International rating agency Moody's has reaffirmed Panama's credit rating at Baa3, allowing the country to maintain its investment grade, but with a negative outlook. Analysts explained that this decision was made based on some positive economic shifts, however, significant risks remain that could hinder further budget deficit reduction in the coming years.
It is noted that state revenues are growing faster than the economy, which is a positive dynamic. However, according to Moody's, this is not enough to improve the country's credit profile, requiring more profound structural reforms. Special attention is paid to water resource management and climate vulnerability, which are key factors not only for public finances but also for the operation of the Panama Canal—the main source of income.
Despite recognizing the government's efforts to reduce the deficit and liabilities, the agency points to structural problems: a low level of revenue (around 7% of GDP, down from 12% previously), the rigidity of public spending due to special laws, and weakened budget credibility. Moody's projects that Panama's debt will continue to grow for at least the next two years, and more concrete and sustainable measures are needed to stabilize the situation.
The key factors to be determined in the next 12-18 months will be political events, the government's ability to pass necessary legislative reforms, and the overall economic situation. Analysts emphasize that Panama's economic recovery is still ongoing, and the 4% growth may not be felt by the population due to a lack of new job creation.
