Economy is slowing down

PANAMA. The Panamanian economy is beginning to show the first symptoms of a contraction, but that does not mean that a recession is imminent, said the Minister of Economy and Finance, Alberto Vallarino and the General Comptroller, Carlos Vallarino, during the monthly meeting held to discuss the Monthly Economic Activity (IMAE in Spanish) report.

The General Comptroller said that various sectors such as the manufacturing industry, commerce in general, fishing, farming and real estate have slowed down during the last few months.

Although the government obtained extraordinary revenues of $250 million, of which $73 million were generated by the Panama Canal Authority and another $172 million from concessions granted to two cellular telecommunications companies, there is a shortfall of $400 million in the central government.

An example given by the Minister of Economy and Finance and the National Comptroller is the case of the Social Security, which in the period between January and May generated an income of $59 million, but had a shortfall of $92.5 million. The shortfall is due to the $63.5 million paid in additional pensions, $31 million spent in goods and services and $13.5 million in wages. Both officials said that the administrative expenses must be controlled and for that reason only policemen, doctors and teachers should be hired, but not administrative personnel.

The minister and the comptroller presented a series of measures to the Cabinet yesterday aiming to keep the government’s shortfall under control.

During the last year of the Martin Torrijos Administration, pensioners, the administrative personnel of the Social Security as well as doctors received substantial pay increases, although the Treasury was in trouble. Other mega projects such as the Coastal Strip, which cost $189 million, affected the government’s finances.