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Business & Economy Briefs

Another El Niño year

Ocean temperatures have risen in the Central Pacific, and that means that we are into an El Niño year. Usually that means less rain for about six months, but the droughts can vary. The Panama Canal and the nation's hydroelectric dams begins with full reservoirs, but severe conditions can lead to electrical brownouts and draft restrictions on ships passing through the canal, as happened in the 1997-1998 El Niño. The "Dry Arc" along the western littoral of the Gulf of Panama is where droughts usually have the worst agricultural impacts, which can lead to political battles between cattle ranchers and industrial farmers over shares of irrigation water. The up side of a drought tends to be felt in Aguadulce, where those who produce salt by evaporating sea water in large but shallow ponds see their production increase. The last El Niño was a mild one whose effects were hardly felt in Panama. We don't know how severe this one will be, but various government ministries are making contingency plans.

Government to borrow $1.176 billion to balance budget

The Torrijos administration has sent the legislature a 2007 national budget that could increase the net national public debt by about three percent. The spending side of the budget is $7.346 billion, of which $1.176, around 15 percent, would be borrowed. Were this borrowing all added to the $10.6 billion national debt, that would represent an 11 percent rise. However, much of the borrowing will be used to pay off existing debts --- buying old bonds with new bonds, in effect. Minister of Economy and Finance Carlos Vallarino told La Prensa that it would mean that the national debt would go down in 2007, but Rolando Gordón, the former dean of the University of Panama economics faculty, told the daily that what's really going to happen is that there will be a net increase in the debt of more than $300 million. Upon taking office Torrijos declared a budget emergency --- something he had to do because Mireya Moscoso ran up huge unpaid bills in a vain attempt to buy her party's re-election in 2004 --- and since then the legal limit of two percent on national budget deficits has been suspended. There are various ways of crunching numbers and concealing deficits, but however one wants to look at it the net national debt is at a record high and by most ways of figuring it the 2007 budget will have the biggest annual deficit since the dictatorship ended with the 1989 US invasion.

Drivers license privatization

Continuing its policy of the private appropriation of public assets, the Torrijos administration has assigned the proceeds of the drivers license business and the collection of weight tolls from commercial trucks to a Panamanian - Salvadoran consortium composed of GSI International and Servicio de Transito Centroamericano. The 10-year contract goes into effect next year. It is expected that the present $20 fee for a driving license renewal will be raised. The government agency that is ceding these functions to private companies, the Land Transportation and Transit Authority (ATTT), has pretty much earned a reputation as a racketeering organization under successive administrations. So far the authority is holding onto the most notoriously lucrative source of illicit income for its functionaries, the power to sell taxi and bus permits.

Chiquita makes COOSEMUPAR an offer

Chiquita Brands, faced with the prospect of losing its exclusive marketing deal with the COOSEMUPAR cooperative to which it devolved the Puerto Armuelles banana plantations it once owned, has offered to pay the co-op $4.5 million and waive another $1 million in debts, in exchange for promises that there will be no more work stoppages and the contract that obliges the co-op to sell to Chiquita at well below world market prices is honored. The Torrijos administration on the one hand has extended the co-op's existence by subsidies that will last until the upcoming referendum (which is how it got a "yes" endorsement from Puerto Armuelles banana union leaders), but on the other hand maintains the threat that the Panamanian Cooperative Institute (IPACOOP) will dissolve the organization on the basis of its insolvency. That would allow the transfer of the co-op's assets to a bidder with the right political ties.

Port activity down

While most of the Panamanian economy is growing this year, one of the exceptions is the movement of containers at the nation's ports. That figure was down 2.6 percent in the first half of this year as compared with the same period in 2005. In previous years the sector had been booming, with as much as 18 percent annual growth and expansions in all of the nation's container ports. Minister of Commerce and Industry Alejandro Ferrer told La Estrella that the downturn was just a temporary blip and predicted continued growth over time.

La Estrella hires Chéry away from La Prensa

One of Panama's most reputable --- and thus most prosecuted --- journalists, investigative reporter Jean Marcel Chéry, has been hired as La Estrella's new editor. Chéry comes from La Prensa, and previously worked at El Panama America. La Prensa has received the lion's share of government print advertising for the "yes" campaign and is similarly the beneficiary of most print advertising handled by the ad agency cartel that was founded by the president's father-in-law, but over recent months they have been losing ground to competitors in the circulation wars, mainly El Panama America and La Estrella. The owners of El Siglo, a group headed by Abdul Waked and largely managed by Ebrahim Asvat, bought La Estrella earlier this year and have been making changes. The paper was founded in 1853, making it Panama's oldest, but the Duque family turned it into a state-subsidized propaganda sheet for the former dictatorship and it had been pretty much moribund since Noriega's time. It came under Mireyista control during the Moscoso administration but that didn't help matters either, except to keep the government advertising flowing. Waked and Asvat are politically aligned with the Partido Popular but have avoided the extreme pro-government news slant that has been costing La Prensa readers. Chéry's hiring coincides with a television advertising blitz to promote La Estrella.

Conflicts of interest in BANISTMO deal

The main issue with the special capital gains tax loophole created for the BANISTMO sale to HSBC is that it gave hundreds of millions of dollars to just a few people, one of whom is Vice President Samuel Lewis Navarro and several others of whom were opposition leaders who despite what rank-and-file members of their parties think are campaigning for the "yes" side in the referendum. But El Panama America also reported an interesting sidelight to the deal in a story about how, for some technical reason, trading in BANISTMO shares was temporarily halted on the Bolsa de Valores. The nation's blunt-fanged Comision Nacional de Valores issued the order, but over the signatures of three suplentes. Why was that? It seems that all three regular commissioners, Rolando De León, Carlos Barsallo and Yanela Yanisselly, have financial ties to one or both of the banks involved in the transaction.

BDA auctions off Veraguas community

The Torrijos administration's beach and island development law is being applied to a farming and fishing village of some 20 families in Santa Catalina, Veraguas. The Agricultural Development Bank (BDA) has auctioned off the community where they have lived and worked the land for many years to make way for a 201-hectare "residential tourism" development for foreigners. The move is being challenged in court.

Bahamian trade mission

Despite Panama's restrictive visa laws that serve as an "unwelcome" mat for Caribbean business ties, a trade delegation from the Bahamas was here during the last week in September. The 30-member contingent included representatives of the pelagic nation's Ministry of Tourism and Chamber of Commerce, and concentrated on studying the Colon Free Zone as a place through which to put Bahamian products on the Latin American market and the possibilities of attracting upscale Panamanian tourists who find trips to Florida theme parks difficult, annoying or impossible given current political conditions in the United States.

RP eyes CARICOM

The nations of the Caribbean Community (CARICOM) --- Antigua and Barbuda, the Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucía, St. Vincent and the Grenadines, Suriname, and Trinidad and Tobago --- are in the process of creating a common market, using the European Community as their pattern. Now Panama, which has made a few small steps in recent years to recognize that geographically and culturally it is also a Caribbean nation, is reviewing its ties with CARICOM. Although it does not seem that this country, which is now an associate member of the Association of Caribbean States, is going to join CARICOM anytime soon, Panama will probably have more dealings with it as a trading bloc.

What to do in a crisis?

So what's the Social Security Fund (CSS) to do when its patients are dropping like flies and they have no reasonable explanation? Why, change all the phone numbers at their administrative offices, of course. On October 10 the CSS took out full-page ads in the daily newspapers to advise of the new telephone numbers going into effect that day.    

Also in this section:
Rubén Blades assesses national tourism effort
Odebrecht: company whose corruption brought down a Brazilian president replacing PYCSA
ACP in denial as Parson Brinckerhoff's Big Dig woes grow
USAID supports forest products certification
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