Panama's Infrastructure Spending to Help Economy Grow 6%, Martinelli Says
Panamanian President Ricardo Martinelli said his nation’s economy may grow more than 6 percent this year, higher than a previous estimate from the finance minister, as the government boosts spending on infrastructure projects.
“We are very confident and happy with the aggressive investment plan,” Martinelli said in an interview today in Mexico City. “Security, low inflation and stability are helping Panama along.”
Panama aims to spend $20 billion during the next four years to build ports, expand its main airports and lure international companies to the Central American nation, Martinelli said.
The International Monetary Fund forecasts Panama’s economy will grow 5 percent this year after it grew 2.4 percent in 2009, according to the IMF website. Finance Minister Alberto Vallarino said in November the economy may grow 5 percent this year.
The country will invest in businesses that have a “naturally competitive advantage,” including shipping and financial services, Vallarino said in November. The investment will help double Panama’s gross domestic product in the next 10 years, putting the nation on par with first-world countries, he said.
Investment Grade, Taxes
Martinelli said his government respected a U.S. warrant authorizing former Panamanian President Manuel Noriega’s transfer to France after a French court sentenced him to 10 years in jail.
“We would have preferred him going to Panama, but it’s a decision I respect,” Martinelli said.
Panama’s infrastructure plans include a $1.5 billion subway system and a $500 million public bus system, Martinelli said.
The government will begin the pre-qualification period for bids on the subway system next week, Martinelli said.
Singers Julio Iglesias and Marc Anthony are also investing in Panama, with Anthony planning to build hotels there, he said.
Panama’s credit rating was raised to investment grade in March by Fitch Ratings, which cited low debt levels and a resilient economy that posted one of the fastest growth rates in Latin America last year as the reason for a BBB- rating.
Moody’s Investors Service rates Panama as Ba1, while Standard & Poor’s rates its long-term foreign currency debt at has a BB+.
The nation faces threats of international sanctions over banking-secrecy rules, a punishment last imposed on Panama in 1989 to pressure Noriega.
Martinelli has said tax treaties with Mexico and other countries will help remove Panama from the Organization for Economic Cooperation and Development list of countries that have not implemented international taxation standards.
-- With assistance by Eric Sabo in Panama City, Panama. Editors: Bill Faries, Harry Maurer.