According to a report in the Financial Times last week, Panama's hopes of an investment-grade credit rating have been dashed again by two leading ratings agencies.
The government of the low tax jurisdiction recently passed a law stipulating debt and deficit ceilings, and outlining plans to buy back $1 billion of its own government bonds in an attempt to improve Panama's debt profile. However, it appears that these moves have been to no avail.
Both Moody's and Standard and Poor's (which rate the country one notch and two notches below investment grade respectively) have said that although the new legislation is a step in the right direction, there still remains a great deal to be done.
'There are fundamental problems to be tackled,' the FT quoted Moody's as observing.
The ratings agency suggested last week that in order to secure an investment grade rating, the government of Panama will need to increase the low tax take to above 10% of GDP, rein in spending, and put in place measures to further stimulate economic growth
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