OPINION: Betting on debt and mega projects

In the final stretch of President Varela’s administration, the Ministry of Economy and Finance is taking an initiative to clean up the country’s public finances. The proposal seeks to reform the Fiscal Social Responsibility Law, to obtain a dispensation that allows for  $300 million dollars to inject capital into the infrastructure projects of the government that were affected by the strike of construction workers that began in April. Perhaps the most important novelty is the establishment of a cap on the growth of the current expenditure of the State and an improvement of the parameters of flows for the Savings Fund of Panama. The proposal aims for the next government to be more serious and restrained with the operating expenses than the current administration. Thus, the ratio between public debt and the gross domestic product would be reduced from 36.9% in 2018 to 34.2% in 2023. This projection requires a lot of fiscal discipline, which seems unlikely in the face of the economic slowdown and financial pressures of the Social Security Fund. The bad news of all this is that Panama will continue to bet on debt and megaprojects as a way to stimulate the economy. Nothing is talked about entrepreneurship, innovation or increased productivity. More public spending today is less freedom tomorrow.-LA PRENSA, Sep. 15