Based on the argument that there is no significant fiscal consolidation and sustained economic recovery, the rating agency decided to downgrade the government's long-term issuer rating perspective from stable to negative.
Although the outlook was modified, Moody's decided to maintain the long-term issuer and senior unsecured debt ratings at Baa1.
Fitch Ratings agreed to change the perspective of the region's banks from stable to negative, arguing that the current health crisis will affect financial institutions in all countries.
Considering the measures that countries have adopted in the last 15 days in economic matters, following the spread of covid-19, Fitch expects that there will be a decrease in the issuance of loans.
Moodys confirmed that the country's investment grade is Baa1 with a stable outlook, arguing that the economy has a solid performance and that it reflects stability at the macro level.
In 2020, Moody's expects the growth of the Panamanian economy to recover to 4.5%, boosted mainly by a full year of production in the copper mine, according to the forecasts of the international agency.
Arguing that the country has a diversified economy which has contributed to sustained GDP growth, Standard and Poor´s raised the rating from BBB to BBB+, with a stable outlook.
Economic diversification has also allowed per capita income to double in the last decade, one of Standard and Poor's arguments for raising the rating.
...and I will tell you who you are. In their quest to reduce exposure to risk, banking correspondents have started to restrict the services they provide to gambling companies, remittance companies, and brokerage firms that are not related to banking groups in the region.
In order to reduce risk exposure, some international banks with correspondents in Panama and other countries in the region are failing to open accounts for or provide services for companies whose income comes from activities such as remittances and gambling.The banks' argument is that they are more likely to be used for money laundering. Even non-banking brokerage firms claim to have difficulty offering their customers products and services,"... since banks wont open accounts in which customers can deposit their funds and receive a return on their investment."
The Superintendency of Banks is working on an update of the regulation on credit risk management and a new regulation of corporate governance for insurers.
Jose Alejandro Arevalo, head of the Superintendency of Banks (SIB), told Dca.gob.gt that"... in the case of regulation 93-2005 they want to ensure that the valuation of assets which is presented every 4 months by banks reflects economic reality and the quality of the goods."
For the last four years the loan portfolio of the Salvadoran financial system has been growing at an average rate of 3.5%, below the 11% growth average in the rest of the region.
A report produced by the rating agency Moody's notes that growth in El Salvador's financial sector has been stagnant since 2010, as the total loan portfolio has not achieved growth rates above 3.5% per year.
The Central Bank of Costa Rica has submitted a query regarding the possibility of eliminating the restriction on financial institutions of varying its assets in dollars per day by up to 4% .
The Chamber of Banks looks favorably on the initiative to abolish the current limit of 4% so that more currencies can be bought and sold daily.
The Central Bank "justified in the consultation paper that the move is in line with exchange rate flexibility, to allow intermediaries to increase participation in the determination of the exchange rate, managing risk better and providing liquidity."
Changes to the rules of the 8204 Act include the classification of customers according to risk levels and the automation of anti-money laundering controls.
In order to improve the identification of people at high risk of carrying out money laundering activities the National Council of Supervision of the Financial System (Conassif) has amended Act 8204, the regulation against money laundering and financing of terrorism.
Additional provisions by banks for loans to companies in the CFZ are a "medicine worse than the disease."
The Association of Users of the Colon Free Zone (AU) fears that the bank contingency measures, ordered last week by the Superintendency of Banks of Panama (SBP), will limit bank lending to companies in the CFZ.
"Entrepreneurs foresaw an adverse scenario for the Colon Free Zone (CFZ) as, in addition to warnings from the banking regulator, there is the possibility of tax collection approved by the City Council of Colon, as well as pressure from insurers after multiple disasters".