The Legislative Assembly has approved and President Moscoso has signed a $5.493 billion national government budget for 2003. After making its way through the Legislative Assembly the budget was some $203 million more than that originally proposed by the administration, with much of the difference reflecting cuts that were restored in Social Security and education. However, Comptroller General Alvin Weeden, who is feuding with Social Security director Juan Jované, can effectively block any spending that was added to the budget by the legislature and the president can sequester funds more or less as she sees fit. In recent years the government's revenue projections have been too optimistic and as the fiscal years have progressed actual spending and the national budget have tended to become increasingly dissimilar. About 22 percent of the budget is earmarked for payments on the national debt, but when one takes into account the Fiduciary Development Fund, borrowing to refinance bonds coming due and other "off budget" sources, a much greater part of the nation's public spending will actually go toward servicing the debt.

Despite severe cutbacks in many government services and continuing low tax receipts, the Moscoso administration is by its own admission spending more on the national government payroll. According to a comptroller general's report, the government's monthly payroll for 2002 through this past September averaged $90.5 million, while in the same period of 2001 it was $88 million. The comptroller said that the increases came mainly in the education and social services sector, and that as of June 30 there were 142,913 people on the national government payroll.

The email protests continue to come into The Panama News from the grass roots, and "jackass" is one of the tamer epithets we've heard about the Public Services Regulating Board and its decision to block Internet telephony. The protests are also coming from business and political circles. Intered Panama, the local industry association of Internet providers, issued its protest in the form of an ad in the daily newspapers, which pointed out that the board's order to block 24 User Datagram Protocol portals was made without a public hearing beforehand, which they consider an illegal procedure, and that the move disrupted several services other than net telephony. Legislators of all parties called for hearings and denounced the board and its policy, with radio show host and PRD deputy Andrés "Domplín" Vega summing up the gist of public opinion by declaring that the government has made Panama the object of "public ridicule" around the world by adopting an Internet regulation policy that puts us in step with a small minority of countries that includes "Mozambique, Senegal, Ethiopia, Croatia and Belize." Arnulfista legislator Jacobo Salas alleged conflict of interest in the decision and vowed to appeal the board's order to the Supreme Court. Meanwhile the National Secretariat of Science, Technology and Innovation (SENACYT) denounced the board's decision as "absurd" and said that it restricts the nation's technological development. The Public Services Regulating Board's president, Alex Arroyo, defended the policy before a Legislative Assembly committee as a reasonable measure to stop the evasion of Panama's $1 per call tax on international telephone services.

Cable & Wireless Panama says that it is letting more than 600 employees go in order to be competitive when its fixed line and international calling monopolies end on January 1. The company says that the employees will be paid severance benefits according to their seniority on their jobs. The layoffs, which are not a big surprise, may nevertheless lead to labor strife, both between the workers and the company and within the employees' union.

Prosecutors have issued arrest warrants for five members of the Nandwani family, alleging fraud in the bankruptcy of the Fotokina group of companies. It is said that some $60 million worth of assets was fraudulently transferred to relatives or otherwise concealed from bankruptcy liquidators and creditors. The accused deny any wrongdoing.

On November 17 high winds during a tropical cloudburst sent a palm tree crashing onto a power line serving IDAAN's Chilibre water purification plant, which supplies most of the water for Panama City. The Elektra Noreste utility was called in to do repairs, but needed to bring in some equipment from Colon province to do so. Once the equipment was brought in and the line was back up, it was then necessary to repair pumps that had been damaged by the power fluctuation and outage. By that time there were air bubbles in Panama City's water lines that needed bleeding before service could be restored. Some parts of the capital went without water for nearly three days. The incident prompted the government to consider buying a backup generator for such emergencies at the plant, and meanwhile the Panama Canal Authority, which also generates electricity, offered to supply power to the plant at prices well below what Elektra Noreste charges. Elektra Noreste, whose local CEO is former Panama Canal Commission canal operations director and the former head of Panama's ENRON subsidiary René Van Hoorde, is demanding that the Panama Canal get out of the electricity sales business, alleging that it's unfair competition.

Attorneys from some of Panama's most prestigious law firms are accusing the Union Fenosa and Elektra Noreste power utilities of systematically overcharging on their consumer electric bills while the Public Utilities Regulating Board looks the other way, and are threatening legal action. Three law firms, Carreira Pittí & Garibaldi, De Castro & Robles and Tapia, Linares & Alfaro, have formed the Panamanian Association for the Defense of Competition (APADEC) and say that they may file a class action lawsuit about the practice.

The Panama Canal Authority says that no decision has been made about a proposal to expand the Panama Canal by building a series of new dams that would create a new lake in western Colon and northern Cocle provinces, and that the dialogue continues. The Farmers' Coordinator Against the Reservoirs (CCCE), a group of local residents who stand to be displaced if the project goes through and don't want to see it happen, accuse the authority of lying. The critics say that the decision has already been made and there is no real dialogue. On November 18 hundreds of protesters made their way to the Panama Canal Administration Building to voice their opposition to the project, and both the authority and the CCCE have been making their arguments in the press and to the Catholic Church hierarchy in recent days. The nation's Catholic bishops, who may be as divided as the lower-ranking clergy and lay organizations appear to be, have said that they are considering the controversy and will be taking a position on it shortly. Meanwhile, mainly on the opinion pages of La Prensa and El Panama America, a debate about canal expansion continues among engineers, current and retired canal managers and business leaders. The two main points of contention are whether it would be a wise investment to build a third set of locks to accommodate the larger post-Panamax-sized ships and whether the better way to collect more water for the canal and urban uses would be a new dam farther up the Chagres River system on the eastern side of the canal instead of damming the Western Watershed. Changes in the Byzantine world of Panamanian small party politics may also have implications in the debate --- former Cocle governor Richard Fifer recently went from the National Liberal Party to Canal Affairs Minister Ricardo Martinelli's Cambio Democratico, and Fifer, as the major shareholder in a mining concession that would be inundated if the Western Watershed project proceeds, could be the largest beneficiary of any compensation program for flooded-out property owners.

President Moscoso has named Eduardo de Bello to finish out the term of Luis Carlos Cho on the Panama Canal Authority (ACP) board of directors. Cho's, and now Bello's, term ends next July. The position must by law go to a member of the Panamanian Society of Engineers and Architects.

The Moscoso administration has submitted a free trade agreement with El Salvador, which covers most products with the notable exception of meat, to the Legislative Assembly. Though the votes may be lined up to ratify the treaty, which would be the first free trade pact to which Panama is a party, the debates about both the provisions of the proposed agreement and the Moscoso administration's economic integration policy of negotiating bilateral deals with Central American countries is likely to be fierce.

The government has given $2.8 million in subsidies to eight independent banana operations in economically depressed Divala, which has been left destitute by the partial withdrawal of Chiquita Brands from Chiriqui province and the international troubles in the banana market. The subsidy will go to pay arrears to the independent farms' suppliers and the social security system, and to maintain inspections for the purpose of detecting and deterring crop diseases.

The Economic Commission for Latin America (CEPAL) reports that Panama's school dropout rate reached 25 percent in the late 1990s and hasn't changed much since then. The commission's report said that most of the dropouts leave school in the first cycle of secondary education. In this country the dropout rate is higher among boys than among girls.

The common but illegal practice of bus or taxi permits being rented out by the permit owners is not going to be tolerated much longer, Transito director Pablo Moncada Luna says. On November 13 he announced that all permits rented out by their owners to others will be cancelled. Bus and taxi permits are and have long been something of a racket, and in some places people have used their political or transport syndicate connections to obtain multiple permits and go into the transport business as non-operating owners. The law reserves the transportation sector to owner-operators.

A Florida employment agency is advertising that it wants to recruit Panamanian nurses to work in that state. If nurses from this country can pass an English-language test of their professional proficiency, they can get visas and find work in the United States, where there is a shortage of nurses. But leaders of the nursing profession here, along with spokespeople for the Health Ministry and Social Security Fund, are expressing their worries that if many Panamanian nurses emigrate in search of better opportunities to the north this country's health care system will be seriously harmed. Panamanian nurses have seen their pension benefits cut by the government in recent years, and thus many of them would discount appeals to their sense of patriotism accordingly.

In at least its third effort at developing Fort Sherman's tourist capabilities, the Interoceanic Regional Authority (ARI) has signed a contract with Proyectos y Capitales to build a $9 million marina there, with a hotel and tourist-oriented shops contemplated in a second phase of the project. ARI has also recently signed yet another hotel development contract for the former Fort Amador, where many projects have been announced and a few have not evaporated, and a deal to move a technology development firm from India to Colon.

The Legislative Assembly is considering changes to the nation's broadcasting law, and the radio broadcasters' industry group complains that what it's all about is a grab for free radio frequencies for politicians to promote themselves in the upcoming elections. There is no concrete proposal on the table at the moment, but the Panamanian Radio Association (APR) complains that it has heard that the plan is to put frequencies closer together, thus opening up new channels to be distributed according to political criteria.