News
Thursday 12th September 2024.
September 11, 2024
The situation of the Social Security Fund (CSS) requires urgent action, and this government will do what it has to do to prevent citizens from losing their pensions.
This was stated by the Minister of Economy and Finance (MEF), Felipe Chapman , at the Moody’s Inside LatAm Central America 2024 forum held in Panama.
The minister told an audience of investors, risk analysts, bankers and businessmen that the critical situation of the CSS had been known for several years, but three administrations had “blindly” ignored the problem.
“We already knew in 2010, in 2014, in 2017 and in 2021 that we would have a problem with the CSS in 2024 and society did nothing. Neither governments, nor private employers, nor workers; so now we have a problem that will have to be dealt with,” he stressed.
Chapman, who did not want to reveal what the measures or the methodology for discussing this issue will be, indicated that they will be announced this Thursday, September 12, by the President of the Republic, José Raúl Mulino.
He did say that one must be prepared because it is possible that taxpayers who are part of the State will also have to assume and pay for them.
“I anticipate that there will be measures that will have to be taken from all areas of society. And that includes, if necessary, a contribution from taxpayers, because the State is all of us and there is no such thing as the State paying for it, the State is all of us, citizens of flesh and blood, through our taxes it will be part of a comprehensive solution ,” Chapman said.
The minister said that once the proposal is known, it will have to be analyzed in light of the 2025 fiscal year budget. “If it occurs and has an impact, and I don’t know the amount, on the 2025 fiscal year budget, it will have to be addressed in the five-year plan and in the following budgets.”
He said that this administration is determined to address the issue. “Doing nothing is not the option. We have a social responsibility, we cannot allow any citizen to be left without their pension.” He also believes that this is the feeling of the entire population.
“Tomorrow’s message will be the beginning of a journey, the flag-waving,” he said.
The Minister of Economy and Finance, Felipe Chapman, reviewed the actions that have had to be taken in the last two months, such as the containment of spending by $1,387 million due to the fall in income.
He said they are preparing a five-year fiscal plan, as well as a budget for 2025 that is adapted to the reality of the country’s income and expenses.
“We must attack both expenses and income. In the short time that we have for a change of government, that room for maneuver is on the spending side. Prudence, a better allocation of resources and spending better and being prudent in spending,” he said at the Moody’s Inside LatAm Central America 2024 forum moderated by Mauro Leos, associate director of sovereign risk at Moody’s Ratings.
The minister said he is in favour of analysing the effectiveness of all subsidies. He said that there are some that should be redirected and focused on the population that really needs them, such as preferential interest rates for mortgages, electricity subsidies and even domestic gas subsidies.
Chapman said that the country needs fiscal and tax reforms, but clarified that it is not about implementing a shock policy or program, but rather a soft landing without affecting the population or the economic recovery. “These will be medium and long-term measures.”
At PH Crystal , in the Bella Vista district , 28 families continue to face serious problems due to leaks and structural damage caused by the construction of a penthouse without the corresponding permits.
Despite multiple complaints and a demolition order issued by the Panama City Council since 2014, the authorities have remained indifferent to the situation, leaving residents in a constant state of vulnerability.
An inspection of the site was scheduled for Wednesday, September 11, organized by the municipality itself; however, representatives from the Department of Works and Construction were absent.
The purpose of this inspection was to enter the 15th floor, where the illegal construction had been erected, and determine the best way to carry out the demolition that has been postponed by three municipal administrations.
Jorge Camarena, legal representative of several of those affected, described what happened as an “administrative mess,” pointing out that the last three administrations of the Municipality of Panama have not shown any interest in resolving this problem.
Years ago, a penthouse was built on level 15 of this PH, owned by the company Josephco, SA, which caused leaks and cracks in the slabs of several apartments. The most critical situation affects the floor where Cristina and Kathleen McGrath live, on level 14.
In a report prepared on January 19, 2023, the National Civil Protection System (Sinaproc) noted that if the necessary security measures are not taken, there is a risk of “material damage” and, in the worst case, “loss of human lives.”
Only Carlos Domínguez, councilor of Las Mañanitas and president of the Housing Commission of the Municipal Council of Panama, attended the site, but no further progress was made.
Meanwhile, the families living there continue to live through an ordeal that has lasted 10 years.
In recent days, a series of robberies perpetrated by heavily armed criminals has caused alarm in different parts of the country.
Last Tuesday night, four robbers broke into the Leonardo pizzeria, located in Brisas del Golf, in the district of San Miguelito, and stole money from the cash register. Three of the robbers entered the premises with assault rifles, while a fourth guarded the entrance.
That same Tuesday, at 7:35 p.m., five armed men robbed the Vintage Jewelry store , located in the Sheraton Hotel, taking an as yet unspecified amount of jewelry and valuable items.
On the other hand, a bus on the Panama-Border route was assaulted by four criminals who got on pretending to be passengers. The robbery occurred in the Gariché area, where, in a sparsely populated area, the criminals threatened the driver and forced him to stop the vehicle. Then, they ordered the passengers to hand over money, mobile phones and valuables.
So far, no arrests have been reported in connection with these cases.
According to figures from the Public Prosecutor’s Office, 2,975 cases of theft had been reported nationwide by last July, with the province of Panama having the highest number of complaints with 1,908.
Followed by the provinces of Western Panama with 329 and Chiriquí with 236 cases.
While in the same period of 2023, a total of 2,779 reports of theft were registered throughout the country. In which the province of Panama also reached the highest number of reports with 1,307, followed by the province of Panama Oeste with 326 and Chiriquí with 266.
President José Raúl Mulino announced the application of a curfew starting at 9:00 p.m. for minors in the provinces of Colón, Bocas del Toro and in the district of San Miguelito to curb the actions of gangs.
The Panamanian economy will grow at a rate of between 2.5% in 2024 and 4% in 2025, according to projections by Moody’s , the risk rating agency that holds the Moody’s Inside LatAm Central America 2024 forum in the country, in which it analyzes the economic situation and prospects for the region.
Renzo Merino, vice president and senior analyst at Moody’s, explained that in the case of Panama, the economic outlook points to relatively low growth for this year, at 2.5%, due to the impact of the decision to close mining operations last year. This same growth outlook has been given by the International Monetary Fund.
“Taking into account the mining issue, as a result of what happened last year, we maintain a relatively low growth outlook for 2024. And for next year, the trend for Panama is close to 4%,” he said.
Panama’s economy at the beginning of the 2000s showed very favorable growth and fiscal strength. Merino explained that the debt load, which was at 70% in 2005, later dropped to 40%, which placed the country in a good position from the point of view of the sovereign risk rating.
“There is always a risk that when investment grade is achieved, there will be complacency on the part of macroeconomic policy makers, especially when there are increasing challenges that, if not addressed, can lead to deterioration,” said Renzo Merino.
Panama obtained investment grade from Moody’s in 2009, and the rating improved in 2012 and 2013. But then it began to deteriorate due to debt issues, management of the situation of the Social Security Fund and other indicators.
Moody’s has Panama in Baa3 rating with a stable outlook since October 2023, meaning it still maintains the country in investment grade.
The vice president for the region said that in the case of Panama, Moody’s has emphasized in several analyses the need to address the issue of the Social Security Fund.
“This problem has not been addressed and there is much more urgency,” said Renzo, acknowledging that at this time they perceive that there is more talk about the issue and that the agency will be attentive to the Government’s decisions.
Merino also indicated that the debt burden in Panama, as in other countries, remains high, which also affects its credit and risk profile.
“In terms of debt burden, we see that there are two groups of countries, one that has less debt than most governments globally, and there are others, such as Panama, Costa Rica and El Salvador, that have the highest debt burden.”
He argues that given this scenario in which governments must pay higher interest on their debt, the space or availability to reserve resources for public investment and to address social spending, among other needs, is affected.
As for governance and social indicators, the analyst indicates that Panama faces relatively low risks, although he notes that social tensions will depend on the management of politics.