Panama Will Cut Debt to 35%
of GDP, Minister Says
By Eric Sabo
BLOOMBERG - Panama will cut its public debt
as a percentage of gross domestic product by
10 percentage points as the Panama Canal’s
expansion boosts revenue and increased
foreign investment generates royalties from
mining, Finance Minister Alberto Vallarino
said.
The Central American nation plans to slash
its obligations to 35 percent of GDP from 45
percent by 2014 as collections from the
upgraded canal rise to $5 billion a year
from about $2 billion, Vallarino said. The
government also plans to sell land and is
“looking very carefully” at granting mining
concessions to enhance revenue, he said.
“We recognize the responsibility of managing
public finances,” Vallarino, 59, said today
at a conference in Panama City. “Our country
is on a very clear path to sustained
growth.”
Panama’s credit rating was raised yesterday
to investment grade by Fitch Ratings, which
cited low debt levels and a resilient
economy that posted one of the fastest
growth rates in Latin America last year.
Fitch raised Panama’s foreign- and
local-currency debt to BBB-, the lowest
investment-grade level, up from BB+. The
outlook on both ratings is positive, Fitch
said in a statement yesterday. The country’s
foreign-currency rating is in line with
those of Brazil and Peru.
While Panama’s debt levels are lower than
Brazil, the Central American country’s debt
is mostly foreign-owned and vulnerable to
shocks, said Roberto Sifon, an analyst with
Standard & Poor’s.
“If you have a global crisis, foreigners
pull out,” Sifon said in an interview today
from Panama City.
Fitch forecasts the Central American
country’s economy will grow an average of 5
percent a year, compared with a 2.4 percent
expansion in 2009. The country’s debt was
equivalent to an estimated 45 percent of
gross domestic product last year, down from
70 percent in 2004, according to Fitch. |
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