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LatinNews Daily - 20 January 2021

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In brief: IMF approves new funds for Panama

* The International Monetary Fund (IMF) has approved a two-year arrangement for Panama under the Precautionary and Liquidity Line (PLL) for US$2.7bn. According to an IMF press release, the PLL will serve as insurance against extreme external shocks stemming from the coronavirus (Covid-19) pandemic which is expected to see Panama’s GDP contract 11% in 2020 on forecasts from the United Nations Economic Commission for Latin America & the Caribbean (Eclac). The IMF press release notes that access under the PLL in the first year will be equivalent to about US$1.35bn. It adds that Panama qualifies for the PLL thanks to its “sound economic fundamentals, strong institutional policy frameworks, long track record of good economic performance and policy implementation, and commitment to maintain such policies in the future”. It says the arrangement should boost market confidence and provide protection against downside risks. It cites as examples of government measures taken to mitigate the impact of the pandemic on the economy “a temporary relaxation of fiscal deficit limits under the social and fiscal responsibility law to support health and social-related expenditures, permitting banks to drawdown their accumulated dynamic provisioning to absorb credit losses, and loan restructurings for affected borrowers”.