Unraveling presidential statement about $567 million Minera payment

The $567 million that the State received from Minera Panama as a result of the obligations established in the law contract, will not be used by the Government and will be kept in a restricted account in the National Bank of Panama.

This was announced  Thursday by President Cortizo and validated by the Ministry of Economy and Finance (MEF), which gave rise automatically to questions about the measure, the reasons behind it, and on what basis such a decision was made, especially because these are retroactive payments, to a large extent.

When the president made the announcement, there were immediate responses via X that it was better for Minera Panamá not to deposit the funds derived from a contract that may lose validity; Others warned that the money was for operations from 2021 to 2023 and for this reason Panama already belonged to them. Some even denied the funds because it was an extractive activity that they did not want in the country.

As agreed between Minera Panamá SA and the State, 30 days after the contract was sanctioned, the company had to make initial payments to cover taxes and royalties until the end of 2022, which amounted to approximately $395 million.

This corresponds to a type of settlement, linked to the fiscal period that runs from December 22, 2021, to December 31, 2022.

In addition, it had to make payments corresponding to corporate taxes for the year 2023, as well as quarterly royalty payments, all within the same 30-day period.

Of the total $567 million, the General Directorate of Revenue received the sum of $562.8 million from Minera Panamá. Additionally, the Ministry of Environment and the municipalities of Donoso and Omar Torrijos Herrera received $4.2 million which corresponds to the payment of water use, surface fee, and use and easement rights.

This initial disbursement covers the period between December 2021 and October 2023, Minera Panamá said in a statement.

However when the year 2023 ends, it is assumed that the mining company’s total contributions will be $770 million.

“Given that we are awaiting the ruling of the Supreme Court of Justice, I have given precise instructions to the MEF so that these sums of money received to date cannot be used,” said Cortizo.

In the Supreme Court, there are 10 unconstitutionality lawsuits against Law 406 of October 20, 2023, which adopted the contract between the Panamanian State and Minera Panamá,

Iván Zarak, former vice minister of Economy, explained that the first step is to recognize the income in this year’s fiscal accounts. “And if they want to incorporate or use it as part of the budget, they have to approve an additional credit.”

“If the contract is declared unconstitutional, then there are several options on the table and depending on them, different results. Meanwhile, the State and the mine have to comply with what is established in the contract,” he stated.

“In the condition that the country is in, it is better that they not spend it, although they should recognize it as income this year,” stressed the former vice minister of Economy.

 Starting November 24, the Supreme  Court will declare itself in permanent session to debate the decision of the unconstitutionality claims of Law 406 of October 20, 2023. Previously, in December 2017 and June 2021, the Plenary Session of the Supreme Court of Justice decided unanimously, on both occasions, that Law 9 of 1997, a direct predecessor of Law 406, was unconstitutional.