NEW YORK, March 14 (Fitch) Despite tight poll numbers implying
any of three
leading candidates could become Panama's next president on May
4, the electoral
contest outcome will not introduce major risks into the economy,
policy, according to a new Fitch Ratings report.
'It has been difficult for opposition candidates to
from the incumbent given Panama's unprecedented economic
growth,' said Lucila
Broide, Director in Fitch's Latin America Sovereign Group.
continuity - centered on the expansion of the Panama Canal and
of the country as a regional logistics hub - is likely. '
'However, further potential delays on the construction of the
third set of locks - the main component of the expanded canal -
cannot be ruled
out. This scenario would make fiscal consolidation harder for
administration as the fiscal windfall coming from the enlarged
canal will take
longer to materialize.'
Public debt reduction has been driven more by the country's fast
rather than by a focus on fiscal consolidation. Debt to GDP fell
to 38.4% in
2013 from 39.2% in 2012, representing the slowest pace of
reduction since 2006 -
except during the 2009 global financial crisis.
With slower growth ahead, improved spending control and
prioritization will be a main challenge for the next
public investment to more sustainable levels from a record high
10% of GDP in
2013 should provide significant fiscal space.
Challenges for the new administration include still significant
disparity, social security actuarial imbalance, as well as
corruption and security concerns.
The Panamanian economy grew by an estimated 8.5% in 2013; the
enjoy a more sustainable 6% growth over the medium term.
growth has helped the country improve its credit profile over
the past eight
years. Panama received investment grade in 2010 and was upgraded
to its current
'BBB' rating in 2011, which Fitch recently affirmed.ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
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