Large 2024 deficit (7.35% of GDP) and commitment of MEF to reduce it to less than the 4.0% ceiling of the Fiscal Law

PANAMA - In Brief 20 Feb 2025 by Marco Fernandez
Today, Minister Chapman presented the fiscal situation for the end of 2024 and perspectives for 2025. The deficit of the NFPS of 7.35% in 2024, above our estimate of 6.2% and above the 2.0% that the Fiscal Law established in the 2020 revision by Minister Alexander. The explanation is twofold: underperformance of revenues by 3.1% of GDP, and higher-than-budgeted expenditures by 2.2% of GDP. Nominal growth was 4.8%, and real expansion of around 3.4%. Four explanations were provided: El Niño, that reduced the valued added of the Canal (although revenues grew more than expected); inherited arrears from Cortizo's government; the implications of the uncertainty about the May election; and the July inauguration of José Raúl Mulino (change of government). The results below the line for the Central Government (7.76% of GDP) reflect US 4.354.5 MM from external debt, and US 2,413.2 MM in local debt. For 2025, Chapman mentioned that the Government is analyzing options for its domestic financing strategy, with issuances on a quarterly base “to give investors time to adapt to our calendar”. He would not take a position about the adjustment strategy, but suggested that the investment plan could be the pièce de résistance because current expenditures are less flexible to a substantial reduction. He did not expand on the fiscal gap that could emerge from the result of the pension reform of the CSS. If revenues remain weak during 2025, investment will be cut, he stated, although the Government's preference is to reduce OPEX rather than CAPEX. Article 275 of the Constitution establishes that MEF (without receiving the approval of the Legislative Assembly) could slash expenditures if reve...

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2025 GlobalSource Partners. All rights reserved. This is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this or its contents.