Canal reduces income forecasts

PANAMA. The Panama Canal expansion project continues on course, but the effects of the global financial crisis on the waterway are starting to worry some in the country, as the growth projections are not being met, and the movement of goods across the Canal starts to decrease.

The shipping industry is riding through a storm, and this has hurt the tonnage and toll projections for the Canal, which the Panama Canal Authority has reduced for the present fiscal year.

The warning begins with the calculations that the economist Juan Jovane has made, by stating that the rise in tonnage of goods passing through the canal and the increase of earnings in the way of tolls touted by Canal directives and the government to promote the expansion program, are not taking place.

The movement of goods “is not only not increasing, but last September it registered a decrease of 3 percent,” explained the economist.

Ships that two months ago left the East completely full, “today travel a 30 percent and even 50 percent empty.” And the more empty, the less tolls they pay to pass through the Canal.

The Canal’s expansion proposal signaled that the goods passing through the canal would grow at a rate of 3 percent until 2025, while revenues coming from tolls would increased at a yearly rate of 3.5 during the same period.

Jovane stressed the fact that the self-financing of the Canal is based on these growth rates, “which are not being met.”

The economist believes that in the midst of the current world economic situation, it would not be feasible to increase tolls in order to increase revenues, as shipping fleets are already being hurt by the reduction in world commerce.

Jovane’s worries are not shared by the economist Enrique Ho, who considers that in works like that of the magnitude of the Canal’s expansion, “unforeseen situations always come up.”

He also believes that the ACP has enough funds to survive any shortcomings.

Although the economist considers that the recession currently facing the world’s major economies would not cancel the expansion project in its entirety, he does believe it will make the project less profitable than was expected. After all, the prolongation of the current crisis will affect in the number of imports and exports, which feed the Canal.