The National Assembly of Panama (AN) approved today in first reading the bill with the amendments to the fiscal social responsibility law, which will now be submitted to the legislative plenary session for the last two readings.
The legislative committee of Economy and Finance of the AN gave the first reading of bill 693, which reforms Law 34 of 2008 on Fiscal Social Responsibility and Law 38 of 2012, which creates the Savings Fund of Panama (FAP) and opens the doors for a financial dispensation.
The Minister of Economy and Finance, Eyda Varela de Chinchilla, said that "this favorable vote is important because it is sought that transparently, through the Fiscal Social Responsibility Law, the FAP can continue to accumulate reserves."
With this regulation, said the minister, all the income generated by the investments "will become part of the assets of the FAP, as well as the contributions of the Panama Canal above 2.5 percent."
She added that this will achieve a growth of up to 5 percent of gross domestic product (GDP).
Specifically, according to the senior official, with the approval of this bill, the current saving of the Non-Financial Public Sector (SPNF) is increased, decreasing the use of debt instruments to finance public investments and guarantee the sustainability and gradual consolidation of the net public debt as a percentage of GDP, says an AN statement.
To achieve this objective, the bill establishes deficit limits of the Non-Financial Public Sector and the net public debt compared to GDP.
The bill of the Executive also aims to provide accountability to society, according to official information.
On September 21, the council of ministers approved the new bill that reforms the fiscal responsibility law to simplify the calculation of the deficit, two months after it was forced to withdraw a similar bill.
The bill will provide "greater transparency by simplifying the calculation of the fiscal deficit rule" and will maintain "the deficit limit according to GDP growth," the Ministry of Economy and Finance of Panama (MEF) said.
The reform "also guarantees increases to the assets of the FAP by incorporating its annual returns and through a realistic calculation based on contributions from the Panama Canal," the statement added.
The government withdrew on July 19 the bill to expand the fiscal deficit and access to 300 million dollars for investment spending this year, which had provoked resistance in the opposition majority in parliament.
Panama's economy grew 5.4 percent of GDP in 2017, up from 5 percent in 2016, boosted by the interoceanic canal, the airline industry and financial services.