President wants $300 million to save 20,000 jobs
President Varela, has announced that he will ask the National Assembly for a tax exemption to raise the deficit by 1% that, according to the Law on Fiscal Social Responsibility, should not exceed 0.5% of gross domestic product. (GDP).
The Fiscal Responsibility Law obliges governments to comply with a maximum deficit ceiling, in order to control spending and public debt. A deficit cap is established for the NFPS based on the Nominal Gross Domestic Product .
The exemption, says Varela president, would be to be able to inject at least $300 million into new construction projects and thus maintain the level of growth and execution of works so as not to lose about 20,000 jobs in the transition between the current government and administration reports La Estrella.
The announcement came after the International Monetary Fund (IMF) reduced expectations of economic growth of the country by 1%.
“That was the cost of the construction strike, a totally unnecessary strike of thirty days, ” said Varela.
The bill requesting the dispensation would reach the Assembly in the midst of a political struggle between the official Panameñista Party and the current legislative majority made up of the Democratic Revolutionary Party (PRD) and Cambio Democrático (CD) in the middle of the election year says La Estrella.
Varela said that the strike resulted in a loss of $250 million, which can be recovered by working weekends or 24 hours in some projects. “We have to make the best effort to be able to recover that month when the construction of the country was stopped, which represents almost 20% of the economy,” he said.
He said he was concerned about reactivating new construction projects because the completion of the works of the current government in the first half of 2019, such as Line 2 of the Metro, the expansion of Tocumen Airport, Urban Renovation of Colon and others, more than 20,000 jobs will be lost.
Varela gas asked the Minister of Public Works, Ramón Arosemena, to move forward with the fourth bridge over the Canal and with Line 3 of the Metro, among other works.
The MEF originally had $100 million from the budget to finance the start of construction of the fourth bridge, but made transfers of items to other projects as the project for the mega-project has not yet been awarded. Varela announced last year that work would start in January.
“The most important thing for us is to be able to move forward with the projects and we are going to be asking the Assembly for a tax exemption to leave the deficit at 1% in order to inject $300 million into new projects and this way to maintain the level of growth and execution of works so as not to lose those 20,000 jobs in the transition between one government and the other,
Lawmaker, Pedro Miguel González, General Secreyary of the PRDm the government has had an “irresponsible” management of public finances.
He said that on the one hand the Government maintained the same rules used by the last administration to make the State contracts for four years and made an estimate of the 2018 budget well above what the economic reality of the country.
Although González believes that the construction strike will have a negative impact on growth, he pointed out that: “The commercial sector and the services sector have been depressing too,” reports La Estrella
He said that the strike is the perfect excuse to do what they are going to do in Tocumen S.A., with an Odebrecht contract in which they asked for an addendum of $14 million.
“We know that they are works with huge surcharges and the strike is the perfect excuse to increase these surcharges through addenda, just before the start of the electoral tournament,” he said.
Regarding the request of the dispensation to the Assembly, González said that the deputies must act with a vision of the country.
” To not approve a dispensation would represent a degradation in the rating of the economy in the future, which would be much more catastrophic for the development of the country,” he said.
