LatinNews Daily - 01 February 2022

In brief: Fitch changes Panama’s outlook

* International credit ratings agency Fitch Ratings has affirmed Panama's Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BBB-' and revised the Rating Outlook to stable from negative. According to a statement by Fitch, the revision of Panama’s outlook to stable reflects the “ongoing improvement in the fiscal position” and a “better-than-expected economic recovery” following the initial shock of the coronavirus (Covid-19) pandemic. Fitch expects that Panama’s GDP growth will reach 15% in 2021 (up from Fitch's previous forecast of 12%) after a 17.9% contraction in 2020 and projects 7% GDP growth in 2022. Fitch now expects Panama to reach its pre-pandemic GDP level by 2022 (a year earlier than previously forecast). The ratings agency also estimates Panama's non-financial public-sector deficit to have reached 5.6% of GDP, down from 9.7% of GDP in 2020, and notes that the approved 2022 state budget targets a 4% of GDP deficit. Fitch estimates central government debt declined to 64.2% of GDP by end-2021 from 68.5% in 2020 and that general government debt (net of social security government debt holdings) will reach 57.7% of GDP, below the current 'BBB' category median of 60.3%.

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