Panamas deficit eased in under legal limit

SOME creative accounting kept Panama’s 2015 deficit within the 2 percent of GDP  limit allowed by law.

The  adjusted public sector deficit for 2015 was $1.034 billion, a figure equivalent to 2 percent of the country’s gross domestic product (GDP).

The total deficit was actually $1.46 billion (2.8 percent of GDP), but the government excluded contributions to the Panama Savings Fund,  to keep the total deficit to the limit established by the Fiscal Responsibility Law, which is 2 percent of GDP.

This practice has been challenged by local economists and international agencies alike reports La Prensa.

Minister of Economy and Finance Dulcidio De La Guardia said that the mechanism has been endorsed by the International Monetary Fund.

However, he also acknowledged that the agency has expressed the need to revise the rule to reduce the size of the adjustment says La Prensa.

The deficit is the difference between the income and expenditure of the non-financial public sector.

Revenues totaled $10.62 billion, 3.9 percent more than the previous year, while total spending was $12.08 billion, a 2.5 percent increase.