A crisis ignored

The three risk rating agencies: S&P Global Ratings, Fitch Ratings and Moody’s have completed their round on Panama, and all have lowered the country’s risk rating. In the case of Fitch, one more downgrade means the loss of the rating. What is this about? On the one hand, tax revenues plummeted, and this implies the loss of Panama’s ability to pay its debt. The 2020 economic contraction was 18%, causing public sector revenues to plummet by more than 20%. This is quite serious, since the consequence was that the fiscal deficit –that is, expenses without payment sources– went from 3.1% in 2019 to 10.1% in 2020. All this caused, in turn, that the GDP / debt ratio will go from 46% in 2019 to 69% in 2020. This outlook is very serious, Well, we have already far exceeded the reasonable limit between what the country produces and its ability to borrow. Thus, it is difficult for Panama to obtain more credits, since it faces the possibility of not being able to pay them. That is what we are up against. And this year may be worse, but in the Government no one is thinking of saving, only of continuing to spend hands full, completely ignoring this serious crisis. – LA PRENSA Mar.18