Panama: 2022 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Panama

This 2022 Article IV Consultation discusses that in the decade-and-half preceding the coronavirus disease 2019 pandemic, an unprecedented construction and investment boom precipitated a rapid economic expansion in Panama. The Panama Canal and Tocumen Airport were expanded, there was large scale building of new skyscrapers in Panama City, and one of the largest copper mines in the world was constructed. Economic growth is expected to slow to 5 percent in 2023 and 4 percent in the medium term. Policies should focus on boosting resilience to shocks (by rebuilding fiscal buffers, strengthening financial integrity, and enhancing financial sector oversight) and sustaining the rapid convergence with advanced economies. To reduce the fiscal deficit over the medium term while at the same time creating room for new spending, including on education, and preserving spending on social assistance, the steady decline in the revenue-to-gross domestic product ratio needs to be reversed.