Panama's Budget To End '10
Near Equilibrium Or Small Deficit
By Inti Landauro, Dow Jones Newswires
CARTAGENA, Colombia -The Panamanian
government's budget will end the year 2010
near equilibrium or with a "very small"
deficit as a result of the tax bill recently
passed, a crackdown on tax evasion and
stronger economic growth than previously
expected.
In the original budget approved for this
year, the Panama government expected a
deficit equivalent to 1.9% of the country's
gross domestic product, but recent tax
reform that will boost the value-added tax
rate, a planned crackdown on tax evasion and
the faster-than-expected economic growth
will change that, Economic and Finance
Minister Alberto Vallarino said Wednesday in
an interview with Dow Jones Newswires.
As a result, the government's financial
needs for the year won't be significant,
Vallarino said.
"We don't foresee, now in the month of
April, than we will need to sell bonds on
the international market this year,"
Vallarino said in an interview on the
sidelines of the Latin American World
Economic Forum held in the Colombian port of
Cartagena.
He said the government plans to carry out
liability-management operations this year in
a bid to reduce the size of a $1 billion
debt maturing in 2015.
"You never know what will be the market
conditions when you'll need the money," he
said. He wants the government to avoid such
big debt payments in the future.
Panama Deputy Minister Frank de Lima had
recently said a budget deficit equivalent to
1.9% of GDP would have required a bond sale
of $500 million.
Vallarino added that the Panamanian economy
will expand more than 5% this year, which is
significantly higher than the 3% growth
originally forecast.
The stronger economy will boost tax revenue,
Vallarino said.
Additionally, Vallarino said the government
will soon explain what it plans to do with
the roughly $900 million in government debt
sold by the country's Development Fund,
which yielded a profit of about $120
million.
The government wants that sovereign fund to
invest in projects that will generate
economic growth in the future, Vallarino
said, though he refused to elaborate.
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