Caribbean & Central America - August 2015 (ISSN 1741-4458)

Budget for 2016 clears first hurdle: On 29 July Panama’s cabinet council approved the US$20.1bn budget for 2016, up US$534m on the current 2015 spending plan. According to the minister of economy and finance, Dulcidio de la Guardia, US$2.3bn will be spent on education and culture, US$3.6bn on health, US$2bn on security and public safety, US$2.1bn on transportation and communications and US$1.4bn on industry, trade and tourism. Major projects that will be funded in the budget are line 2 of the Metro, the urban renewal of Colón, the fourth bridge over the Panama Canal, the expansion of water and sewer systems, universal scholarships, pensions for indigent seniors and the expansion of English education. The budget was based on a projection of growth of 6.3% of GDP, around US$54bn in nominal terms, including inflation of 1.9%. According to De la Guardia, this level of growth will allow the government to reduce the fiscal deficit to 2% of GDP in 2015 and 1.5% in 2016. The budget will now be presented to the national assembly.

More arrests over corruption

Eight former cabinet ministers in the government of former president Ricardo Martinelli (2009-2014) have now been arrested on corruption charges. The latest, Emilio Kieswatter, a former minister for agricultural development, was arrested in mid-July over a planned irrigation project which was paid for, but never built.

Martinelli himself is starting to feel the heat. In January Panama’s supreme court voted to remove his immunity from prosecution and on 3 July launched a third investigation into the former president, this time for issuing over 350 illegal pardons to his imprisoned allies at the end of his term.

While Martinelli denies the charges against him and blames the politicisation of the supreme court, public support for the investigations is high.

Martinelli’s successor, President Juan Carlos Varela, who won office promising to burnish public sector corruption once and for all, has politically benefitted from Martinelli’s tarnished legacy.