The executive board of International Monetary Fund (IMF) completed this Friday the second review of the Precautionary and Liquidity Line Agreement (PLL) for Panama for 2,500 million dollars, in the midst of the social crisis in the country.
The PLL, approved on January 19, 2021, is like an insurance policy against extreme impacts derived from the global uncertainty caused by the war in ukraine and the new variants of Covid-19 that can derail the economic recovery.
It is about 1,884 million Special Drawing Rights that at the current exchange rate are equivalent to about 2,500 million dollars, which the country has at its disposal in case it needs them.
Access to the full amount of the PLL “will be available after completing this review” but the Panamanian authorities “intend to continue to assign a precautionary character to the agreement,” the IMF said in a statement.
Panama’s economy grew 15.3% in 2021, recovering as lockdowns imposed to fight coronavirus were lifted. Covid-19and is expected to continue on the growth path in 2022, due in part to the resumption of construction of a new metro line and the improvement in private investment.
The IMF grants this type of agreement to countries that can meet their external financing needs, as is the case of Panama, a dollarized economy based largely on activities related to the Canal that connects the Pacific and Atlantic oceans through the Sea. Caribbean.
Panama’s economy recovered in 2021 “driven by a rebound in domestic demand and higher copper exports, despite the continued challenges of the Covid-19 pandemic and global uncertainties,” said Kenji Okamura, after the deliberations. deputy managing director, quoted in the statement.
The uncertainty will continue in 2022, due to the consequences of the war in Ukraine, the rise in oil prices, the tightening global financial conditions and the new variants of Covid-19.
Okamura highlights the importance of strengthening public finance management and fiscal transparency “to preserve Panama’s position as a regional financial center.”
The Central American country is experiencing one of the biggest social crises since the military dictatorship of General Manuel Antonio Noriega fell in 1989 after the US invasion.
The discontent occurs in a scenario of 4.2% year-on-year inflation registered in May, an unemployment rate of around 10% and an increase in fuel prices of 47% since the beginning of the year.
