Panama’s Canal Is Drying Up and Its Bonds Are Getting Hit Hard
- Government debt lags returns of its Latin America peers
- Fewer vessels crossing the canal will weigh on fiscal accounts
Cargo ships wait at the entrance of the Panama Canal on Aug. 23.
Photographer: Luis Acosta/AFP/Getty ImagesThis article is for subscribers only.
The Panama Canal is, in many ways, the Panama economy. It hands over about $1 out of every $4 the government takes in, generating a constant stream of cash that flows through all corners of the small country.
So when dozens of container ships began backing up outside the canal recently, the result of a drought so fierce that water levels have plunged to dangerously low levels, it got the attention of traders on Wall Street.