Panama Moves Away from Fiscal Risk with Pension System Reform According to the Bank of America
The financial institution analyzed the CSS Law and noted that the approved reform will alleviate the system’s liquidity by $16.1 billion over 10 years. It also indicated that the changes allow the country to organize its finances and avoid losing its investment grade status.
Bank of America (BofA) issued an analysis of the approval of Law 462, which reformed the Social Security Fund, in which it expressed optimism about Panama’s fiscal and economic outlook. They explain that the reform, which merged the previous pension systems—the pay-as-you-go and the mixed pension systems—into a new unified capitalization system with a joint guarantee, allows the Social Security Fund (CSS) to use accumulated surpluses to cover the deficits of the old system, something that was previously impossible due to the segregation of funds.
