Panama's Credit Rating Raised
Ratings agency Standard and Poor's has raised Panama's long-term sovereign
credit rating to BB+ from BB on the basis of strong economic growth and continued
improvement in the government's fiscal health. With the economy enjoying record growth - estimated at 10% in 2007 and averaging
6.5% since 2002 - S&P affirmed its 'stable' outlook for the country
and its 'B' rating for the short-term sovereign credit rating. While the Panama Canal and its multi-billion dollar expansion programme continues
to be the main driver of Panama's economic growth, S&P noted that the country's
economy has successfully diversified in recent years, with sectors such as tourism,
port logistics, and high-end construction making a growing contribution to the
overall economy. On the fiscal front, the government expects a surplus of about 0.7% of GDP
for 2007 - a significant improvement since a deficit of 5.6% was recorded in
2004. Net general government debt should drop to 33% of GDP in 2007 from 42%
in 2004, according to S&P. However, S&P analyst Roberto Sifon Arevalo cautioned that it was "critical"
that a near-balanced fiscal position be maintained during the expansion of the
Panama Canal, and warned that a slowdown in the United States economy during
2008 could undermine growth in Panama. .
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