MAD MONEY

Panama 2015 | ECONOMY | FOCUS: STRATEGIC PLAN 2015-19

After years of strong growth, policy makers are implementing a massive stimulus package that invests past earnings in the country's longer-term prosperity.

The objectives of President Juan Carlos Varela Rodríguez are clearly defined in his Strategic Plan of Government (PEG, Plan Estratégico de Gobierno de Panamá) for 2015-2019. The government is prioritizing sustainable economic growth with social equity to enhance standards of living in Panama through a public investment of more than $19 billion, the majority of which is earmarked for social and basic infrastructure investments.

As far as social strategy is concerned, the main targets are accessible and potable water, along with the total elimination of latrines, to improve the quality of life of more than one million Panamanians. Education is another pillar of the current government's strategy. The aim is to achieve bilingual public educational that, combined with universal scholarship and a strong vocational education, will allow Panama to have a highly competitive workforce.

President Varela envisions the logistics sector remaining one of the main pillars of the economy, and the basis for the development of the national economy. The sector will be strengthened by a $3.28 billion five-year investment. To improve the transportation system, $2.9 billion has been assigned for the construction of roads.
Agriculture is a sector that the current government is keen to develop further in part through an $869 million allocation. The government wants to maximize output and productivity with Cadena Frio. Andres Camargo, Secretary of Cadena Frio, told TBY that, “Our major objective is to support the producer to prevent [waste] from happening, and right now we are experiencing losses of around 40%. Ultimately, we aim to reduce this loss to under 10%, so that producers in Panama can become more competitive, with products better conserved and more complete."

Tourism is another of the fastest growing and most promising sectors in Panama. To lock in this growth, a plan to diversify the sector is being implemented. Some $222 million has been assigned to the sector to attract new visitors from the EU and BRICs. According to the government, the number of tourists visiting the country hit a record 2.5 million in the coming five years.

The Strategic Plan of the government will allow the energy sector to guarantee the availability of energy required for Panama's growth, by investing in transmission (the 4th line east-west) interconnection with Colombia, with an investment of $1.2 billion. In an interview with TBY, the National Secretary of Energy, Mr. Urrutia, commented that, “…we want a supply scheme that would provide the most economical solution as well as energy security through a diversity of sources. We are concerned about the sustainability of the sector, and are looking closely at the possibilities presented by renewables. Our short-term goals are related to renewability, while our long-term goals are focused on the sustainability and affordability of the energy supply. The government's participation in the electricity sector is mostly as a regulator, and operating the transmission companies and systems. In that regard, it is establishing strategic partnerships with several companies using mixed capital sources."

With more than $11 billion invested in social development, the government will support not only the economic growth of the country, but the social side as well. The Minister of the Presidency, Alvaro Aleman, stressed to TBY the current government's commitment to investing in social reforms: “We are a country of low unemployment and inflation, and have projected growth of over 6%. I am confident that we will exceed this level, because one of our main objectives is to reduce the rate of poverty, which has now dropped significantly, and today is at around 23-24% of the population. Extreme poverty is down to about 10% of the population. We want to reduce this even further, and if we continue to experience high economic growth and attract foreign investment, we will be able to create the conditions necessary to allow people to step out of poverty and enter the middle class. Part of our goal is to improve education and social programs for people in the lower tier of economic society".