MUCH MORE THAN A VILLAGE

Panama 2017 | FINANCE | INTERVIEW

TBY talks to Dulcidio de la Guardia, Minister of Economy and Finance, on increasing transparency, meeting the highest international standards, and supporting the government's commitment to accountability and citizen participation.

Dulcidio de la Guardia
BIOGRAPHY
A graduate of Florida State University with a degree in business administration (1984), Dulcidio de la Guardia holds an MBA from Loyola University (1986), New Orleans. In July 2002, he joined Primer Banco del Istmo (Banistmo) as Vice President of Investment Banking responsible for corporate finance, M&A, fiduciary services, and brokerage operations. In 2005 he was promoted to Executive Vice President and Head of the regional banking unit. In 2006, he oversaw the merger of HSBC (Panama) and Banistmo banks and was appointed Director of Corporate Banking and Markets. In September 2007, he was appointed Director of Private Banking. On July 1, 2009, he was appointed Deputy Minister of Finance of Panama.

How would you define Panama's economic performance in 2016?

The IMF has estimated that global growth was in the order of 3.1% in 2016, partly as a result of the deceleration in world trade. Meanwhile, Latin America and the Caribbean as a whole recorded an economic recession (-0.7%). In spite of this context, Panama showed growth of 4.9%, making us the second fastest-growing country in the Americas and one of the highest in the world.

How is the ministry working to boost the perception of Panama as a transparent and globalized country?

The transparency of Panama and its financial system are the keys to attracting investors. This is why it has been subject to the evaluations of financial regulators such as the International Financial Action Task Force (FATF) to ensure our commitment to the fight against money laundering and terrorism. In this regard, Panama has complied with the recommendations of the FATF. In 2015 we were taken off this agency's gray list.

What is the ministry's strategy for diversifying the national economy?

Panama already has a fairly diversified economy; no single activity accounts for more than 20% of GDP. Standing out for their contributions are: wholesale and retail trade (17.4%), construction (16.5%), real estate business and rental companies (14.7%), and transport, storage, and communications (13.9%). This level of diversification allowed Panama's economy not only to continue to grow, but to be one of the fastest growing on the continent, especially during the financial crisis of 2008-2009, the global instability of 2016, and despite the recent animus against foreign trade. At the sectoral level, the most important activities are concentrated in the service sector. In order to strengthen other sectors, the government has developed actions to promote and encourage agricultural and industrial sectors. With regard to the latter, we are currently working on a new industrial policy. The government also approved a modernization of the Colón Free Zone Act to update its business model and diversify its target markets and competitiveness.

Panama has proven itself a leader in the financial platform of the Americas. What is your strategy for attracting more international financial institutions to Panama?

Considering strategies to attract investment and maximize our competitive advantages in the financial sector, the Ministry of Economy and Finance has presented a proposal to review and diversify our financial services platform. We thus developed a consultancy that evaluates 11 new products that were created through the interaction of public and private sector actors and are related to legal, regulatory, private banking, insurance, payment, and reinsurance compensation, among other things. To strengthen our banking sector, we have four pillars to update our regulatory framework, according to international standards (Basel III): implementing standards for solvent and more liquid banking; achieving optimal levels of macroeconomic stability; improving the transparency of the resources of the banking institutions; and preventing systematic crises.

In relation to FDI, what incentives should be promoted to enhance the country's appeal?

Panama offers an unparalleled logistics platform for rapid and efficient maritime distribution in the Atlantic and Pacific for the distribution of imports and exports. There is also a hub at Tocumen International Airport with direct connections to Europe, Asia, the Middle East, and America. Our Law on Multinational Businesses (SEM) has incentives on taxes, labor, customs, and immigration through special areas such as Panama Pacífico, free zones, the Colón Free Trade Zone, and the promotion of research and innovation in the City of Knowledge.

What are the ministry's main objectives this year?

The Ministry of Economy and Finance promotes the fundamental objectives of the government insofar as it ensures sustainable growth and low levels of inflation; maintains transparency and discipline in the execution of fiscal policy; fulfills and enforces our commitment to the ongoing fight against money laundering and the financing of terrorism; and implements the open government policy of access to information, accountability, consensus construction, and citizen participation.