International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper assesses risks in the Panamanian banking sector. The analysis suggests that Panama’s banking system seems able to withstand reasonably severe shocks, while contagion risks stem primarily from foreign banks. Ample starting capital buffers and bank profitability prevent translation of higher loan defaults under stress into materially impair capital adequacy ratios. Reverse engineering the exercise to gauge what it would take to erase one-fourth of system capital reveals that the shock would need to be not only unprecedented, but also extremely large. In terms of contagion, while failures of both domestic and foreign banks would result in significant capital losses for Panamanian banks, the risk of contagion propagation is much higher in the case of the latter.
This paper estimates medium-term potential growth for a country undergoing significant
structural and secular changes. Our forward-looking framework, incorporating three
analytical approaches for examining economic prospects, constitutes an important
complement to typical backward-looking methods that filter or extrapolate historical data. In
particular, the opening of the expanded Panama Canal in 2016 highlights significant
structural changes underway in the Panamanian economy. We first analyze growth
determinants and find that Panama is well-placed to maintain its business model, with
improvements in education and governance important to support growth. Second, the current
pipeline of investment projects can help sustain investment-led growth, although at a more
moderate pace. Third, further development of the logistics and tourism sectors holds promise
to further build on Panama’s comparative advantage.
International Monetary Fund. External Relations Dept.
This paper highlights that one of the most dramatic developments in the 20th century was the entry of women into economic and political spheres previously occupied almost exclusively by men. Although women are making progress in eliminating gender disparities, they still lag men in the workplace and in the halls of government. These gaps are found throughout the world, but are particularly pronounced in developing economies. So far, the greatest success has been in reducing education and health disparities and the least in increasing women’s economic and political influence.
Strong economic fundamentals helped Panama contain the adverse impact of the global economic downturn and financial turmoil. The 2009 Article IV Consultation highlights that real GDP of Panama in 2008 grew by 9.2 percent. Panama’s large banking system has weathered the global financial crisis relatively well. Executive Directors have noted that Panama is facing the global economic crisis from a position of strength. Directors have also commended the authorities for the fiscal consolidation of recent years and the associated rapid decline in the public debt-to-GDP ratio.