Weekly Report - 23 December 2003

PANAMA | Deadline for blacklisters approaches. Countries that have blacklisted Panama as a tax haven, restricting financial operations and investments, have until February at the latest to remove it from their lists or become liable to Panama's `retorsion law', introduced in December last year. Known blacklisters are Brazil, France, Italy, Mexico, Peru, Spain, and Venezuela. 

All were sent reminders four months ago. Some have responded by opening negotiations: foreign minister Harmodio Arias says that with Peru they are `very advanced' and with Spain `going well', but that Mexico is a `very difficult' case.

Retorsion is a legal term for paying back in the same coin. Unlike other small countries, Panama has the wherewithal to sound menacing. As noted by Arias, the first agencies that would implement the retorsion law are the ACP, the Panama Canal Authority, and the ARI, the Interoceanic Region Authority (which administers the old Canal Zone assets handed over by the US).

ST KITTS-NEVIS | Sharp upturn predicted. Prime minister Denzil Douglas is predicting for next year a 5% economic growth rate, one of the highest in Latin America and the Caribbean. This comes after indications that in 2002 St Kitts-Nevis managed to avoid, barely, the recession that everyone from the IMF down had forecast. Growth in 2002, says Davies, is likely to have been 0.8% — low, but four times higher that the average for all member countries of the Eastern Caribbean Central Bank.

EL SALVADOR | Industry takes a plunge. Industrial activity in El Salvador in the first half of this year declined at a rate of 4.18%, more than offsetting the increase of 3.13% in 2002. ASI, the industrialists' association, blames this both on the slowdown in the US economy and earthquake damage at home.