In the News – Panama’s future Debt
By admin. Filed in News |
President-elect Ricardo Martinelli already has plans to advance the country’s economy, which after years of aberrant growth is beginning to show signs of slowing down.
Among the measures Martinelli is contemplating are changes to the laws governing fiscal responsibility that would allow the government to increase the country’s debt ceiling, an expansion of the banking system Financial Stimulus Program and a 20 percent reduction to the budget of the National Assembly.
Currently the absolute debt limit is 1 percent of the country’s gross domestic product, however Martinelli is seeking to raise the ceiling to 3 percent. This would allow the government to absorb and additional $500 million to $700 million of debt per year. The additional money would be used to advance the Martinelli’s administration of aggressive projects planned in the next five years.
Martinelli affirmed, “The economic situation is that we require that the government have more financial flexibility and liquidity, so we need to modify the terms of the current budget ceiling.”
Economist Guillermo Chapman has stated that accretion of government spending is the proper response when a country’s economy beings to lag or become stagnant.
However, analyst Sifon Arevalo said that altering the nation’s debt ceiling could set an alarming precedent.
“It’s one of the weaknesses that we have ever seen in Panama,” Arévalo said. “The new government always seems to find a reason to change the rules.
Written by - A Panama Guide
Tags: debt, government, News