Moody's maintains Panama's investment grade

Moody's reiterated yesterday the degree of investment of the Republic of Panama in Baa2 with a stable outlook and stressed the initiative of the Government of Panama to freeze 50% of the vacancies of the Non-Financial Public Sector (SPNF) and indicated that it seeks to curb the Growth of the state payroll, reducing current spending.

The rating agency believes that savings from freezing vacancies will allow the government to compensate for revenue losses or increase capital expenditures, which is necessary to comply with the country's fiscal regulations.

The new provision will allow the government to partially offset any revenue shortfalls in relation to its budget by achieving a gradual monthly saving of $ 10 million equivalent to 0.2% of annual gross domestic product, Moody's said.

The agency maintains the expectation that the Panama Canal Authority will increase its transfers to the Government by $ 600 million (1% of GDP) in 2017 to reach $ 1.6 billion, after the inauguration of the expanded Canal, given in June 2016.

"Panama's strong economic growth and fiscal discipline made Moody's maintain its Baa2 rating with a stable outlook. The Panamanian economy stands out among the Latin American countries for its dynamism and growth, "said the MEF.