Infrastructure spending and debt get Assembly ok
PANAMA’S Government plans a spending binge on infrastructure projects to energize the economy and could increase public outlay this year by $300 million this year.
After a heated debate bill 693 received the endorsement of the National Assembly in second debate, late Thursday, Oct. 4.
The bill reforms the fiscal social responsibility laws and the Savings Fund of Panama (FAP).
The fiscal deficit limit for this year goes from 1.5% to 2% of the gross domestic product (GDP), a move that, according to the Ministry of Economy and Finance (MEF), will be used to inject capital into infrastructure projects already underway.
In debate, the deputies questioned the MEF team, led by Minister Eyda Varela de Chinchilla, for requesting more resources when operating expenses and debt have increased significantly
The 2% fiscal deficit limit will remain for 2019, a ceiling higher than the 1.75% approved in the first debate. For 2020 and 2021 the limit will be 1.75%, and from 2022, during the mandate of the next government, it will be 1.5% if further changes are not made.
The bill eliminates the questioned adjustment to the deficit that allowed greater spending if the contributions of the Canal of Panama did not reach 3.5% of GDP. Currently, the Canal is booming and there is talk of the need for another expansion but a slowdown brought on by a trade war between its biggest users the USA and China could throw a wrench into growth projections.
