S&P turns Panama view to negative

S&P said it revised Panama’s outlook to negative from stable and affirmed its BBB rating.

“We revised the outlook to negative given the pronounced hit to per capita GDP amid the global pandemic that, along with a slow policy response, could hurt trend growth such that it does not surpass its peers or slow the projected improvement in fiscal balances and change in debt over the forecast period. This, amid an already higher net general government debt burden–at 50% of GDP–limits policy flexibility under the dollarization regime,” the agency said in a press release.

The agency noted real GDP per capita declined to $12,373 in 2020 from $15,831 in 2019, showing the country’s vulnerability to the pandemic.

“We now expect GDP per capita to return to its pre-pandemic level only in 2024, despite more benign external conditions benefiting Panama's financing requirements,” S&P said.

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