Money, money, money…it´s not always sunny. The contract with Minera Panama approved by legislators and ratified by Cortizo, but the positive impact on public finances is overshadowed by nationwide protests against the contract
The end of the year presents a challenge for Panama's public finances as the likelihood of meeting fiscal targets diminishes due to lower-than-expected revenue collection. The final quarter's performance, hinging on the Panama Canal, remains critical to closing this gap. Currently, the government faces a complex situation, with significant opposition to the controversial contract with Minera Panama, despite the revenue it promises to bring to achieve budget goals. We argue that the US$ 750 million from Minera Panama (if the contract remains in place) and the US 500 million from ACP are the indispensable keys to compliance with the fiscal law this year (an NFPS deficit of 3% of GDP). Additional funds from Canal transfers (US$ 50 MM more than last year) and expected tax revenue growth (US$ 133 MM more than last year) would also reduce fiscal pressure. This financial challenge is compounded by high debt interest rates, a strict fiscal cap of 2% in 2024, and an unspecified US$ 4 billion budget “adjustment”, all of which guarantee future fiscal pressure. In the political sphere, most presidential alliances are confirmed, but the most important event occurred last week when Ricardo Martinelli's appeal to the Second Tribunal was dismissed, and the guilty verdict in the New Business trial was confirmed. A new appeal to the Supreme Court will likely produce the same result.
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