News
Thursday 17th August 2023.
August 16, 2023
After almost a year of receiving the report from the International Labor Organization (ILO) , in which it was confirmed that the Disability, Old Age and Death (IVM) pension subsystem will run out of reserves in 2024, President Laurentino Cortizo announced on the Wednesday afternoon, that he received a report with the actuarial valuation of the Panamanian pension system, which includes an analysis of possible scenarios.
The looming crisis is of enormous proportions. The reserves that are used to pay retirees each year, because income is less than expenses, have come to an end. And this coincides with an electoral period in Panama.
Although the Executive has not revealed the possible scenarios analyzed by the ILO, and which would serve as the basis for possible reforms to the pension system, locally business and worker groups have favored two approaches: the first favor completely eliminating the defined benefit system and migrate to an individual savings system structured in several pillars; while unionized employees would prefer to eliminate the mixed pension subsystem, which has a personal savings component, so that the exclusively defined benefit subsystem survives.
This last proposal would give a little breather to the public pension program, since the funds from the first would be used to finance the second. But money is not unlimited. The reserves would have a positive balance only until 2036 and legal funds would run out in 2041, with a much larger pool of people unable to be paid.
Regarding the meeting between Panamanian officials and the ILO, the Presidency of the Republic said that the president met with specialists in pension systems, Fabio Durán and José Ortiz.
The president took advantage of the meeting to tell the ILO members that the mining law contract that ensures a minimum of $375 million per year has already been presented to the National Assembly, and within that contract there is a clause that grants 50% of the annual income to the CSS IVM.
But the CSS must pay more than $2,000 million a year to current retirees, so the possible mining contributions would solve just one month’s pay for pensioners.
In addition, Cortizo promised that 20% of that income per year will be allocated so that no old-age retiree or CSS pensioner receives less than $350 a month, which is a new financial commitment for a program in a critical financial state.
Fabio Durán, on behalf of the ILO, pointed out that they are aware of what this work means and that it is a highly sensitive issue.
Salary increases as a result of special laws imply an expense of $324 million for next year, the Ministry of Economy and Finance (MEF) recognized this Wednesday, during the support of the general state budget for fiscal year 2024, in the Budget Commission of the National Assembly.
$336 million will be spent on salary increases.
“96% of the increase in payrolls corresponds to special laws,” explained Carlos González, director of the MEF Budget.
The general state budget for 2024 was presented to the Assembly by Minister Héctor Alexander on July 31. On the legislative agenda, it is identified as bill number 1041.
The document presented by Alexander proposes a budget of $32,754.5 million, which represents $5,175 million more than that approved for fiscal year 2023. “Almost half of this increase is due to the development of social services and 28% to debt service ”. For debt service, $5,958 million has been allocated.
“We have been told that it is an optimistic budget. We are not going to deny that, because we are at a time when public finances are strong and the economy is at an enviable moment in the region,” said Gonzalez.
He stressed that the budget includes subsidies for $1,893 million, a reduction in relation to the more than $2,400 million in subsidies corresponding to 2023.
Deputy Juan Diego Vásquez , who forms part of the Budget Committee, praised Alexander’s experience and knowledge, but criticized him for having presented a “biased analysis” of unemployment, for example. “They don’t talk about reality,” Vásquez said.
The legislative subcommittee formed to discuss the elimination of the current Transparency Law ( Law 6 of 2002 ) and the approval of a new one, met for the first time yesterday, to analyze the proposal presented by the National Transparency and Access Authority to Information (Antai) , through the Ministry of the Presidency.
“This is not the right time for its debate due to the upcoming electoral contest, on the one hand, and on the other hand, this bill has arrived here with significant deficiencies in the citizen consultation process,” said Leah de Brosner , from the Civic Space Foundation Both Brosner and Olga de Obaldía , executive director of the Fundación para el Desarrollo de la Libertad Ciudadana (Panamanian chapter of Transparency International) , asked the subcommittee to convene a broad consultation, “that there be sufficient opportunity for all sectors to know that there is this discussion, and that therefore it is a participatory process that transcends this legislative term, that there is an opportunity to analyze it without the noise that the electoral contest creates”.
De Obaldía protested because the bill promoted by Anati ( identified with the number 1031 ) relaxes the sanctions for officials who do not provide public information: fines of up to 50% of the offending server’s monthly salary are proposed, while the Law 6 contemplates fines equivalent to twice the monthly salary and, in case of recidivism, removal from office.
The 39.5% increase in the electricity rate reflected by the National Statistics Institute in the Consumer Price Index (CPI) report for July, is due to the elimination of the Extraordinary Rate Stabilization Fund (FET) due to covid-19 that It was in force until the end of 2022, in addition to high consumption.
This was explained by the national secretary of energy, Jorge Rivera Staff, who indicated that the executive has not yet authorized the tariff plan that will govern this semester and the next few years that is being analyzed together with the National Authority of Public Services (ASEP).
“The electricity rate has not increased, the latest data that has been published by the National Institute of Statistics and Census does not reflect an increase in the rate, but the increase in the receipt that citizens receive due to the effect of the elimination or suspension of the FET covid-19, which was the subsidy that 75% of customers had in the rate that was in force until December 2022,” Rivera Staff said in a forum with journalists on the energy transition.
The energy secretary explained that customers who consumed more than 300 kilowatt hours (kwh) and 750 kwh, 30% of their bill was assumed by the State. In addition, those who consumed up to 300 kilowatts, 50% of the bill was assumed by the State.
Rivera Staff explained that there is a plan to execute a long-term energy tender that is required for the country, which will allow a greater supply of energy.
This process is expected to be announced at the end of August for a requirement of around 500 megawatts (MW) and also to plan a short-term energy tender to present the specifications before the end of 2023.
Rivera Staff clarified that there is no energy rationing, only occasional interruptions have been reported due to poor service from a single distributor. “There are no rationing plans for next year either,” he said.
The administration of the Tocumen International Airport reported this Wednesday that in the month of July there was a movement of 1.5 million passengers.
According to the entity, this figure reflects that the air terminal received 100,725 more passengers compared to July 2022.
“In the second half of the year we expect an increase in tourist activity throughout the region, therefore, an increase in passengers through Tocumen and Panama Pacifico, as well as through the Rio Hato airport, with flights from Canada,” Raffoul Arab general manager of the Tocumen International Airport said.
It is reported that in July 2023 Tocumen maintained direct routes to 87 destinations, through 15 commercial airlines that offer services to the main cities in America and Europe.
74% of the passengers who arrived at the Tocumen Airport did so to connect to other destinations. In addition, 12,153 aircraft movements were managed.
The markets with the greatest regional movement last July were South America with 44%, North America 29%, the Caribbean 12%, Central America 11% and Europe 4%.
Regarding the cargo terminal, it is detailed that in July 2023, 16,406 metric tons of merchandise were mobilized.
From this Wednesday, August 16, the incursion of dust particles from the Sahara desert to Panama is expected.
This was reported by the Institute of Meteorology and Hydrology of Panama (IMHPA), after issuing a surveillance notice which will be in force until the night of Thursday, August 17.
According to Roberto Martínez, IMHPA meteorologist, the dust will enter in low concentrations. However, the phenomenon will keep the day foggy and will increase the thermal sensation on Thursday.
Meanwhile, visibility is expected to drop slightly in some sectors. In addition, these particles will affect the population sensitive to respiratory allergy symptoms.
The places under notice are: Colón, central and northern Veraguas, Bocas del Toro, Coclé, Panama West, Panama and Darién.