PANAMA CITY Aug 11 Panama's new government said
on Monday that it may have to raise the country's fiscal deficit
limit for 2014, blaming unfinanced debts run up by the previous
administration and lower revenues from the Panama Canal.
Economy Minister Dulcidio de la Guardia told Congress $600
million of unfinanced debts from the previous government, lower
tax take and reduced revenues from the canal could mean the
deficit is higher than the 2.7 percent allowed by law.
"We've suspended all loan applications that do not have
financing and are studying a public spending containment plan,"
he said. "If this isn't possible we will present a request to
increase the fiscal deficit level for this year."
De La Guardia said that any spending cuts would be from
areas that are not crucial to the functioning of the state.
President Juan Carlos Varela won May's election by taking
credit for outgoing president and former ally Ricardo
Martinelli's successful economic policies while promising
Under Martinelli's watch, Panama's gross domestic product
(GDP) grew at an average rate of around 8.2 percent a year, one
of the fastest in Latin America.
But recent data has shown a sharp economic slowdown. In May
the country's economy grew 1.71 percent, the slowest pace since
2009, as major public works projects, including an expansion of
the canal slowed or wrapped up.
(Reporting by Elida Moreno; Writing by Christine Murray;
Editing by Shri Navaratnam)