The National Dialogue begins amid dismal GDP numbers: what to expect on both issues
November 26 is the government's date to open the discussion of the reforms on several important issues for the basic institutions of the country, with the participation of the main stakeholders in the Panamanian society under the United Nations' aegis. The dialogue - called "Closing the Gap" - will tackle education, health, and security. Fiscal and labor reforms are not on the menu. The former is particularly relevant for the near future because the reforms - if any - resulting from the high public debt burden (which induced S&P to lower its rating from BBB+ to BBB this week) will likely imply a financial commitment from the government. In any of their traditional forms, these forums are an effective mechanism to deal with a political crisis in a polarized environment, which is not the case in Panama yet. Our evaluation is that the Cortizo Administration may use the dialogue to substitute for a more direct approach to reforms, namely, the presentation of its proposals to the Legislative Assembly, where the political debate ought to occur. We explore the four pre-conditions that would produce a successful outcome. The GDP decrease in Q2 (38.4%) and for the first semester (18.9%) were the worst numbers for Latin America. We explore the causes. Ricardo Martinelli was hit by a new Court Decision, but his political strength remains.
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