Panama's Minister of Economy and Finance, Felipe Chapman, announced that the country will close the 2025 fiscal year with a deficit below the projected level, surpassing both budgetary targets and the expectations of rating agencies. "We are going to exceed the target we had in the budget," the minister stated, anticipating that the year's fiscal result will be better than expected. "This is unprecedented, not only for Panama, but for the markets," he said, suggesting that investors are already pricing in a better fiscal outcome before the agencies make their pronouncements. Chapman also referred to the factors that rating agencies consider in their analysis, such as budgetary rigidity and the need for institutional consensus, including the role of the Assembly in achieving necessary changes. "The price of Panamanian bonds has risen and the interest rate has fallen by 54% in the last year," Chapman noted. He affirmed that the deficit result and the market's reaction will be central elements in Moody's evaluation in the coming months. In this regard, he pointed out that the Executive has reached agreements with the Legislative branch on key issues like the general state budget, the fiscal social responsibility law, the reform of the Social Security Fund, and changes to the preferential interest rate law. "The executive branch has to have conversations with the legislative branch to reach an understanding, as we have done in this year and a half," he indicated. According to the minister, the better fiscal performance occurs in a context where Panama is seeking to resolve the negative outlook of its sovereign rating.
