The pandemic hit the real economy and the fiscal situation harder than anticipated. Banks face a year of living dangerously…while the PRD Party (in power) criticizes Cortizo.
The government's estimate of a GDP contraction of 3.3 percent for 2020 (projected in March by the MEF) seems optimistic now, because the economy is in a virtual shutdown of more than fifty percent of real activity, with no date in sight for further re-openings. Unemployment may double by the end of the year compared with the 7.1% of 2019, depending on epidemiological data (worsening lately), which has been the measuring stick for easing or toughening restrictions.
The Central Government deficit as of March was 7.4% of GDP (4.5% for the NFPS); those figures may increase because of sliding tax receipts and inflexible government outlays. Gross funding requirements for the rest of the year will surpass US$ 1 billion.
The Legislature approved an amnesty proposal to prevent banks (and other financial institutions) from collecting debts, both personal and commercial, of clients who consider themselves affected by the pandemic.
GAFI’s review of Panama scheduled for October will likely result in the country's remaining on the "blacklist" of non-cooperating countries in money-laundering issues because of the lack of advance in compliance in non-financial activities. Correspondent banks may take note of this risk. in political news, Cortizo and the PRD are in a clash over the party's real role in government.
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