The Panamanian government issued $550 million of sovereign debt in the international market, expiring in 2050 and with an average yield of 4.92%.
According to information from the country's authorities, the resources collected will be used to partially finance the investment plan contemplated in the General State Budget for fiscal year 2018.
The rating agency has raised the outlook from stable to positive and reaffirmed the Baa2 investment grade rating, arguing that economic growth will continue to rise and will remain above the level of its peers.
From a statement issued by Moody´s:
New York, September 29, 2017 -- Moody's Investors Service has today affirmed the Government of Panama's issuer rating and senior unsecured bonds at Baa2 and senior unsecured shelf at (P)Baa2.
With the exception of improvements in Nicaragua and Honduras, in the rest of the Central American countries problems in public finances range from latent in Panama and already serious in Guatemala, to critical in Costa Rica and El Salvador.
From the report "Macrofiscal Profiles: 4th Edition" by the Central American Institute for Fiscal Studies (Icefi):
A recently passed tax moratorium law includes several changes related to public finances, the Canal contributions and even exemptions for agricultural, livestock and aquaculture.
The passage of the tax moratorium law brought changes that support the State not only in increase the level of debt to GDP, but also includes tax adjustments and the fact that "...
The National Assembly has approved raising the maximum limit for government borrowing to 4.1% of GDP, above the 3.9% originally requested by the Executive.
The Assembly amended the project which initially envisaged raising the limit on the fiscal deficit from 2.7% to 3.9%, to bring it up to 4.1% of GDP.
'... This means that in the whole of 2014, the government will spend about $1.945 billion more than it earns, $95 more than was provided for in the text approved in the first debate. "
Economists recommend fiscal discipline in order to better address the economic environment in the coming years and avoid the credit risk being raised due to increased borrowing.
The recent bond issue of state debt by $1250 million on the international market and the consequent increase in total public debt should be a wake up call for the government, which should be able to maintain an adequate balance in the relationship between debt and Panama's Gross Domestic Product.
Analysis of debt sustainability in Central America, economic growth, inflation, revaluation and management of the fiscal deficit.
Central America Fiscal Lens No. 5 reported that gross domestic production in Central America in 2012 amounted to U.S. $184.000 million. The fastest growing economies were Panama, Costa Rica and Nicaragua.
As for exports, although they grew by 7.1%, they were quite far from the 20.5% achieved in 2011.
In July, the public debt balance reached $14.57 billion, the highest in Central America in relation to GDP.
Elmundo.com.sv reports that "in the first half of the year, the ratio of public debt in El Salvador in relation to its Gross Domestic Product (GDP) was the highest in Central America, according to the Central American Monetary Council (CAMC)" .
The Central American Institute for Fiscal Studies has concluded that only the public debts of Panama and Nicaragua, using official data, are sustainable in the medium term.
The main theme of the fifth edition of the 'Lente Fiscal Centroamericano' (Central American Fiscal Lens) is an analysis of debt sustainability in Central America, which depends greatly on interest payments on debt, economic growth, inflation, revaluation and management of the fiscal deficit.
During 2011 the Government will issue up to $ 600 million in Treasury Notes to finance the deficit and meet debt maturities.
Alberto Vallarino, Minister of Economy and Finance, explained that the deficit for 2011 is planned at $ 436 million, but could grow as a result of national emergencies.
In addition to approving the issuance, the National Economic Council approved a credit of $ 500 million with Banco Nacional de Panama.