A Panama Guide

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.

The official transfer of leadership of the Panamanian government is now less than a month away.  Currently sitting President Martin Torrijos and member of the ruling PRD party are currently rushing too cross their final “t’s” and dotting their final “i’s” before the last remnants of their power slips away at 4 months and 10 months into power.

Back in 2004, the Panamanian Constitution was amended.  Their were several large changes such as the removal of the position of Second Vice-President (looks like Rubén Arosemena will be the last one) and most importantly the start date of new government was moved from a September 1 start date to July 1.

This however this did not stop the National Assembly from attempting to pay themselves for the extra two months of not working.  Considering legislators are paid handsomely above the general population – paying legislators two months of salary for sitting around and watching reruns on TV was not popular.  So much so that the Panamanian National Comptroller had to step in and say it would be illegal to pay legislators for working.  Nice try guys.

In the end, Panama gets a new president in Martinelli and gets to flush out some of the flotsam from its government a little earlier this time around.  Let’s hope Martinelli’s government won’t need a flushing in 5 years or earlier.