Week in Review

DEFICIT CLIMBS

The Ministry of Economy and Finance (MEF) raised its deficit forecast for this year to 2.5% of gross domestic product (GDP). It based this on a GDP of about $34 billion at the end of 2012 to meet with the Executive’s estimate that the deficit would be about $850 million.

SPENDING UP

Spending on advertising by businesses and government entities on promotion increased by 7.7% in 2011 compared to 2010. The cost was around $200 million, estimated by Ibope Media, a Brazilian company specializing in media and marketing research in Latin America with a presence in Panama.

SELL OR RENT?

The Colon Free Zone (CFZ) is in the eye of the storm said Raul Moreira, president of the Panama College of Economists. ‘We have recommended that it is not necessary to raise the rent because it would raise operating costs and affect the business climate, not only in the region, but also throughout the country,” said Moreira. The bill planned for sale of the free zone lands would allow the land to be sold at market value and change the rules not only to allow the sale of lots and buildings within the economic hub but also in adjacent areas. “Adjacent or nearby areas may be leased, franchised or sold by the Colon Free Zone to develop projects that benefit the nation, whether they are engaged in the retail trade, services or tourism …”, says in part Article 33 of the bill that was endorsed last month in the Cabinet. Although the Constitution prohibits selling land reclaimed from the sea, the Government will use the formula of “reversal” of the reclaimed land, by law, to sell these lands to entrepreneurs. The ability to decouple the public use of these lands includes an Executive initiative approved by the Cabinet and now the Assembly should discuss it.

REGION GROWS

Central America will have a real growth of about 4%, which is largely driven by Panama, Costa Rica and Nicaragua, said the Central American Institute for Fiscal Studies (ICEFI). The three remaining nations, El Salvador, Guatemala and Honduras, in contrast, have a growth of between 2.2 and 3.5%, said the executive director of ICEFI, Hugo Noe Pino, president of the Central Bank of Honduras.

RICE IMPORTED

The Cabinet approved importing 1.1 million quintals of rice to meet the demand of the country during August and September. Although this year 63,300 hectares were planted, more than in the previous cycle, yields were lower due to climatic variations.

MONEY CHANGERS

The tender for currency exchange in the Tocumen International Airport is temporarily suspended. The administration is reviewing the air terminal tenders at the request of the Board of the airport, after a claim brought by one of the companies that participated in the process and is not classified for lack of experience.

PANAMA MAGNET

Panama is the largest recipient of foreign direct investment per capita in Latin America. Last year it exceeded $3 billion, an increase of 27% over 2010. This achievement is mainly attributed to the policy of attracting investment that focuses on four strategic areas: logistics, agribusiness, tourism and financial services.

IMF WARNING

In a country that has been highlighted for its steady growth in the last two decades and has withstood economically and financially one of the worst global crises in history, the International Monetary Fund (IMF) points out as one of the main challenges for Panama is to achieve “inclusive growth”.

MELONS LOST

Melon producers of the Macaracas district are concerned, since the production of this fruit did not have a good result, which represents a danger for marketing. Pastor Vergara, one of the producers in the region, said the crop did not reach the size required for marketing and also failed to take off the plant foliage for proper development.

CANAL CONTRIBUTES

The Panama Canal is a route used to transport goods and products. As the great ships pass, laden with containers, dry bulk or liquid, a series of port activities, tourism and sport fishing is developed around it. Everything is going at the pace of the economy, which grew 10.6% at the end of 2011 driven largely by the Canal.

HOUSING EXPO

There are 400 housing projects expected at the Housing Expo 2012, an event organized by the Panamanian Chamber of Construction (CAPAC) at the Atlapa Convention Center from April 19 to 22. Transactions this year are expected to be in excess of $125 million through financing of residential products.

CANAL REPORTS

The administrator of the Panama Canal Authority (ACP), Alberto Aleman Zubieta, sustained before the National Assembly the annual report of 2011, as part of the commitment to transparency and accountability of the entity.

NEW TAX DUE

A new blow to Panamanian consumers’ pockets will be approval of the proposed undergrounding of cables in the capital city and some parts of the interior, on the basis of the creation of a new tax on fixed and cellular telephones and TV cable billing.

DUTY FREES PAY

The management of the Tocumen International Airport plans to obtain some $30 million through the granting of commercial premises (duty free) at the northern dock. This involves about 20 shops that will be commissioned in the newly expanded area of the airport to operate toy stores, stores that sell handbags, perfumes, luxury accessories and clothing for children.