Panama - Future trends

The potential economic benefits of the Panama Canal are substantial. However, in order to capitalize on this potential, the nation needs a significant amount of investment. This is problematic since the current government has announced an end to privatization programs and many foreign firms are unwilling to invest new monies into Panama until there is further privatization. The loss of income from American forces in the Canal Zone will continue to impact the economy for some years. There is also widespread domestic pressure to increase tariffs that were lowered in order to join the WTO. A rise in tariffs could significantly harm foreign trade. The wide gaps between the rich and poor in the nation may mean future political instability. The country's high unemployment rate poses the same threat. The nation's high foreign debt also continues to constrain the economy by forcing the government to pay over US$740 million per year in debt payments.

There is international support to widen the canal to allow 2-way traffic by large vessels which is expected to increase traffic by 20 percent. The government has a US$1.3 billion fund as a reserve to provide increased social spending to compensate for the loss of funds associated with the American presence in the Canal zone. In addition, the government has received loans from the Inter-American Development Band to help develop rural areas (the most significant being a US$18 million loan to improve infrastructure in the Darien province). The commitment of the government to the development of new, and the expansion of existing, free trade areas means that the nation will continue to attract new foreign investment and new businesses.

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A. Brown
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Jul 11, 2013 @ 3:15 pm
What are the health status predictions for Panama?

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