By Kylie Madry and Elida Moreno
PANAMA CITY (Reuters) – Panama will maintain its economic forecasts for next year despite Congress rejecting its budget proposal, said Economy and Finance Minister Felipe Chapman.
Chapman confirmed that the government aims for a real GDP growth of 3% and is reassessing the budget, which previously planned a 15% spending cut.
Concerns from Congress about a higher deficit led to the proposal’s withdrawal. The ministry will submit reforms to the fiscal responsibility law, allowing more flexibility for economic conditions.
Chapman said the government will present a five-year fiscal plan later this year to ensure economic stability.
Investors are showing renewed confidence, as indicated by lower yields on treasury bills. Chapman recently met with financial agencies, who offered substantial credit lines.
Despite Fitch downgrading Panama to junk status, Chapman remains optimistic about improving relations with credit agencies.
He highlighted concerns about external economic threats and potential droughts affecting the Panama Canal, mentioning plans for a dam to secure water supply.
The government is nearing a deal to manage copper from the closed First Quantum mine, which was shut down due to constitutional issues. Any future operations must consider public opinion that is largely against restarting the mine.
Future agreements would need to include increased royalty fees to gain public support.
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