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International Monetary Fund. Statistics Dept.
At the request of the Superintendency of Banks of Panama (SBP), and with the support of the International Monetary Fund’s (IMF’s) Western Hemisphere Department (WHD), a monetary and financial statistics (MFS) remote technical assistance (TA) mission from the IMF’s Statistics Department (STA) took place during June 22-July 10, 2020. The main objective of the mission was to assist the SBP in the compilation of new standard report forms for depository corporations (SRF 1SR and SRF 2SR) on the basis of internationally accepted standards, as set out in the IMF’s 2016 Monetary and Financial Statistics Manual and Compilation Guide (MFSMCG), following the introduction of a new chart of accounts by the SBP, and to agree on an improved timeline to report monetary and financial statistics to STA, on a monthly basis. The work of the mission was facilitated by the excellent collaboration of the staff of the Financial Studies Directorate (FSD) of the SBP. The officials met during the mission are listed in Appendix I.
International Monetary Fund. Statistics Dept.
Panama’s statistical system is well established by a legal framework that generally provides the necessary authority for the collection and compilation of statistics. Panama has a well-developed macroeconomic statistical system and the government recognizes the importance of good statistics for policy and investment decisions. This Report on the Observance of Standards and Codes (ROSC) is a follow-up to the Panama ROSC issued in 2006. Since 2006, Panama has acted upon a number of the recommendations of the previous ROSC, has passed and implemented new statistical legislation, created the National Statistical Institute and enhanced its statistical compilation and dissemination practices. This report assesses the current state of the statistical system and makes a number of recommendations related to future developments that will further enhance the statistical system. The legal framework assigns responsibility for the socio-economic statistics to the Comptroller General of the Republic of Panama (CG), which is subsequently delegated to the National Statistical Institute (INEC). Among other social and economic data INEC compiles and disseminates national accounts, consumer price index (CPI), government finance, and external statistics. The MEF in collaboration with INEC also compiles and disseminates fiscal statistics. Given Panama’s long history of dollarization and absence of a central bank, there is no assignment of responsibility for compiling and disseminating a complete set of monetary and financial statistics. Instead, the Superintendency of Banks of Panama (SBP) produces banking sector statistics in line with its functions. Consequently, statistical practices for some elements of the DQAF do not apply to this sector (Box 1). Opportunities exist for improving the methodological basis and source data for most datasets.
International Monetary Fund

Panama has a well-developed macroeconomic statistical system, and the government recognizes the importance of good statistics for policy and investment decisions. All statistical agencies are committed to further statistical progress by promoting implementation of the National Strategy for Statistical Development (NSSD). Executive Directors recommend that Panama should proceed with the amendment to the Law of the Controller General aimed at creating the National Institute of Statistics, and implement the annual supply and use framework to investigate discrepancies and improve consistency.

International Monetary Fund

Panama has a well-developed macroeconomic statistical system, and the government recognizes the importance of good statistics for policy and investment decisions. All statistical agencies are committed to further statistical progress by promoting implementation of the National Strategy for Statistical Development (NSSD). Executive Directors recommend that Panama should proceed with the amendment to the Law of the Controller General aimed at creating the National Institute of Statistics, and implement the annual supply and use framework to investigate discrepancies and improve consistency.

International Monetary Fund

Bank financial soundness indicators are solid, with high levels of capitalization and low nonperforming loan rates. Among other measures, they include broadening of the tax base, changes to dividend taxation, an increase in the value-added tax, lower personal and corporate income tax rates, and elimination of loopholes. They welcomed the adoption of a medium-term fiscal framework and the government’s ambitious plans for fiscal consolidation over the medium term. The resilience of the banking system to the global financial crisis was welcomed.

International Monetary Fund

The 2011 Article IV Consultation reports that Panama’s economy has rebounded strongly from the 2009 slowdown, and is one of the fastest-growing in the region. Rapid growth and prudent fiscal policy have lowered public debt to less than 40 percent of GDP, and rating agencies have placed Panama’s sovereign debt one notch above investment grade. The neutral fiscal stance envisaged for 2012–13 is broadly appropriate, though a tighter stance would have been preferable to rebuild buffers and contain inflation.

International Monetary Fund. Western Hemisphere Dept.

Panama’s per capita GDP has doubled, driven by a steady rise in public and private investment underpinned by a stable macroeconomic environment and prudent policies. Easy credit and fiscal conditions should continue to support public and private consumption. Further fiscal restraint through better tax administration and expenditure management and enhanced buffers would help cope with adverse spillovers. There is progress in implementing financial sector assessment program (FSAP) recommendations, though there is a need to upgrade financial sector supervision. Improvements in competitiveness and recent education reforms should help sustain growth over the medium term.

International Monetary Fund. Western Hemisphere Dept.

Backdrop and Outlook. Panama’s economic growth is slowing towards its medium-term potential and is expected to remain in the 6–7 percent range over the next 5 years. Inflation has been declining due to lower oil prices and price controls imposed on some food items in July 2014. The external current account deficit remains elevated, with foreign direct investment as the main source of financing, but should moderate over time as investment winds down and the corresponding projects start generating exports. Risks. A globally integrated economy brings substantial benefits to Panama, but also makes it vulnerable to external shocks to global growth, trade, and financial markets. However, strong fundamentals and the room to implement a countercyclical fiscal response would mitigate the impact of such external shocks. Delayed reforms to financial transparency are an important risk that could restrict access to global capital and the international payments system. Policy advice. It is essential to finalize the strengthening of the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework in order to comply with the international standard. The fiscal framework needs to be strengthened to serve as a solid medium-term anchor. In particular, fiscal buffers should be enhanced to cope with risks and expected or potential liabilities. In parallel, the pension system needs to be reformed, notably to address the large unfunded pension liabilities. Financial sector reforms should be geared towards implementing fully the remaining recommendations of the 2011 Financial Sector Assessment Program (FSAP), including establishing a facility for the provision of temporary liquidity to banks, improving the monitoring of external and systemic risks, upgrading the legislation on non-bank financial intermediaries, and developing further the macroprudential policy framework along with key instruments. Further investment in training, education, and healthcare will raise labor productivity and promote sustained and more inclusive growth.