With a diversified economy and a strong, conservative, banking system, Panama is on the move to protect the country as much as possible from the current economic crisis. For the last three years, Panama positioned itself as one of the fastest growing economies in the region, with numbers as far as 10% a growth reached only by countries such as China.
Worldwide, this year has been very different for everyone. But Panama’s advantage over the region may survive based on its diversified economy and mega projects that are being fueled by the government to support the system while times get tougher.
On the big scheme, as reporter Yolanda Sandoval from La Prensa notes in her last article “Liquid Transfusion: in the hands of Multilateral Agencies”, last December, the ACP (Canal Authority of Panama) signed credit with five multilateral agencies for over two thousand million dollars to finance the Panama Canal Expansion. 2,300 million Dollars only with the Inter-American Development Bank. This mega project is already gaining momentum, and is expected to employ most of the construction workers that may be laid off from the real estate industry.
From our experience, even in real estate, niches such as Panama’s colonial town Casco Viejo (a UNESCO protected World Heritage site also known as Casco Antiguo) are still thriving. Hotels are being built; projects are being completed and delivered. Every commercial space seems rented and there is demand for more. Investors are attracted by the limited supply of unique real estate and the influx of tourism, as one of Panama’s most visited sites.
Panamanian banks are also being proactive. The Inter-American Development Bank has approved a loan for 500 million dollars to finance a program called Liquidity Program for Sustained Growth. This financing will be part of a stimulus package that the Panamanian Government has announced as a first front to counter the effects of the crisis. The Government package includes 1,110 million dollars to incentive credit to investments.
Private Banks have also gone out to lobby funding. Global Bank got a credit line through the Inter- American Development Bank and IFC. About 25 million dollars will be earmarked for micro and middle size companies. Banco General, one of Panama’s leading banks, received financing from the Inter- American Development Bank for 80 million dollars to support the growth of their long term clients, especially mortgages.
The article also points out that as competition for money gets harder, the region will be competing with Asia, Europe, and the United States; international financial institutions will consider seriously how governments have preserved their social policies. Being actively involved in commercial exchange will be a big positive point. Because of its geographic location and facilities, several international agencies are already setting headquarters in Panama which will benefit the country when applying for funds. The General Secretary of Iberoamerica (Secretaria General de Iberoamerica) inaugurated their branch and next May the International Monetary Fund will have a new Regional Center for Technical Assistance to Central America, Panama and Dominican Republic.
The biggest threats for the region are unemployment and deceleration. But as Enrique Iglesias current Secretary General for Iberoamerica said in his interview to La Prensa, “the fundamental piece is the recovery of banks”. At least here, Panama seems to be an easier case.