S&P gives Panama credit raise for stable credit rating

(latinobusinessreview.com) After years of rapid economic growth, trim budgets and tax system overhauls, Panama wins a second investment-grade rating

S&P has rewarded Panama for its years of rapid economic growth, trim budgets and tax system overhauls by giving the country a second investment-grade rating on its debt.

Panama has been given this upgrade, which should attract more investment to the country, which is known best for its transoceanic canal and banking industry that does not ask sufficient questions from its depositors.

The economy in the country has grown, despite the global recession. During the economic crisis, Panama’s economy actually grew, and began a $5.25 billion project to expand the canal.

The expansion is believed to bring a steady increase in revenue while tax reform and more efficient tax administration provides an ample supply to fund investment plans.

In March, Panama joined Mexico, Brazil and Chile in the investment-grade club when Fitch ratings upgraded its debt to BBB-minus. The upgrade is a reflection of the country’s assessment that continued economic growth, combined with moderate fiscal deficits, should reduce the government’s debt burden, according to a representative from S&P in a recent news report.

Currently, approximately four percent of the world’s commerce flows through the Panama Canal. The country also ships goods via train from ports on one coast to the other. This has allowed Panama to gain an average of eight percent in annual growth from 2008-2009, the fastest pace in Latin America.

A representative from S&P stated the company expects Panama’s economy to grow at an average rate of five percent between 2010 and 2015, as opposed to its average of eight percent between 2004 and 2009.

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Original source: http://www.latinobusinessreview.com/industry-focus/supply-chain/s-p-gives-panama-credit-raise-stable-credit-rating
Date Retrieved: May 28, 2010.