the interoceanic canal, while President Juan Carlos Varela his last 181 days of his five-year term, with the prospect that the economy will finally come out of the slowdown and will grow by 6.3 percent.

The government of Panama, which began in 2014 and which concludes on July 1, registered an average annual expansion of 5.12 percent, according to figures from the Ministry of Economy and Finance (MEF), well above the rest of Latin America, but it was a victim of the destructive comparison.

Apart from the global reality, or intentionally, depending on the reader, the opponents have not stopped comparing it with its predecessor, who had growth rates of 10 percent as a result of the immense public investment, such as the expansion of the Panama Canal and the first metro line in Central America.

Varela was in the two administrations, approved and continued the growth of public debt, which already exceeds 26,000 million dollars, but did not have the same fortune since 2014 because the global crisis and the growth of the US protectionism hit the local economy, specialized in services.

5.1 percent expansion in 2014; climbed to 5.6 (2015); fell to 5 percent (2016), recovered slightly to 5.4 percent (2017) and it is expected that by 2018 it will only reach 4.5 percent, which is the most difficult year of the cycle, although expert local economists like Adolfo Quintero believe that he was "at rock bottom."

This is so, because the International Monetary Fund (IMF) in its last Chapter IV, which was revealed on December 28, anticipated that this 2019 will grow 6.3 percent, although it warns that 2018 will close at 4.3 percent.

That is the main indication that the cycle of economic slowdown has reversed.

The Government of Varela, who was vice president of Ricardo Martinelli (2009-2014), had to pay outstanding bills left by the former president for 3,390 million dollars in "turnkey" projects, which even had to renegotiate due to the leonine conditions they were conceived.

The MEF already anticipated that the administration that begins on July 1 will receive in this concept outstanding accounts for 840 million dollars.

For 2019 a budget of 23.669 billion dollars has been prepared, which contemplates a "conservative" economic growth of 5.5 percent, an inflation of 1.4 percent, a deficit of 2 percent of the gross domestic product (1.402 billion dollars) and a GDP of 70,847 million dollars.

A total of 8,995 million dollars will go to public investments this year.

Tax revenues were estimated at 6.597 million dollars and a contribution from the Panama Canal to the National Treasury for 1.74 billion dollars, 2.17 percent higher than the record figure of 2018, when it was 1,703 million dollars.

One of the pillars of the Panamanian economy is its channel, which for this fiscal year, started last October, foresees total revenues of 3,239.5 million dollars, from which the Panama Canal Authority (ACP) budgeted direct contributions to the Treasury for 1,736.6 million, "which represents an increase compared to the 1,659.2 million budgeted for the fiscal year 2018," recalled a communiqué from the institution.

The number of contributions of the last fiscal year calculated on paper was exceeded by reality and is close to what Panama should have received from the ACP in 2016 (about 1,800 million), according to the document that Panamanians approved in 2006 in the referendum for the construction of the third set of locks.

Not even the number of contributions for 2019 come close to that originally projected in the expansion proposal because it does not get close to the 2 billion dollars that were estimated for 2017.

This distortion was caused mainly by the late delivery of the project, from October 2015 to June of 2016, by the consortium, Grupo Unidos por el Canal (GUPC) led by the Spanish company Sacyr and formed by Jan de Nul (Belgium), Impregilo (Italy) and Constructora Urbana (Panama).

Tourism, logistics, construction, and mining exploitation are projected as the booster of the Panamanian economy by 2019.


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