Panamanian e-comics received another blow. Standard & Poor’s Global Ratings lowered the country’s credit rating to BBB-, putting it on the verge of losing the precious investment grade. The decision was prompted by the increase in public debt, exacerbated by low tax revenues.
The agency explained that, although the outlook remains stable for now thanks to political stability and the continuity of key economic policies, it warns that the picture could change.
The Minister of Economy, Felipe Chapman explained that, although S&P’s decision reflects current fiscal challenges, it also represents a timely wake-up call for prudent action. We’re getting a very strong bell. It is a sign that, if we are responsible for important decisions such as reform of the pension system, we can achieve significant benefits. Otherwise, the risk is enormous,” he emphasized.
Chapman also pointed out that this reduction was anticipated by analysts and markets, given the fiscal deterioration the country has faced, especially in the last 24 months.
According to the qualifier, the Panamanian government has taken key measures, such as the presentation of an austere budget for 2024 and a proposal to reform the pension system, designed to ensure sustainability without raising taxes.
S&P highlighted the government’s efforts to strengthen tax collection through tools such as promoting tax bills and reducing tax evasion. These initiatives, according to Chapman, seek to generate resources for social investments and public works, while improving transparency in fund management.
In addition, the Panamanian banking system was identified as a key pillar for the country’s financial stability, thanks to liquidity buffers that exceed international standards and ensure confidence in the sector.
The report warns that, if concrete measures are not taken, Panama could face further degradation over the next 12 to 24 months. However, the stable outlook allocated by S&P reflects confidence in political stability and the continuity of responsible economic policies.
This setback is in addition to last March, when Fitch Ratings also lowered Panama’s rating. Now, eyes are on Moody’s pending evaluation, which could define the country’s economic future.
This article was translated after appearing in Critica