Panama Business & Economy Briefs

Business & Economy Briefs

Fuel prices may be down, but cost of living is up

In January the canasta basica --- the price of a certain collection of household staples by which Panama measures the cost of living --- continued its climb despite falling energy prices. In December the price was $224.16, while in January it was $227.24.

Government announces short 2009 school year

The Torrijos administration has announced that the 2009 school year will be shortened by a month, starting on April 9 and ending on December 18. That reduces the chances of teacher strikes over shortened 2010 teacher vacations, but now parents and business leaders are criticizing the education cutbacks and teachers' unions are also saying that there's a need for more hours and days of instruction in the school year.

Medical technicians' strike settled

Late on February 14 negotiators for the government and the CONAGEPROTSA alliance of medical technician unions signed a contract granting modest pay raises to the workers. Although there was some opposition to the deal from the rank-and-file, the striking union members have gone back to work.

Construction deaths prompt street blockages

On February 12 members of the SUNTRACS construction workers' union on their lunch breaks blocked five major traffic arteries in Panama City, causing major traffic chaos that lasted significantly longer than their half-hour protest. (They were aggravating an already dysfunctional city traffic situation.) The union did this because of three deaths from work accidents at the Metro Mall construction site, and what they say is an inadequate government response to the contractors and subcontractors the union considers responsible for unsafe working conditions at the site.

Export crops down

National production of the export crops of watermelons, pineapples and cantaloupes is down more than half, from 4,600 hectares under cultivation last year to 2,200 hectares now. Economic troubles in the importing countries of North America and Europe and problems with farmers getting loans are the reasons given for the steep decline, according to El Panama America.

Hotel occupancy down

La Critica reports that the hotel room occupancy rate for January 2009 was six percent lower than the same month in 2008. There were more rooms available this year due to new construction, but we are also seeing a contraction in tourism due to hard economic times in North America and Europe.

Purse seining restriction renewed

First PRD legislator Freidi Torres surreptitiously inserted a clause in legislation about something else that eliminated the ban on purse seining for tuna in Panama's Pacific waters. The law passed, the president signed it and environmentalists cried foul. President Torrijos said it was a mistake and asked the legislature to fix it. After acrimonious debate the National Assembly passed the renewed ban on first and second readings but didn't get to the needed third vote before ending their 2008 session. After weeks of further agitation by environmentalists, President Torrijos issued a decree to reimpose the ban, which became law on February 16. Purse seins tend to catch all sorts of marine organisms other than what is being sought, quickly depleting the wildlife in an area. When this method is used to go after tuna, huge nets are used, causing devastation over a wide area.

Court orders end to Mireya scam investigation

So, an administration can set up a "private" foundation to receive foreign aid to Panama from other governments, and in that way raise an impenetrable shield against public scrutiny and accountability for funds gone missing. The Supreme Court has effectively legalized this by prohibiting the Comptroller General's investigation of the Fundacion Mar del Sur, which the Moscoso administration set up to receive Taiwanese aid. Much of the money was, through large salaries for at most part-time work, dubious contracts and so on, diverted to Mireya Moscoso's small inner circle of friends and relatives. The vote was 2-1 by the high court's Administrative Bench, with magistrates Spadafora and Benavides in favor and Arjona dissenting.

Purge for EU duty mess doesn't include Balbina's brother

It was quite simple. In order to get preferential import duties for Panamanian agricultural products entering Europe, the Panamanian government delegation to the European Union, headed by Balbina Herrera's brother Pablo Garrido, needed to file a piece of paper requesting the extension of this tax break on or before October 31. This was not done. Of course, there is no accountability for Garrido, at least not before the government changes and maybe not even then if his sister wins the presidency. Instead, Garrido's aide Jorge Eduardo Ruiz has been fired, along with the Ministry of Commerce and Industry's mid-level functionaries Kelvia Hidalgo and Mabel Del Cid.

Business groups demand bunkering bid

The Chamber of Commerce and Panama's chapter of Transparency International are objecting to the Torrijos administration's proposal to renew the long-term concession for the fuel oil tanks systems near the Bridge of the Americas on the Pacific side and on Telfers Island in Colon that serve ships using the Panama Canal. Atlantic Pacific SA (APSA) has had the contract to run the tank farms, which are state-owned, ever since Panama received them from the United States under the 1977 Panama Canal treaties. The government intends to extend the concessions in a no-bid process, but the business groups say that the public will probably get cheated if there is no competitive bidding process. At this late stage in the Torrijos administration there are many moves to grant concessions and make contracts before next July's change of government, and in many minds there is a presumption of corruption about this. "They say in this case there are millions in contributions," opposition presidential candidate Ricardo Martinelli alleged.

MOP, Spanish company fall out over road work

BMG, a Spanish company, says that it has suspended work on five road projects because the Ministry of Public Works (MOP) was neglecting to inspect the company's work on road projects in a timely manner and then, for want of an inspector's report, delaying payment for work done. MOP says that it fired BMG for not doing the work in a timely fashion, or not meeting specifications. BMG, however, says that MOP kept changing the specs in ways that were either impractical or illegal under Panama's environmental laws. The company further alleges that what MOP, which is headed by the former head of General Noriega's Dignity Battalions goon squad, was setting it up to give the contracts to someone else. Now the dispute, which affects sections of the Trans-Isthmian and Pan-American highways, the road from Divisa to Chitre and three projects in Veraguas province, is before an administrative tribunal. If both sides don't accept the result there, it will end up before the Supreme Court.

ADELAG sentences handed down, appealed

Aquilino and Carlos de la Guardia, two brothers who owned the Grupo ADELAG companies, have been sentenced to four-year prison terms for bankruptcy fraud and falsifying documents by Panama's 13th Penal Court, after many years of litigation. The brothers are still on the streets as they appeal the convictions arising from the multi-million-dollar fraud.

Stanford's Panama branches intervened

After a US federal fraud and money laundering investigation of Texas financier Robert Allen Stanford and his Stanford Bank was reported in US news media, Panama's Banking Superintendent suspended the Stanford Bank's local operations on February 17. Two days later the Comision Nacional de Valores suspended trading by Stanford Casa de Valores SA, Stanford's affiliated stock brokerage here. R. Allen Stanford was named in a civil suit by the US Securities and Exchange Commission for allegedly running an $8 billion fraud through the Antigua & Barbuda based Stanford International Bank. The charge is not precisely the running of a Ponzi scheme, but offering unrealistically high rates of return on certificates of deposit, which would be a part of such a classic swindle. That civil suit called into question dozens of companies in the Stanford empire, and the more journalists looked into Mr. Stanford's business history the ruder the questions and observations got, causing depositors in many associated institutions to withdraw their funds. But for all this Stanford has not been arrested in the USA and there are no charges against him here. In a communique to depositors who no longer have access to their money, Stanford's bank in Panama said that "the situation which Stanford Bank (Panama) SA is currently facing is an isolated event, resulting from decisions made by foreign authorities."

Fitch rates RP long-term debt at BB+

Not junk, but not investment grade either. The Fitch bond rating service said upbeat things about the Panamanian economy, predicting the canal expansion work would keep us growing this year despite international problems and giving our government bonds a BB+ rating with a positive outlook. While our growth rate is going to go down this year, the company said, Panama's finances are structurally sound.

New leadership in postal union concerned about "reforms"

Panama's postal workers' union, FETRACELAP, used to be a stodgy PRD-oriented organization that pretty much toed the party line. Now, however, the PRD is down in the polls and the union has elected an independent-minded set of leaders. That means that the government's plan to turn the Direccion de Correos y Telegrafos into an authority whose board of directors outgoing President Torrijos would appoint for years to come doesn't get the automatic union support that it probably would have in years past. The union's president, Ismael Ruiz, warns that the proposed law would also privatize many services and eliminate some of his organization's members' jobs, and then over the long run cause postal service to deteriorate.

Petaquilla goes back to court

This is how Richard Fifer works: he starts work on an open pit gold mine and its supporting infrastructures without a legally required environmental permit; when the National Environmental Authority (ANAM) orders him to stop, he sues in the Supreme Court, claiming exemption from all environmental laws; he loses in the Supreme Court; ANAM then approves an environmental impact study and tentatively allows his Petaquilla mine to proceed so long as a more than $1 million fine for prior violations is paid and a compliance bond is posted and so long as he gets new permits, with new environmental studies, for further steps along the way to opening the mine; then, Fifer's company goes back to the Supreme Court, to challenge the fine and other restrictions that were part of ANAM's approval of the Petaquilla environmental impact study. Let's guess whether Fifer takes the months of delay during the new court case to continue work on his illegal mine.