EXHIBIT E
RECENT DEVELOPMENTS IN THE REPUBLIC AS OF MAY 27, 2014
The information included in this Exhibit E supplements the information about Panama contained in Panama’s annual report for the year ended December 31, 2012 on Form 18-K filed with the SEC on September 30, 2013, as amended by Amendment No. 1 thereto, filed on Form 18-K/A with the Commission on March 27, 2014. To the extent the information in this Exhibit E is inconsistent with the information contained in such annual report, as previously amended, the information in this Exhibit E replaces such information. Initially capitalized terms used in this Exhibit E have the respective meanings assigned to those terms in such annual report.
Selected Panamanian Economic Indicators(1)
The following table sets forth Panama’s principal economic indicators for the years 2009 through 2013:
| | | | | | | | | | | | | | | | | | | | |
| | | 2009(R) | | | 2010(R) | | | 2011(R) | | | 2012(P) | | | 2013(P) | |
Economic Data: | | | | | | | | | | | | | | | | | | | | |
GDP (millions, nominal dollars) | | $ | 25,925 | | | $ | 28,814 | | | $ | 33,271 | | | $ | 37,956 | | | $ | 42,648 | |
GDP (millions, constant dollars)(2) | | $ | 23,970 | | | $ | 25,373 | | | $ | 28,106 | | | $ | 30,986 | | | $ | 33,573 | |
GDP (% change, constant dollars)(2) | | | 4.0 | % | | | 5.9 | % | | | 10.8 | % | | | 10.2 | % | | | 8.4 | % |
Service Sector (% change, constant dollars)(2)(3) | | | 5.1 | % | | | 6.6 | % | | | 10.3 | % | | | 8.4 | % | | | 5.9 | % |
Other (% change, constant dollars)(2)(4) | | | 0.2 | % | | | 3.3 | % | | | 12.3 | % | | | 16.8 | % | | | 16.4 | % |
GDP Per Capita (constant dollars)(2) | | $ | 6,658 | | | $ | 6,929 | | | $ | 7,548 | | | $ | 8,181 | | | $ | 8,719 | |
Population (millions) | | | 3.60 | | | | 3.66 | | | | 3.72 | | | | 3.79 | | | | 3.85 | |
CPI – Period Average (% change) | | | 2.4 | % | | | 3.5 | % | | | 5.9 | % | | | 5.7 | % | | | 4.0 | % |
Unemployment | | | 6.6 | % | | | 6.5 | % | | | 4.5 | % | | | 4.1 | % | | | 4.1 | % |
Public Finance: | | | | | | | | | | | | | | | | | | | | |
Total Consolidated Non-Financial Public Sector Revenues (millions) | | $ | 6,125 | | | $ | 6,874 | | | $ | 7,762 | | | $ | 9,013 | | | $ | 9,909 | |
Total Consolidated Non-Financial Public Sector Expenditures (millions)(5) | | $ | 6,378 | | | $ | 7,385 | | | $ | 8,465 | | | $ | 9,564 | | | $ | 11,128 | |
Overall Surplus (Deficit) (millions) | | $ | (253 | ) | | $ | (512 | ) | | $ | (703 | ) | | $ | (551 | ) | | $ | (1,219 | ) |
As % of Current GDP | | | (1.0 | )% | | | (1.8 | )% | | | (2.1 | )% | | | (1.5 | )% | | | (2.9 | )% |
Central Government Surplus (Deficit) (millions) | | $ | (357 | ) | | $ | (683 | ) | | $ | (1,108 | ) | | $ | (1,029 | ) | | $ | (1,789 | ) |
As % of Current GDP | | | (1.4 | )% | | | (2.4 | )% | | | (3.3 | )% | | | (2.7 | )% | | | (4.2 | )% |
Public Debt (at December 31): | | | | | | | | | | | | | | | | | | | | |
Internal Debt (millions) | | $ | 822 | | | $ | 1,191 | | | $ | 1,904 | | | $ | 3,483 | | | $ | 3,453 | |
External Debt (millions) | | $ | 10,150 | | | $ | 10,438 | | | $ | 10,910 | | | $ | 10,782 | | | $ | 12,231 | |
Public Debt (as % of Current GDP) | | | | | | | | | | | | | | | | | | | | |
Internal Debt | | | 3.2 | % | | | 4.1 | % | | | 5.7 | % | | | 9.2 | % | | | 8.1 | % |
External Debt | | | 39.2 | % | | | 36.2 | % | | | 32.8 | % | | | 28.4 | % | | | 28.7 | % |
Total Public Debt (millions) | | $ | 10,972 | | | $ | 11,629 | | | $ | 12,814 | | | $ | 14,265 | | | $ | 15,684 | |
Trade Data: | | | | | | | | | | | | | | | | | | | | |
Exports (f.o.b.) Goods(6) (millions) | | $ | 12,038 | | | $ | 12,675 | | | $ | 16,926 | | | $ | 18,872 | | | $ | 17,505 | |
Imports (c.i.f.) Goods(6) (millions) | | $ | (14,218 | ) | | $ | (17,218 | ) | | $ | (24,143 | ) | | $ | (25,413 | ) | | $ | (24,256 | ) |
Merchandise Trade Balance (millions) | | $ | (2,180 | ) | | $ | (4,543 | ) | | $ | (7,217 | ) | | $ | (6,541 | ) | | $ | (6,751 | ) |
Current Account Surplus (Deficit) (millions) | | $ | (179 | ) | | $ | (2,765 | ) | | $ | (4,993 | ) | | $ | (3,816 | ) | | $ | (4,806 | ) |
Overall Balance of Payments Surplus (Deficit)(7) (millions) | | $ | 606 | | | $ | 307 | | | $ | (228 | ) | | $ | 24 | | | $ | 622 | |
Total Official Reserves (at December 31) (millions) | | $ | 2,637 | | | $ | 2,166 | | | $ | 1,766 | | | $ | 2,130 | | | $ | 2,405 | |
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| (1) | All monetary amounts in millions of U.S. dollars at current prices, unless otherwise noted. |
| (2) | Constant GDP figures are based on 2007 constant dollars. |
| (3) | Including real estate, public administration, commerce, restaurants and hotels, financial services, the Colón Free Trade Zone (or the “CFZ”), the Panama Canal, transportation and communications, public utilities and other services. |
| (4) | Including mining, manufacturing, agriculture and construction. |
| (5) | Excluding interest payments. |
| (7) | Figures have been calculated pursuant to the fifth edition of the Balance of Payments Manual prepared by the IMF. |
Sources: Directorate of Analysis and Economic Policies, Office of the Comptroller General, Banco Nacional de Panamá (“BNP”) and Ministry of Economy and Finance.
Government
On May 4, 2014 Panama held general elections for the posts president, the national assembly and other regional posts. The current vice-president Juan Carlos Varela of the Partido Panameñista was elected President with 39.07% of the vote. The results of the National Assembly are still to be certified, but with 97.96% of the total votes counted, 30 representatives belong to the Unidos por Más Cambios alliance, consisting of the Molirena and Cambio Democrático political parties, 21 representatives belong to the Partido Revolucionario Democrático, 12 representatives belong to El Pueblo Primero alliance, consisting of the Partido Popular and the Partido Panameñista and one representative has no party affiliation.
On December 3, 2013, President-Elect Varela announced the priorities of his administration in a Plan for the El Pueblo Primero Alliance. The plan includes, among other initiatives, implementation of price controls on basic foods, in order to reduce the cost of living, and initiatives to maintain the growth of the Panamanian economy through public investment projects, such as a plan to provide clean potable water for the entire country at the national level; construction of Metro lines 2 and 3 to San Migelito and East and West Panama City; to construct 500 kilometers of new highways, 15 health centers and four hospitals; and to increase the coverage of the irrigation system from 20% to 40% of all cultivated land. The plan also calls for new rules to increase transparency in the government and to reduce corruption and cronyism.
Recent Government Initiatives
Law 90 of November 7, 2013 created the Cold Chain National Markets Company (Mercados Nacionales de la Cadena de Frio, S.A.), which is a public company that will have the responsibility to promote, construct and manage the network of wholesale and retail national markets and the Cold Chain Integrated Logistics System, as well as other initiatives that contribute to the improvement of the supply chain and distribution of food products. The objective of this company is to provide support to the nation’s farmers and increase the availability of domestically grown food products to consumers across the country. The company’s stock will be 100% owned by the State.
Law 109 of November 25, 2013 created Metro de Panama, S.A., which is a public company in charge of planning, promoting, managing and executing the Metro system. The company’s stock will be 100% owned by the State. The first line of the Metro was inaugurated on April 5, 2014, and the current administration expects to complete the bidding process for the second line of the Metro before the end of its term in July 2014.
Executive Decree 741 of December 4, 2013, raised the minimum wage in the public sector to $400 per month. Executive Decree 182 of December 30, 2013 raised the minimum wage per hour to a range of $1.38 per hour to $3.85 per hour, depending on the region, type of economic activity, type of profession and size of the employer companies.
Law 119 of December 30, 2013 created a new province within the political division of Panama, Panama Oeste, that was segregated from the province of Panama. The capital city of Panama Oeste is La Chorrera, and the province is comprised of the districts of Arraijan, Capira, Chame, La Chorrera and San Carlos.
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The Economy
Economic Performance in 2013. In 2013, Panama’s real GDP grew by an estimated 8.4% compared to 10.2% in 2012. Inflation, as measured by the end-of-period CPI, was 4.1% in 2013. The open unemployment rate increased from 3.0% in August 2012 to 3.1% in August 2013. As of March 31, 2014, the estimated nominal GDP for year 2014 is $47,459.0 million, an 11.3% growth compared to preliminary nominal GDP for year 2013.
Mining activities increased 31.4% in 2013, compared to 2012, reflecting a contribution of 1.3% to GDP, due to increased extraction of raw materials, mainly sand and stone, in response to increased demand by the construction industry, and by increased volumes of gold and silver extraction activities. The construction sector grew by 29.8% in 2013, compared to 2012, primarily due to the execution of large-scale public and private infrastructure projects such as the Panama Metro, the Panama Canal expansion project and residential and non-residential buildings. The contribution of the construction industry to GDP increased from 11.1% in 2012, to 13.3% in 2013. The financial intermediation sector grew by 9.6% in 2013, compared to 2012, representing a contribution of 7.6% to GDP in 2013, at the same level as in 2012, primarily due to a strong performance of the International Banking Center as well as increased banking commissions and other revenues.
The transportation, warehousing and telecommunications sector grew by an estimated 6.1% in 2013, compared to 2012 (contributing 18.6% to estimated GDP in 2013, compared to 19.0% in 2012) due to increased volumes of passengers using Tocumen International Airport, benefiting from Panama’s growth as a regional hub. The public utilities sector grew by 3.1% in 2013, compared to 2012, representing a contribution of 2.6% to GDP in 2013, at the same level as in 2012. In 2013, primary activities increased an estimated 10.5% from 2012. Agriculture sector output increased 1.8% in 2013 over 2012, and represented 2.6% of GDP in 2013, compared to 2.7% in 2012. This increase is due to exports of non-traditional products, such as pineapples and watermelons, and growth in local demand for sugar cane and bananas.
Activities of the Colón Free Zone (“CFZ”) decreased 7.2% in 2013, compared to 2012. This decrease is primarily attributable to tariff issues imposed by Colombia. The manufacturing sector grew 2.7% in 2013, compared to 2012 (contributing 5.1% to GDP in 2013, compared to 5.3% in 2012) due to an increase in the production of cement, concrete and non-alcoholic beverages. Panama Canal activities decreased 0.1% in 2013, compared to 2012 due to an decrease in vessels that transited the canal.
The National Assembly approved Panama’s 2014 budget on October 21, 2013. The 2014 budget contemplates total expenditures of $17.8 billion, with budget estimates based on an anticipated 11.2% growth in nominal GDP and an anticipated consolidated non-financial public sector deficit of approximately $1,344.5 million (or approximately 2.7% of nominal GDP) for 2014.
The Central Government’s current savings for 2013 registered a surplus of $1,949.6 million (4.6% of nominal GDP), compared to a surplus of $1,909.4 million in 2012 (5.0% of nominal GDP). The Government’s overall deficit increased from $1,028.7 million in 2012 (2.7% of nominal GDP) to a deficit of $1,788.8 million in 2013 (4.2% of nominal GDP). In 2013, Panama’s non-financial public sector balance registered a deficit of $1,219.4 million (or 2.9% of nominal GDP), an increase from a deficit of $550.6 million (or 1.5% of nominal GDP) in 2012.
The following table sets forth Panama’s principal price indicators for each of the years 2009 through 2013:
Inflation
(percentage change from previous period)
| | | | | | | | | | | | | | | | | | | | |
| | | 2009 | | | 2010 | | | 2011 | | | 2012 | | | 2013 | |
Annual Percentage Change: | | | | | | | | | | | | |
Consumer Price Index | | | 2.4 | % | | | 3.5 | % | | | 5.9 | % | | | 5.7 | % | | | 4.0 | % |
Wholesale Price Index: | | | | | | | | | | | | |
Imports | | | -14.1 | | | | 6.9 | | | | 17.1 | | | | 5.2 | | | | -1.9 | |
Industrial products | | | 0.6 | | | | 0.9 | | | | 6.8 | | | | 3.9 | | | | 2.2 | |
Agricultural products | | | 8.6 | | | | 1.9 | | | | 3.3 | | | | 5.3 | | | | -0.7 | |
All products | | | -6.7 | | | | 3.9 | | | | 11.9 | | | | 4.7 | | | | 0.1 | |
Source: Office of the Comptroller General and Ministry of Economy and Finance.
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The following tables set forth Panama’s GDP, including sectoral origin (in dollars and as a percentage of GDP) and percentage change from 2009 to 2013:
Gross Domestic Product
| | | | | | | | | | | | | | | | | | | | |
| | | 2009(R) | | | 2010(R) | | | 2011(R) | | | 2012(R) | | | 2013(P) | |
Gross Domestic Product (millions of dollars in
constant prices)(1) | | $ | 23,970.1 | | | $ | 25,372.8 | | | $ | 28,105.5 | | | $ | 30,985.5 | | | $ | 33,573.5 | |
% Change over Previous Year | | | 4.0 | % | | | 5.9 | % | | | 10.8 | % | | | 10.2 | % | | | 8.4 | % |
Gross Domestic Product (millions of dollars in
nominal prices) | | $ | 25,925.1 | | | $ | 28,8140.1 | | | $ | 33,270.5 | | | $ | 37,956.2 | | | $ | 42,648.1 | |
% Change over Previous Year | | | 4.2 | % | | | 11.1 | % | | | 15.5 | % | | | 14.1 | % | | | 12.4 | % |
| (1) | Figures are based on 2007 constant dollars. |
Source: Office of the Comptroller General and Ministry of Economy and Finance.
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Sectoral Origin of Gross Domestic Product
(in millions of dollars)(1)
| | | | | | | | | | | | | | | | | | | | |
| | | 2009(R) | | | 2010(R) | | | 2011(R) | | | 2012(R) | | | 2013(P) | |
Primary Activities: | | | | | | | | | | | | | | | | | | | | |
Agriculture(2) | | $ | 1,005.9 | | | $ | 915.1 | | | $ | 926.9 | | | $ | 970.2 | | | $ | 1,004.4 | |
Mining | | | 198.6 | | | | 213.1 | | | | 252.7 | | | | 325.5 | | | | 427.7 | |
Total | | $ | 1,204.5 | | | $ | 1,128.2 | | | $ | 1,179.6 | | | $ | 1,295.6 | | | $ | 1,432.1 | |
Industrial Activities: | | | | | | | | | | | | | | | | | | | | |
Manufacturing | | $ | 1,563.1 | | | $ | 1,596.0 | | | $ | 1,650.3 | | | $ | 1,655.1 | | | $ | 1,699.8 | |
Construction | | | 2,114.6 | | | | 2,255.5 | | | | 2,671.9 | | | | 3,438.1 | | | | 4,463.7 | |
Total | | $ | 3,677.7 | | | $ | 3,851.5 | | | $ | 4,322.2 | | | $ | 5,093.2 | | | $ | 6,163.5 | |
Services: | | | | | | | | | | | | | | | | | | | | |
Public utilities | | $ | 932.2 | | | $ | 756.1 | | | $ | 901.8 | | | $ | 836.4 | | | $ | 862.2 | |
Commerce, restaurants and hotels | | | 4,939.6 | | | | 5,438.3 | | | | 6,193.7 | | | | 6,712.0 | | | | 6,972.4 | |
Transportation, storage and communications | | | 4,165.5 | | | | 4,713.4 | | | | 5,295.2 | | | | 5,892.5 | | | | 6,253.2 | |
Financial intermediation | | | 1,969.9 | | | | 2,011.1 | | | | 2,164.0 | | | | 2,341.4 | | | | 2,566.8 | |
Real estate | | | 3,474.7 | | | | 3,662.7 | | | | 3,892.6 | | | | 4,267.5 | | | | 4,613.6 | |
Other services | | | 3,187.6 | | | | 3,317.1 | | | | 3,508.7 | | | | 3,754.1 | | | | 3,947.3 | |
Total | | $ | 18,669.6 | | | $ | 19,898.8 | | | $ | 21,956.0 | | | $ | 23,803.9 | | | $ | 25,215.4 | |
Plus Import Taxes(3) | | | 1,025.9 | | | | 1,124.9 | | | | 1,311.5 | | | | 1,502.3 | | | | 1,525.3 | |
Less Imputed Banking Services | | | (607.6 | ) | | | (630.5 | ) | | | (663.8 | ) | | | (709.5 | ) | | | (762.9 | ) |
Gross Domestic Product | | $ | 23,970.1 | | | $ | 25,372.8 | | | $ | 28,105.5 | | | $ | 30,985.5 | | | $ | 33,573.5 | |
| (1) | Figures are based on 2007 constant dollars. |
| (3) | Including value-added tax. |
–5–
Percentage Change from Prior Year for
Sectoral Origin of Gross Domestic Product (percentage change)(1)
| | | | | | | | | | | | | | | | | | | | |
| | | 2009(R) | | | 2010(R) | | | 2011(R) | | | 2012(R) | | | 2013(P) | |
Primary Activities: | | | | | | | | | | | | | | | | | | | | |
Agriculture(2) | | | (9.7 | )% | | | (9.0 | )% | | | 1.3 | % | | | 4.7 | % | | | 3.5 | % |
Mining | | | 4.6 | % | | | 7.3 | % | | | 18.6 | % | | | 28.8 | % | | | 31.4 | % |
Total | | | (7.6 | )% | | | (6.3 | )% | | | 4.6 | % | | | 9.8 | % | | | 10.5 | % |
Industrial Activities: | | | | | | | | | | | | | | | | | | | | |
Manufacturing | | | (0.9 | )% | | | 2.1 | % | | | 3.4 | % | | | 0.3 | % | | | 2.7 | % |
Construction | | | 4.2 | % | | | 6.7 | % | | | 18.5 | % | | | 28.7 | % | | | 29.8 | % |
Total | | | 2.0 | % | | | 4.7 | % | | | 12.2 | % | | | 17.8 | % | | | 21.0 | % |
Services: | | | | | | | | | | | | | | | | | | | | |
Public utilities | | | 36.5 | % | | | (18.9 | )% | | | 19.3 | % | | | (7.3 | )% | | | 3.1 | % |
Commerce, restaurants and hotels | | | 1.9 | % | | | 10.1 | % | | | 13.9 | % | | | 8.4 | % | | | 3.9 | % |
Transportation and communications | | | 9.0 | % | | | 13.2 | % | | | 12.3 | % | | | 11.3 | % | | | 6.1 | % |
Financial intermediation | | | (0.9 | )% | | | 2.1 | % | | | 7.6 | % | | | 8.2 | % | | | 9.6 | % |
Real estate | | | 4.5 | % | | | 5.4 | % | | | 6.3 | % | | | 9.6 | % | | | 8.1 | % |
Other services | | | 2.9 | % | | | 4.1 | % | | | 5.8 | % | | | 7.0 | % | | | 5.1 | % |
Total | | | 5.1 | % | | | 6.6 | % | | | 10.3 | % | | | 8.4 | % | | | 5.9 | % |
Plus Import Taxes(3) | | | 7.8 | % | | | 9.6 | % | | | 16.6 | % | | | 14.5 | % | | | 1.5 | % |
Less Imputed Banking Services | | | 6.6 | % | | | 3.8 | % | | | 5.3 | % | | | 6.9 | % | | | 7.5 | % |
Gross Domestic Product | | | 4.0 | % | | | 5.9 | % | | | 10.8 | % | | | 10.2 | % | | | 8.4 | % |
| (1) | Figures are based on 2007 constant dollars. |
| (3) | Including value-added tax. |
Source: Office of the Comptroller General and Ministry of Economy and Finance.
–6–
Sectoral Origin of Gross Domestic Product
(as percentage of GDP)(1)
| | | | | | | | | | | | | | | | | | | | |
| | | 2009(R) | | | 2010(R) | | | 2011(R) | | | 2012(R) | | | 2013(P) | |
Primary Activities: | | | | | | | | | | | | | | | | | | | | |
Agriculture(2) | | | 4.2 | % | | | 3.6 | % | | | 3.3 | % | | | 3.1 | % | | | 3.0 | % |
Mining | | | 0.8 | % | | | 0.8 | % | | | 0.9 | % | | | 1.1 | % | | | 1.3 | % |
Total | | | 5.0 | % | | | 4.4 | % | | | 4.2 | % | | | 4.2 | % | | | 4.3 | % |
Industrial Activities: | | | | | | | | | | | | | | | | | | | | |
Manufacturing | | | 6.5 | % | | | 6.3 | % | | | 5.9 | % | | | 5.3 | % | | | 5.1 | % |
Construction | | | 8.8 | % | | | 8.9 | % | | | 9.5 | % | | | 11.1 | % | | | 13.3 | % |
Total | | | 15.3 | % | | | 15.2 | % | | | 15.4 | % | | | 16.4 | % | | | 18.4 | % |
Services: | | | | | | | | | | | | | | | | | | | | |
Public utilities | | | 3.9 | % | | | 3.0 | % | | | 3.2 | % | | | 2.7 | % | | | 2.6 | % |
Commerce, restaurants and hotels | | | 20.6 | % | | | 21.4 | % | | | 22.0 | % | | | 21.7 | % | | | 20.8 | % |
Transportation and communications | | | 17.4 | % | | | 18.6 | % | | | 18.8 | % | | | 19.0 | % | | | 18.6 | % |
Financial intermediation | | | 8.2 | % | | | 7.9 | % | | | 7.7 | % | | | 7.6 | % | | | 7.6 | % |
Real estate | | | 14.5 | % | | | 14.4 | % | | | 13.8 | % | | | 13.8 | % | | | 13.7 | % |
Other services | | | 13.3 | % | | | 13.1 | % | | | 12.5 | % | | | 12.1 | % | | | 11.8 | % |
Total | | | 77.9 | % | | | 78.4 | % | | | 78.1 | % | | | 76.8 | % | | | 75.1 | % |
Plus Import Taxes(3) | | | 4.3 | % | | | 4.4 | % | | | 4.7 | % | | | 4.8 | % | | | 4.5 | % |
Less Imputed Banking Services | | | (2.5 | )% | | | (2.5 | )% | | | (2.4 | )% | | | (2.3 | )% | | | (2.3 | )% |
Gross Domestic Product | | | 100.0 | % | | | 100.0 | % | | | 100.7 | % | | | 100.0 | % | | | 100.0 | % |
| (1) | Figures are based on 2007 constant dollars. |
| (3) | Including value-added tax. |
Source: Office of the Comptroller General.
The Panama Canal
The Canal plays a significant role in the Panamanian economy. In the Canal’s 2013 fiscal year, canal transits decreased to 13,660 transits from 14,544 transits in 2012, while cargo tonnage decreased to 209.9 million long tons from 218.1 million long tons in 2012. The Panama Canal Authority announced that toll revenues for the fiscal year ended September 30, 2013 reached $1,850.0 million, a decrease of 0.11% over fiscal year 2012.
From the Canal’s 2009 fiscal year to the Canal’s 2013 fiscal year, transits through the Canal decreased by 6.1% and cargo tonnage decreased by 3.8%. Factors such as the development of alternative land routes and the increasing size of vessels transiting the Canal have caused the decrease in the number of vessels required to transport cargo between 2009 and 2013. However, from the Canal’s 2009 fiscal year to the Canal’s 2013 fiscal year, toll revenues have on average increased by 6.7%, primarily due to an increase in tolls.
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As of September 30, 2013, the Canal’s total work force (which includes temporary and permanent employees) was 10,098. Of the 2013 total work force, 8,288 were permanent workers and 1,810 were temporary workers.
The following table sets forth the Canal’s statistical and financial information for fiscal years 2009 through 2013 (each ended on September 30):
Panama Canal Principal Statistics
| | | | | | | | | | | | |
Fiscal Year | | Number
of Transits | | | Tolls
(millions of dollars) | | | Long Tons of Cargo
(millions) | |
2009 | | | 14,342 | | | | 1,438.2 | | | | 198.0 | |
2010 | | | 14,230 | | | | 1,482.1 | | | | 204.8 | |
2011 | | | 14,684 | | | | 1,730.0 | | | | 222.4 | |
2012 | | | 14,544 | | | | 1,852.4 | | | | 218.1 | |
2013 | | | 13,660 | | | | 1,849.6 | | | | 209.9 | |
Source: Panama Canal Authority.
The Panama Canal Expansion Project
On July 14, 2006, the National Assembly approved a $5.25 billion canal expansion plan, which was approved in a national referendum held on October 22, 2006. On July 15, 2009, the construction of the third set of locks was awarded to the Grupo Unidos por el Canal consortium, composed of Sacyr Vallehermoso, S.A., Impregilo S.p.A., Jan de Nul n.v., and Constructora Urbana, S.A., for a total base price of approximately $3.1 billion. On August 11, 2009, Grupo Unidos por el Canal provided a performance bond of $400 million to the Panama Canal Authority. As of March 2014, the third set of locks was 68% complete. The expected date of completion was moved to December 2015 from June 2015 (the original completion date was October 2014) due to suspension of construction for almost two months because of a contractual dispute involving $1.6 billion in cost overruns. A preliminary agreement was reached on February 20, 2014, which allowed work to resume and a final agreement was executed on March 20, 2014. The final agreement sets a new completion date for the project of December 2015 and does not change the total cost of the project. The disputed amounts have been submitted to arbitration while construction continues.
The Panama Canal expansion project was also halted due to a strike of the construction workers’ syndicate (SUNTRACS) that started on April 23, 2014 and ended on May 9, 2014. The strike had paralyzed most of the construction projects throughout the country. The Panamanian Construction Chamber (CAPAC), with the support of the Ministry of Labor, negotiated with SUNTRACS a new collective agreement covering the period 2014 – 2017. The agreement provides for an increase in hourly wages. Wages will increase yearly and in accordance with the occupation of the worker to a maximum of 98 cents per hour for the lowest paid worker to a high of $1.33 per hour for the highest paid worker. The increase per hour in the first year will be of 27 cents and 33 cents, respectively. The strike affected the construction schedule for the third set of locks and may cause further delays as it increases the amount of work that will need to be carried out during the wet season.
The Panama Canal Authority
The Panama Canal Authority (“PCA”) makes annual payments to the Central Government based upon the amount of tonnage that transits the Canal. By law, the rate (as measured on a per ton basis) for such payments may not be set at a level that will generate lower payments than those paid to Panama by the Panama Canal Commission on December 31, 1999. The PCA transfers to the Central Government any net surpluses generated by the Canal. In fiscal year 2009, the PCA had a surplus of approximately $1.1 billion, down 2.1% from 2008. In fiscal year 2010, the PCA had a surplus of approximately $964.0 million, down 4.3% from 2009. In fiscal year 2011, the PCA had a surplus of approximately $1.2 billion, up 27.5% from 2010. In fiscal year 2012, the PCA had a surplus of approximately $1.3 billion, up 2.4% from 2011. In fiscal year 2013, the PCA had a surplus of approximately $1.2 billion, down 3.6% from 2012.
On May 1, 2010 the PCA terminated a short-term cost reduction program consisting of temporary measures designed to help mitigate the impact of the economic crisis on the Panama Canal’s customers and the PCA returned to its regular pricing measures, but it determined to continue to offer flexibility in its reservation system until further notice. Based on discussions with industry representatives, shipping lines, Government representatives and an internal analysis, the PCA decided not to proceed with a toll adjustment in 2010, in part due to the global economic slowdown. Instead, the PCA determined that the new toll adjustment would go into effect on January 1, 2011 for all segments other than PC/UMS tolls for reefers, which went into effect on April 1, 2011. The second toll adjustment became effective on October 1, 2012.
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A toll adjustment became effective on January 1, 2011 for all segments other than PC/UMS tolls for reefers, which went into effect on April 1, 2011. A toll increase occurred in October 2012 and a new toll adjustment became effective in October 2013.
On July 16, 2013, the Assembly approved the PCA’s budget for its fiscal year ending September 30, 2014, allocating $269.9 million to the Canal’s investment program and $178.8 million to the Canal’s modernization program.
Labor Force
In 2013, Panama’s labor force was preliminarily estimated at 1.7 million (up from 1.6 million in 2012), which represented approximately 64.1% of the total working age population.
In 2013, the unemployment rate remained at 4.1%, the same level as the one registered in 2012, primarily as a result of solid economic conditions.
The following table sets forth certain labor force and unemployment statistics for the five years ended August 30, 2009 through August 30, 2013:
Labor Force and Employment
| | | | | | | | | | | | | | | | | | | | |
| | | 2009 | | | 2010 | | | 2011(R) | | | 2012 | | | 2013 | |
Total Population | | | 3,600.0 | | | | 3,661.8 | | | | 3,723.8 | | | | 3,787.5 | | | | 3,850.7 | |
Working-Age Population | | | 2,403.7 | | | | 2,450.4 | | | | 2,603.4 | | | | 2,658.9 | | | | 2,719.8 | |
Labor Force | | | | | | | | | | | | | | | | | | | | |
Employed | | | 1,440.8 | | | | 1,455.6 | | | | 1,538.1 | | | | 1,621.1 | | | | 1,672.4 | |
Unemployed | | | 101.1 | | | | 101.5 | | | | 72.2 | | | | 68.4 | | | | 71.5 | |
Total | | | 1,541.9 | | | | 1,557.1 | | | | 1,610.2 | | | | 1,689.5 | | | | 1,743.8 | |
| | | (annual percentage change) | |
Total Population | | | 1.8 | % | | | 1.7 | % | | | 1.7 | % | | | 1.7 | % | | | 1.7 | % |
Working-Age Population | | | 2.0 | % | | | 1.9 | % | | | 6.2 | % | | | 2.1 | % | | | 2.3 | % |
Labor Force | | | | | | | | | | | | | | | | | | | | |
Employed | | | 1.3 | % | | | 1.0 | % | | | 5.7 | % | | | 5.4 | % | | | 3.4 | % |
Unemployed | | | 20.3 | % | | | 0.3 | % | | | (28.9 | )% | | | (5.3 | )% | | | 4.7 | % |
| | | | | | | | | | | | | | | | | | | | |
Total | | | 2.4 | % | | | 1.0 | % | | | 3.4 | % | | | 4.9 | % | | | 3.5 | % |
| | | (in percent) | |
Labor Force: | | | | | | | | | | | | | | | | | | | | |
Participation Rate(1) | | | 64.1 | % | | | 63.5 | % | | | 61.9 | % | | | 63.4 | % | | | 64.1 | % |
Employment Rate(2) | | | 93.4 | | | | 93.5 | | | | 95.5 | | | | 95.9 | | | | 95.9 | |
Unemployment Rate | | | 6.5 | | | | 4.5 | | | | 2.9 | | | | 4.1 | | | | 4.1 | |
| (1) | Total labor force as percentage of working-age population. |
| (2) | Employed labor force as percentage of total labor force. |
Source: Office of the Comptroller General.
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Public Finance
The National Assembly approved Panama’s 2014 budget on October 21, 2013. The 2014 budget contemplates total expenditures of $17.8 billion, with budget estimates based on an anticipated 14.9% growth in nominal GDP, and an anticipated consolidated non-financial public sector deficit of approximately $1,344.5 million (or approximately 2.7% of estimated nominal GDP) for 2014. Under the 2014 budget, nominal GDP for 2014 is expected to be $48.9 billion.
Under the 2014 budget, the Public Sector’s total expenditures for the year are expected to be approximately $9.8 billion, which includes approximately $1,438.0 million for public debt service. The 2014 budget allocates public expenditures as follows: 49.8% to the social sector; 9.5% to infrastructure; 4.0% to production/development; 16.4% to general services; and 8.0% to debt service.
Period Ended March 31, 2014
The Central Government’s total revenues for the period ended March 31, 2014, totaled US$1,411.8 million, an increase of 6.4% from the same period in 2013. Capital expenditures increased by 2.4% to US$2,265.1 million at March 31, 2014 when compared to the same period in 2013. Current savings reached US$243.1 million as of March 31, 2014, which represents 0.5% of estimated 2014 GDP or an increase of 15.4% compared to the same period in 2013. The table below sets forth the revenues, by purposes, expenditures, by sector, of the Central Government for the periods indicated.
Fiscal Performance Central Government
| | | | | | | | |
| | | Period Ended March 31, | |
| | | 2013 | | | 2014 | |
| | | (in millions of dollars) | |
Total Revenues | | | 1,327.2 | | | | 1,411.8 | |
Adjusted Current Revenue | | | 1,325.3 | | | | 1,410.8 | |
Tax Revenue | | | 1,154.7 | | | | 1,164.7 | |
Direct | | | 581.4 | | | | 556.7 | |
Indirect | | | 573.4 | | | | 608.0 | |
Non Tax Revenues | | | 213.4 | | | | 288.8 | |
Income Adjustment | | | (42.8 | ) | | | (42.8 | ) |
Capital Income | | | 0.0 | | | | 0.0 | |
Donations | | | 1.9 | | | | 1.0 | |
Total Expenditures | | | 2,186.6 | | | | 2,265.1 | |
Current Expenditures | | | 1,114.8 | | | | 1,167.7 | |
Personal Services | | | 339.7 | | | | 441.9 | |
Goods and Services | | | 65.8 | | | | 87.1 | |
Transfers | | | 274.9 | | | | 261.5 | |
Interest Payments | | | 335.7 | | | | 334.6 | |
Others | | | 38.7 | | | | 42.6 | |
Current Savings | | | 210.6 | | | | 243.1 | |
Capital Expenditures | | | 1,071.9 | | | | 1,097.4 | |
% of GDP | | | 2.5 | % | | | 2.3 | % |
Deficit | | | (859.4 | ) | | | (853.3 | ) |
% of GDP | | | (2.0 | )% | | | (1.8 | )% |
Source: Ministry of Economy and Finance.
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The non-financial public sector, which includes the Central Government, decentralized agencies (including CSS and principal universities) and non-financial public enterprises, had total revenues of US$2,298.9 million as of March 31, 2014, an increase of 6.0% compared with the same period in 2013. The increase was mainly due to an increase of Central Government Non-Tax Revenue and Social Security System collections. Current savings for the sector amounted to US$619.2 million in the period ended March 31, 2014, an increase of 7.3% compared to the same period in 2013. Approximately 52.2% of capital expenditures were financed with current savings.
The following table sets forth the revenues, by purpose, and expenditures, by sector, of the consolidated non-public financial sector for the periods indicated.
Fiscal Performance Non-Financial Public Sector
| | | | | | | | |
| | | Period Ended March 31, | |
| | | 2013 | | | 2014 | |
| | | (in millions of dollars) | |
Total Revenues | | | 2,169.2 | | | | 2,298.9 | |
General Government Current Revenue | | | 2,005.3 | | | | 2,130.2 | |
Central Government | | | 1,298.7 | | | | 1,387.3 | |
Social Security | | | 658.3 | | | | 699.4 | |
Consolidated Agencies | | | 48.3 | | | | 43.5 | |
Public Enterprises Balance | | | 61.8 | | | | 60.9 | |
Non-consolidated Agencies | | | 89.8 | | | | 102.6 | |
Capital Income | | | 10.4 | | | | 4.3 | |
Donations | | | 1.9 | | | | 1.0 | |
Total Expenditures | | | 2,666.9 | | | | 2,861.8 | |
General Government Current Exp. | | | 1,580.1 | | | | 1,674.5 | |
Current Expenditures (exc. interest) | | | 1,244.2 | | | | 1,339.7 | |
Central Government | | | 717.0 | | | | 784.9 | |
Social Security | | | 486.9 | | | | 510.6 | |
Consolidated Agencies | | | 40.3 | | | | 44.2 | |
Interest | | | 336.3 | | | | 335.2 | |
Current Savings | | | 576.8 | | | | 619.2 | |
Capital Expenditures | | | 1,086.3 | | | | 1,186.9 | |
% of GDP | | | 2.5 | % | | | 2.5 | % |
Deficit | | | (497.6 | ) | | | (562.8 | ) |
% of GDP | | | (1.17 | )% | | | (1.19 | )% |
Source: Ministry of Economy and Finance.
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Year Ended December 31, 2013
The following tables set forth the revenues, by purpose, and expenditures, by sector, of the Central Government and the consolidated non-financial public sector for the years 2009 through 2013. Under the terms of the 1994 amendments to the Constitution, the Panama Canal Authority budget is not included in the budget of the Central Government.
Central Government Operations
(in millions of dollars)
| | | | | | | | | | | | | | | | | | | | |
| | | 2009 | | | 2010 | | | 2011 | | | 2012 | | | 2013 | |
Total Revenues | | | 4,459.9 | | | | 4,993.3 | | | | 5,571.0 | | | | 6,490.1 | | | | 6,916.8 | |
Current Revenues | | | 4,376.7 | | | | 4,845.6 | | | | 5,537.9 | | | | 6,472.6 | | | | 6,789.2 | |
Tax Revenues | | | 2,639.6 | | | | 3,286.4 | | | | 3,711.8 | | | | 4,689.9 | | | | 5,020.0 | |
Direct | | | 1,412.2 | | | | 1,678.6 | | | | 1,701.8 | | | | 2,477.9 | | | | 2,680.9 | |
Indirect | | | 1,227.4 | | | | 1,607.8 | | | | 2,010.0 | | | | 2,212.0 | | | | 2,339.1 | |
Non Tax Revenues | | | 1,737.1 | | | | 1,756.9 | | | | 1,994.1 | | | | 2,051.0 | | | | 1,941.2 | |
Adjustments to Rent | | | — | | | | (197.6 | ) | | | (168.0 | ) | | | (268.3 | ) | | | (172.0 | ) |
Capital Gains | | | 53.1 | | | | 130.2 | | | | 15.0 | | | | 3.0 | | | | 114.3 | |
Donations | | | 30.1 | | | | 17.5 | | | | 18.1 | | | | 14.4 | | | | 13.3 | |
Total Expenses | | | 4,817.1 | | | | 5,676.0 | | | | 6,678.9 | | | | 7,518.7 | | | | 8,705.6 | |
Current Expenses | | | 3,285.0 | | | | 3,696.9 | | | | 4,164.6 | | | | 4,563.3 | | | | 4,839.6 | |
Wages and Salaries | | | 1,178.6 | | | | 1,278.9 | | | | 1,413.4 | | | | 1,588.3 | | | | 1,765.3 | |
Goods and Services | | | 335.3 | | | | 324.7 | | | | 407.7 | | | | 524.7 | | | | 529.0 | |
Transfers | | | 983.7 | | | | 1,279.6 | | | | 1,513.7 | | | | 1,577.0 | | | | 1,552.4 | |
Interest | | | 703.6 | | | | 706.1 | | | | 730.2 | | | | 739.8 | | | | 822.1 | |
Others | | | 83.8 | | | | 107.6 | | | | 99.5 | | | | 133.5 | | | | 170.8 | |
Current Savings | | | 1,091.7 | | | | 1,148.8 | | | | 1,373.4 | | | | 1,909.4 | | | | 1,949.6 | |
% of GDP | | | 4.2 | % | | | 4.0 | % | | | 4.1 | % | | | 5.0 | % | | | 4.6 | % |
Total Savings | | | 1,174.9 | | | | 1,296.5 | | | | 1,406.5 | | | | 1,926.8 | | | | 2,077.2 | |
% of GDP | | | 4.5 | % | | | 4.5 | % | | | 4.2 | % | | | 5.1 | % | | | 4.9 | % |
Capital Expenditures | | | 1,532.1 | | | | 1,979.1 | | | | 2,514.2 | | | | 2,955.5 | | | | 3,866.0 | |
Primary Balance | | | 346.4 | | | | 23.5 | | | | (377.5 | ) | | | (288.9 | ) | | | (966.7 | ) |
% of GDP | | | 1.3 | % | | | 0.1 | % | | | (1.1 | )% | | | (0.8 | )% | | | (2.3 | )% |
Surplus or Deficit | | | (357.2 | ) | | | (682.6 | ) | | | (1,107.9 | ) | | | (1,028.7 | ) | | | (1,788.8 | ) |
% of GDP | | | (1.4 | )% | | | (2.4 | )% | | | (3.3 | )% | | | (2.7 | )% | | | (4.2 | )% |
Source: Ministry of Economy and Finance.
–12–
Consolidated Non-Financial Public Sector Operations
(in millions of dollars)(1)
| | | | | | | | | | | | | | | | | | | | |
| | | 2009 | | | 2010 | | | 2011 | | | 2012(R) | | | 2013(P) | |
Revenues: | | | | | | | | | | | | | | | | | | | | |
General Government | | | | | | | | | | | | | | | | | | | | |
Central Government | | $ | 4,182.7 | | | $ | 4,632.8 | | | $ | 5,391.7 | | | $ | 6,343.7 | | | $ | 6,666.5 | |
Caja de Seguro Social (“CSS”) | | | 1,383.3 | | | | 1,637.1 | | | | 2,041.5 | | | | 2,186.1 | | | | 2,676.7 | |
Consolidated agencies | | | 171.9 | | | | 161.2 | | | | 147.3 | | | | 154.0 | | | | 187.1 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 5,737.9 | | | $ | 6,431.1 | | | $ | 7,580.5 | | | $ | 8,683.8 | | | $ | 9,530.3 | |
Public Enterprises Operations Surplus | | | 225.5 | | | | 197.5 | | | | 147.2 | | | | 138.3 | | | | 112.3 | |
Nonconsolidated Agencies Surplus and Others | | | 50.1 | | | | 64.5 | | | | (16.2 | ) | | | 150.0 | | | | 69.8 | |
Education Tax Surplus(2) | | | 15.6 | | | | — | | | | — | | | | — | | | | — | |
Capital Revenues | | | 65.4 | | | | 163.0 | | | | 32.1 | | | | 26.7 | | | | 182.7 | |
Donations | | | 30.1 | | | | 17.5 | | | | 18.1 | | | | 14.4 | | | | 13.3 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 6,124.5 | | | $ | 6,873.6 | | | $ | 7,761.7 | | | $ | 9,013.2 | | | $ | 9,908.5 | |
Expenditures: | | | | | | | | | | | | | | | | | | | | |
General Government | | | | | | | | | | | | | | | | | | | | |
Central Government | | | 2,047.7 | | | | 2,447.8 | | | | 2,883.0 | | | | 3,394.4 | | | | 3,577.8 | |
CSS | | | 1,672.3 | | | | 1,807.5 | | | | 1,946.4 | | | | 2,084.9 | | | | 2,423.6 | |
Consolidated agencies | | | 185.0 | | | | 175.6 | | | | 194.9 | | | | 200.3 | | | | 212.0 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 3,905.0 | | | $ | 4,430.9 | | | $ | 5,024.3 | | | $ | 5,679.6 | | | $ | 6,213.4 | |
Capital Expenditures | | | 1,758.0 | | | | 2,238.3 | | | | 2,698.6 | | | | 3,142.0 | | | | 4,090.6 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 5,663.0 | | | $ | 6,669.2 | | | $ | 7,722.9 | | | $ | 8,821.6 | | | $ | 10,304.0 | |
Balance(3) | | | 461.5 | | | | 204.4 | | | | 38.9 | | | | 191.6 | | | | (395.5 | ) |
Debt Interest Paid | | | 714.8 | | | | 716.1 | | | | 741.9 | | | | 742.2 | | | | 823.9 | |
Overall Surplus (Deficit) | | $ | (253.3 | ) | | $ | (511.7 | ) | | $ | (703.1 | ) | | $ | (550.6 | ) | | $ | (1,219.4 | ) |
Percentage of GDP (nominal) | | | (1.0 | )% | | | (1.8 | )% | | | (2.1 | )% | | | (1.5 | )% | | | (2.9 | )% |
| (1) | Non-Financial Public Sector excludes Panama Canal Authority, Banco Nacional de Panamá and Caja de Ahorros. |
| (2) | For the year 2010 and any subsequent year, this figure is included in the “Nonconsolidated Agencies Surplus and Others” line item. |
| (3) | Excluding interest payments. |
Sources: Office of the Comptroller General, Ministry of Economy and Finance and other public institutions.
International Reserves
Because Panama uses the U.S. dollar as legal tender and prints no domestic paper currency, Panama does not have foreign currency reserves in the conventional sense. In Panama, unlike in other countries, foreign currency reserves are not necessary for providing the private sector economy foreign currency to pay for imports or for supporting exchange rates for a domestic currency. Panama’s foreign currency reserves are generally considered to consist of BNP’s U.S. dollar-denominated foreign assets. As of December 31, 2013, BNP’s foreign assets increased to $2.4 billion (from $2.1 billion as of December 31, 2012).
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The following table sets forth certain information regarding Panama’s international reserves at the dates indicated:
International Reserves
| | | | | | | | | | | | | | | | | | | | |
| | | December 31, | |
| | | 2009 | | | 2010 | | | 2011 | | | 2012 | | | 2013 | |
Foreign Exchange(1) | | $ | 2,624.8 | | | $ | 2,154.3 | | | $ | 1,754.2 | | | $ | 2,118.3 | | | $ | 2,393.5 | |
Reserve Position in IMF | | | 11.9 | | | | 11.9 | | | | 11.9 | | | | 11.9 | | | | 11.9 | |
| | | | | | | | | | | | | | | | | | | | |
Total(2) | | $ | 2,636.7 | | | $ | 2,166.2 | | | $ | 1,766.1 | | | $ | 2,130.2 | | | $ | 2,405.4 | |
| (1) | Foreign assets of BNP in millions of dollars |
| (2) | In millions of dollars. |
Source: IMF and BNP.
Banking Sector
Total assets of the banking sector were approximately 9.1% higher at year-end 2013 than at year-end 2012. Total deposits were approximately 9.5% higher at year-end 2013 than at year-end 2012.The table below sets forth information on the banking sector at December 31 for each of the years 2009 through 2013:
The Banking Sector
(in millions of dollars)
| | | | | | | | | | | | | | | | | | | | |
| | | December 31, | |
| | | 2009(R) | | | 2010(R) | | | 2011(R) | | | 2012(R) | | | 2013 | |
Assets: | | | | | | | | | | | | | | | | | | | | |
Liquid Assets: | | | | | | | | | | | | | | | | | | | | |
Deposits in local banks | | $ | 2,366 | | | $ | 1,958 | | | $ | 2,431 | | | $ | 2,630 | | | $ | 3,089 | |
Deposits in foreign banks | | | 10,380 | | | | 10,206 | | | | 10,158 | | | | 12,275 | | | | 13,280 | |
Other | | | 676 | | | | 687 | | | | 1,043 | | | | 882 | | | | 996 | |
| | | | | | | | | | | | | | | | | | | | |
Total Liquid Assets | | | 13,421 | | | | 12,851 | | | | 13,633 | | | | 15,787 | | | | 17,366 | |
Loans | | | 36,820 | | | | 43,248 | | | | 50,186 | | | | 56,009 | | | | 60,615 | |
Investments in Securities | | | 11,558 | | | | 12,945 | | | | 14,093 | | | | 14,852 | | | | 16,195 | |
Other assets | | | 2,758 | | | | 2,798 | | | | 3,063 | | | | 3,078 | | | | 3,752 | |
| | | | | | | | | | | | | | | | | | | | |
Total Assets | | | 64,557 | | | | 71,842 | | | | 80,975 | | | | 89,726 | | | | 97,928 | |
Liabilities: | | | | | | | | | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | | | | | | | | | |
Internal: | | | | | | | | | | | | | | | | | | | | |
Official | | | 4,338 | | | | 4,405 | | | | 4,892 | | | | 5,723 | | | | 6,860 | |
Public | | | 21,997 | | | | 24,362 | | | | 25,966 | | | | 29,328 | | | | 32,281 | |
Banks | | | 2,286 | | | | 1,827 | | | | 2,274 | | | | 2,553 | | | | 3,178 | |
| | | | | | | | | | | | | | | | | | | | |
Total Internal Deposits | | | 28,621 | | | | 30,594 | | | | 33,131 | | | | 37,603 | | | | 42,319 | |
External: | | | | | | | | | | | | | | | | | | | | |
Official | | | 19 | | | | 60 | | | | 61 | | | | 44 | | | | 99 | |
Public | | | 15,512 | | | | 15,902 | | | | 17,500 | | | | 19,734 | | | | 20,145 | |
Banks | | | 5,924 | | | | 4,822 | | | | 6,746 | | | | 6,688 | | | | 7,586 | |
| | | | | | | | | | | | | | | | | | | | |
Total External Deposits | | | 21,455 | | | | 20,784 | | | | 24,307 | | | | 26,467 | | | | 27,830 | |
Total Deposits | | | 50,076 | | | | 51,378 | | | | 57,438 | | | | 64,070 | | | | 70,149 | |
Obligations | | | 5,345 | | | | 10,392 | | | | 11,912 | | | | 13,408 | | | | 14,978 | |
Other Liabilities | | | 1,928 | | | | 1,999 | | | | 2,557 | | | | 2,691 | | | | 2,843 | |
| | | | | | | | | | | | | | | | | | | | |
Total Liabilities | | | 57,350 | | | | 63,769 | | | | 71,907 | | | | 80,168 | | | | 87,970 | |
Capital and Reserves | | | 7,207 | | | | 8,074 | | | | 9,068 | | | | 9,558 | | | | 9,958 | |
| | | | | | | | | | | | | | | | | | | | |
Total Liabilities and Capital | | $ | 64,557 | | | $ | 71,842 | | | $ | 80,975 | | | $ | 89,726 | | | $ | 97,928 | |
| | | | | | | | | | | | | | | | | | | | |
Source: Superintendency of Banks.
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Foreign Trade and Balance of Payments
In 2013 Panama’s net exports of goods and services increased to $843.9 million, or by approximately 2.7%, as compared to 2012. In 2013, Panama’s imports of goods and services increased to $11,980.1 million, or by approximately 4.1%, as compared to 2012.
For the year ended December 31, 2013, Panama’s largest trading partners for exports were the United States of America, Canada and China, with exports amounting to $152.8 million, $66.0 million and $51.3 million, respectively. For the year ended December 31, 2013, Panama’s largest trading partners for imports were the United States of America, China and Mexico, with imports amounting to $3,163 million, $1,024.0 million and $530.0 million, respectively.
Approximately 9.8% of Panama’s 2013 imports came from the CFZ.
On January 23, 2013, Colombia imposed supplemental import tariffs on certain textiles, apparel and footwear coming from countries where no trade agreement had been signed effective March 1 2013. On June 18, 2013, Panama lodged a complaint at the World Trade Organization (WTO) against Colombia claiming that the effective import tariff on those products is higher than the maximum allowed under the WTO membership agreement. On January 15, 2014, the Director General of WTO established a panel to hear Panama’s complaint. China, Ecuador, El Salvador, the European Union, Guatemala, Honduras, the Philippines and the United States have reserved their rights to participate in the panel proceedings as third parties. Since the CFZ re-exports goods to Colombia, such re-exported goods are not considered national exports of Panama, thus the recently entered Free Trade Agreement between Colombia and Panama would not exempt the CFZ re-exported goods from the Colombian import tariffs. This is the third complaint that Panama has filed with the WTO with regard to Colombia’s import policies. The first complaint was withdrawn in 2006 after the two parties came to an agreement. Colombia lost the second dispute in 2009, and the decision required Colombia to change its laws to comply with WTO rules.
On March 6, 2014, Venezuela’s President Nicolas Maduro announced that Venezuela would break diplomatic and economic relations with Panama after it sought a meeting with regional diplomats in the Organization of American States (OAS) to discuss the protests that have shaken Venezuela since February 2014. As a consequence, there have been delays in resolving a series of backlogged debts concerning goods imported into Venezuela from Panama’s Colon Free Zone. Estimates of the amount owed by Venezuelan companies range from $0.5 billion to $2.0 billion. Venezuelan and Panamanian authorities have claimed part of this debt derives from fraudulent over-invoicing and some Panamanian counterparties have conceded that there may be some unjustified charges. Resolution of claims by Panamanian exporters will likely involve a protracted process.
The newly elected President of Panama, Juan Carlos Varela, invited the Venezuelan President to his inauguration and has stated his desire to restore relations with the Venezuelan Government. President Maduro has similarly stated he is willing to reinstate the bilateral relationship among both countries once the Varela administration begins its term on July 1, 2014.
On September 20, 2013, Panama and Colombia signed a Free Trade Agreement that replaced the Partial Scope Agreement, which was effective since 1995. During 2013, Panamanian exports to Colombia, other than CFZ, totaled $9.8 million (1.2% of total 2013 exports). Imports from Colombia, other than CFZ, amounted to $393.4 million (3.0% of total 2013 imports).
Panama and Mexico signed a document on March 24, 2014, that closes negotiations on a bilateral Free Trade Agreement, which was signed on April 3, 2014. During 2013, Panamanian exports to Mexico, other than CFZ, totaled $8.6 million (1% of total 2013 exports). Imports from Mexico, other than CFZ, amounted to $530.0 million (4.1% of total 2013 imports).
Once these Free Trade Agreements are ratified by the National Assembly, Panama will gain access to the regional trade integration initiative “Pacific Alliance”, whose members are Colombia, Chile, Peru and Mexico. Panama already has Free Trade Agreements with Chile and Peru.
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The following tables set forth the composition of Panama’s imports and exports for the years indicated:
Composition of Merchandise Exports, F.O.B.(1)
(in millions of dollars)
| | | | | | | | | | | | | | | | | | | | |
| | | 2009(R) | | | 2010 | | | 2011 | | | 2012 | | | 2013(P) | |
Petroleum(2) | | $ | 7.1 | | | $ | 2.0 | | | $ | 0.8 | | | $ | 0.6 | | | $ | 3.6 | |
Non-petroleum Merchandise Exports: | | | | | | | | | | | | | | | | | | | | |
Bananas | | | 62.1 | | | | 65.2 | | | | 86.3 | | | | 85.9 | | | | 90.6 | |
Muskmelon | | | 36.9 | | | | 13.3 | | | | 5.6 | | | | 5.9 | | | | 4.0 | |
Watermelon | | | 45.0 | | | | 37.1 | | | | 16.6 | | | | 15.8 | | | | 16.5 | |
Sugar | | | 13.3 | | | | 19.2 | | | | 37.2 | | | | 34.5 | | | | 24.0 | |
Shrimp | | | 43.9 | | | | 35.4 | | | | 37.7 | | | | 40.5 | | | | 74.7 | |
Coffee | | | 9.6 | | | | 13.7 | | | | 9.4 | | | | 9.4 | | | | 6.9 | |
Fishmeal(4) | | | 16.6 | | | | 10.2 | | | | 14.4 | | | | 19.8 | | | | 34.8 | |
Frozen yellowfin tuna, fresh and frozen fish filet | | | 247.9 | | | | 118.5 | | | | 46.7 | | | | 33.3 | | | | 36.5 | |
Other seafood | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 1.6 | | | | 0.0 | |
Clothing | | | 7.8 | | | | 9.1 | | | | 12.2 | | | | 10.1 | | | | 7.1 | |
Meat from cattle | | | 14.0 | | | | 14.5 | | | | 18.2 | | | | 24.7 | | | | 25.2 | |
Standing cattle | | | 0.2 | | | | 0.0 | | | | 0.3 | | | | 3.1 | | | | 1.9 | |
Leather and similar products | | | 4.1 | | | | 8.8 | | | | 14.2 | | | | 17.9 | | | | 21.6 | |
Other | | | 313.3 | | | | 380.6 | | | | 485.3 | | | | 518.8 | | | | 496.4 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | | 821.9 | | | | 727.6 | | | | 784.9 | | | | 821.9 | | | | 843.9 | |
Re-exports other than CFZ | | | 114.4 | | | | 101.4 | | | | 135.7 | (5) | | | 155.6 | (5) | | | 205.9 | (6) |
Total | | $ | 936.1 | | | $ | 829.0 | | | $ | 920.6 | | | $ | 977.5 | | | $ | 1,049.8 | |
| | | | | | | | | | | | | | | | | | | | |
| (1) | Excluding the CFZ. [Note: Not all numbers are shown in the table above.] |
| (2) | Petroleum exports primarily consist of maritime and aviation fuel sales. |
| (3) | Excludes oil sales for consumption on board. |
Source: Office of the Comptroller General and Ministry of Economy and Finance.
For 2013, the current account balance was a $4,805.9 million deficit. For 2013, the capital and financial account balance was a $5,749.2 million surplus. For 2012, the current account balance was a $3,816.4 million deficit. For 2012, the capital and financial account balance was a $3,723.3 million surplus.
In reviewing Panamanian balance of payments statistics for merchandise imports and exports, it is also important to consider the effect of the CFZ and the significant amount of merchandise passing through it. Panama had $13,035.3 million in non-CFZ merchandise imports in 2013, an increase of (3.2% from 2012), while imports to the CFZ for the period between January and September 2013 were $9,947.8 million. Similarly, Panama had $843.9 million in non-CFZ merchandise exports in 2013 (2.7% more than in 2012), while CFZ re-exports for the period between January and September 2013 were $11,165.2 million.
Excluding the CFZ, Panama has historically suffered large merchandise trade deficits. The deficit, excluding the CFZ, was $9.2 billion (27.5% of real GDP) in 2013, an increase from 26.9% of GDP in 2012. However, these deficits have been significantly offset by the economic value added by the CFZ. In 2013, the merchandise trade deficit including the CFZ was $6.7 billion (20.1% of real GDP), a decrease from 21.1% from 2012. Other segments within the service sector of the Panamanian economy, including ports and the Panama Canal, also help offset the merchandise trade deficit. In 2013, the service sector had a net balance of payments surplus of $5,051.8 billion (a 2.2% decrease from 2012).
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The following table sets forth Panama’s balance of payments for the years 2009 through 2013:
Balance of Payments(1)
(in millions of dollars)
| | | | | | | | | | | | | | | | | | | | |
| | | 2009 | | | 2010 | | | 2011(R) | | | 2012(R) | | | 2013(E) | |
Current Account: | | | | | | | | | | | | | | | | | | | | |
Merchandise Trade(2) | | | | | | | | | | | | | | | | | | | | |
Exports | | | 12,037.5 | | | | 12,675.1 | | | | 16,926.2 | | | | 18,872.1 | | | | 17,504.5 | |
Imports | | | (14,218.2 | ) | | | (17,218.3 | ) | | | (24,143.4 | ) | | | (25,412.6 | ) | | | (24,255.9 | ) |
Balance | | | (2,180.7 | ) | | | (4,543.2 | ) | | | (7,217.2 | ) | | | (6,540.5 | ) | | | (6,751.4 | ) |
Services | | | 3,324.2 | | | | 3,490.1 | | | | 3,932.9 | | | | 5,164.3 | | | | 5,051.8 | |
Rent(3) | | | (1,448.8 | ) | | | (1,849.2 | ) | | | (1,911.4 | ) | | | (2,534.2 | ) | | | (3,080.9 | ) |
Unilateral Transfers(4) | | | 126.3 | | | | 137.7 | | | | 202.4 | | | | 94.0 | | | | (25.4 | ) |
Balance | | | (179.0 | ) | | | (2,764.6 | ) | | | (4,993.3 | ) | | | (3,816.4 | ) | | | (4,805.9 | ) |
Capital and Financial Account: | | | | | | | | | | | | | | | | | | | | |
Capital Account | | | 30.0 | | | | 42.5 | | | | 8.9 | | | | — | | | | 23.4 | |
Financial Account | | | 301.8 | | | | 3,010.6 | | | | 4,564.3 | | | | 3,723.3 | | | | 5,725.8 | |
Direct Investment | | | 1,259.3 | | | | 2,362.5 | | | | 2,956.2 | | | | 3,161.7 | | | | 4,370.5 | |
Portfolio Investment | | | 302.0 | | | | (1,057.8 | ) | | | 968.5 | | | | 832.4 | | | | (52.3 | ) |
Other Capital | | | (1,259.5 | ) | | | 1,705.9 | | | | 639.6 | | | | -270.8 | | | | 1,407.6 | |
Assets | | | (1,568.2 | ) | | | (3,665.4 | ) | | | (3,948.7 | ) | | | (3,477.0 | ) | | | (2,123.3 | ) |
Liabilities | | | 308.7 | | | | 5,371.3 | | | | 4,588.3 | | | | 3,176.2 | | | | 3,530.9 | |
Balance | | | 331.8 | | | | 3,053.1 | | | | 4,573.2 | | | | 3,723.3 | | | | 5,749.2 | |
Errors and Omissions (net) | | | 452.9 | | | | 18.7 | | | | 191.9 | | | | 117.3 | | | | (320.9 | ) |
Overall Surplus (Deficit) | | | 605.7 | | | | 307.2 | | | | (228.2 | ) | | | 24.2 | | | | 622.4 | |
Financing | | | (605.7 | ) | | | (307.2 | ) | | | 228.2 | | | | (24.2 | ) | | | (622.4 | ) |
Total Reserves | | | (605.7 | ) | | | (307.2 | ) | | | 228.2 | | | | (24.2 | ) | | | (622.4 | ) |
Use of IMF credit and IMF loans | | | — | | | | — | | | | — | | | | — | | | | — | |
| (1) | Figures have been calculated pursuant to Fifth Edition of the Balance of Payments Manual prepared by IMF. |
| (3) | Includes wages and investment profits. |
| (4) | Unilateral transfers consist of transactions without a quid pro quo, many of which are gifts and migrant transfers. |
| Source: | Office of the Comptroller General. |
Public Debt
Period Ended March 31, 2014.
As of March 31, 2014, total public debt was US$17,014 million. Internal public debt accounted for 25.4% of total debt, while external public debt accounted for 74.6% of total debt. The average maturity of the debt portfolio as of March 31, 2014 was 10.9 years, with an average duration of 8.4 years. For the first quarter of 2014, Treasury note issuances reached US$270.8 million and local secondary market transactions reached US$87.9 million. Secondary market transactions during the period included US$58.86 million of Panotas due 2018, an increase from US$18.2 million in the same period in 2013, US$14.83 million of Panotas due 2021, an increase from US$3.9 million in the comparable period in 2013, US$7.03 million of Pabonos due 2022, for which there were no transactions in the comparable period in 2013 and US$7.52 million of Pabonos due 2023, a decrease from the US$9.9 million in the same period in 2013.
On April 29, 2014, Central Lationamericana de Valores S.A, or Latin-Clear, the clearing system for Panama, launched the “iLink” platform in connection with Euroclear Bank. The link allows institutional investors in the Euroclear system to buy, sell and settle and have held in custody applicable assetclasses registered and issued locally under the Latin-Clear system.
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Year Ended December 31, 2013.
Internal Debt
At December 31, 2013, Panama’s public sector internal debt represented approximately 22.0% of the total public sector debt. A substantial portion of total public sector internal debt is extended by public sector sources, such as CSS (Caja de Seguro Social) and official banking institutions, and BNP in particular. As of December 31, 2013, Panama’s public sector internal debt totaled approximately $3.5 billion, a decrease of $30.3 million from December 31, 2012. This decrease was due to the amortization of the 2013 Treasury Note. Panama’s public sector internal debt as a percentage of GDP was 8.1% as of December 31, 2013.
The following table sets forth Panama’s outstanding public sector internal debt at year-end for the years 2009 through 2013:
Public Sector Internal Debt
(in millions of dollars)
| | | | | | | | | | | | | | | | | | | | |
| | | December 31, | |
| | | 2009 | | | 2010 | | | 2011 | | | 2012 | | | 2013 | |
Private Sector Sources: | | | | | | | | | | | | | | | | | | | | |
Treasury notes | | $ | 265.1 | | | $ | 635.1 | | | $ | 1,133.0 | | | $ | 1,133.0 | | | $ | 1,022.8 | |
Treasury bills | | | 220.8 | | | | 230.0 | | | | 264.1 | | | | 415.1 | | | | 449.5 | |
Domestic bonds | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 1,364.0 | | | | 1,464.0 | |
Long-term private financing | | | 33.5 | | | | 29.1 | | | | 24.8 | | | | 20.5 | | | | 16.1 | |
Labor notes | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | |
SIACAP Bonds | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 519.2 | | | $ | 894.2 | | | $ | 1,421.9 | | | $ | 2,932.6 | | | $ | 2,952.4 | |
Public Sector Sources: | | | | | | | | | | | | | | | | | | | | |
CSS | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | | | $ | 0.0 | |
Official banking institutions | | | 302.8 | | | | 296.7 | | | | 481.9 | | | | 550.2 | | | | 500.1 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 302.8 | | | $ | 296.7 | | | $ | 481.9 | | | $ | 550.2 | | | $ | 500.1 | |
Total Public Sector Internal Debt | | $ | 822.2 | | | $ | 1,190.9 | | | $ | 1,903.8 | | | $ | 3,482.8 | | | $ | 3,452.5 | |
| (1) | Notes issued under the Government’s early retirement program. |
| (2) | Internal Floating Debt of the Republic. |
| (3) | The remaining unpaid overdraft debt that the Central Government incurred at BNP during the 1987-1989 period is reflected in this category. |
| Source: | Ministry of Economy and Finance. |
External Debt
As of December 31, 2013, total public sector external debt was approximately $12.2 billion, up from $10.8 billion as of December 31, 2012. Panama’s public sector external debt as a percentage of GDP was 28.7% as of December 31, 2013, as compared to 28.4% as of December 31, 2012.
As of March 31, 2014, total public sector external debt was approximately $12.7 billion, up from $12.2 billion as of December 31, 2013. Panama’s public sector external debt as a percentage of GDP was 26.7% as of March 31, 2014 (based on a GDP of $47,459 million), as compared to 28.7% as of December 31, 2013, with respect to the preliminary 2013 GDP results.
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The following tables set forth the composition of public sector external debt outstanding at year-end for the years 2009 through 2013 and the scheduled amortizations for public sector external debt for each of the years indicated:
Public Sector External Debt
(in millions of dollars)
| | | | | | | | | | | | | | | | | | | | |
| | | December 31, | |
| | | 2009 | | | 2010 | | | 2011 | | | 2012 | | | 2013 | |
Commercial banks | | $ | 218.8 | | | $ | 216.9 | | | $ | 216.0 | | | $ | 302.2 | | | $ | 693.3 | |
Bonds | | | 8,070.6 | | | | 8,070.6 | | | | 8,274.1 | | | | 7,725.7 | | | | 8,307.1 | |
Multilateral agencies | | | 1,638.1 | | | | 1,825.7 | | | | 2,039.4 | | | | 2,403.0 | | | | 2,937.4 | |
Bilateral entities | | | 222.7 | | | | 325.4 | | | | 380.9 | | | | 351.6 | | | | 293.3 | |
| | | | | | | | | | | | | | | | | | | | |
Total | | $ | 10,150.2 | | | $ | 10,438.6 | | | $ | 10,910.4 | | | $ | 10,782.5 | | | $ | 12,231.1 | |
| (1) | Debt stated at its outstanding principal amount and not at trading value in the secondary market. All external debt of the Republic is funded debt. Currencies other than U.S dollars are translated into U.S dollars at the exchange rate (selling) as of December 31, 2013. |
Source: Ministry of Economy and Finance.
Public Sector External Debt Amortization
(in millions of dollars)(1)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2014 | | | 2015 | | | 2016 | | | 2017 | | | 2018 | | | 2019-2053 | |
Multilaterals | | | | | | | | | | | | | | | | | | | | | | | | |
World Bank | | | 29.1 | | | | 32.0 | | | | 37.3 | | | | 38.4 | | | | 38.3 | | | | 407.3 | |
IDB | | | 119.3 | | | | 131.0 | | | | 151.7 | | | | 151.6 | | | | 100.3 | | | | 962.2 | |
IADF(2) | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 0.0 | |
CAF(3) | | | 8.7 | | | | 38.3 | | | | 46.3 | | | | 46.3 | | | | 45.9 | | | | 483.0 | |
EIB(4) | | | 3.4 | | | | 3.6 | | | | 3.9 | | | | 4.6 | | | | 4.6 | | | | 32.3 | |
OFID(5) | | | 1.0 | | | | 1.7 | | | | 1.7 | | | | 1.5 | | | | 1.4 | | | | 12.8 | |
Total | | | 161.4 | | | | 206.6 | | | | 240.9 | | | | 242.4 | | | | 190.5 | | | | 1,897.6 | |
Bilaterals | | | 24.9 | | | | 23.5 | | | | 23.2 | | | | 19.0 | | | | 15.3 | | | | 189.3 | |
Bonds | | | 0.0 | | | | 378.8 | | | | 0.0 | | | | 0.0 | | | | 0.0 | | | | 7,938.3 | |
Commercial Debt | | | 23.0 | | | | 118.6 | | | | 130.5 | | | | 130.5 | | | | 96.0 | | | | 444.9 | |
Total | | | 47.9 | | | | 520.9 | | | | 153.7 | | | | 149.5 | | | | 111.3 | | | | 8,572.5 | |
| (1) | Projections based on outstanding balance as of 03/28/2014. |
| (2) | International Agricultural Development Fund. |
| (3) | Andean Development Corporation. |
| (4) | European Investment Bank. |
| (5) | The OPEC Fund for International Development. |
Source: Ministry of Economy and Finance.
IMF Relationship
Panama is a member of the International Monetary Fund (“IMF”). Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with its member countries, usually every year, to assess their economic health. The IMF concluded its most recent Article IV consultation with Panama on February 21, 2014.
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