News
Wednesday 9th October 2024.
October 8, 2024
The increase in current spending is undeniable, and the burden of the payroll is overwhelming.
For the 2025 budget, the Ministry of Economy and Finance (MEF) has estimated $7,179 million in personal services spending, which represents an increase of $264 million compared to the amount originally approved for 2024.
Everything seems to indicate that the increase is closely linked to the automatic salary increases that the State must face, estimated at around $300 million, according to the Minister of Economy, Felipe Chapman.
This growth represents a challenge for public finances, since payroll remains one of the most important components of government spending.
It is striking that no significant reduction has been achieved in the area of personal services, which could have been achieved by reducing the number of staff or by reducing salaries in positions that were replaced by newly arrived officials.
It is not yet clear whether the current situation is due to the planning of new hirings in sensitive areas such as security, education or safety.
Total current expenditure of the non-financial public sector for 2025 is estimated at $16,534 million .
This means that the payment for personal services, which includes all payroll expenses and social security contributions, will represent approximately 43.42% of the total current expenditure of the non-financial public sector for next year.
With staff spending on the rise, questions are being raised about fiscal sustainability and deficit management, especially in an environment of moderate economic growth.
When Chapman presented the budget to the National Assembly on October 7, he explained that an effort had been made to adjust spending.
The assumptions used to prepare the budget are based on projections from the International Monetary Fund (IMF), which anticipates economic growth of 3% for Panama in 2025, slightly higher than that estimated for 2024.
In addition, nominal gross domestic product (GDP) growth is expected to be 5%, while inflation will remain at 2%.
These projections, although more conservative, are consistent with estimates from other international organizations, such as the World Bank and the Economic Commission for Latin America and the Caribbean (ECLAC).
Chapman has promised that a review, targeting and optimisation of operating expenditure will be undertaken to ensure that resources are used efficiently and concentrated on priority areas.
In this sense, a decrease in the relative weight of public debt in the context of the country’s finances is projected, which will contribute to economic stability.
When comparing total current expenditures projected for 2025 with the approved budget for 2024, an increase of $378 million is expected.
In 2024, current expenses approved by law were $16,156 million, while for 2025 they are estimated at $16,534 million.
However, it would be limiting to compare only the new figures with those of an approved budget, since, as is known, the Government usually requests additional allocations during the year, which increases the total amount of available funds.
Just as an example, the 2024 budget was estimated at $30.69 billion, but according to reports from the Ministry of Economy and Finance (MEF), by August of this year it had been modified to $31.065 billion.
In terms of expenses, debt interest has also been on the rise. Payments of $3.542 billion are forecast for 2025, compared to $2.774 billion a year ago.
The Institute for the Training and Utilization of Human Resources (Ifarhu ) will see an increase in its budget for 2025, reaching $565 million, up from the $547.2 million allocated in 2024.
This is stated in the draft general state budget bill, presented this week by the Minister of Economy and Finance (MEF), Felipe Chapman, to the plenary session of the National Assembly.
This amount is known at a time when director Jaime Díaz has reported that the entity is “bankrupt,” with financial commitments “three times higher” than budgeted and that it has accumulated debts of more than $178 million.
Díaz explained that during the government of Laurentino Cortizo (2019-2024), Ifarhu granted benefits that did not comply with the regulations and the law, and without budgetary support.
“We received an institution that was totally bankrupt, without resources. We have no technology, which does not allow us to have traceability in any process. We have overdrafts in accounts of up to three times the budgets granted for operation and we have administrative and investment debts that exceed $178 million,” he explained on Monday, October 7, in a televised press conference from the amphitheater of the Presidency of the Republic.
In this scenario and according to the budget project presented by Chapman, next year Ifarhu will receive $19.2 million for operation and $545.8 million for investment.
In the specific case of investment, $489 million will be allocated to the educational assistance scholarship program by 2025.
The director of Ifarhu announced that, from now on, the entity will no longer grant direct financial aid. Instead, those interested must apply for the new scholarship program for studies within and outside the country, which will come into effect soon. This change responds to a strategy focused on ensuring a more structured and transparent process for the distribution of educational resources.
The measure is intended to serve students who, according to the director, are currently in their first or second year of university, but have not followed a formal process to receive support. “Once the new program comes into effect, we will call on these students to apply,” he said.
This approach appears to be geared towards creating a more rigorous system, in which students will have to comply with established requirements and procedures to access funds, which could reduce discretion in the allocation of aid.
Between 2014 and 2024, Ifarhu distributed a total of $380.3 in non-reimbursable economic aid and other programs, according to official data. These funds benefited 23,631 people, whose names, amounts received and details of their studies were published by the Presidency of the Republic.
This registry also complements the interactive database released by La Prensa in April 2024, which revealed information on 4,903 beneficiaries, although only 2,144 were identified by name. The publication of this data has sparked a debate on transparency in the management of public funds allocated to education.
The Government Commission of the National Assembly approved on Tuesday, October 8, a bill that seeks to strengthen protection for those who report acts of corruption in the public sector.
The initiative, proposed by independent MP Jorge Bloise , seeks to fill the legal gap that exists regarding the protection of whistleblowers in the administrative and property or accounting jurisdiction.
Bloise, during the presentation of the proposal, said that in the last five years there had been various acts of corruption and there had also been a lack of protection for whistleblowers. This was the case at the Government Innovation Authority (AIG) .
Luis Stoute, when he was deputy administrator of the (AIG), asked the Public Prosecutor’s Office in 2023 to investigate the role of Luis Oliva – former administrator – in a business involving an entity program in the hands of a company. In February 2024 he was removed from his position.
Bloise said that in many cases there are subordinate officials who may have knowledge but fear losing their jobs.
He stressed that the project he is promoting was developed in collaboration with Transparency International (TI). The project was passed for discussion in the first debate in the Government Commission, chaired by Deputy Luis Eduardo Camacho, of the Realizing Goals party.
Supreme Court Justice Carlos Vásquez Reyes filed a complaint with the Public Prosecutor’s Office (MP) for the alleged commission of the crime of identity theft.
The complaint was filed on October 3, after Vásquez discovered a fake profile on the social network Facebook, which used a photo of himself.
According to a statement from the Judicial Branch, the fraudulent account was created using a telephone number from the Dominican Republic, which was used to contact people close to the magistrate.
Vásquez filed the complaint with the aim of having the MP determine the identity of those responsible and establish how long the fake profile has been active.
Judge Vásquez becomes the second high-ranking official to file complaints related to computer security crimes and identity theft. Previously, Panamanian President José Raúl Mulino reported the hacking of his phone, through which third parties used his contact list to request money in his name.
Both investigations are being conducted by the Specialized Prosecutor’s Office for Computer Crimes, which has already carried out various steps to identify those possibly responsible.
Two members of the Single Union of Construction and Similar Workers (Suntracs) were arrested during Operation Obra Gris , carried out by the Public Prosecutor’s Office and the National Police.
The two leaders were accused of participating in an alleged case of extortion at a construction site. On Tuesday, October 8, Suntracs reacted.
Saúl Méndez, the union’s general secretary, said that this is a “systematic persecution against the union movement.”
He explained that the workers were accused by subcontractors who allegedly did not want to apply the collective agreement in a project in Bella Vista . He alleged that the task of both leaders is to “voluntarily” affiliate the workers.
“They have adopted the discourse promoted by business sectors, by replicating the idea that the defense of labor rights constitutes a form of extortion,” Méndez alleged. At a press conference on Monday, prosecutor Emeldo Márquez provided details about the arrests made during Operation Obra Gris. He explained that the investigations were carried out after receiving information that two companies, one in the province of Panama and another in the province of Panama Oeste, were being pressured to hire and fire employees.
The legislative subcommittee on Transportation charged with analyzing the bill that seeks to establish a legal framework for the safety and protection of children during vehicle transportation has completed its work.
The members of that body made some changes to the document, among which sanctions are established with fines and retention of driving licenses for those who fail to comply with the provisions of this norm.
The amended Article 19 states that drivers who transport a child without using a child restraint seat for the first time will be fined $100 and receive 5 points on their license for each violation. They will also be required to take an intensive course on road safety and child restraint seat use.
If it is a repeat offender, the fine will be $200, plus 5 points on the driver’s license and suspension of the license for a period of two months, while if the violation is committed for the third time, the fine will increase to $500 and the license will be suspended for three months.
Likewise, the Land Transport and Transit Authority (ATTT) may modify these sanctions in accordance with current regulations, without this implying a reduction or forgiveness of the same.
The bill was sent to the National Assembly’s Transport Legislative Committee for approval in the first debate next week.