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.