Martinelli Wanted Wider Reporting on Fitch Investment Grade Rating of Panama
Friday, June 01 2012 @ 03:08 PM EDT
Contributed by: Don Winner
In a statement issued by the firm in New York, Fitch specifies the country ceiling remains at "A" and its foreign exchange and currency ratings at "BBB" are "consistent with the country's strong economic performance." The financial sector soundness and convergence in income per person (more than $5,000) on average expected for a country located in the grade "BBB", and its dollarized economy "have contributed to macroeconomic stability." Fitch praised the "source of debt reduction driven by robust (economic) growth" and the modest fiscal deficit as another argument for maintaining the investment grade, assigned to Panama two years ago for the first time.
However, Fitch noted the evaluations received by Panama "are limited by their debt which is still moderately high, especially in the context of the dollarization of the country, a narrow revenue base, and a rigid expenditure profile." Fitch also called for a "consistent" management of the law of fiscal responsibility, ensuring sufficient flexibility in the future to address the long-term social problems. To move away from the plan to reduce the debt burden, poor management of the large public investment plan, or to use savings to offset a sharp fiscal deterioration, would work against Panama's investment grade, Fitch warns. (TVN)