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LatinNews Daily - 11 March 2019

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In brief: Panama

* International credit ratings agency Moody’s Investors Service has upgraded the Panamanian government’s foreign-currency long-term issuer rating to 'Baa1' from 'Baa2', the foreign-currency long-term senior unsecured debt ratings to 'Baa1' from 'Baa2', as well as the foreign-currency long-term senior unsecured shelf ratings to (P)'Baa1' from (P)'Baa2'. A Moody’s press release cited two factors as grounds for its decision. It notes that “Panama’s economic growth and fiscal metrics exceed that of most Baa-rated peers and prospects remain more favourable over the medium term,” stating that in Moody’s view, “Panama’s growth outlook over the coming years will remain robust, following a deceleration in 2018 to 3.7%.” It projects GDP growth above 5% through 2022 – compared with a Baa-category median of about 3%. Moody’s cites as the other factor the fact that the government “has strengthened its fiscal policy framework” – namely its reform of the social and fiscal responsibility law that had been in place since 2008 and “whose performance had been mixed”. According to Moody’s, “following changes made in 2018, the fiscal deficit target defined in the new rules will not incorporate an upward adjustment as it did in the past. This will facilitate in-year monitoring of fiscal performance relative to targets, but more importantly it will make the actual fiscal targets more transparent for policymakers and market participants”.