Significance: By issuing the bonds Panama intends to refinance part of its debt (currently US$332m) and cover its fiscal deficit in 2011. The announcement comes on the back of the recent financial problems experienced by some Euro Zone countries, which have pushed measures of their country risk rise to much higher levels than those registered in many Latin American countries.
It is largely recognised that Latin America weathered the 2008 global financial crisis better than most regions because regional governments adhered to sound monetary and fiscal policies. These policies allowed Latin American central bankto accumulate reserves that were instrumental in dealing with the global financial meltdown. As a result, many countries in the region now find themselves in the unprecedented position of being able to attract investors away from countries that would otherwise be considered to be more attractive. This has prompted them to lobby for a more important role in the global economy at the recent G-20 meeting. Panama's lead could be followed by other countries in need of refinancing their debt, possibly even Argentina.
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