Fiscal Balance in Panama
Panama - Fiscal Balance
Government announces fiscal response to coronavirus pandemic fallout
In the face of the growing coronavirus pandemic, the government raised USD 2.5 billion in global debt markets on 26 March to help fund a sizeable response to the economic impact of the public health crisis. This, coupled with a USD 515 million emergency loan from the IMF, brings funds equivalent to approximately 5.0% of GDP at the government’s disposal. The proposed fiscal measures include increased healthcare spending, such as on the purchasing of supplies and test kits; relief payments to small businesses and informal workers; tax deferrals and unemployment benefits.
The measures will go some way to covering a sizeable balance of payments gap, although will likely prove insufficient to avoid a contraction in economic activity this year. The suspension of non-essential commercial activities in late March and a mandatory nationwide quarantine are likely to significantly hamper domestic activity in the first half of the year. Additionally, already-sizeable twin deficits will be weighed on further by additional borrowing, with a potential credit rating downgrade a key risk.
FocusEconomics Consensus Forecast panelists foresee a fiscal shortfall of 4.5% of GDP in 2020 and of 3.1% of GDP in 2021. Meanwhile the economy is projected to contract 2.4% in 2020, before growing 5.3% in 2021.
Panama - Fiscal Balance Data
|Fiscal Balance (% of GDP)||-2.3||-1.9||-1.9||-2.9||-3.1|
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October 19, 2022
Economic activity rose 12.8% year on year in August (July: +3.6% yoy).
September 19, 2022
Economic activity expanded 3.4% year on year in July (June: +8.4% yoy).
September 17, 2022
According to a preliminary reading, GDP growth softened to 9.8% year on year in the second quarter, from 13.6% in the first quarter.
September 15, 2022
Inflation eased to 2.1% in August from July’s 3.5%.
August 19, 2022
Economic activity rose 8.4% year on year in June, softening from May’s +26.3% increase.