Previous business & economy briefs (as of Feb. 24)

Earlier Business & Economy Briefs

Most mortgages for modest homes

The Banking Superintendency reports that some 85 percent of those who signed mortgages in 2007 were financing homes worth $50,000 or less, while fewer than five percent of mortgages were for homes worth $100,000 or more. It doesn't really reflect the true impact of the high-end real estate boom, because to the extent that those units are sold they are usually paid for in cash rather than financed. Still, it's an indication that most of the activity in the Panamanian housing market is directed at filling the large shortage of housing for working and middle class Panamanians rather than catering to rich foreigners.

Free trade with Guatemala

Guatemala's maquiladora sector, mostly foreign owned, will by and large get duty free access to the Panamanian economy, while there will be fewer obstacles to Panamanian service companies doing business in Guatemala. That's assuming that a bilateral free trade agreement signed on February 13 by representatives of Panama and Guatemala is ratified by both countries. There is no problem anticipated with ratification in either place.

US crisis to reduce canal usage

Not to worry, La Estrella reported that Panama Canal advisors Gerhard E. Kurz and Salvador A. Jurado told Panama Canal Authority (ACP) execs. The US economic crisis will cause a slight drop in canal traffic, but major shipping companies won't change their canal usage strategies. The problem is that the ACP spent millions of dollars to promise that canal usage would be up sharply this year and every year for the next 20 years, and based the canal expansion financing on that assumption. The ACP is unavailable for comment to journalists who point out the contradiction.

Canal purchasing scandal

Now that the Panama Canal has eliminated its apprenticeships and has a hiring and promotion system in which nepotism and patronage play major roles, we get people with illustrious surnames in positions to damage the institution. And so it turns out that one Igor Tello Spadafora, whose uncle happens to be Supreme Court magistrate Winston Spadafora, was in the Panama Canal Authority (ACP) purchasing department and manipulated the system and his access to inside information to steer 261 contracts, worth some $700,000, to TPM Suppliers SA. Not coincidentally, Igor Tello Spadafora owns that company. The ACP's own internal review system detected something fishy, and Spadafora was transferred to another department. The Comptroller General's office is now conducting an audit of these purchases and may then refer the case to prosecutors.

Lands expropriated

The government has seized two large parcels of land from private owners for the private-owned, public-subsidized Corredor Norte toll road, alleging that the owners had demanded exaggerated prices for their property. Seized by the government are 5,000 square hectares from Cerro Lindo SA and another parcel owned by Sociedad Viviendas Panamericanas SA. Under a court order the Corredor Sur's owner, the PYCSA consortium, is under receivership for failing to pay for other lands that it seized. However, PYCSA has the Ministry of Public Works on its side and the court receivership is being ignored by the government. The property owners have the right to sue the government to get paid for their land, but the national government is almost as bad at paying court judgments as is Máximo Haddad's politically connected PYCSA.

$64 million subsidy for electric utilities

There is no energy shortage this year, and as 2007 was one of the rainiest years on record the reservoirs are full enough to assure hydroelectric power through our dry season. However, even though the great majority of this country's electricity is produced at hydroelectric dams the government sets electricity rates based on the price of oil and thus Panama has some of the world's highest electric rates. To avoid public disturbances the government subsidizes the power companies to keep the bills for the smallest residential consumers's bills down, and, according to a report in El Panama America, the government is estimating that in what remains of 2008 it will pay the companies some $64 million in subsidies. High electricity rates that supermarkets and food processors must pay are a major factor behind steep increases in food prices but the people least able to pay more for their food generally don't make the connection with electric rates because their own bills are subsidized.

Public debt at $10.477 billion

Panama's public debt is still rising and there are parts of it that are off the books, but officially it stood at $10.477 at the end of January. According to La Prensa most of this debt is held by private institutions and persons who hold government bonds, while $1.243 billion is owed to international financial institutions.

Stolen utility tower metal found at recycler

On February 15 there was a power outage in eastern parts of Panama City, and indeed there were brief little blackouts over the rest of the country. Most dangerous and disruptive of all, power went out at Tocumen Airport. An Elektra Noreste transmission tower had come down, and not due to natural forces. It was toppled and dismantled by thieves, to be sold as scrap metal. Over the next few days police went looking around at places that buy scrap metal and sure enough, pieces of the tower were found at two facilities of Panama Metal Recycling SA (PAMERSA), a recycling center in Tocumen and a scrapyard in Felipillo. The company has not been charged with wrongdoing, but the investigation about just how it came into possession of the transmission tower parts is ongoing.

Macaracas against strip mining

The latest municipal council to go on record against strip mining is that of Macaracas, in Los Santos. The representantes there are concerned about environmental damage in their district from the proposed Cerro Quema gold mine in neighboring Tonosi district, including a threat of pollution to the Cacao River from which much of the Macaracas water supply comes. The Macaracas resolution comes three weeks after a similar one by the Tonosi municipal council.

Anton residents protest sand mining

On February 22 residents of Anton's Los Pantanos neighborhood blocked the road to their community to keep out sand mining trucks. They complained that the 35 heavy trucks per day that are carrying sand from a privately owned pit through their community are crumbling the roads and took action after learning that the Ministry of Commerce and Industry had granted a new sand mining concession without informing anyone in the community of the permit process, let alone holding public hearings.

School will be more expensive

The Comptroller General estimates that between higher prices for uniforms, books, school supplies and transportation, as well as tuition for those sending their children to private schools, the 2008 school year will be some 15.8 more expensive for parents than was 2007. Most Panamanian elementary and secondary students go back to school on March 10.

Figali makes an offer

Millions behind on payments that he contracted to make for the properties he occupies on the Amador Causeway, years behind on developments he contracted to have done by now and having just finished a landfill he did without the proper permits, now the well politically connected businessman Jean Figali is making demands of the government. They can either buy him out for $80 million or lower his concession payments from $10 per square meter to $2.60 and relocate a fiber optic cable that runs through the property. With recent changes on the Supreme Court it's unclear whether magistrate Winston Spadafora will have the votes to void debts and rules for Figali anymore.

More expensive to visit Isla Iguana

Isla Iguana, a 53-hectare wildlife refuge off the coast of the Azuero Peninsula near Pedasi, will be more expensive to visit. The National Environmental Authority (ANAM) has raised the fee to visit the island and its surrounding waters that are also part of the refuge from $3 to $4 and have also established a $10 fee for boats to anchor in the park. The island, which was a bombing practice range in World War II and then left to the wildlife afterwards, is in waters where whales and sea lions give birth to their young and home to a large dolphin population. Some of its terrestrial wildlife is also rare, and there are turtles that nest on the beaches. The island draws several dozen tourists per day on average, with the largest crowds during the dry season.

These briefs were compiled through February 24.

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