business

After an initial review of the incoming government’s financial situation by the new Minister of Economy and Finance, Ricaurte Vásquez, the Cabinet Council adopted a series of austerity measures that will be in effect for the remainder of the year.

The Torrijos administration found that Mireya Moscoso had left at least $220 million in bills to be paid, and that by any reasonable calculation the statutory government budget deficit limit of two percent of the Gross Domestic Product had already been exceeded. It all adds up to about $720 million in red ink for 2004.

Thus there is a government hiring freeze in effect and talk of between 40,000 and 50,000 public sector layoffs in the coming weeks. Travel and telephone restrictions have been imposed. The government won’t be renting any cars, and won’t be renewing many personal services contracts.

There will be no more government borrowing for the rest of the year, but still the debt limit law will be temporarily suspended to reflect economic realities.

The Torrijos administration has promised not to use the Fiduciary Fund for Development, which consists of the proceeds from the privatizations of state-owned enterprises during the Pérez Balladares administration, the income from which is used to finance development projects, to ease the current budget squeeze.

When he took office, President Torrijos noted that the increased number of public employees from the Moscoso years would have to be rolled back. At the time leaders of some of the public sector labor unions admitted that this would be necessary. Now, however, the unions express grave concerns about the possible scale of job losses. In the short term, the elimination of tens of thousands of government jobs would ripple through the national economy, indirectly causing further unemployment in the private sector.
























Also in this section:
Business & Economy Briefs
Blades at AMCHAM
Torrijos planning austerity measures
The problems with the Albrook-Balboa overpass
Luciani tapped to head Seguro Social

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