Fitch Ratings issued a statement reaffirming the investment grade rating in Panama and its long-term foreign currency and local currency issuer ratings to default at ‘BBB’. The issue ratings of senior bonds in foreign and local currency unsecured Panama also claim to ‘BBB’. The outlook for long-term exams are Stable. The country ceiling is affirmed at ‘A’ and the short-term foreign currency ‘F3’.
Gogetit Highlights
* Fitch expects growth will average around 6% in 2014-2015, the highest rate in the category of ‘BBB’, supported the Panama Canal expansion and its impact on other logistics activities.
* Inflation has slowed to a pace consistent with other countries and therefore more favorable to the dollarization regime. However, increases in real wages in recent years could keep the pressure on domestic demand and inflation.
* Fitch expects the authorities are able to reduce the deficit of the nonfinancial public sector 3.7% of GDP in 2015 and 3.3% in 2016. This is a slower-than-expected fiscal consolidation and law allow higher deficits to offset the windfall Canal delay.
The global rating agency Fitch Ratings recently issued a statement in which the degree of investment in Panama is reaffirmed, demonstrating a stable outlook .
According to information posted on Central America Data website, and according to the statement issued by Fitch Ratings, there are several key drivers for evaluation, such as evaluation, affirmation and Outlook Stable Panama.
It is important to note that Panama’s ratings are supported by the outperformance of its dynamic and diversified economy based on services. The increase in foreign direct investment in the mining, energy and tourism could further diversify the economy.
On the other hand, inflation has slowed to a pace consistent with other countries and therefore more favorable to the dollarization regime. However, increases in real wages in recent years could keep the pressure on domestic demand and inflation. Rising food prices led the authorities to impose price controls in mid-2014, though these are temporary and limited in scope.
Credit growth remains in line with nominal GDP, and the risk of asset bubbles are mitigated by prudent bank lending practices. The current account deficit remains relatively high, although still financed by foreign direct investment, broad-based and should decline on lower oil prices and the completion of the Canal expansion.
Fitch expects the authorities will be able to reduce the deficit of the nonfinancial public sector 3.7% of GDP in 2015 and 3.3% in 2016.
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