Weekly Report - 27 November 2014 (WR-14-47)

PANAMA | Inching towards a debt deal with Venezuela. The Panamanian government led by President Juan Carlos Varela has announced a preliminary deal with Venezuela over the latter’s outstanding debt to Panamanian businesses, which reportedly totals some US$2bn owed to companies operating in Panama’s Colón Free Trade Zone (FTZ). The previous Panamanian government led by former president Ricardo Martinelli government (2009-2014) attributed the mounting debt to Venezuela’s official foreign currency controls that restrict the supply of US dollars available to Venezuelan companies for trading purposes. On 18 November Panama’s trade & industry ministry (Mici) issued a press release announcing that a preliminary pay arrangement had been reached with Venezuela. This came more than two weeks after meetings took place in Venezuela between Panama’s trade & industry minister, Melitón Arrocha, and Venezuela’s finance minister, Rodolfo Marco Torres. According to the Mici press release, the two ministers agreed to establish working tables to address the issue. Back in March, Panama’s then trade & industry minister, Ricardo Quijano, had said that Panama had presented “various protest notes” before the World Trade Organisation (WTO). Discussions regarding Venezuela’s debt with Panama were interrupted in March following a breakdown of diplomatic relations under the Martinelli government although these were fully restored in July after President Varela took office. At the start of the year, Panamanian media cited official figures which suggested that trade in the Colón FTZ reached US$28.9bn in 2013, down 9.4% on 2012. According to a report by Panama’s economy & finance ministry (MEF), re-exports to Venezuela from the FTZ were down 43.3% in 2013 compared with the same period in 2012, from US$3bn to US$1.7bn. The MEF report noted that on average, in 2009-2012 re-exports to Venezuela accounted for 17% of the total sales at the Colón FTZ, second only to Puerto Rico (19%).

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