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business & economyAlso in this section: Business & Economy Briefs
Morgan Stanley raises Panama's rating The Morgan Stanley investment bank has promoted its ranking of the risk of putting your money in Panama from "even weight" to "overweight. The company cited the Torrijos administration's tax reform law and budget restraint, and hopes that the problems with the Social Security Fund will be soon straightened out, as the reasons for its more positive estimate.
Budget cuts, tax hike show up on balance sheet What are all those out-of-work PRD campaign volunteers complaining about? They say they worked for Torrijos expecting government jobs in return, and their hopes have been unrealized. Now the source of that frustration is showing up in macro figures. The nation's budget director Carlos González told La Prensa that in the first four months of 2005 government payroll spending was $19 million below what had been budgeted for that period, and that the cuts are but one part of a plan to pare some $1 billion per year off of that part of public spending. Combining that with a $43 million rise in revenues over what had been budgeted for those months and a growing economy, the government estimates that this year there will be a public deficit amounting to some 1.6 percent of Gross Domestic Product, which is substantially less than had been contemplated when the budget was passed. Officially, unemployment stands at about 13 percent (though most economists put the true number a few points higher), a factor that hasn't changed much as other economic indicators have improved. Which is why, in certain wardheeling circles, the Torrijos administration's failure to create public sinecures isn't very popular.
Government claims 9% GDP growth in first trimester The Torrijos administration is claiming the biggest four-month economic growth spurt in many years, one that if continued through the year would mean a nine percent rise in the Gross Domestic Product. Leading the way were non-traditional agricultural exports (particularly melons), business activity in the Colon Free Zone, canal tolls, construction and public utilities. Some critics, particularly from the labor unions, believe that the administration's numbers are too high, and the government itself is not predicting that this growth rate will hold through the rest of the year.
Minimum wage committee named On May 5 President Torrijos issued a decree creating this year's National Minimum Wage Committee. By law, the minimum wage is reviewed every two years by a committee with representatives of labor, management and government. During the Moscoso administration the economy was in free fall for the 2001 review and in a sluggish recovery in 2003, so there were only token increases. However, the economy is a bit stronger this year, plus the rippling effects of high fuel prices and increased taxes have driven up the cost of living, so it is expected that the wage adjustment will be more substantial than in the previous two reviews. The committee, composed of Labor Minister Reynaldo Rivera, Antonio Fletcher and Jaime Penedo from the National Council of Private Enterprise (CoNEP), Genaro López, Alfredo Berrocal, and Rafael Chavarría from the National Council of Organized Workers (CONATO) and Walter Medrano from the Panamanian Construction Chamber (CAPAC), with observers from the Ministry of Agricultural Development and the Ministry of Economy and Finance, has four months to come up with new minimum wage levels, which must be approved by the Cabinet Council to go into effect. In the event that the committee members can't agree, the cabinet would decide. Panama's minimum wages are set according to economic sector and region of the country, and at the moment for most private sector workers in Panama City it's $266.24 per month.
Electric rates going up Panama has some of the world's highest electricity rates, and they are about to go up again. On May 10 the president of the Public Services Regulating Board (Ente Regulador) announced that electric rates will go up in the second half of this year. The power companies, citing higher fuel costs, have asked for a 10 percent increase. Most of Panama's power comes from hydroelectric generation, but especially during the dry season and at times of peak electrical usage we also produce power at thermoelectric plants which run on gas or oil.
Confrontation at ARI The Interoceanic Regional Authority (ARI), set up after the 1989 US invasion to care for and dispose of properties that came into Panama's possession as the result of the 1977 Torrijos-Carter Treaties, will go out of business at the end of this year. Run a presidentially appointed director who is overseen by a board composed principally of party activists, ARI has earned a reputation for corruption, inefficiency, willful waste of many of the assets it received and above all abominable land use planning. Now the authority's death throes include its downsizing and dismantlement by director Julio Ross Anguizola, which is opposed by members of the board. The latest blows are board members' remarks published in La Estrella to the effect that Ross must be removed, and Ross's report on travel when ARI was run by Alfredo Arias, the nephew of Mireya Moscoso's late husband Arnulfo Arias. Ross tells a tale of prodigious globetrotting, mostly upon trips for which ARI's junketeers returned with no sales or other benefits to show. Arias says it's much ado about nothing, to distract attention from Ross's problems with the board. Ross says it's about abuse of the public trust, which may result in criminal charges once all the audits are done.
Banana arbitration underway A lawsuit that Panama, Costa Rica, Colombia, Ecuador, Honduras and Guatemala brought before the World Trade Organization against $290 per ton European Union banana import duties set to go into effect at the start of next year is in arbitration. I what was seen as a procedural victory for the Latin American countries, the WTO rejected the European request for a single judge and created a panel of John Weekes of Canada, John Lockhart of Australia and Yasuhei Taniguchi of Japan to hear the case and reach a decision within 90 days. Europe's banana import policies have repeatedly been struck down by similar panels. The EU is free to ignore WTO decisions, but in that case the aggrieved countries become free to impose retaliatory trade sanctions that would otherwise violate the organization's rules.
US certifies RP shrimp After four months during which imports of Panamanian shrimp were banned, the seafood is back on the US market. As of January 1 the United States banned Panamanian shrimp because many of this country's trawlers were not using turtle exclusion devices, hatches through which sea turtles and some of the shrimp can escape from their nets. The National Maritime Authority cracked down, US inspectors verified increased compliance and the ban turned out to be short-lived.
Darien highway paving to go for bids The improvement of the last three unpaved stretches of the Pan-American Highway in the Darien, from Aguas Frias to Meteti, Meteti to Canglon and Canglon to Yaviza, will be submitted to the bidding process in the coming weeks. President Torrijos announced this at a community forum in Meteti on May 7, and if all goes as planned then this time next year people should be able to drive from the capital to the road's end in Yaviza in a vehicle without four wheel drive. The improvements have been a long-standing and nearly unanimous demand by Darien residents, particularly farmers who have trouble getting their produce to market when the rains turn the road into mire.
New airport for La Palma The old La Palma airport, which featured a crumbling airstrip and few amenities for people awaiting flights in and out of the Darien's administrative capital, has been replaced by a new one some 8.2 kilometers out of town. The first flights in and out of the new facility began May 7, and the old facility will be closed to traffic on May 15 and the land dedicated to other uses.
El Valle developer fined The National Environmental Authority (ANAM) has issued a stop work order and imposed a $13,400 fine on Inversiones Forestales SA because the company violated terms of its environmental permit to build the Villa Las Nubes residential project in El Valle. The authority said that the company cut down trees that it shouldn't have and failed to take required measures to limit the runoff of sediments into nearby streams.
Panamanian rockers get a break Panamanian rock band Cage9 has yet to release that big hit, but may be on the verge of their big show business break. Now living in Los Angeles, Cage9 will be featured on the soundtrack of a new The Dukes of Hazzard movie. They're also working on their fourth album.
Prince recording here American singer-songwriter Prince has been in Panama City, writing songs and recording with Panamanian musicians. No word yet on who the local artists are or when the recording will be released.
Drug precursor chemicals to be regulated If you use acetone in industrial quantities, you may run into some new official forms and restrictions. The National Assembly has passed legislation to create a Chemical Control Unit with the power to track, regulate and restrict access to chemicals that can be used in drug manufacturing. The specific regulations have yet to be announced.
COPA buys 15 new jets Just as the European Airbus consortium was unveiling its new jumbo passenger plane, COPA Airlines decided to buy a fleet of 15 smaller aircraft from Airbus's American rival Boeing, with an option to buy 10 more. The 737 Next Generation planes are more fuel efficient and have a longer range than earlier Boeing passenger jets, and thus better suited for an airline that uses a system of hubs, as opposed to one which concentrates on high volume long flights for which the jumbo jets make more sense. COPA is paying $750 million for the 15 planes.
City acts against child labor In order to reduce the incidence of child labor, the Panama City municipal government has banned minors from its main farmers' market and is stepping up enforcement of an existing prohibition against minors entering the Cerro Patacon landfill. The problem with the latter measure was that even if kids were prevented from passing through the gate, they could walk through the woods to get into the dump to pick through the garbage and find things to sell. Thus more people will be put to the task of keeping the kids out.
No more casino licenses this year The new hotel and casino under construction on Via Veneto may be Panama's last new gambling establishment for awhile. Moved by criticisms of gambling concentrating on attracting low income Panamanians rather than tourists, by the revelation that the 23 slot machine permits given out during the Moscoso administration were issued without any serious investigation of those seeking licenses and by a gambling industry that has outgrown all of the institutions that are supposed to control their activities, director Raúl Cortizo of the Gaming Control Board has decided that no new gambling permits will be issued at least through the end of this year.
Ukraine takes Panama off its blacklist The Ukraine has removed Panama from its list of tax havens. Prior to that action, Ukrainian businesses doing business here could not deduct their expenditures in Panama from their taxes in the Ukraine. Now those costs will be deductible.
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