Panama sees decline in FDI

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By LatAm Reports Editorial Team

Panama fails to recover the pace of growth of foreign investment it had before Covid-19, a government report today says.

According to the communiqué of the National Institute of Statistics and Census (INEC) of the Office of the Comptroller General of the Republic, in 2023 this flow represented two thousand 14.6 million dollars, which meant a fall of 30.7 percent compared to the same previous stage.

The report states that the fall was due to the fact that reinvested profits fell 40.2 per cent, particularly by the international licensing banks.

In contrast, in 2022 the flow of Foreign Direct Investment (FDI) stood at two thousand 906 million dollars, representing 50.8 percent increase over the 1 927 million recorded in 2021.

In 2019, before the pandemic, according to statistics published by the newspaper La Prensa, the channel country received three thousand 895 million dollars in IEDs. And in 2028 it reached the record of four thousand 750 million dollars.

In statements to the newspaper, economist Felipe Chapman pointed out that the country must work to be more transparent in its governance and institutions, while restoring confidence to bring back investment.

In Chapman’s view, you have to look at the recovery plans beyond the short-term of the five years of a government administration, and he predicted that it could take more than a decade and up to 20 years.

In that regard, he mentioned reference countries such as New Zealand, Estonia, Lithuania, Slovenia, South Korea, Denmark, the Netherlands, Ireland and Singapore.

On March 28, risk qualifier Fitch Ratings lowered the level of investment in Panama.

According to that company, the downgrade of the isthmus reflects fiscal and governance challenges that have been aggravated by the closure of the largest mine in the country, in reference to Minera Panama, a subsidiary of Canadian transnational First Quantum forced to suspend operations last November, following a Supreme Court ruling.

Fitch’s message, rejected by the government, states that large fiscal deficits and low income returns have driven some of the biggest increases in public debt/gross domestic product (GDP) and peer-to-peer interest/interest/income since 2019, before Covid-19.

This situation poses a greater vulnerability in the light of the sovereign’s heavy dependence on external markets for its financing, this text points out.

This article has been translated from the original which first appeared in El Pais