Latin Finance - July/August 2010 - 36

panama

De La Guardia says ambitious spending last through the global downturn and will not jeopardize the fiscal austerity administration change. Martinelli also that helped win investment grade. pushed through tax hikes on banks, After posting a 0.6% of GDP-equivalent airlines, and Panama’s large Caribbean budget deficit in the first quarter, Panama free trade zone and casinos, in spite of expects to be inside its legally required skepticism and opposition. Sales tax will 2.0% deficit for 2010. It modified fiscal increase to 7% from 5% in July. responsibility laws last year to permit an “We want to make sure that they up to 2.5% deficit in 2009, but the fiscal continue to manage their public finances gap was only 1.0%. in a responsible way,” says Paiz Fredel. In 2004, the government’s debt-to“Things like costs overruns do happen in GDP ratio topped 70% but dropped to large projects like a metro . . . these are about 45% in 2009, aided by an economic things that we have to monitor.” boom in which real GDP growth averaged Paiz Fredel says Panama has 9.7% from 2005-2008. The government unquantified assets, including expects 2009 growth to be revised upward undeveloped land along the Panama to about 3% and officials are promising Canal, lack of currency risk owing 5% for 2010. Though cutting debt-to-GDP to dollarization, a good maturity relies on continued robust expansion, schedule and track record with liability De La Guardia expects the LatAm FDI as Percentage of GDP administration to Panama leads the pack reach a ratio of 35% by 2014. 14.6 Analysts have 2009 2007 2006 2008 been bullish on Panama for 10.4 a number of 9.0 years but will 7.2 6.8 be watching 5.2 5.1 closely to make 3.7 sure Martinelli 2.9 2.6 1.8 1.8 does not suffer a black eye from popping the cork Panama Peru Brazil on a champagne bottle of cheap Source: Panama Economy and Finance Ministry debt. Major infrastructure projects like the subway are prone to management. “In some ways Panama inefficiencies and cost overruns. The can handle a higher debt load than president will be under intense pressure to other countries at a similar rating,” she quickly complete the 14-kilometer project says. “We’re not necessarily concerned that will rip up a major commercial artery that by going in and doing these types in the traffic-gnarled capital. of investments that they’re going to be “[Spending plans] are relatively blowing their debt through the roof.” ambitious and the government’s made huge strides in increasing the amount of Red Gold investment over the last few years, but With improbable tax reform under they still have a hard time executing it as his belt, investment grade notches on planned,” says Theresa Paiz Fredel, senior his club and a subway project verging director at Fitch. on afterthought, Martinelli’s biggest Panama has been on track for upgrade challenge might be opening up Panama’s since the previous administration, copper mining sector. but Martinelli needed to show that a Copper reserves were originally an commitment to fiscal restraint would estimated 36 billion pounds at two sites.

Developing the mines could draw $10 billion in investment over five years, says Ricardo Quijano, Panama’s vice minister for commerce and industry. Copper mining could add as much as 4% to Panama’s GDP, he adds. But tapping tiny Panama’s comparatively vast copper reserves has eluded as long as it has tempted. Environmental opposition and volatile prices have derailed developing concessions, while companies existing only on paper have obtained concessions but not followed through with development obligations, says Quijano. The most advanced of the two major copper projects is Cobre Panama, near the Caribbean coast in central Panama. It is owned by Canada’s Inmet Mining, which recently calculated that the site contains more than the 11 billion pounds of copper originally estimated. Quijano says up to $400 million has already been invested and an environmental impact study 2.1 2.6 2.1 should soon be 1.3 approved. The company forecasts Mexico commercial production by 2015. Inmet is also seeking investors for the project. The government says it will help attract participants by a change in the mining code allowing investment by foreign government-owned companies, which is prohibited under Panamanian law. The new code, which the executive plans to have drafted by July, will also raise royalties and fines for environmental transgressions. Quijano declines to predict how much cash mining could generate for government coffers. Heather Berkman, an analyst at Eurasia group who recently met with government officials on mining issues, says the government expects transfers to eventually equal those from the canal. Cobre Panama shares land with the

36 LatinFinance

July/August 2010



Latin Finance - July/August 2010

Table of Contents for the Digital Edition of Latin Finance - July/August 2010

Latin Finance - July/August 2010
Contents
Equity/Debt Fund Performance
European Investors
Brazil Domestic Buyside
Mexican Domestic Buyside
Mexico Venture Capital
CEMEX CFO Interview
Panama Investment
Canadian Miners
Peru Investor Report
Peru is Making Strides to Develop Gas and Oil
Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - Latin Finance - July/August 2010
Latin Finance - July/August 2010 - Cover2
Latin Finance - July/August 2010 - Contents
Latin Finance - July/August 2010 - 2
Latin Finance - July/August 2010 - 3
Latin Finance - July/August 2010 - 4
Latin Finance - July/August 2010 - 5
Latin Finance - July/August 2010 - 6
Latin Finance - July/August 2010 - 7
Latin Finance - July/August 2010 - 8
Latin Finance - July/August 2010 - 9
Latin Finance - July/August 2010 - Equity/Debt Fund Performance
Latin Finance - July/August 2010 - 11
Latin Finance - July/August 2010 - 12
Latin Finance - July/August 2010 - 13
Latin Finance - July/August 2010 - 14
Latin Finance - July/August 2010 - 15
Latin Finance - July/August 2010 - 16
Latin Finance - July/August 2010 - European Investors
Latin Finance - July/August 2010 - 18
Latin Finance - July/August 2010 - Brazil Domestic Buyside
Latin Finance - July/August 2010 - 20
Latin Finance - July/August 2010 - 21
Latin Finance - July/August 2010 - 22
Latin Finance - July/August 2010 - 23
Latin Finance - July/August 2010 - 24
Latin Finance - July/August 2010 - 25
Latin Finance - July/August 2010 - Mexican Domestic Buyside
Latin Finance - July/August 2010 - 27
Latin Finance - July/August 2010 - 28
Latin Finance - July/August 2010 - Mexico Venture Capital
Latin Finance - July/August 2010 - 30
Latin Finance - July/August 2010 - CEMEX CFO Interview
Latin Finance - July/August 2010 - 32
Latin Finance - July/August 2010 - 33
Latin Finance - July/August 2010 - Panama Investment
Latin Finance - July/August 2010 - 35
Latin Finance - July/August 2010 - 36
Latin Finance - July/August 2010 - 37
Latin Finance - July/August 2010 - 38
Latin Finance - July/August 2010 - Canadian Miners
Latin Finance - July/August 2010 - 40
Latin Finance - July/August 2010 - 41
Latin Finance - July/August 2010 - Peru Investor Report
Latin Finance - July/August 2010 - 43
Latin Finance - July/August 2010 - 44
Latin Finance - July/August 2010 - Peru is Making Strides to Develop Gas and Oil
Latin Finance - July/August 2010 - Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - 47
Latin Finance - July/August 2010 - 48
Latin Finance - July/August 2010 - Cover3
Latin Finance - July/August 2010 - Cover4
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