EXHIBIT L
RECENT DEVELOPMENTS IN THE REPUBLIC AS OF SEPTEMBER 15, 2014
The information included in this Exhibit L 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 SEC on March 27, 2014, Amendment No. 2 thereto filed on Form 18-K/A with the SEC on May 27, 2014 and Amendment No. 3 thereto filed on Form 18-K/A with the SEC on June 27, 2014. To the extent the information in this Exhibit L is inconsistent with the information contained in such annual report the information in this Exhibit L replaces such information. Initially capitalized terms used in this Exhibit L 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)(7) (millions) | | $ | 12,038 | | | $ | 12,675 | | | $ | 16,926 | | | $ | 18,872 | | | $ | 17,505 | |
Imports (c.i.f.) Goods(6)(7) (millions) | | $ | (14,218 | ) | | $ | (17,218 | ) | | $ | (24,143 | ) | | $ | (25,413 | ) | | $ | (24,256 | ) |
Merchandise Trade Balance(7) (millions) | | $ | (2,180 | ) | | $ | (4,543 | ) | | $ | (7,217 | ) | | $ | (6,541 | ) | | $ | (6,751 | ) |
Current Account Surplus(7) (Deficit) (millions) | | $ | (179 | ) | | $ | (2,765 | ) | | $ | (4,993 | ) | | $ | (3,816 | ) | | $ | (4,806 | ) |
Overall Balance of Payments Surplus (Deficit)(7) (millions) | | $ | 153 | | | $ | 289 | | | $ | (420 | ) | | $ | 93 | | | $ | 943 | |
Total Official Reserves (at December 31) (millions) | | $ | 2,643 | | | $ | 2,173 | | | $ | 1,772 | | | $ | 2,137 | | | $ | 2,412 | |
| (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) | Including interest payments. |
| (7) | Figures have been calculated pursuant to the fifth edition of the Balance of Payments Manual prepared by the IMF. |
Sources: Office of the Comptroller General, Banco Nacional de Panamá (“BNP”) and Ministry of Economy and Finance.
Presentation of Economic and Other Information
The Office of the Comptroller General has updated the base year used for the System of National Accounts from 1996 to 2007. International best practices call for updating the constant GDP base year at least every 10 years to reflect structural changes in production, consumption and prices, and to ensure that the National Accounts provide a more accurate depiction of the economy given its dynamism. Data for the Colón Free Zone (CFZ) and the Panama Canal has not yet been published using the new base year.
Government financial statistics and related tables are presented in accordance with the IMF Government Finance Statistics Manual 1986 (GFSM 1986). Real sector statistics are presented in accordance with the UN 1993 System of National Accounts (SNA 1993); however, with the recent change of base year from 1996 to 2007, financial intermediation activity is being measured following the UN SNA 2008. Balance of payments statistics are prepared in accordance with the fifth edition of the IMF Balance of Payments Manual (BPM5).
Open unemployment figures are no longer presented. Unemployment figures are now used.
Government
On May 4, 2014 Panama held general elections for the posts of president, members of the Assembly and other regional posts. The incumbent vice-president, Juan Carlos Varela, was elected President with 39.08% of the vote obtained by the “El Pueblo Primero” alliance composed of the Partido Popular and Partido Panameñista. President Varela took office on July 1, 2014. In the Assembly, 30 seats belong to Cambio Democrático, 25 seats belong to the Partido Revolucionario Democrático, 12 seats belong to the Partido Panemeñista, , two seats belong to the Partido Molirena, one seat belongs to Partido Popular and one representative has no party affiliation. There are 71 seats in the Assembly. There are 14 representative who currently cannot take a seat in the Assembly due to disputes before the Electoral Tribunal for actions taken in the May 4, 2014 election.
On December 3, 2013, then presidential candidate 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 potable water nationwide; to construct Metro lines 2 and 3 to San Miguelito 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.
The Social and Fiscal Responsibility Regime established by Law No. 34 of 2008 (referred to as the Social Fiscal Responsibility Law) requires the new government to present, during the first six months of its administration, a multi-year social strategy, a five-year financial plan and the macroeconomic criteria
to manage public expenditures and to incentivize current savings. The Law also establishes that during the last six months of a government’s term, the government cannot use more than 50% of the operating expenses within the general budget. The Law does not, however, impose a limitation on debt service.
The preliminary fiscal deficit of the Non-Financial Public Sector for the first six months of 2014 was approximately U.S.$1.5 billion. Article 10 of the Social and Fiscal Responsibility Law, as amended by Law No. 38 of 2012, establishes a Non-Financial Public Sector deficit ceiling of 2.7% of nominal GDP projected in the budget for the fiscal year.
The Assembly adopted the fiscal year 2014 budget based on a projected GDP of approximately U.S.$ 49.0 billion. The corresponding fiscal deficit permitted under the Social and Fiscal Responsibility Law is approximately U.S.$1.3 billion.
While the preliminary deficit for the first half of 2014 alone exceeded the annual limit permitted by Law, compliance with the Social and Fiscal Responsibility Law is only assessed against the actual year-end results. Due to the seasonality of revenue receipts and year-end dividend payments, fiscal results expressed as a percentage of GDP have historically improved by the end of the fiscal year.
The Non-Financial Public Sector deficit for the six-month period ended on June 30, 2014, exceeded the result registered for the same period of the previous fiscal year by U.S.$696.4 million. Total Non-Financial Public Sector expenditure on current and capital expenditures increased by U.S.$744.7 million (13.6%), while total revenue increased by U.S.$68.7 million (1.5%). On the expenditure side, capital expenses totaled U.S.$2.7 billion for the first six months of 2014, a U.S.$512.9 million (23.7%) increase compared to the same period of 2013 and current expenses amounted to U.S.$3.1 billion, a U.S.$217.7 million (7.5%) increase with respect to the period ended on June 30, 2013. Tax revenue registered a decrease of $21.8 million (0.9%) during the first six months of 2014, while non-tax revenue reached U.S.$770.9 million, a U.S.$214.3 million increase (38.5%) for the same period. Capital revenue recorded a decrease of U.S.$100.8 million (92.1%) during the same time frame.
As of June 30, 2014, the Assembly had approved modifications to the budget in the form of supplemental spending authorizations totaling more than U.S.$600.0 million for fiscal year 2014: U.S.$333.6 million related to capital expenditure and U.S.$274.9 million to current expenses. The electric power subsidy scheme was not revised in time for inclusion in the budget adopted by the Assembly and the Government estimates there was a disbursement of an additional amount of as much as U.S.$175.0 million for this subsidy account in the first half of 2014. The Government has postponed the adjustment on the electric power rate until January 2015. The subsidy for freezing the electric power rate is estimated at $475.0 million for fiscal year 2014.
Government estimates show that total revenue of the Non-Financial Public Sector for the fiscal year may fall short of the budgeted figure by approximately U.S.$532.0 million, mainly due to an overestimate in revenues related to the sale of land and reverted properties of U.S.$125.0 million, a decrease in the projected direct contributions from the Panama Canal Authority (PCA) of U.S.$129.0 million and a decline in tax revenue of U.S.$278.0 million.
On September 2, 2014, pursuant to Cabinet Resolution No. 152, the Executive approved an approximately $590 million expenditure reduction plan for 2014, consisting of reductions of $100 million in current expenditures and $490 million in the investment budget. The plan calls for a freeze on new hiring. The projects that will suffer budget cuts are those that have not yet started and those with low priority.
The plan does not affect the debt service budget. The Government is committed to reducing the deficit in light of the 2014 ceiling of the Social and Fiscal Responsibility Law. At this time, the Government estimates that the expenditure reduction plan would not, by itself, accomplish the goal of meeting the Fiscal and Social Responsibility Law target and that the deficit may fall within a range of 3.7%-4.2% of GDP. At a point in the fourth quarter of 2014 when the year-end deficit can be projected with more precision, the Government plans to request the Assembly to increase the 2014 deficit ceiling, but not the deficit ceiling for future years. No assurance can be given that Panama will be able to meet the deficit through its cost cutting measures or that the Cabinet and Assembly will approve a modification of the deficit ceiling if such modification is requested. The Fiscal and Social Responsibility Law provides that five senior economic officials of the Republic, including the Minister of Economy and Finance and the Comptroller General, will be responsible if the deficit ceiling is exceeded, but does not currently specify what responsibility entails or contain any institutional consequences for non-compliance. The Varela administration is considering proposing to the Assembly legislation to make the deficit ceiling more enforceable.
On August 5, 2014, as part of its legislative oversight function, the Assembly summoned Gioconda Torres de Bianchini, Comptroller General of the Republic, to appear before the Assembly to address questions about alleged cost overruns in public contracts, the elimination of ex ante control in certain public entities and other issues. The Comptroller General testified on August 19 and 20, 2014. Following her testimony the Panamenista and PRD party members in the Assembly reached an agreement on the terms of a criminal referral for investigation for possible prosecution for breach of her duties as a public official. On September 2, 2014, the referral was transmitted to the Judicial Branch and forwarded to the Office of the Public Prosecutor, which has jurisdiction pursuant to article 348 of the Judicial Code. The Comptroller General’s term expires on December 31, 2014, according to Assembly Resolution No. 82 of 2009. The Assembly does not have the power to remove the Comptroller. In the case of a vacancy in the office, whether by the expiration of the term or otherwise, the Assembly has the power to nominate a new Comptroller General, subject to ratification by the Executive.
In March 2014, the ENA Este Trust issued U.S.$212 million senior secured notes as part of financing for the construction of the phase IIB toll road, also referred to as ENA Este. ENA Este is an expansion of Corredor Norte toll road which will effectively connect with the Panamerican Highway, itself connected to the Corredor Sur toll road. Principal construction began in March 2012 and is expected to end in October 2014.
Panama signed three contracts with subsidiaries of Finmeccanica, S.p.A. in 2010, within the framework of a Memorandum of Understanding signed with the Government of Italy. Panama alleges that it has discovered serious deficiencies in the performance of one of the contracts, which is for radar equipment purchased from Selex Sistemi Integrati, S.p.A. (“Selex”) for a coastline surveillance system. The Government, through the Ministry of Security, has demanded that Selex overhaul seven installed radar systems and that tests be conducted to ensure that the systems comply with the performance specifications in the contract. If Selex is unable to overhaul the systems, Panama has demanded the installation of new equipment. If Selex does not, Panama intends to pursue its legal remedies.
In June 2014, the contract with Selex was amended to extend the project delivery date to December 31, 2015. In the meantime, the Government will not accept new invoices from Selex until there has been demonstrated performance of the equipment. Notwithstanding the situation involving Selex, as of August 2014, the Government has disbursed euros 53.5 million in connection with the contract with Selex, including payment of certain related international financing arrangements supporting the contracts with Selex and the other Finmeccanica, S.p.A. subsidiaries.
In light of several months of press reports of alleged corruption and corruption trials in Italy against the certain high level executives of Finmeccanica, S.p.A., the Public Ministry will perform an investigation to determine whether there was corruption in the three contracts signed with subsidiaries of Finmeccanica, S.p.A.
In June 2014, the Financial Action Task Force (FATF), an intergovernmental body developing and promoting policies to combat money laundering and terrorist financing, placed Panama on its list of jurisdictions with strategic anti-money laundering (AML) and combating terrorism financing (CFT) deficiencies, also commonly referred to as the grey list. In June 2014, Panama made a high-level political commitment to work with the FATF and the Grupo de Accion Financiera de Sudamerica to address its strategic AML/CFT deficiencies. Panama will work on implementing its action plan to address these deficiencies, including by: (1) adequately criminalizing money laundering and terrorist financing; (2) establishing and implementing an adequate legal framework for freezing terrorist assets; (3) establishing effective measures for customer due diligence in order to enhance transparency; (4) establishing a fully operational and effectively functioning financial intelligence unit; (5) establishing suspicious transaction reporting requirements for all financial institutions and designated non-financial businesses and professions; and (6) ensuring effective mechanisms for international cooperation. If Panama follows the recommended FATF plan, it believes it will eligible to be removed from the grey list in 2015.
Recent Government Initiatives
Law 56 of September 17, 2013 created the Treasury Single Account (TSA), an official bank account, administered by the Ministry of Economy and Finance, in which all public revenues will be deposited and from which payment of the obligations of public institutions will be made. Implementation of the TSA remains subject to the issuance of required regulations by the Ministry of Economy and Finance.
The TSA will include institutions from the Central Government, decentralized institutions and non-financial public enterprises, and will exclude State universities, municipalities, public financial institutions, the PCA and Caja de Seguro Social (CSS), and certain public enterprises such as Empresa Nacional de Autopistas (ENA).
This initiative is intended to allow for greater efficiency, transparency and security in the administration of public funds. Implementation of the TSA is intended to lead to the modernization of the Treasury, the standardization of operating procedures, the generation of timely and reliable information regarding balances and financial availability of the National Treasury and an increase in liquidity and in the efficiency of the management of public funds. It is expected that the TSA will become an essential tool for consolidating and managing the Government’s cash resources, thereby reducing borrowing needs and costs.
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 sector 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. The State will contribute to the new company the existing cold chain infrastructure developed through previous budgetary allocations. The company will finance further development, as well as operations, through fees for services and the incurrence of debt through loans from domestic and foreign public and private sector financial institutions
and bond issuances. Financing operations up to $300,000 will require shareholder approval; above that amount and up to $3.0 million will require the approval of the National Economic Council (CENA); and above U.S.$3.0 million will require the approval of the Cabinet. The Executive branch will be represented in the shareholders assembly through the Ministry of Economy and Finance; and on the Board of Directors through a representative from the Ministry of Agricultural Development and a representative from the Ministry of Economy and Finance.
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 currently links Los Andes County with the City Center. The Government is initiating the bidding process for the proposed construction of the second Metro line. Metro line 2 will provide service to 500,000 inhabitants of east Panama City and will have a direct connection to Metro line 1. Once operational, the line is expected to initially be able to transport 15,000 passengers per hour with the ability to transport more than 30,000 passengers per hour in the future.
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 in the private sector 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 Panama Province. 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.
Executive Decree No.165 of July 1, 2014, established temporary price caps on 22 products that are part of the family food basket. The measure became effective on July 7, 2014 for a six-month period. It applies throughout the national territory except for Darien province and the island territories (which may be subject to a later determination under the Decree). Thirteen items are assigned a maximum price and nine are assigned both a maximum price and a maximum gross margin of sale, ranging from 10% to 15%. As to each of those nine items, the retailer has the obligation to sell at least one brand at the maximum price and the rest of the brands at the maximum gross margin of sale. The Decree creates a Price Adjustment Commission, comprised of the Ministers of Commerce and Industry, Agricultural Development and Economy and Finance, which will evaluate price adjustment requests from companies or producers’ associations. This Commission may adjust prices on the regulated products in response to market conditions. Retailers that offer the remaining 28 products that are part of the family food basket that are listed in the Decree are required to give advance notice to the Authority for Consumer Protection and Defense of Competition (ACODECO) of any increase in the retail price of any of these products.
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 average CPI, was 4.0% in 2013. The unemployment rate maintained its level from 2012 (4.1%). 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, storage 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, a decrease from the level recorded in 2012 of 2.7%. 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. Fisheries registered an increase of 15.2%, due to the higher number of commercial species caught and increases in exports of by-products of industrial fishing, shrimp and tuna.
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.
The Central Government’s current savings for 2013 registered a surplus of $1.95 billion (4.6% of nominal GDP), compared to a surplus of $1.90 billion in 2012 (5.0% of nominal GDP). The Government’s overall deficit increased from $1.0 billion in 2012 (2.7% of nominal GDP) to a deficit of $1.8 billion in 2013 (4.2% of nominal GDP). In 2013, Panama’s non-financial public sector balance registered a deficit of $1.2 billion (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 | | | | 6.7 | | | | 4.0 | | | | 2.2 | |
Agricultural products | | | 8.6 | | | | 1.9 | | | | 3.3 | | | | 5.4 | | | | 4.0 | |
All products | | | (6.7 | ) | | | 3.9 | | | | 11.9 | | | | 4.7 | | | | 0.1 | |
Source: Office of the Comptroller General and Ministry of Economy and Finance.
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 | | | $ | 28,814.1 | | | $ | 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.
Sectoral Origin of Gross Domestic Product
(in millions of dollars)(1)
| | | | | | | | | | | | | | | | | | | | |
| | | 2009(R) | | | 2010(R) | | | 2011(R) | | | 2012(R) | | | 2013(P) | |
Primary Activities: | | | | | | | | | | | | | | | | | | | | |
Agriculture | | $ | 749.9 | | | $ | 764.4 | | | $ | 808.2 | | | $ | 847.5 | | | $ | 863.1 | |
Fisheries | | | 256.0 | | | | 150.7 | | | | 118.7 | | | | 122.7 | | | | 141.3 | |
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(2) | | | 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. |
| (2) | Including value-added tax. |
Note: Totals may differ due to rounding.
Source: Office of the Comptroller General.
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 | | | (11.6 | )% | | | (1.9 | )% | | | 5.7 | % | | | 4.9 | % | | | 1.8 | % |
Fisheries | | | (3.7 | )% | | | (41.2 | )% | | | (21.2 | )% | | | 3.4 | % | | | 15.2 | % |
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, storage 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(2) | | | 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. |
| (2) | Including value-added tax. |
Source: Office of the Comptroller General.
Sectoral Origin of Gross Domestic Product
(as percentage of GDP)(1)
| | | | | | | | | | | | | | | | | | | | |
| | | 2009(R) | | | 2010(R) | | | 2011(R) | | | 2012(R) | | | 2013(P) | |
Primary Activities: | | | | | | | | | | | | | | | | | | | | |
Agriculture | | | 3.1 | % | | | 3.0 | % | | | 2.9 | % | | | 2.7 | % | | | 2.6 | % |
Fisheries | | | 1.1 | % | | | 0.6 | % | | | 0.4 | % | | | 0.4 | % | | | 0.4 | % |
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, storage 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(2) | | | 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. |
| (2) | Including value-added tax. |
Source: Office of the Comptroller General.
As of the end of the first quarter of 2014, the estimated real GDP growth was 5.8%, driven mainly by growth in the transportation and communications sector, domestic wholesale and retail commerce, construction, financial intermediation, real estate activities and governmental services.
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 $1,849.6 million, a decrease of 0.2% over fiscal year 2012.
On average, from the Canal’s 2009 fiscal year to the Canal’s 2013 fiscal year, transits through the Canal decreased by 1.4% and cargo tonnage increased by 0.1%. 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, on average, from the Canal’s 2009 fiscal year to the Canal’s 2013 fiscal year, toll revenues have increased by 7.2% per annum, primarily due to an increase in tolls.
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 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 June 30, 2014, the third set of locks was approximately 76.6% 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 series of contractual disputes involving approximately $1.6 billion of claims or potential claims with respect to 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 are being 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 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. In addition, 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.
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 1.744 million (up from 1.689 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(1) | | | 3,600.0 | | | | 3,661.8 | | | | 3,723.8 | | | | 3,787.5 | | | | 3,850.7 | |
Working-Age Population(1) | | | 2,403.7 | | | | 2,450.4 | | | | 2,603.4 | | | | 2,658.9 | | | | 2,719.8 | |
Labor Force | | | | | | | | | | | | | | | | | | | | |
Employed(1) | | | 1,440.8 | | | | 1,455.6 | | | | 1,538.1 | | | | 1,621.1 | | | | 1,672.4 | |
Unemployed(1) | | | 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(2) | | | 64.1 | % | | | 63.5 | % | | | 61.9 | % | | | 63.4 | % | | | 64.1 | % |
Employment Rate(3) | | | 93.4 | | | | 93.5 | | | | 95.5 | | | | 95.9 | | | | 95.9 | |
Unemployment Rate | | | 6.6 | | | | 6.5 | | | | 4.5 | | | | 4.1 | | | | 4.1 | |
| (2) | Total labor force as percentage of working-age population. |
| (3) | Employed labor force as percentage of total labor force. |
Source: Office of the Comptroller General.
Public Finance
The 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. 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. See “— Government”.
On September 2, 2014, the Cabinet approved the draft budget for 2015, with total expenditures of $19.556 billion dollars or more than 10 percent higher than the budget proposed by the Martinelli Administration for 2014. The 2015 budget proposal is based on an estimated economic growth in 2015 of 6.5% and a projected rate of inflation of 4.3% per annum. The draft budget law projects a budget deficit
for 2015 of 2.0% of GDP, which is also the deficit ceiling for 2015 established in the Social and Fiscal Responsibility Law currently in force. The major spending initiatives included in the budget proposal include funding for the construction of Metro Line 2, the Colón Urban Revitalization project and the Panama City and Bay Sanitation project. Social programs with budget allocation include Roofs of Hope and the Basic Sanitation project “100/0”, which consists in providing uninterrupted drinking water supply and toilets for the entire population, thus eliminating latrines across the country. Social transfers such as “120 a los 65” and Universal Scholarship have also been included in the budget.
Period Ended June 30, 2014
The Central Government’s total revenues for the period ended June 30, 2014, totaled U.S.$3,132.9 million, an increase of 3.1% from the same period in 2013. Capital expenditures increased by 13.3% to U.S.$2,447.6 million at June 30, 2014 when compared to the same period in 2013. Current savings reached U.S.$700.9 million as of June 30, 2014, which represents 1.5% of estimated 2014 GDP or an decrease of 3.6% 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 June 30,
(in millions of dollars) | |
| | | 2013 | | | 2014 | |
Total Revenues | | | 3,039.7 | | | | 3,132.9 | |
Adjusted Current Revenue | | | 2,938.4 | | | | 3,130.9 | |
Tax Revenue | | | 2,381.7 | | | | 2,359.9 | |
Non Tax Revenues | | | 556.6 | | | | 770.9 | |
Capital Income | | | 92.8 | | | | 0 | |
Donations | | | 8.5 | | | | 2.1 | |
Total Expenditures | | | 4,423.1 | | | | 4,877.5 | |
Current Expenditures | | | 2,262.0 | | | | 2,430.0 | |
Current Savings | | | 676.4 | | | | 700.9 | |
Capital Expenditures | | | 2,161.1 | | | | 2,447.6 | |
Deficit | | | (1,383.4 | ) | | | (1,744.6 | ) |
% of GDP | | | (3.2 | )% | | | (3.7 | )% |
Source: Ministry of Economy and Finance.
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 U.S.$4,705.6 million as of June 30, 2014, an increase of 1.5% 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 U.S.$1,154.9 million in the period ended June 30, 2014, an increase of 6.1% compared to the same period in 2013.
The following table sets forth the revenues, by purpose, and expenditures, by sector, of the consolidated non-public financial sector for the periods indicated.
| | | | | | | | |
| | | Period Ended June 30,
(in millions of dollars) | |
| | | 2013 | | | 2014 | |
Total Revenues | | | 4,636.9 | | | | 4,705.6 | |
Adjusted Current Revenue | | | 4,351.7 | | | | 4,465.7 | |
Capital Income | | | 109.4 | | | | 8.7 | |
Donations | | | 8.5 | | | | 2.1 | |
Total Expenditures | | | 5,471.4 | | | | 6,216.1 | |
Current Expenditures | | | 2,898.2 | | | | 3,115.8 | |
Current Savings | | | 1,230.0 | | | | 1.154.9 | |
Capital Expenditures | | | 2,161.6 | | | | 2.674.56 | |
Deficit | | | (814.1 | ) | | | (1,510.5 | ) |
% of GDP | | | (1.9 | )% | | | (3.2 | )% |
Source: Ministry of Economy and Finance.
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 | | | | 4,993.4 | | | | 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 | | | | 3,286.3 | | | | 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 Expenditures | | | 4,817.1 | | | | 5,676.0 | | | | 6,678.7 | | | | 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 | | | 1,091.8 | | | | 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 | | | 1,175.0 | | | | 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 | ) | | | (1,107.7 | ) | | | (1,028.7 | ) | | | (1,788.8 | ) |
% of GDP | | | (1.4 | )% | | | (2.4 | )% | | | (3.3 | )% | | | (2.7 | )% | | | (4.2 | )% |
Source: Ministry of Economy and Finance.
Note: Totals may differ due to rounding.
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 | |
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 | |
Total Consolidated Non- Financial Public Sector Expenditures | | $ | 6,377.8 | | | $ | 7,385.3 | | | $ | 8,464.8 | | | $ | 9,563.8 | | | $ | 11,127.9 | |
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. |
Note: Totals may differ due to rounding.
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).
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 | | | 18.6 | | | | 18.3 | | | | 18.2 | | | | 18.2 | | | | 18.3 | |
| | | | | | | | | | | | | | | | | | | | |
Total (2) | | $ | 2,643.4 | | | $ | 2,172.6 | | | $ | 1,772.4 | | | $ | 2,136.5 | | | $ | 2,411.8 | |
| (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(P) | |
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.
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.
During 2013, banana and pineapple exports totaled $131.1 million, an increase of 6.0% from 2012. The increase in exports of bananas and pineapples came from an increase in the number of export destinations, which grew from $11 to $15 million for bananas, and from $15 to $18 million for pineapples.
In 2013, shrimp exports increased by 84.4% to $74.7 million. The growth in exports of shrimp in 2013 was due to an increased demand from countries such as United States, China and Vietnam, as well as the control of the white spot disease which deeply affected the industry in previous years.
In 2013, exports of frozen yellow fin tuna and fresh and frozen fish filets totaled $36.5 million, reflecting a 9.6% increase from 2012. In 2013, frozen yellow fin tuna and similar products were exported to 12 countries, while in 2012 the export destinations comprised nine countries.
In 2013, fishmeal exports amounted to $34.8 million, an increase of 75.8% from 2012 levels. The increase in exports of fishmeal came from an increased demand from countries such as Germany, China and Honduras as compared to 2012.
In 2013, petroleum exports were $3.6 million, a 500.0% increase compared to 2012. In 2013 there was increased demand for petroleum and related products from Caribbean countries such as Jamaica, Puerto Rico and Trinidad & Tobago as compared to 2012.
For the year ended December 31, 2013, Panama’s largest trading partners for exports were the United States, 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, 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 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 Assembly, Panama will be eligible to 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.
The European Free Trade Association (EFTA) States, composed of Iceland, Liechtenstein, Norway and Switzerland, signed a free trade agreement (FTA) with Panama and Costa Rica on June 24, 2013. The FTA between the EFTA States and Panama and Costa Rica was approved by Panama through Law 4 of April 7, 2014. Entry into force is pending. The FTA covers trade in goods and services, investment, competition, the protection of intellectual property rights, government procurement, sustainable development and cooperation.
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 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 Colón 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. Diplomatic relations between both countries were restored as of July 1, 2014.
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 yellow fin 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 | |
Gold | | | 5.8 | | | | 16.0 | | | | 70.3 | | | | 116.8 | | | | 115.8 | |
Pineapples | | | 36.5 | | | | 33.1 | | | | 32.0 | | | | 37.8 | | | | 40.5 | |
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 | | | 264.2 | | | | 278.3 | | | | 330.7 | | | | 362.5 | | | | 385.8 | |
| | | | | | | | | | | | | | | | | | | | |
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 | |
| | | | | | | | | | | | | | | | | | | | |
| (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. According to preliminary figures, the CFZ for the period between October 2013 and June 2014 had imports of $7,936.9 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. According to preliminary figures, during the period between October 2013 and June 2014 the CFZ had re-exports of $9,638.2 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).
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(R) | | | 2010(R) | | | 2011(R) | | | 2012(R) | | | 2013(E) | | | Period
ended
March 31,
2013 | | | Period
ended
March 31,
2014 | |
Current Account: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Merchandise Trade(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Exports | | | 12,037.5 | | | | 12,675.1 | | | | 16,926.2 | | | | 18,872.1 | | | | 17,504.5 | | | | 4,149.4 | | | | 3,214.9 | |
Imports | | | (14,218.2 | ) | | | (17,218.3 | ) | | | (24,143.4 | ) | | | (25,412.6 | ) | | | (24,255.9 | ) | | | (5,837.5 | ) | | | (5,052.3 | ) |
Balance | | | (2,180.7 | ) | | | (4,543.2 | ) | | | (7,217.2 | ) | | | (6,540.5 | ) | | | (6,751.4 | ) | | | (1,688.1 | ) | | | (1,837.4 | ) |
Services | | | 3,324.2 | | | | 3,490.1 | | | | 3,932.9 | | | | 5,164.3 | | | | 5,051.8 | | | | 1,371.2 | | | | 1,416.3 | |
Rent(3) | | | (1,448.8 | ) | | | (1,849.2 | ) | | | (1,911.4 | ) | | | (2,534.2 | ) | | | (3,080.9 | ) | | | (905.1 | ) | | | (963.9 | ) |
Unilateral Transfers(4) | | | 126.3 | | | | 137.7 | | | | 202.4 | | | | 94.0 | | | | (25.4 | ) | | | 11.3 | | | | (5.5 | ) |
Balance | | | (179.0 | ) | | | (2,764.6 | ) | | | (4,993.3 | ) | | | (3,816.4 | ) | | | (4,805.9 | ) | | | (1,210.7 | ) | | | (1,390.5 | ) |
Capital and Financial Account: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Capital Account | | | 30.0 | | | | 42.5 | | | | 8.9 | | | | — | | | | 23.4 | | | | 6.0 | | | | 3.3 | |
Financial Account | | | 301.8 | | | | 3,010.6 | | | | 4,564.3 | | | | 3,723.4 | | | | 5,725.8 | | | | 1,296.4 | | | | 449.0 | |
Direct Investment | | | 1,259.3 | | | | 2,362.5 | | | | 2,956.2 | | | | 3,161.7 | | | | 4,370.5 | | | | 1,485.5 | | | | 767.3 | |
Portfolio Investment | | | 302.0 | | | | (1,057.8 | ) | | | 968.5 | | | | 832.4 | | | | (52.3 | ) | | | (711.5 | ) | | | (364.9 | ) |
Other Capital | | | (1,259.5 | ) | | | 1,705.9 | | | | 639.6 | | | | (270.8 | ) | | | 1,407.6 | | | | 522.4 | | | | 46.6 | |
Assets | | | (1,568.2 | ) | | | (3,665.4 | ) | | | (3,948.7 | ) | | | (3,477.0 | ) | | | (2,123.3 | ) | | | (2,114.5 | ) | | | (1,079.1 | ) |
Liabilities | | | 308.7 | | | | 5,371.3 | | | | 4,588.3 | | | | 3,176.2 | | | | 3,530.9 | | | | 2,635.9 | | | | 1125.7 | |
Balance | | | 331.8 | | | | 3,053.1 | | | | 4,573.2 | | | | 3,723.3 | | | | 5,749.2 | | | | 1,302.4 | | | | 452.3 | |
Errors and Omissions (net) | | | 452.9 | | | | 18.7 | | | | 191.9 | | | | 117.3 | | | | (320.9 | ) | | | (423.9 | ) | | | 160.7 | |
Overall Surplus (Deficit) | | | 152.8 | | | | 288.5 | | | | (420.1 | ) | | | (93.1 | ) | | | 943.3 | | | | 91.7 | | | | (938.2 | ) |
Financing | | | (605.7 | ) | | | (307.2 | ) | | | 228.2 | | | | (24.2 | ) | | | (622.4 | ) | | | 332.2 | | | | 777.5 | |
Reserve Assets | | | (605.7 | ) | | | (307.2 | ) | | | 228.2 | | | | (24.2 | ) | | | (622.4 | ) | | | 332.2 | | | | 777.5 | |
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 and Ministry of Economy and Finance.
Foreign Direct Investment
Panama’s foreign direct investment (FDI) for 2013 was $4,651.3 million, an increase of $1,763.9 million, or 61.1%, from the amount recorded in 2012. 84.0% of 2013 FDI came from reinvested earnings, which the government believes is based on continued confidence investors have placed in the performance shown by the Panamanian economy. In 2013, 14.0% of FDI came from the purchases of shares of domestic companies by non-resident investors, mainly in the hospitality and real estate sectors and manufacturing companies; and the remaining 2.0% from other capital. Of this gross amount of
investments made by non-residents, $583.4 million corresponds to capital invested in the Colón Free Zone in 2013, an increase of $48.3 million as compared to the same period of the previous year. FDI inflows for the first quarter of 2014 amounted to $1.3 billion, a 2.1% increase as compared to the same period in 2013.
The following table sets forth the foreign direct investment in Panama by investor resident country for the years 2010 through 2012.
F
Foreign Direct Investment in Panama by Investor Resident Country
| | | | | | | | | | | | |
| Investor Residence Country | | Foreign Direct Investment (in thousands of U.S.$) | |
| | | 2010 (R) | | | 2011 (P) | | | 2012 (P) | |
TOTAL | | | 2,723,370 | | | | 3,132,408 | | | | 2,887,393 | |
EUROPE | | | 607,095 | | | | 1,039.211 | | | | 262,664 | |
European Union | | | 155,144 | | | | 821,901 | | | | 48,378 | |
Germany | | | 15,275 | | | | 131,328 | | | | 56,779 | |
Belgium | | | 11,348 | | | | 23,472 | | | | (139,707 | ) |
Denmark | | | (6,249 | ) | | | (16,260 | ) | | | (31,414 | ) |
Spain | | | (49,936 | | | | 176,844 | | | | 263,302 | |
France | | | (11,221 | ) | | | (7,596 | ) | | | 29,842 | |
Italy | | | (99,914 | ) | | | 77,810 | | | | 32,715 | |
Netherlands | | | 126,034 | | | | 36,253 | | | | 169,821 | |
United Kingdom | | | 79,140 | | | | 377,683 | | | | (280,487 | ) |
Sweden | | | 20,466 | | | | 7,982 | | | | 21,627 | |
Other Countries (1): Greece, Hungary, Ireland, Poland, Portugal, and Finland | | | 70,201 | | | | 14,385 | | | | (74,100 | ) |
Other European Countries | | | 451,951 | | | | 217,310 | | | | 214,286 | |
Andorra | | | 7,974 | | | | 1,302 | | | | 4,363 | |
Norway | | | (239 | ) | | | (216 | ) | | | 597 | |
Switzerland | | | 444,215 | | | | 209,514 | | | | 204,423 | |
Other countries (1): Liechtenstein, Russia and Turkey | | | 1 | | | | 6,710 | | | | 4,903 | |
AFRICA | | | 879,123 | | | | 349,824 | | | | 653,399 | |
South Africa | | | 879,123 | | | | 349,824 | | | | 653,399 | |
AMERICAv | | | 1,097,616 | | | | 1,393,548 | | | | 1,708,714 | |
North America | | | 1,119,406 | | | | 445,928 | | | | 717,134 | |
Canada | | | 8,598 | | | | 39,109 | | | | 32,434 | |
United States | | | 1,120,021 | | | | 392,081 | | | | 551,775 | |
Mexico | | | (9,213 | ) | | | 14,738 | | | | 132,925 | |
Central America and the Caribbean | | | (214,352 | ) | | | 297,897 | | | | 348,684 | |
| | | | | | | | | | | | |
Aruba | | | (963 | ) | | | (237 | ) | | | 5,353 | |
Bahamas | | | 4,678 | | | | 786 | | | | 35,770 | |
Costa Rica | | | 12,803 | | | | 104,481 | | | | 51,678 | |
Cuba | | | (1,194 | ) | | | 1,442 | | | | 1,096 | |
Curaçao | | | 726 | | | | (5,285 | ) | | | 769 | |
El Salvador | | | (19,547 | ) | | | 8,374 | | | | 3,840 | |
Guatemala | | | 4,358 | | | | 28,779 | | | | 23,729 | |
Honduras | | | 6,563 | | | | 72 | | | | 768 | |
Jamaica | | | (208,920 | ) | | | (11,044 | ) | | | 51,473 | |
Nicaragua | | | (1,142 | ) | | | (3,351 | ) | | | 300 | |
Puerto Rico | | | (63,109 | ) | | | 8,421 | | | | 57,849 | |
Dominican Republic | | | 34,622 | | | | 29,962 | | | | 30,950 | |
Other countries (1): Belize, Haiti, Barbados, Leeward Islands (UK), San Martin Island, Virgin Islands (USA), Trinidad and Tobago | | | 16,773 | | | | 135,497 | | | | 85,109 | |
South America | | | 192,562 | | | | 649,723 | | | | 642,896 | |
Argentina | | | (21,715 | ) | | | 3,659 | | | | 26,636 | |
Bolivia | | | 5 | | | | 48 | | | | 243 | |
Brazil | | | (1,973 | ) | | | 20,311 | | | | 122,765 | |
Chile | | | 36,848 | | | | 8,931 | | | | 35,352 | |
Colombia | | | 82,274 | | | | 412,020 | | | | 277,715 | |
Ecuador | | | 8,784 | | | | 12,581 | | | | 7,480 | |
Peru | | | 12,806 | | | | 182,301 | | | | 28,051 | |
Venezuela | | | 75,533 | | | | 9,872 | | | | 144,654 | |
ASIA | | | 117,278 | | | | 334,851 | | | | 248,834 | |
Middle and Near East | | | 5,078 | | | | (258 | ) | | | 4,193 | |
Israel | | | 5,078 | | | | (258 | ) | | | 4,193 | |
Central Asia, southern and other Persian Gulf countries | | | 1,809 | | | | 15,597 | | | | 4,022 | |
India | | | 1,792 | | | | (730 | ) | | | 1,629 | |
Singapore | | | — | | | | 17,468 | | | | 2,259 | |
Other countries (1) : Philippines, Pakistan, Saudi Arabia and Singapore | | | 1 | | | | (1,141 | ) | | | 134 | |
East Asia | | | 110,391 | | | | 319,512 | | | | 240,619 | |
China, Hong Kong | | | (25,133 | ) | | | 9,713 | | | | (2,035 | ) |
China, Democratic People’s Republic of Korea (North Korea) | | | (2,835 | ) | | | (278 | ) | | | 4,163 | |
Republic of Korea (South of Korea) | | | (17,646 | ) | | | 251,232 | | | | 27,562 | |
Japan | | | 25,677 | | | | 4,938 | | | | 70,716 | |
Republic of China (Taiwan) | | | 130,328 | | | | 53,907 | | | | 140,213 | |
OTHER COUNTRIES: (1) Angola, Uruguay, Australia and Libya | | | 22,258 | | | | 14,974 | | | | 13,782 | |
Note: Totals may differ due to rounding.
| (1) | Due to statistical confidentiality, countries with up to two companies of direct investment have been included in this line. |
Source: Office of the Comptroller General.
The following table sets forth foreign direct investment in Panama by category of economic activity for the years 2010 through 2012.
Foreign Direct Investment in Panama by Category of Economic Activity
| | | | | | | | | | | | |
| Category of Economic Activity | | Foreign Direct Investment (in thousands of U.S.$) | |
| | | 2010 (R) | | | 2011 (P) | | | 2012 (P) | |
TOTAL | | | 2,723,370 | | | | 3,132,408 | | | | 2,887,393 | |
Agriculture, cattle, hunting and forestry | | | 79,133 | | | | 54,542 | | | | 14,274 | |
Mining and quarrying | | | (2,151 | ) | | | 39,446 | | | | (1,130 | ) |
Manufacturing industries | | | (113,757 | ) | | | 141,698 | | | | 694,260 | |
Electricity, gas and water supplies | | | (33,677 | ) | | | 278,723 | | | | (220,208 | ) |
Construction | | | (211,650 | ) | | | 155,166 | | | | 145,641 | |
Wholesale and retail | | | 1,571,905 | | | | 1,103,011 | | | | 1,316,612 | |
Transport, storage and mail | | | 783,202 | | | | 350,223 | | | | 408,486 | |
Hotels and restaurants | | | (11,997 | ) | | | 156,549 | | | | 50,498 | |
Information and communication | | | 37,516 | | | | 36,714 | | | | 263,202 | |
Finance and insurance activities | | | 360,205 | | | | 592,170 | | | | 61,002 | |
Real estate activities | | | 112,235 | | | | 80,259 | | | | 29,343 | |
Professional, scientific and technical activities | | | (12,755 | ) | | | 82,933 | | | | 43,066 | |
Administrative activities and support services | | | 165,292 | | | | 34,231 | | | | 33,820 | |
Education | | | (1,525 | ) | | | 5,316 | | | | 2,636 | |
Social and health related services | | | 13,366 | | | | 6,905 | | | | 25,634 | |
Arts, entertainment and related activities | | | (17,697 | ) | | | 14,033 | | | | 15,319 | |
Other services activities | | | 5,725 | | | | 489 | | | | 4,938 | |
NOTE: Totals may differ due to rounding.
Source: Office of the Comptroller General.
Public Debt
Period Ended June 30, 2014.
As of June 30, 2014, total public debt was U.S.$17,639.5 million. Internal public debt accounted for 25.0% of total debt, while external public debt accounted for 75.0% of total debt. The average maturity of the debt portfolio as of June 30, 2014 was 10.5 years, with an average duration of 8.6 years. As of the second quarter of 2014, Treasury note issuances reached U.S.$285.4 million and local secondary market transactions reached U.S.$314.5 million.
Secondary market transactions during this period included U.S.$116.3 million of Panotas due 2018, a decrease from U.S.$232.3 million in the same period in 2013, U.S.$85.1 million of Panotas due 2021, for which there are no comparable transactions in 2013, U.S.$94.0 million of Pabonos due 2022, a decrease from U.S.$406.3 million in 2013, and U.S.$19.2 million of Pabonos due 2024, for which there are no comparable transactions in 2013.
On April 29, 2014, Central Latinoamericana 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 asset classes registered and issued locally under the Latin-Clear system.
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, 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 | |
| | | | | | | | | | | | | | | | | | | | |
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 | |
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 June 30, 2014, total public sector external debt was approximately $13.2 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 June 30, 2014 (based on a March 31, 2014 estimate of 2014 GDP of $47,459 million), as compared to 28.7% as of December 31, 2013, with respect to the preliminary 2013 GDP results.
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 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.
