The International Monetary Fund (IMF) has approved a precautionary and liquidity line of $ 2.7 billion in favor of Panama to face the Covid-19 pandemic and act as insurance in case of extreme external impacts, as reported by the agency multilateral in a statement.

During 2020, Panama was strongly impacted by the global epidemic due to social distancing measures and confinements, which led to a significant reduction in economic activity, especially in tourism. In addition, the Covid-19 was added by Hurricane Eta and Tropical Storm Iota, which cut off a large part of the country’s agricultural production.

As a result, the institution expects the country’s economy to contract 9 % in 2020, with a significantly deteriorated fiscal position due to the drop in revenues and pressure on spending.

The IMF indicated that although the Central American country can currently cover its external financing needs, the Fund’s line will allow Panama to have insurance against different risks.

The conditions subject to this line consist of an adequate level of spending on health and on the social sectors affected during the pandemic, as well as the strengthening of institutional policy frameworks, the inclusion of financial integration and the preparation of the economy for its post-pandemic recovery.

The deputy managing director and chairman of the IMF board in charge of granting the line, Mitsuhiro Furusawa, highlighted “Panama’s solid macroeconomic policies,” which have led the country to more than three decades of dynamic growth. However, he noted that the pandemic impact “has caused a considerable deterioration in the country’s macroeconomic situation and outlook.”

K. Tovar

Source: Prensa

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