Panama - Domestic policy

High oil prices, a slump in agricultural exports, a worldwide economic slowdown, and the withdrawal of U.S. military forces have created an economic slowdown in Panama since2000. Economic growth is expected to be sluggish for 2003–04. A major challenge facing Moscoso's administration has been turning to productive use the 70,000 acres of former U.S. military land and the more than 5,000 buildings that reverted to Panama at the end of 1999. The agency responsible for the development and promotion of these areas, the Interoceanic Regional Authority (ARI), has not been able to attract significant new investment to make up for the loss of jobs and income resulting from the U.S. withdrawal.

In efforts to address the problems facing the economy, the government has set up several panels of government and business leaders to suggest steps to promote employment generation, investment, and tourism in Panama. The 45 proposals announced in March 2001 suggest that the government needs to streamline its bureaucracy and speed up execution of public works. In 2000, union leaders pressured the government to raise Panama's minimum wage by 12%. Two more wage hikes are expected before 2004.