In the midst of the positive outlook that is predicted for Panama in 2022, there are a number of challenges that the current government will have to face in its effort to maintain the paths of the post-pandemic recovery. There is still a risk of more waves of contagion, even as the country gets the pandemic under control. Randall Castillo Ortega, a successful businessman and import and export expert in Costa Rica and Panama, provides insight into what obstacles Panama faces going forward.
Education, employment, the continuity of anti-COVID-19 vaccination and the control of its variants are on the list of issues Panama has to face this year. Additionally, the country has to find a solution to the problems of the Social Security Fund, transparency, the exit from the gray and blacklists, and the preservation of the risk rating and foreign investment.
However, one of the main challenges for the country in 2022 is, without a doubt, the issue of education. Its return to face-to-face attendance is complicating matters. Asserts Castillo, “The government and civil groups have to find a balance so that education starts off on the right foot and is not interrupted.”
Another great challenge is that once you bet on that control of the pandemic, there is the issue of accepting tourism and air transport, hotels and restaurants. These activities are considered “very important” for the economy.
From an economic point of view, the government must work hard with State projects, in public investment to generate those jobs that allow improving the unemployment figures of 11.3%, with which 2021 was closed. It must try to lower it to the levels that were in 2019, of 7.1%.
Yet another great challenge that the country has to make in 2022 is the population and housing census. These will allow updating of data and have reliable, timely and updated data that will be important for planning. They are related to the presidential commitment of the current government, with the creation of the Institute that started last January, and that will undoubtedly be one of the great users of an updated population and housing census.
The country must make every effort to maintain the country risk rating, “not” lower it. In Latin America, there are few countries that have investment grade, and Panama is one of them.
“We are at the lowest point of investment grade,” explains Castillo, “which is still investment grade. This is attractive for countries and for foreign investors. But, if we downgrade, we would be left in a degree of speculation.”
Panama depends on private investment and cannot be sustained only by public investments. This is because the country or the government has a capacity for indebtedness and is limited in its level of indebtedness.
At the end of December 2021, the Ministry of Economy and Finance reported that Panama’s public debt would close above $40 billion. It expects to exceed the budget goal by at least $450 million or $500 million, which would help close that deficit gap that must be met under the fiscal social responsibility law.
Another challenge that could affect growth estimates would be to return to the scenario of closure and confinement, as the US and Europe are currently experiencing as a result of irresponsible actions by the population that does not comply with biosecurity measures, mainly in agglomeration scenarios.
In addition, the implementation of Europe’s measures as a result of the country’s inclusion in lists of the Financial Action Task Force (FATF) and the European Union (EU) could “constitute a serious additional challenge for our economic recovery,” Moreira said.
By 2022, INEC forecasts that Panama’s economy will grow above 7%. The Economic Commission for Latin America estimates that it will increase by 8.2%, which will lead the list of Latin American countries with the best prospects for economic growth by 2022.