IMF Predicts “dynamic “Panama’s return to 6% growth

Panama’s economic fundamentals remain strong. The economy is on the road to rebounding from the temporary slowdown and will be gradually converging to its potential growth of 5.5% in the medium term ,said  the  IMF on February 14  after the conclusion of a  visit to the country.. T he entity forecasts that in 2019 the economy  will register a 6% increase, which will be the envy of nations throughout the continent.. An  IMF staff team of led by Alejandro Santos, visited Panama during February 6–13.  In a final statement  Santos said “Panama remains one of the most dynamic growing countries in Latin America, but economic activity has been less than expected, with growth estimated at 3.6 percent in the first nine months of 2018 (compared to 5.6 percent in the same period of 2017), reflecting broad slowdown in key sectors, including construction, which was partly affected by the strike in April–May. While there are clear signs of an economic recovery, the prolonged cyclical weakness has led us to revise down our growth estimate for 2018 to 3.9 percent (from 4.3 percent estimated in our recent report) and to 6.0 percent for 2019 (from 6.3 percent). The authorities estimate the overall fiscal deficit of the non-financial public sector at 2 percent of GDP for 2018 (from a revised deficit of 1.9 percent in 2017), which is in line with the modified fiscal responsibility law. Progress on financial integrity continues, including the recent approval of the legislation to criminalize tax evasion and the introduction of a procedural tax code among other legislative amendments.

 “We reiterated the need to sustain fiscal discipline and to improve the fiscal position as the economy recovers in the years ahead, aided by the stronger fiscal framework, to keep the public debt to GDP ratio on a downward trajectory. We encouraged the authorities to rely less on turnkey projects and to continue improving their statistical framework by bringing it closer to best practices. We also recommended the authorities to further raise revenue including through improvements in revenue administration and to rein in current spending to support growth-enhancing investments.