Moodys Agency ups Panama outlook to positive

MOODY’S rating agency has upped Panama’s outlook from stable to positive and reaffirmed its Baa2 investment grade.

It is the first time, in five years, that the agency  has improved the country’s outlook at this level, as it is  in

compliance with the Law of  Fiscal Social Responsibility, in addition to the growth of the country compared to other countries in the region.

Moody’s representatives visited Panama in August and met with the authorities of the Ministry of Economy and Finance (MEF) as part of the annual visit.

The report, presented on Friday, September 29, highlights that Panama’s Baa2 rating reflects credit strengths and a moderate debt burden.

The government of Juan Carlos Varela reduced the deficit of the non-financial public sector, to 1.9% in 2016 from 3.2% in July 2014, when he took office.  However, the

central government has remained relatively constant at around 4% of the gross domestic product (GDP).

The rating agency warned that despite efforts, total expenditure growth has outpaced revenues for the central government, consequently, despite the fact that Panama has had strong economic growth and favourable financing conditions, the debt-to-GDP ratio increased to 39.1% in 2016, from 35% in 2013.