In order to accommodate the financing of major infrastructure projects, the government is proposing the creation of a fund made from oil and mining royalties, and contributions from state enterprises.
Thursday, July 5, 2012
According to Ricardo Barrientos, the former deputy minister of Finance in the previous administration, "The idea is good but it needs more discussion."
"It is proposed that the fund, which would be non-revolving (money does not return, is used only once), would increase with an annual contribution from the state and funds coming from its involvement in public or private businesses or those that provide public services or exploit natural resources, and funds from privatization or concession of state services", published Elperiodico.com.gt.
At the moment the proposal does not contain the amount of the fund, "A study has to be conducted of all mineral resources, oil and rivers, among other things, in order to able to establish an amount", added the Minister of Finance Pavel Centeno.
The Panamanian Chamber of Commerce supports the creation of a sovereign fund and recommends separate discussion of matters relating to limiting the fiscal deficit.
A statement from the Chamber of Commerce, Industries and Agriculture in Panama (CCIAP) reads:
The Chamber of Commerce, Industries and Agriculture of Panama, agrees with the establishment of a Savings Fund for Panama and recommends that the National Assembly have a separate debate over matters relating to the amendment to limit the fiscal deficit, which was incorporated into the bill creating the Fund.
Governments should act as good parents, thinking about the welfare of future generations, not just about the next election.
Governments should act as good parents, thinking about the welfare of future generations, not just about the next election.
In his article in Martes Financiero, Oscar Castaño Llorente discusses the rationale of the proposed creation of the Panama Savings Fund (FAP in Spanish), not only in its philosophical scope, but also from a practical point of view, present and future.
The Fondo de Ahorro de Panamá (Panama Savings Fund) aims to be a mechanism for economic stabilization and savings for natural disasters or economic crises.
"The Cabinet has approved a bill proposing the creation of a sovereign fund called the ‘Fondo de Ahorro de Panamá ‘(FAP), which according to a statement from the presidency will have two parallel objectives: National savings for future generations and economic stabilization in case of predetermined situations such as natural disasters or economic crises," reported Capital.com.pa.
Savings must be made and reserves accumulated during booms times, so that those funds can be used in times of national crisis or contraction.
The creation of funds to build up currency reserves during periods of economic expansion from specific high-revenue sources, such as China's trade surpluses, Chile's copper or Norway's oil, is an option to be considered in Panama, which does not have a central bank to control monetary policy or act as a lender of last resort.
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