Abstract
IMF Country Report No. 23/122
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IMF Country Report No. 23/122
PANAMA
2022 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR PANAMA
March 2023
Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2022 Article IV consultation with Nicaragua, the following documents have been released and are included in this package:
A Press Release summarizing the views of the Executive Board as expressed during its February 22, 2023 consideration of the staff report that concluded the Article IV consultation with Panama.
The Staff Report prepared by a staff team of the IMF for the Executive Board's consideration on February 22, 2023 following discussions that ended on December 12, 2022 with the officials of Panama on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on February 8, 2023.
An Informational Annex prepared by the IMF staff.
A Debt Sustainability Analysis prepared by the IMF staff.
A Statement by the Executive Director for Panama.
The IMF's transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities' policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
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International Monetary Fund
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© 2023 International Monetary Fund
Press Release
PRESS RELEASE
PR23/95
IMF Executive Board Concludes 2022 Article IV Consultation with Panama
FOR IMMEDIATE RELEASE
Washington, DC – March 24, 2023: On February 22, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation.1
In the decade-and-half preceding the Covid-19 pandemic, an unprecedented construction and investment boom precipitated a rapid economic expansion in Panama. The Panama Canal and Tocumen Airport were expanded, there was large scale building of new skyscrapers in Panama City, and one of the largest copper mines in the world was constructed. Economic growth was further supported by the expansion of the services and logistics sectors, which benefited from the widening of the Panama Canal. With a rapid expansion of the capital stock, real GDP grew by 6 percent annually, poverty declined sharply, and income levels rapidly converged with those in advanced countries.
The Covid-19 pandemic led to a deep downturn, with real GDP shrinking by 18 percent and unemployment spiking to 181/2 percent in 2020, from 7 percent in 2019.
The recovery has been very strong, but the outlook is uncertain. Output expanded by 15 percent in 2021 and a projected 9 percent in 2022. Employment has rebounded strongly, while inflation remained low compared with other countries. The fiscal deficit declined to from 10.4 percent of GDP in 2020 to 4 percent of GDP in 2022. Nonetheless, risks of new external shocks have emerged, including a sharper than expected downturn of the world economy, renewed surges of food and energy prices, and disruptions to global capital markets. There are also uncertainties about when the rebound of the deep Covid-related downturn will have run its course, and what the medium-term growth potential of Panama will be given that construction is unlikely to provide the same support to growth as it has in the past decade and a half. Other domestic risks include a prolonged inclusion of Panama in the Financial Action Task Force (FATF) grey list and disruptions to copper mining activities after negotiations between the government and Minera Panama on a new contract failed to meet a mid-December 2022 deadline.
Executive Board Assessment2
Executive Directors agreed with the thrust of the staff appraisal. Panama witnessed a strong post-pandemic economic recovery, supported by a rebound in the global economy. However, the outlook remains uncertain, with risks of new external shocks, vulnerabilities from a prolonged inclusion in the Financial Action Task Force (FATF) grey list, and possible disruptions to copper mining activities following delays in reaching a new mining agreement. Looking ahead, Directors concurred that policies should focus on rebuilding buffers and ensuring the convergence of Panamanian income levels with those in advanced countries continues. While welcoming the recent progress, they underscored the critical importance of prioritizing an exit from the FATF grey list at the earliest date possible by expeditiously addressing the remaining deficiencies in the AML/CFT regulatory framework.
To ensure debt sustainability in the medium term, Directors highlighted the importance of further reducing the fiscal deficit, in accordance with the fiscal rule. They agreed that tax revenue will need to increase to sustainably reduce the fiscal deficit while preserving social spending and creating room for more education spending. In this context, Directors stressed the importance of improving tax and customs collection efficiency; broadening the tax base by reducing exemptions, deductions, and tax expenditures; and addressing the deficits in the defined-benefit pension component of the social security system.
Directors noted that capital adequacy and liquidity indicators in the banking sector are well above regulatory minima. As Panama does not have a lender of last resort and deposit insurance, they emphasized the importance of keeping the banking system well capitalized and liquid. In this context, they highlighted the need for continued intensive supervision and monitoring and expanding the macroprudential policy toolkit to mitigate future asset quality and liquidity risks. They also urged AML/CFT regulation and supervision to be applied to Fintech companies.
Directors noted that Panama's past income convergence to advanced-economy levels was driven by an unprecedented construction boom. To sustain convergence, Directors underscored the necessity for other productive sectors to take over, and for governance and human capital to improve. They also called for structural reforms to enhance innovation, improve critical infrastructure, and strengthen labor policies to bolster competitiveness and growth potential. Directors encouraged the authorities to work toward SDDS subscription, and stressed the importance of more timely statistics, which would reinforce transparency.
Panama: Selected Economic and Social Indicators
Includes Panama Canal Authority (ACP). Includes Staff adjustment to account for the accrual of previously unrecorded expenditure for 2015-18. These estimates are preliminary.
Non-Financial Public Sector according to the definition in Law 31 of 2011.
Includes debt of public enterprises outside the national definition of NFPS (ENA, ETESA, and AITSA) and non-consolidated agencies.
Panama: Selected Economic and Social Indicators
| Population (millions, 2021) | 4.3 | Poverty line (percent, 2019) | 21.5 | ||||||||
| Population growth rate (percent, 2021) | 1.4 | Adult literacy rate (percent, 2019) | 95.7 | ||||||||
| Life expectancy at birth (years, 2019) | 78.5 | GDP per capita (US$, 2021) | 14,664 | ||||||||
| Total unemployment rate (October 2021) | 11.3 | IMF Quota (SDR, million) | 376.8 | ||||||||
| Est. | Projections | ||||||||||
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | |
| Production and Prices | (Percent change) | ||||||||||
| Real GDP (2007 prices) | 3.7 | 3.0 | -17.9 | 15.3 | 9.0 | 5.0 | 4.0 | 4.0 | 4.0 | 4.0 | 4.0 |
| Consumer price index (average) | 0.8 | -0.4 | -1.6 | 1.6 | 2.9 | 2.2 | 2.2 | 2.0 | 2.0 | 2.0 | 2.0 |
| Consumer price index (end-of-year) | 0.2 | -0.1 | -1.6 | 2.6 | 2.1 | 3.1 | 2.0 | 2.0 | 2.0 | 2.0 | 2.0 |
| Output gap (% of potential) | 4.2 | 2.0 | -17.1 | -6.3 | -0.9 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Demand Components (at constant prices) | |||||||||||
| Public consumption | 6.5 | 4.9 | 16.2 | 5.4 | -5.4 | -0.4 | 2.0 | 2.6 | 2.1 | 3.1 | 3.1 |
| Private consumption | 2.3 | 4.9 | -15.5 | -0.7 | 15.8 | 6.0 | 3.6 | 3.4 | 3.0 | 3.5 | 3.7 |
| Public investment 1/ | 6.9 | 1.0 | -62.4 | 133.7 | 13.5 | 12.4 | -4.6 | -3.4 | 5.1 | 8.4 | 7.7 |
| Private investment | -0.4 | -0.9 | -45.4 | 47.4 | 15.5 | 5.2 | 5.9 | 5.7 | 3.9 | 3.2 | 3.4 |
| Exports | 5.3 | 1.2 | -20.6 | 25.4 | 12.3 | 5.4 | 6.6 | 5.3 | 5.5 | 5.4 | 5.1 |
| Imports | 4.5 | -2.5 | -34.0 | 32.4 | 7.7 | 2.5 | 8.7 | 5.9 | 5.2 | 5.7 | 5.7 |
| Financial Sector | |||||||||||
| Private sector credit | 4.5 | 2.4 | -2.6 | 1.5 | 5.4 | 5.6 | 6.1 | 6.1 | 6.1 | 6.1 | 6.1 |
| Broad money | 2.8 | 2.3 | 9.5 | 4.1 | 12.1 | 7.4 | 6.3 | 6.1 | 6.1 | 6.1 | 6.1 |
| Average deposit rate (Percent) | 1.9 | 2.0 | 1.8 | 1.4 | 1.8 | ||||||
| Average lending rate (Percent) | 7.8 | 7.8 | 7.7 | 7.6 | 7.6 | ||||||
| Saving-Investment Balance | (In percent of GDP) | ||||||||||
| Gross domestic investment | 41.5 | 38.3 | 24.1 | 32.5 | 34.3 | 34.7 | 34.8 | 34.8 | 34.8 | 34.8 | 34.8 |
| Public sector | 6.2 | 6.0 | 2.6 | 5.2 | 5.4 | 5.8 | 5.3 | 4.9 | 5.0 | 5.2 | 5.4 |
| Private sector | 35.3 | 32.3 | 21.5 | 27.3 | 28.9 | 28.9 | 29.4 | 29.9 | 29.9 | 29.6 | 29.4 |
| Gross national savings | 33.9 | 33.3 | 23.7 | 29.3 | 30.4 | 30.7 | 31.2 | 31.8 | 32.1 | 32.1 | 32.3 |
| Public sector | 4.2 | 2.6 | -4.2 | -2.1 | 0.4 | 2.4 | 2.6 | 3.1 | 3.6 | 3.8 | 4.0 |
| Private sector | 29.7 | 30.8 | 27.9 | 31.4 | 30.1 | 28.3 | 28.6 | 28.7 | 28.4 | 28.3 | 28.3 |
| Public Finances 1/ | |||||||||||
| Revenue and grants | 22.0 | 20.8 | 21.5 | 20.5 | 22.2 | 23.1 | 23.3 | 23.5 | 23.6 | 23.8 | 23.9 |
| Expenditure | 24.9 | 23.9 | 30.7 | 27.1 | 26.0 | 25.8 | 25.1 | 24.6 | 24.5 | 24.7 | 24.9 |
| Current, including interest | 17.2 | 17.7 | 25.2 | 21.9 | 20.6 | 20.0 | 19.8 | 19.7 | 19.6 | 19.5 | 19.5 |
| Capital | 6.6 | 6.2 | 5.5 | 5.2 | 5.4 | 5.8 | 5.3 | 4.9 | 5.0 | 5.2 | 5.4 |
| Overall balance, including ACP | -2.9 | -3.1 | -9.2 | -6.5 | -3.8 | -2.7 | -1.8 | -1.2 | -0.9 | -0.9 | -1.0 |
| Overall balance, excluding ACP | -3.2 | -3.4 | -10.4 | -6.7 | -4.0 | -3.0 | -2.0 | -1.5 | -1.5 | -1.5 | -1.5 |
| Total Public Debt | |||||||||||
| Debt of Non-Financial Public Sector 2/ | 37.3 | 41.9 | 65.6 | 58.4 | 55.4 | 54.9 | 54.1 | 53.2 | 52.4 | 51.5 | 50.8 |
| External | 31.1 | 35.2 | 54.1 | 50.6 | 50.9 | 50.8 | 51.1 | 50.5 | 50.2 | 49.5 | 48.8 |
| Domestic | 6.3 | 6.7 | 11.5 | 7.8 | 4.5 | 4.1 | 3.0 | 2.7 | 2.2 | 2.0 | 2.0 |
| Debt of ACP | 4.2 | 3.8 | 4.2 | 3.2 | 2.6 | 2.1 | 1.7 | 1.3 | 1.0 | 0.7 | 0.4 |
| Other 3/ | 4.2 | 4.1 | 5.1 | 4.3 | 3.9 | 3.6 | 3.4 | 3.2 | 3.0 | 2.8 | 2.7 |
| External Sector | |||||||||||
| Current account | -7.6 | -5.0 | -0.4 | -3.2 | -3.9 | -4.0 | -3.5 | -3.0 | -2.8 | -2.7 | -2.5 |
| Net exports from Colon Free Zone | 2.5 | 2.7 | 3.1 | 2.5 | 2.2 | 2.2 | 2.2 | 2.3 | 2.3 | 2.4 | 2.4 |
| Net oil imports | 4.4 | 3.8 | 1.7 | 3.1 | 4.2 | 3.5 | 3.2 | 3.0 | 2.8 | 2.6 | 2.5 |
| Net foreign direct investment inflows | 7.5 | 5.6 | 0.1 | 2.6 | 4.0 | 4.3 | 4.3 | 4.2 | 4.1 | 3.9 | 3.8 |
| External Debt | 153.0 | 155.0 | 209.4 | 188.3 | 169.4 | 168.1 | 167.0 | 166.5 | 166.0 | 164.3 | 162.5 |
| Memorandum Items: | |||||||||||
| GDP (in millions of US$) | 64,929 | 66,984 | 53,977 | 63,605 | 71,299 | 76,540 | 81,383 | 86,331 | 91,580 | 97,148 | 103,055 |
Includes Panama Canal Authority (ACP). Includes Staff adjustment to account for the accrual of previously unrecorded expenditure for 2015-18. These estimates are preliminary.
Non-Financial Public Sector according to the definition in Law 31 of 2011.
Includes debt of public enterprises outside the national definition of NFPS (ENA, ETESA, and AITSA) and non-consolidated agencies.
Panama: Selected Economic and Social Indicators
| Population (millions, 2021) | 4.3 | Poverty line (percent, 2019) | 21.5 | ||||||||
| Population growth rate (percent, 2021) | 1.4 | Adult literacy rate (percent, 2019) | 95.7 | ||||||||
| Life expectancy at birth (years, 2019) | 78.5 | GDP per capita (US$, 2021) | 14,664 | ||||||||
| Total unemployment rate (October 2021) | 11.3 | IMF Quota (SDR, million) | 376.8 | ||||||||
| Est. | Projections | ||||||||||
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | |
| Production and Prices | (Percent change) | ||||||||||
| Real GDP (2007 prices) | 3.7 | 3.0 | -17.9 | 15.3 | 9.0 | 5.0 | 4.0 | 4.0 | 4.0 | 4.0 | 4.0 |
| Consumer price index (average) | 0.8 | -0.4 | -1.6 | 1.6 | 2.9 | 2.2 | 2.2 | 2.0 | 2.0 | 2.0 | 2.0 |
| Consumer price index (end-of-year) | 0.2 | -0.1 | -1.6 | 2.6 | 2.1 | 3.1 | 2.0 | 2.0 | 2.0 | 2.0 | 2.0 |
| Output gap (% of potential) | 4.2 | 2.0 | -17.1 | -6.3 | -0.9 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Demand Components (at constant prices) | |||||||||||
| Public consumption | 6.5 | 4.9 | 16.2 | 5.4 | -5.4 | -0.4 | 2.0 | 2.6 | 2.1 | 3.1 | 3.1 |
| Private consumption | 2.3 | 4.9 | -15.5 | -0.7 | 15.8 | 6.0 | 3.6 | 3.4 | 3.0 | 3.5 | 3.7 |
| Public investment 1/ | 6.9 | 1.0 | -62.4 | 133.7 | 13.5 | 12.4 | -4.6 | -3.4 | 5.1 | 8.4 | 7.7 |
| Private investment | -0.4 | -0.9 | -45.4 | 47.4 | 15.5 | 5.2 | 5.9 | 5.7 | 3.9 | 3.2 | 3.4 |
| Exports | 5.3 | 1.2 | -20.6 | 25.4 | 12.3 | 5.4 | 6.6 | 5.3 | 5.5 | 5.4 | 5.1 |
| Imports | 4.5 | -2.5 | -34.0 | 32.4 | 7.7 | 2.5 | 8.7 | 5.9 | 5.2 | 5.7 | 5.7 |
| Financial Sector | |||||||||||
| Private sector credit | 4.5 | 2.4 | -2.6 | 1.5 | 5.4 | 5.6 | 6.1 | 6.1 | 6.1 | 6.1 | 6.1 |
| Broad money | 2.8 | 2.3 | 9.5 | 4.1 | 12.1 | 7.4 | 6.3 | 6.1 | 6.1 | 6.1 | 6.1 |
| Average deposit rate (Percent) | 1.9 | 2.0 | 1.8 | 1.4 | 1.8 | ||||||
| Average lending rate (Percent) | 7.8 | 7.8 | 7.7 | 7.6 | 7.6 | ||||||
| Saving-Investment Balance | (In percent of GDP) | ||||||||||
| Gross domestic investment | 41.5 | 38.3 | 24.1 | 32.5 | 34.3 | 34.7 | 34.8 | 34.8 | 34.8 | 34.8 | 34.8 |
| Public sector | 6.2 | 6.0 | 2.6 | 5.2 | 5.4 | 5.8 | 5.3 | 4.9 | 5.0 | 5.2 | 5.4 |
| Private sector | 35.3 | 32.3 | 21.5 | 27.3 | 28.9 | 28.9 | 29.4 | 29.9 | 29.9 | 29.6 | 29.4 |
| Gross national savings | 33.9 | 33.3 | 23.7 | 29.3 | 30.4 | 30.7 | 31.2 | 31.8 | 32.1 | 32.1 | 32.3 |
| Public sector | 4.2 | 2.6 | -4.2 | -2.1 | 0.4 | 2.4 | 2.6 | 3.1 | 3.6 | 3.8 | 4.0 |
| Private sector | 29.7 | 30.8 | 27.9 | 31.4 | 30.1 | 28.3 | 28.6 | 28.7 | 28.4 | 28.3 | 28.3 |
| Public Finances 1/ | |||||||||||
| Revenue and grants | 22.0 | 20.8 | 21.5 | 20.5 | 22.2 | 23.1 | 23.3 | 23.5 | 23.6 | 23.8 | 23.9 |
| Expenditure | 24.9 | 23.9 | 30.7 | 27.1 | 26.0 | 25.8 | 25.1 | 24.6 | 24.5 | 24.7 | 24.9 |
| Current, including interest | 17.2 | 17.7 | 25.2 | 21.9 | 20.6 | 20.0 | 19.8 | 19.7 | 19.6 | 19.5 | 19.5 |
| Capital | 6.6 | 6.2 | 5.5 | 5.2 | 5.4 | 5.8 | 5.3 | 4.9 | 5.0 | 5.2 | 5.4 |
| Overall balance, including ACP | -2.9 | -3.1 | -9.2 | -6.5 | -3.8 | -2.7 | -1.8 | -1.2 | -0.9 | -0.9 | -1.0 |
| Overall balance, excluding ACP | -3.2 | -3.4 | -10.4 | -6.7 | -4.0 | -3.0 | -2.0 | -1.5 | -1.5 | -1.5 | -1.5 |
| Total Public Debt | |||||||||||
| Debt of Non-Financial Public Sector 2/ | 37.3 | 41.9 | 65.6 | 58.4 | 55.4 | 54.9 | 54.1 | 53.2 | 52.4 | 51.5 | 50.8 |
| External | 31.1 | 35.2 | 54.1 | 50.6 | 50.9 | 50.8 | 51.1 | 50.5 | 50.2 | 49.5 | 48.8 |
| Domestic | 6.3 | 6.7 | 11.5 | 7.8 | 4.5 | 4.1 | 3.0 | 2.7 | 2.2 | 2.0 | 2.0 |
| Debt of ACP | 4.2 | 3.8 | 4.2 | 3.2 | 2.6 | 2.1 | 1.7 | 1.3 | 1.0 | 0.7 | 0.4 |
| Other 3/ | 4.2 | 4.1 | 5.1 | 4.3 | 3.9 | 3.6 | 3.4 | 3.2 | 3.0 | 2.8 | 2.7 |
| External Sector | |||||||||||
| Current account | -7.6 | -5.0 | -0.4 | -3.2 | -3.9 | -4.0 | -3.5 | -3.0 | -2.8 | -2.7 | -2.5 |
| Net exports from Colon Free Zone | 2.5 | 2.7 | 3.1 | 2.5 | 2.2 | 2.2 | 2.2 | 2.3 | 2.3 | 2.4 | 2.4 |
| Net oil imports | 4.4 | 3.8 | 1.7 | 3.1 | 4.2 | 3.5 | 3.2 | 3.0 | 2.8 | 2.6 | 2.5 |
| Net foreign direct investment inflows | 7.5 | 5.6 | 0.1 | 2.6 | 4.0 | 4.3 | 4.3 | 4.2 | 4.1 | 3.9 | 3.8 |
| External Debt | 153.0 | 155.0 | 209.4 | 188.3 | 169.4 | 168.1 | 167.0 | 166.5 | 166.0 | 164.3 | 162.5 |
| Memorandum Items: | |||||||||||
| GDP (in millions of US$) | 64,929 | 66,984 | 53,977 | 63,605 | 71,299 | 76,540 | 81,383 | 86,331 | 91,580 | 97,148 | 103,055 |
Includes Panama Canal Authority (ACP). Includes Staff adjustment to account for the accrual of previously unrecorded expenditure for 2015-18. These estimates are preliminary.
Non-Financial Public Sector according to the definition in Law 31 of 2011.
Includes debt of public enterprises outside the national definition of NFPS (ENA, ETESA, and AITSA) and non-consolidated agencies.
Title Page
PANAMA
STAFF REPORT FOR THE 2022 ARTICLE IV CONSULTATION
February 8, 2023
KEY ISSUES
Background. Panama was hit hard by the covid-19 pandemic, but the recovery has been strong. GDP expanded by 15.3 percent in 2021 and a projected 9 percent in 2022. Inflation is low compared with other countries, in part the result of temporary subsidies on fuel and food. The fiscal deficit declined from 101/2 percent of GDP in 2020 to 4 percent of GDP in 2022 and central government gross debt is estimated at 60 percent of GDP at end-2022. Banks are, on average, well capitalized and liquid. As insurance against external shocks, the IMF Executive Board approved a two-year Precautionary and Liquidity Line (PLL) arrangement for 500 percent of quota, equivalent to US$2.7 billion (SDR 1.884 billion), on January 19, 2021.
Outlook and Risks. Economic growth is expected to slow to 5 percent in 2023 and 4 percent in the medium term. The expiration of Covid-19 and cost-of-living subsidies, and the adoption of new revenue measures will further reduce the deficit to 3 percent in 2023, in line with the social and fiscal responsibiltiy law. Key risks include a sharper-than-expected slowdown of the global economy, renewed increases in global food and energy prices, rising global interest rates, and dislocations in global capital markets that could put pressures on the rollover of external corporate and sovereign debts. Panama's continued presence on the Financial Action Task Force (FATF) grey list and on the EU list of non-cooperative jurisdictions for tax purposes, could potentially affect correspondent banking relationships and key overseas credit channels.
Policy Advice. Policies should focus on boosting resilience to shocks (by rebuilding fiscal buffers, strengthening financial integrity, and enhancing financial sector oversight) and sustaining the rapid convergence with advanced economies. To reduce the fiscal deficit over the medium term while at the same time creating room for new spending, including on education, and preserving spending on social assistance, the steady decline in the revenue-to-GDP ratio needs to be reversed. To secure an exit from the FATF's grey list, measures to address the remaining items in the FATF action plan should be intensified. Ensuring that banks are well capitalized and liquid is essential to preserve Panama's role as a regional financial center. To sustain convergence, human capital and governance should be strengthened. Implementation of the national statistical plan will improve the quality and timeliness of key macroeconomic data.
Approved By
James Morsink (WHD) and Martin Cihák (SPR)
Discussions took place in Panama City during November 29-December 13, 2022. The in-person staff team comprised of Bas Bakker (Head), Julian Chow, Marina Rousset, Sofia Pires, (all WHD), and Enrico Di Gregorio (FAD). Eloy Fisher (OED) also participated. Paola Aliperti (WHD), Chuling Chen (SPR), José Daniel Rodríguez-Delgado (STA), and Francisco Figueroa (LEG), participated remotely in part of the meetings. The mission met with Minister of Economy and Finance Héctor Alexander, Superintendent of Banks Amauri Castillo, General Manager of the National Bank of Panama Javier Carrizo, and other senior officials and private sector representatives. Julia Muñoz (WHD) provided administrative support.
Contents
Acronyms
BACKGROUND
STRONG RECOVERY POST-PANDEMIC BUT LARGE SCARRING
OUTLOOK AND RISKS
POLICIES
A. Rebuilding Fiscal Buffers
B. Strengthening Financial Integrity
C. Strengthening Financial Sector Resilience
D. Sustaining Convergence
E. Improving Statistics
STAFF APPRAISAL
FIGURES
1. Banking Sector
2. Panama Canal
3. Real GDP and Production Factors
4. Real Sector Developments
5. Fiscal Developments
6. External Sector Developments
7. Banking Sector Soundness
8. Balance of Payments
9. Central Government Finances
10. Central Government Finances
11. General Government Finances
12. Balance of Payments
13. Investment by Activities
14. Construction – Comparison between Countries
15. Labor Markets
TABLES
1. Selected Economic and Social Indicators
2. Summary Operations of the Non-Financial Public Sector, 2018–28
3. Summary Operations of the Central Government, 2018–28
4. Public Debt, 2018–28
5. Summary Accounts of the Banking System, 2018–28
6. Financial Soundness Indicators, 2015–22
7. Summary Balance of Payments, 2018–28
8. External Vulnerability Indicators, 2018–24
ANNEXES
I. Implementation of Past IMF Policy Advice
II. Prospects and Risk Assessment Matrix
III. External Sector Assessment
IV. Debt Sustainability Analysis
V. Management of the Banking Sector During the Covid-19 Pandemic
VI. Social Issues and Recent Protests
VII. What Caused Panama's Sharp 2020 Contraction?
VIII. Panama's Climate Policy Options
IX. Recent Progress towards Exiting the FATF Grey List
X. The Risks of Disruptions in Mining Activities
Acronyms
| AML/CFT | Anti-Money Laundering and Combating the Financing of Terrorism |
| BASEL III | International Regulatory Framework for Banks |
| BNP | Banco Nacional de Panamá (National Bank of Panama) |
| CFZ | Colon Free Zone |
| CIT | Corporate Income Tax |
| Covid-19 | Coronavirus Disease 2019 |
| DRS | Disaster Resilience Strategy |
| DSA | Debt Sustainability Analysis |
| EBA | External Balance Assessment |
| FATF | Financial Action Task Force |
| FDI | Foreign Direct Investment |
| FES | Fund for Economic Stimulus |
| INEC | National Institute of Statistics and Census |
| IO | Immediate Outcome |
| LCR | Liquidity Coverage Ratio |
| MEF | Ministry of Economy and Finance of Panama |
| NEER | Nominal Effective Exchange Rate |
| NFPS | Non-Financial Public Sector |
| NIIP | Net International Investment Position |
| NPLs | Non-performing Loans |
| PLL | Precautionary and Liquidity Line |
| RAM | Risk Assessment Matrix |
| REER | Real Effective Exchange Rate |
| RFI | Rapid Financing Instrument |
| SBP | Superintendency of Banks |
| SFRL | Social and Fiscal Responsibility Law |
| SWF | Sovereign Wealth Fund |
| TA | Technical Assistance |
Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.
