Panama Investor Blog

The Latin American voter wants refrigerators and washing machines

Although the U.S. turned decidedly left in their last presidential election, Latin countries seem to be moving the other direction. This article from the Washington Times points out that Latins want the same thing everyone else does; A better life with more conveniences. Ideology is taking a backseat to the general populations desire for these things. As long as there are opportunities there is hope for people to pull themselves out of poverty. Maybe as North Americans see themselves losing opportunities and  slipping into poverty, they too will change back to free markets as opposed to ideology and class warfare.

Excerpts From the Washington Post

"Voters are more calculating and rational than we give them credit for," said Christopher Sabatini, senior policy director at the Council of the Americas in New York. "People are making the choice to support market economies and rational leaders."

In Panama, Ricardo Martinelli, a supermarket-chain owner with close ties to the United States, won the presidency in May. In Brazil, the popular governor of Sao Paulo state, José Serra, enjoys a solid lead in the polls over his more left-leaning rival ahead of October's presidential election. Polls show the winner in Costa Rica's election next month will probably be the ruling party's Laura Chinchilla, who is expected to closely hew to the current government's market-friendly policies.

Read the whole story here...

Former Panama President Arrested

This is the first time a Panamanian president has ever been arrested and is certain to make all of Panama's politicians and public office holders sit up and take notice. If it can happen to the bull, it can happen to anyone.

La Prensa this morning: SANTIAGO Fascetto
JOSÉ OTERO
[email protected] 

  Ernesto Pérez Balladares yesterday became the first former president of Panama who is deprived of his liberty for an alleged act of corruption: the Public Ministry (MP) ordered his arrest in a criminal case that accuses him of course money laundering.

  The precautionary measure dictated Ayú prosecutor Jose Prado, in charge of the Special Prosecutor's Organized Crime after the former president (1994-1999) refused to testify a second time.

  The extension of the investigation was scheduled for today, but the prosecutor and defense lawyers agreed and 24 hours ahead of diligence.

  Perez Balladares admitted to the prosecutor's office at 8:05 am and left guarded by National Police agents shortly thereafter.

  Apart from the prohibition to leave his home, he dictated the Prado Ayú barred from leaving the country.

  The charge of guarding the former head of state does not leave his home will be the agents of the Institutional Protection Service.  Ayú Prado-reported-not frozen the accounts or property of Perez Balladares.

  "We decided to take certain precautionary measures for procedural health record," said the prosecutor, after issuing the injunctions.

  The defense of Pérez Balladares, meanwhile, unveiled two new resources that add to the other seven: another habeas corpus before the Supreme Court and a reconsideration with the prosecutor for outlawing measures.

  The MP opened the investigation into alleged money laundering against former President Ernesto Pérez Balladares, after a series of investigative reports published in the press and that uncovered links Balladares gaming company with Lucky Games Ltd., the than the government of former president was granted a concession to operate direct free slot machine halls in 1996.

  That company turned steadily money to an account of society "paper" Shelf Holding Inc., which controls the former head of state.

  Ayú Prado, on the other hand, decided yesterday to prosecute seven others, bringing the number to 12.  The latter group reported "relates to people who have benefited from money Shelf Holding Inc.

  SEE Perez Balladares, under house arrest

Panama suffers FTA setback at the hands of a "Tax Evader"

It seems the on again off again FTA agreement is still being hung up by the same old same old. The Chairman of the house ways and means committee, the infamous Charlie the tax cheat Rangle, says Panama must do more in the areas of labor and banking transparency.  I doubt if the labor changes he wants are those we harp about on this blog as much as they are to strengthen unions and provide more control by the state. His continuing to carp at the banking industry seems disingenuous considering he is under investigation for cheating on his taxes.  Just one of his lack of reporting incidents is a high dollar rental property in Punta Cana. WJS: First he blamed his wife for the oversight because he said she was supposed to be managing the property. Then he blamed the language barrier. “Every time I thought I was getting somewhere, they’d start speaking Spanish,” Mr. Rangel explained. Equally interesting is his claim that he didn’t know that the developer of the Dominican Republic villa had converted his $52,000 mortgage to an interest-free loan in 1990. That would seem to violate House rules on gifts, which say Members may only accept loans on “terms that are generally available to the public.” Try getting an interest-free loan from your banker.

From La Prensa:

Panama has outstanding issues that must be resolved before the free trade agreement before the U.S. Congress will ratify it.

That's according to a statement made recently in a press release by Chairman of the Ways and Means Committee Charles B. That's according to a statement made recently in a press release by Chairman of the Ways and Means Committee, Charles B. Rangel, in which he mentions specific actions that the country must take, including applying International Labor Organization standards and working on bringing greater transparency to its banking industry. Rangel, In which he mentions specific actions that the country must take, including applying International Labor Organization standards and working on bringing greater transparency to its banking industry.

Rangel added that the Panamanian government and the country's ambassador to Washington, DC Federico Humbert have already been apprised of the committee's demands. Rangel added that the Panamanian government and the country's ambassador to Washington, DC Federico Humbert have already been apprise of the committee's demands. He added that he would expect Panamanian authorities to take swift action to correct these issues so as not to postpone negotiations. He added that he would expect Panamanian Authorities to take swift action to correct these issues so as not to postpone negotiations.

That news dampened some of the hope for the rapid approval of the treaty raised by the Obama administration earlier this month when it issued a report promising to deal with the agreement “relatively quickly.” Following that report, several meetings held last week between trade officials from both countries were left with the impression that Congress could ratify the treaty as early as June. That news dampened some of the hope for the rapid approval of the treaty raised by the Obama administration earlier this month when it issued a report promising to deal with the agreement "relatively quickly." Following that report, several meetings held last week between trade officials from both countries were left with the impression that Congress could ratify the treaty as early as June.

The Panamanian Minister of Trade and Industry, Gisela Porras, said she preferred to withhold comment on the issue until she knew the context in which Rangel's statements were made. The Panamanian Minister of Trade and Industry, Gisela Porras, said she preferred to withhold comment on the issue until she knew the context In which Rangel's statements were made.

Panama has often appeared on international “black lists” for its reputation as a tax haven, an issue that was discussed yesterday at the Annual Conference of Business Executives in the capital (CADE 2009). Panama has often appeared on international "black lists" for its reputation as a tax haven, an issue that was discussed yesterday at the Annual Conference of Business Executives in the capital (CADE 2009). During the conference, former deputy economy minister Domingo Latorraca referred to Rangel's statements, arguing that the country's banking industry should not be at issue in the trade talks. During the conference, former deputy economy minister Domingo Latorraca Referred to Rangel's statements, arguing that the country's banking industry should not be at issue in the trade talks.

Big news for the future of Chiriqui tourism

I had a surprise this week when we received a call from the offices of the Panama Tourism Authority saying, Salomon Shamah, the head of the ATP would be visiting our resort and wanted to meet with me. It had been September since I last met with him at the tourism dinner in Panama City just after he took office, and I wanted to get an update from him on his efforts to promote Panama. Over lunch with his entourage he told me the following:

He has been working with Copa and several other international airlines  with direct flights into Panama to  book flights through to David. Both Air Panama and Aeroperlas would be making at least one flight each evening from Tocumen to David to coincide with their international flights. The airport in David has had new runway lights and other equipment to allow for flights coming after dark from Tocumen. This  eliminates an airport change and hotel stay in the city and simplifies ticketing for passengers. For those of us in the hospitality and tourism in Chiriqui, this is big news. It is well known that an additional flight from another airport into a country dramatically hinders tourism. It is scheduled to begin in February.

He does not see direct international flights into David for the foreseeable future. Not enough traffic  or tourism infrastructure to support it.

I asked him if some of their advertising budget would be dedicated to promote our region. He said they are developing an advertising campaign focused on the Boquete in particular because it has the greatest concentration of hotels and other tourism infrastructure  in the country outside Panama City and the beaches near it. They have developed a new website that will feature Boquete and Chiriqui as well. This is is much more than was done by previous administrations where we barely were mentioned on their website.

 He suggested that we participate with the ATP in some of the many tourism fairs that they have committed to around the world this year. They have budgeted over $300,000 for these fairs.  Tourism operators would only pay a $250 dollar fee and their expenses to participate. What I found most interesting about this was that he would be working each show and would be directing  both his people and the participants working in the booth. He would expect them to arrive at a certain hour each day to work the booth for a set time with few breaks. Late comers would not be invited back.  He said he would be reporting to each owner/operator on the ability and behavior of their people sent to work the show. He said his wife would also be there (at his travel expense) to help meet and greet attendees. To hear that the head of tourism would be working in such a way gives me great hope for Panama's tourism future. We will certainly participate in some of the international shows.

He also confirmed that the government was going forward with a four-lane road from David to Boquete this year as well as finishing the four-lane  inter-American highway through to Cocle. The last administration had already done much of the work in determining costs etc. and this administration would see it through as the funding has been allocated.

This confirms my first impressions of the new head man in tourism. That he would be spending his time and efforts promoting real tourism in Panama rather than just focusing on the city , which is a business destination, as past administrators had done. He will not neglect Bocas del Toro or the Azuero's areas either although he did not elaborate on the specifics. He said he needs to focus his efforts where the greatest tourism infrastructure is already in place. Bravo, someone finally gets it!

The appraisal trap for condo buyers in Panama

Osvaldo Lau is a tax consultant here in Panama and in an opinion piece published in La Prensa today he gives us some of his insight into the new property tax law and some of its pitfalls. One obvious one that many may not consider is the fact that under the new law the developer will find it more profitable to increase the land value  under a condo tower in order to reduce his capital gains when selling the individual units. Seems like this new law came just in time for the delivery of many of the new condominium towers being delivered this year. Great for the government coffers and the developer, but bad for the buyer who will be left paying the property tax on the land FOREVER even though they have a 20 year tax exoneration on new construction.  What can you do about it? Not much more than complain and ask to see what valuation he is placing on the land versus construction. When a deal seems too good to be true, it usually is.

This is not the best machine translation, but should be understandable. If not, write to Osvaldo at [email protected]

OSVALDO  LAU C.
[email protected]

OPINION. The real estate appraisals closed cases, that magic wand that was born with the Act 6 of 2005 and offered two tax incentives were put to good use by developers and private sellers of real estate because the value of such appraisals became the basic cost or sales to reduce or even eliminate the tax on real estate profit. Some, which failed to sell, were trapped in the property tax net to be valued according to the prevailing market value at the time when the housing sector was in decline.  With the post-crisis boom and a rateable value increased, the property was undergoing the rigors of a tax which in normal times is not recoverable.

  The tax benefits granted in due course of Law 6 / 2005 have now been reinstated with Act 49 of 2009 which provides incentives, with some variations, of the same two taxes.  First granted the right to take the appraised value as the base cost by transferring or selling property, and second, a new alternative rate for calculating the land tax, which in turn replaces the preferential tariff which was given in the first law.  The offer is good overall, but it must be appreciated in its proper dimension to not retake the same, and many properties are burdened with additional taxes. Good appraisals contain two tax incentives, but it must make a preliminary cost analysis / benefits to determine the right time and the after effects of valuation. The precise time depends on the transaction of the building project because the property tax tends to increase from the time the Land Registry Directorate approved the appraisal.  And this can make a big difference in the property tax that will be painful for the owner if a sale is not perfected.

  But there's more: with special rate that incorporated the Law 49/2009 of land for detached vertical condos, from January this year, these properties will be subject to pay property tax on the proportional value of the appropriate terrain. And as every developer is a businessman who looks after his own interests, will be careful to use the offer to reduce or eliminate their tax burden by increasing the value of the land by the appraisal formula. So this resolves the tax problem for the developer, but the innocent buyers of condos bare the side effect of the increased appraisals of the land value for each apartment.

While these are the effects of the appraisals, the cause of everything is in the Law 49/2009 which covered the same blanket with all the condos built, and resources that punished their owners without any social class discrimination.  This new property tax rate tends to end the old game of assigning the value of the land of new condos  a value below 30 thousand dollars to get the benefit of total exemption of the property. 

The Panama Entrepreneur Visa

Panama's commerce minister, Roberto Henriquez, this week announced a new loan structure for small Panamanian entrepreneurs. Although I am sure this will be a most welcome capital flow into micro business here in Panama, few Panamanians  have the needed business experience to make a success of a new enterprise that would truly bring innovation and benefit to the country. Yes, they can open more mini supers, kioskos and taxis, but these will do little to help Panama advance into the first world. Here is what the commerce minister has in mind.

"The bank will be the third component of "Proyecto Impulso" ("Stimulus Project"), and will begin operations with $25 million in capital. The announcement was made by Roberto Henríquez, Commerce and Industries minister, who will present his plan to the Executive Cabinet."Henríquez explained that 90% of the country's companies are classified as micro and small. This is why this bank will be focused on granting credit solutions to this sector of the economy", reported Prensa.com.

My fellow blogger, Matt Landau, wrote a post this week that I believe could be a key to Panama's future social and economic well being. He calls it the Panama Entrepreneur Visa and if adopted could bring tremendous talent, ideas and money to the country. Instead of, or in addition to this micro financing plan, how about considering Matt's Entrepreneur Visa? I have posted it here with his permission. You can read more of his work at The Panama Report.

Matt Landau January 3, 2010

I come from a place where some of the biggest, most successful companies were started by immigrants. From Katz's Delicatessen to Google, stories of smart, motivated entrepreneurs who emigrated to the U.S. and found a better life linger around every neighborhood corner. And while American visa laws and immigration agents aren't exactly known for their hospitality, they do shed an interesting light on how cosmo-obsessed Panama has the potential to grow in a truly international way. "Entrepreneurs drive America's economy, accounting for the majority of the nation's new job creation and innovations. Self-employed individuals who have no paid employees operate three-fourths of U.S. businesses. Further, America's 25.8 million small businesses employ more than 50% of the private workforce, generate more than half of the nations GDP, and are the principal source of new jobs in the U.S. economy." - ODEP, U.S. Office of Disability Employment Policy

It's no secret that entrepreneurs and small business owners are, collectively, the driving force of innovation and economic progress in many countries. While everyone is motivated by their own set of private and professional agendas, the common drive is to fill niches then make money. From the first time I visited Panama, there flowed an air of creativity and innovation: this sense that if you picked the right function and you did it well, great success was just around the bend. The infrastructure was growing and Panama appeared to be in search of ideas, innovation, talent, and organization.

But there was (and is) only one little hitch. Ask any entrepreneur nowadays in Panama what the most difficult obstacle is to deal with and the answer is united: immigration. Visionaries like these can usually see through the little hurdles - the red tape, the cultural nuances, the fact that nothing gets done on time - because that's what entrepreneurs do. But for small business owners, immigration in Panama is an extremely hard obstacle to overcome. Not only are visas difficult to obtain for oneself, but the ability to import skilled laborers is virtually impossible.

The potential to make a profit in Panama supplies a huge incentive for entrepreneurs to come up with new and better ideas: thus the giant explosion in new corporations created over the past five years. There is - and will be more and more amidst a recession and tightening immigration policies elsewhere in the world - a mad dash to bring in the world's skilled foreigners. How can Panama position itself most attractively on that competitive buffet of options?

No one can argue that importing educated people to create jobs and build wealth might be bad for the economy. Chile, for instance, is throwing its doors wide open, offering a permanent visa to entrepreneurs, paying them up to $30,000 to visit the country and another $30,000 to start a business. In some cases, the Chilean government will even pay for office rent for the first five years. Read Chile Wants Your Huddled Masses, Your Tech Entrepreneurs.

A potential problem with such a visa in Panama would be the fact that the Republic's government historically hasn't done well with...let's say...turning down bribes which are inevitable to nuanced immigration. This type of backdoor policy could just lead to more people buying their way in, and more corruption. There's also the question of how the government determines who qualifies as a legitimate entrepreneur - not to mention if the visa-acceptee fails miserably in his promising start-up. [Please use the comment section below to submit your suggestions on how Panama's government could qualify entrepreneurs for an entrepreneur visa and what effects this might have on development.]

All the potential downfalls withstanding, the prospect for an entrepreneur visa in Panama is not outlandish. Just as Chileans call their country a "land of immigrants," Panama too is a nation that has historically utilized the aid of foreigners to accomplish monumental tasks. It's now a time for realizing the expertise that exists (and that can be taught) within its borders, then opening doors to bring in the best and the brightest abroad: to continue Panama down its road of economic and development breakthroughery. Entrepreneurship needs to have a place on Panama's immigration agenda: it belongs alongside retirees and pensioners as the very alluring building blocks of a sustainable nation.

See here for a similarly proposed visa in the U.S.

Economics 101: Moral Hazard

I have forwarded this video on to all four of my teenage children as they don't find reading my posts very interesting. You may want to send it on to someone you think could use a little Economics 101-Moral Hazard. From my friends at the Center for Freedom and Propserity

Demand for construction jobs expected to continue in Panama

You wouldn't know it by looking at residential projects scattered about the interior of the country as most of them have slowed to a craw. But fear not, government projects such as the canal expansion, new metro, coastal strip extension and sewage treatment tunnel are set to suck up much of those construction crews who will be finishing up with the many city towers over the next year or so. That's what I call good timing, even if it means most of the GDP is being generated by big government borrowing. The construction unions are happy as they negotiated a new minimum wage that will be passed on to the general public in a number of new ways.

Machine translated from La Prensa

Minerva Bethancourth
[email protected] [email protected]

  In 2010 it implemented a series of construction projects that demand a great deal of manpower, according to Gregory Guerrel, representative of the Sole Union of Construction Workers and Similar (SUNTRACS).

  Among these projects, which have orders to proceed, are the beginning of the work of the third set of locks, the extension of the coastal strip, building a tunnel to carry waste water treatment plant to clean up the Bay .

  The new year is presented with a better outlook for the construction sector by 2009 when several projects were halted for lack of funding.

  Some companies also chose to defer to 2010 the start of work in the hope the economy improves, said SUNTRACS clerk, Hector Howard.

  The president of the Panamanian Society of Engineers and Architects, Ernesto De Leon, also agreed that during 2009 there was a decline in the construction of new projects and others lowered their speed.  Despite this outlook, De Leon stressed that there were no layoffs.

Panama's fear to compete

I have written occasionally on the idiocy of restricting foreigners from working in Panama. Jaime Raul Molina has written an article regarding the subject that discusses these issues in more detail. I think you will find it a good read. Jaime  is a lawyer in Panama specialized in Commercial Law."

Our fear to compete

Jaime Raúl Molina

 

We in Panama have a series of artificial barriers created by legislative action, that make it extremely difficult for businesses in the country to hire the services of highly qualified foreign employees.  This, instead of benefitting Panamanian workers as is the declared intention, results in a reduced competitiveness for Panamanian businesses in a global marketplace.

 

A Mistaken Economic View

 

The view above expressed is a labour policy based on an economic fallacy, that sees job positions as a pie of fixed size, and that the least people there are to share the pie, the greater the specific portions will be for each one.  A zero sum game, in sum.  However, in a globalized marketplace, it is competitive advantages what makes businesses and economic actors more competitive.

 

But this in turn requires the company to be able to employ the technology, personnel and resources that are more apt for each of the stages in the value-creating process.  Just as a business cannot be competitive in our modern world if its clerks lack computers and appropriate software, and instead have to work with manual files and mechanic typing machines, well, in that same manner no business can become really competitive if it is not permitted to hire the best professionals, technicians and capable people available in their respective areas of competence.  This, necessarily, implies the capacity to hire foreigners, for just as the New York Yankees (as well as all good franchises in the Major League Baseball) have understood, the best players some times are foreigners.

 

But, what about protecting the work of Panamanians?

 

The argument most commonly put forth in defense of labor protectionism is that if it were permitted to hire, for example, a foreign Architect, there is a Panamanian Architect that has been left unemployed as a consequence.  But this is a simplistic zero-sum game calculation that does not apply to the real economic world.  It is similar to that businessman who, when evaluating a possible investment in labor-saving equipment, only takes into account the cost of the piece of equipment, and ignores the likely increase in productivity that the machine may bring about.  As nothing is free, if every entrepreneur thought in that manner, no one would ever invest in productivity-enhancing technologies. 

 

In Panama we have had experiences in which hiring of foreign employees in a specific economic activity were broadly permitted for a given period.  One of the best examples is that of the banking sector, an activity that, when the door was opened to the hiring of foreigners, many sounded the alarm (like today), in the sense that Foreign employees would displace Panamanians and that this would result also in worsened employment conditions for those Panamanians that managed to keep their jobs. 

 

But exactly the opposite happened.  The International Banking Centre was thus born, something that would not have happened if international banks had not been permitted to hire foreign executives the way they were.  In those times, the rule for the international banks that came to Panama was to hire foreigners for the top executive positions.  However, as the years went by, those same banks began to increasingly trust executive roles to Panamanians.  Today, the vast majority of the executive positions in the banking sector are occupied by Panamanian nationals.  And the banking sector has become one of the most competitive, and with the best salaries in the country.

 

 

The same could take place with many more economic activities.  If it were permitted that any business, local or foreign, hired freely those persons that it deems the most qualified for the position in question, independent of that person’s nationality, more companies will start to come and set foot in Panama than have done so heretofore. 

 

We don’t want the best

 

Work of foreign professionals in Panama is extremely restricted.  In the first place, an enormous number of professional activities require the person to be a Panamanian national.  Professions like Medicine and Law are just two examples.  The absurdity is such that, if a Nobel Laureate, say, in Physics or Medicine, wanted to come to Panama to live and take a teaching position at the University of Panama, he could not do so.  The reason is that to be a professor in said university, you have to be a Panamanian national.  This is equivalent to shoot your own foot, as while the Americans made the atomic bomb with the participation of European scientists that had run away from the nazi, fascist and communist tyrannies, here in Panama we pretend that there is no single area of human knowledge in which anybody is better than us Panamanians.  We thus renounce to benefit directly from the best brains in the world in their respective disciplines.

 

Note that I use the United States of America as the benchmark here.  The reason is simple: that country has conquered the economic, scientific and military power of the world, precisely because Americans do not have strategic policies based on professional or economic chauvinisim.  Much on the contrary, while Hitler was expelling from Europe everybody who was not from his invented pure Arian race, the United States of America was receiving with open arms all those brilliant brains from Europe that were running away from fanatic nazi persecution.  On the questions of which of these policies is more advantageous in the long term, one has only to look at who ended up being the victor in World War II. 

 

The Labor Code

 

Apart from the prohibitions of practising certain professions to those who are not Panamanian nationals, the other activities that in principle are not prohibited to foreign nationals, are in practice severely restricted by the Labor Code and other related pieces of legislation.  The Labor Code allows, in theory, any business to hire specialized foreign personnel in certain circumstances.  Nevertheless, it sets a long list of requirements and conditions to be met that end up making this very cumbersome and limited. 

 

The basic restriction is that any in any business enterprise, all foreign employees as a whole cannot constitute more than 10% of its payroll, both in headcount and in salaries.  This last piece is the most absurd part of the restriction, as it is evident that the interest from any company in hiring foreigners and bringing them to the country to work is disproportionately directed towards filling positions that require high professional or technical qualifications, which in turn implies that those positions tend to be ones with high salaries relative to the rest in the company.  In this context, to require that the total salaries and benefits paid to foreign nationals within the company does not exceed 10% of all salaries and compensations paid to the whole of the company’s employees, ends in the real percentage of foreign employees in any one company allowed by the law, being much lower than ten percent. 

 

Conclusion

 

Panama wants to be a first world country in terms of economic development, specifically in the areas of commerce and the provision of services, historically our areas of strength.  In many aspects, Panama is indeed much closer to first world countries than to other countries in the region.  But we will never be able to become one in full right until we abandon our fear to compete in all markets, including the labor market. 

Debt and higher costs spell trouble for 2010

Two articles in the economic section of La Prensa this morning are portends of what the future holds for Panama in 2010. One is titled "Inflation could soar in 2010" and the other is "Public debt swells". The inflation is mostly blamed on the new minimum wage increase and the increase in public debt is past and future commitments for government spending. Of course government economist predict growth and increased revenues. We all have budgets and we all want to be optimistic about the future, but everything depends on sales derived from private businesses. Without growth in sales of goods and services income to the state will decrease relative to spending rather than grow as they plan for. 

Although many see the world coming out of recession and increased growth for 2010, I am ever the contrairian , and believe we have a long way to go before we see growth. Therefore I expect 2010 will see  increased burdens put on private enterprise due to lower overall sales of goods and services. 

Inflation could soar in 2010

Wilfredo S. Jordan
[email protected] [email protected]

  Three factors this year could cause an increase in the cost of living for Panamanians: the minimum wage increase, the rising cost of energy for trade and industry, and a rise in raw material prices .

  These three factors would impact directly on the price of food and service.

  The minimum wage was increased from 31 to $ 95 from 1 January.  On average, the minimum wage was between 349 and $ 416 per month.

  According to Francisco Kiener, president of the Union of Industrialists, for a company of 200 employees this represents an increase of 14 thousand dollars, that cost will be transferred to the consumer.

  The same will happen with electricity, which experience an increase between 6% and 9% from the first half of 2010 for those who consume more than 500 kilowatts, due to rising oil prices that reached $ 80 a barrel at the close of 2009.

  Some commodities have increased in price by increasing demand or increased transportation costs, driven by rising oil prices.

  According to preliminary estimates from the Ministry of Economy and Finance, in 2009, inflation reached 2.5%, well above the almost 0.9% was recorded in 2008.  And according to William Chapman, a partner at the consulting Indesa, inflation could be placed at 3.5% this year.

  The private sector projections contradict the president's announcement, Ricardo Martinelli, who in his last speech, on the occasion of the installation of the ordinary session of the National Assembly, reiterated that he proposes to reduce the basic family basket, primarily in four product Basics: rice, chicken, milk and beans.

Public debt swells

inerva bethancourth
[email protected] [email protected]

  Put in check the growth of public debt remains one of the challenges of governmental authorities. The latest figures 31 October, reflecting an increase of 6.7% over the year end 2008.

The statistics of the Comptroller General of the Republic show at 31 October 2009 that the public debt amounted to 11 thousand 142 million dollars while the same period of 2008 it reached the 10 thousand 437 million dollars.

  The positive note in this growth is that the ratio of gross domestic product (GDP) and total debt has gone down to settle at a 45.3% (24 thousand 574 million dollars) as of 31 October 2009, when in 2005 speaking from 66.4%.

 Local economists warn that the debt reduction is not achieved in the short term, alternative measures are required.