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Latin America Investment News on Viva Tropical

Panama on Verge of Debt Crisis

Article Summary:

The steady increase in personal and public debt and the creativity of authorities to get more money by selling assets, worry analysts that Panama is sitting at the edge of a debt crisis.

Photo Credit: La Estrella

Original Article Text From La Estrella via Google Translate :

Ambition Hanged Current Income Investment

Tax increase, raising the level of government borrowing, issuance of currency and asset sales are the tools that exist in economic theory for governments to achieve to get extra income. Coincidentally, all are tested by the administration of President Ricardo Martinelli.

The commitment is to develop the campaign promises, called Unforgivable projects promised by the president in times of campaigns, which have priority in the budget. Are embedded in the historical investment plan during the five years of $ 13.595 million, and in turn, keep the wheel governmental walk taken in tow by about 105 thousand employees between permanent and temporary, fulfilling its role as the main employer in the country.

Is it enough money to all? Although several specialists in finance and economics polled by the Star agree to say that the Panamanian government would not exaggerate liquidity because the credit is subject to country-yes we can say that current revenues are not growing at the same with rising costs, and if there are suddenly new investment plans.

“The ambitious investment plan of over $ 4.000 million is causing these years the costs grow faster than the 11.8%, while revenues go up an average of 8.1% per year, “illustrated the economist Diego Quijano.

So in 2011, for example the estimated revenue in the nonfinancial public sector (NFPS)-entities that generate expenses not much income, were $ 7,761.70 million, while expenditures were in the order of $ 8,464.80 million. Similarly, in 2010 the influx of money was $ 6,873.90 million and disbursements were $ 7,385.70 million. After that, it’s no wonder that the balance of government debt is increasing.

From July 2009 to December 2011-current period Martinelli administration has grown $ 2.158 million or equivalent to cover more than the construction of the Panama Metro.

The commitments now exceed $ 12,988.8 million, the odds of the specialist are to reach the $ 15.000 million. Frank De Lima, head of the Ministry of Economy and Finance (MEF) states that at the level of expenditure on investment or $ 13.595 million plan five years will come from current revenues of the state. However, it accepts new proposals emerging from Martinelli, so yes they are looking for more sources of income. (See Note enclosed). However, the figures contrast.

An analysis of the reports of the Directorate General of Income-entity to capture the taxes, dividends from joint ventures and the contributions of the Panama Canal, show that in 2011 revenues came not to total budgeted at $ 87.7 million, producing a deficit of -1.5%. It should be noted that in 2011, the only month in which soared substantially income against budget was in November and $ 674 million from contributions of the Canal of Panama leveled the expectations of attracting money.

Like, passed in 2010 with $ 280 million pool of the waterway. During 2010 and 2011, revenue targets slightly touched estimated 50% of the 24 months, but the remaining 50% marked in red. The authorities attributed to failures, such as non-time entry of fiscal printers, so that the aspirations of not being driven by dividends from joint ventures and the Panama Canal may well have been high.

BE CORRECTED For the economist Adolfo Quintero, it is time to ‘wrap up the blanket far enough’. The recurrent deficit in NFPS-sensitive indicator for the risk rating, from $ 511.7 million in 2010 (equivalent to 1.9% of Nominal GDP) of $ 703 million for 2011 or (2.3% of GDP Nominal), and the possibility of that is 2.7% for 2012, so much more, scares the specialist.

‘The fact that the government can not generate surpluses even with the growing economy, spent in generating costs deficit, and to continue growing in proposals investment jeopardizes the country ‘, described. According to the ad ministration Quintero state finances are unwise and could even affect the country’s investment grade.

Link to Original Article:

From La Estrella

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