Minister Alexander proposed revisions to the budget on the expenditure side, and the legislature is likely to approve them next week. Changes in the Fiscal Law were enacted by the Cabinet.

PANAMA - In Brief 22 Dec 2023 by Marco Fernandez

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Cabinet Resolution N. 135 of December 18 authorized several modifications (decreases) to the Public Sector Budget presented to the Legislative Assembly on July 27, 2023. The Budget Committee announced last week to the Minister of Economy and Finance (MEF) that these modifications were unsustainable, citing the impact of the October and November protests. The key issues in Cabinet Resolution 135 included a reduction in payments to retired public sector workers, the elimination of both the digital vouchers created during the pandemic (Vale Digital) and of the fuel subsidy implemented in 2022. Along with other adjustments, the State budget proposal would tick down from US $32,754 million presented in July to US $30,690 million according to the December version. The Non-Financial Public Sector budget was not detailed in the Resolution. Historically it amounts to around 82% of the consolidated Public Sector Budget. The resolution published in the Official Gazette does not provide details of the new budget. We will gain insight once the legislature gives its approval and the information is published in the Official Gazette. The Central Government is slated for a reduction of US $780.6 million (61% in operating expenses and the rest in the investment plan, incorporating the digital voucher with a total expenditure of US $411 million in 2022). The Assembly faces a cut of US $56.8 million, already questioned by the president of the Budget Committee to no avail. Public Works and Health experienced significant cuts in absolute value. Another contentious issue is the US $50.4 million reduction in the decentralization program, generating resources for legislators' spending appetite...