S&P pares Panama

S&P said it lowered its long-term sovereign credit ratings on Panama to BBB from BBB+.

“The downgrade reflects pressures on Panama's debt servicing costs because of the government's higher debt burden, coupled with an abrupt decline in fiscal revenue. We estimate the government's interest payments will consume 17% of its revenue in 2020 and then average 12% in the coming two to three years (2021-2023) as growth accelerates and debt stabilizes,” S&P said in a press release.

The agency noted the pandemic led to the economy to shrink a projected 9% but GDP growth is set to recover in 2021 to 7% and 5% a year subsequently.

The outlook is stable.

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