Moody’s  lowers Panama rating, expects  8% rebound

The fiscal deterioration in Panama last year was “unusually large” when compared to countries with a similar rating,  says Moody’s risk rating agency but it predicts an 8% rebound in the economy this year.

The 17.9% drop in the gross domestic product (GDP), the increase in debt to 69.8% of GDP, and an interest burden on income of 14.5%, are some of the indicators that were highlighted by the agency after lowering the sovereign rating from Baa1 to Baa2.

Renzo Merino, the analyst of Panama’s sovereign rating at the agency, said that the contraction of the economy was one of the largest among the countries in that rating range and that while in Panama the relationship between debt and GDP rose 23 percentage points , the average of the pairs was 13 points.

After S&P Global Ratings and Fitch Ratings, Moody’s completes the group of risk rating agencies that have downgraded Panama in recent months.

Although there is still uncertainty about the pandemic, the agency expects an 8% rebound in the economy this year. The effective recovery of the economy in the medium term and a reduction in the deficit that stabilizes the debt will be key factors to maintain the rating.