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Country Risk Climate: Moody’s Upgrades Panama

Moody’s Investors Service upgraded the government of Panama’s bond rating to Baa2 from Baa3, citing better debt metrics and the country’s growth prospects. The outlook was also revised to stable from positive.

The upgrade reflects “Panama’s ongoing economic dynamism and positive medium-term growth prospects” as well as continued debt metric improvement, according to Moody’s.

“The positive outlook is based on Moody’s expectation that growth in Panama will remain solid – if not quite as stellar as in the past two years,” the credit ratings agency added.  The move “validates the government’s economic and fiscal strategy,” Panama’s Finance Minister Frank De Lima said. “We were expecting an upgrade.”

Between January and August, Panama’s economy grew 9.4 percent compared to the same period in 2011. De Lima said overall growth is expected to be around 10 percent this year, dropping slightly to 8.5 percent in 2013.  In 2011, the economy expanded 10.6 percent, helped by an ongoing $5.3 billion expansion of the Panama canal and heavy infrastructure spending, including construction on a $1.3 billion metro system.   Panama’s dollarized economy is one of Latin America’s top performers.

There is a building boom in progress and Panama City starts to look more and more like a mini Hong Kong. Capital flight from Venezuela seems to find a new haven in Panama.

Source:  Panama Guide.com

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