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Tuesday, September 02 2014 @ 02:46 AM EDT

De Lima Explains New Panama Savings Fund

Money MattersThe Minister of Economy and Finance, Frank de Lima explained on the Telemetro Morning Report the benefits of newly approved law creating the Panama Savings Fund which he said will benefit the country. He also talked about Panama's score by Fitch Ratings. (Telemetro)

Editor's Comment: The interview was 13 minutes long. Last Thursday the National Assembly passed in the third and final debate the law creating the new Panama Savings Fund, and De Lima said he expects the bill will be signed into law by Martinelli today. De Lima explained the funds in the Panama Savings Fund will be used in case of natural disasters, or in the case of a recession. He said in the case of the previous Trust Fund those monies could not be used under any circumstances. This was a fund created during the administration of Ernesto Perez Balladares when the state owned telephone and electric companies were sold and these services were privatized. The State of Panama received the money from the sale, and those funds were locked away in this Trust Fund. However, when it was created they left out a mechanism to add additional funds or monies to this this account, or a way to use the money in case of an emergency. So, for about 15 years it's been just sitting there, and the interest it earns goes directly to the state coffers to be spent. With this new Panama Savings Fund, a set percentage of the money generated by the expansion of the Panama Canal will go into the fund to increase the holdings. And, the money can be used in the case of a natural disaster such as floods or and earthquake. Finally, if the Panamanian economy goes into a recession - defined in the law as two consecutive quarters with GDP growth of 2% or less - then the money can be used to pay for infrastructure improvement projects in order to "jump start" the economy.

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