More good news for Panama on the economic front. Standard & Poor has studied the tax reforms put in place by President Ricardo Martinelli and based on this has decided to upgrade Panama´s country risk classification from “stable” to “positive” mentioning that it is close to the coveted “investment grade classification”.
The decision is based on the new tax reforms and the growth prospects of Panama´s GDP. The classification for long term debt remained at “BB+” and “B” for short term debt.
President Martinelli´s proposed tax reforms such as those that will be imposed upon the Colon Free Zone, the flat tax which should be entered for discussion by the Assembly in December, and reforms being made to increase government collection of fiscal debt will all contribute to the growth of GDP without increasing government spending. The tax reforms approved in September of this year are expected to have a modest effect on the GDP increasing it by 0.75%.
There is no set time frame for Panama to obtain “investment grade” classification however Standard & Poor shall be watching the implementation of the fiscal measures already approved and will be on the look out for new reforms which are expected for next year. The agency indicates that the effect of the current economic crisis on Panama has been minimal and it is one of the few countries in Latin America that is actually expected to grow this year a conservative 2.5% and projections for next year indicate a possible conservative growth of around 3%.
Projections across the board by different qualifying and economic agencies look very positive for Panama in 2010. It should be a very interesting and profitable year for this young country.
For information on Panama: PanamaQmagazine