Massive investment in Panama is set to turn the Central American country into one of the region’s powerhouses with new jobs and opportunities, according to experts.
Not only is the $5.25 billion expansion to the world renowned Panama Canal the largest public works project in the world, but a new metro system for the capital city is expected to be the second largest.
The work on the canal, due to be completed in 2014, will change the dynamics of global logistics, according to consultants Jones Lang LaSalle. It is expected to boost shipping in the southeastern United States and Gulf Coast ports, which could drive new site selection considerations.
The metro project is already attracting interest from financial institutions from the World Bank to the Inter-American Development Bank and construction will begin at the end of this year.
Other plans include an ambitious overhaul of Panama’s already excellent infrastructure. The plans call for new roads and buses to complement the new metro and a new international airport, which authorities say will facilitate tourism in the Pacific Coast beach area known as the Arco Seco. Panama aims to spend $20 billion during the next four years to build ports, expand its main airports and lure international companies to the country.
A stable political situation and strong economic outlook has helped to improve Panama’s international standing. In March of this year, for the first time ever, Panama was given an investment grade rating from Fitch Ratings upgraded Panama’s long term foreign currency and local currency Issuer Default Ratings (IDRs) to BBB- from BB+. The new rating is the lowest investment grade level rating with a positive outlook.
Last month Standard & Poor’s upgraded Panama one notch to BBB- from BB+, saying that Panama’s outlook for the credit rating was stable and effectively rewarding Panama for rapid economic growth and tax overhauls.
Now Moody’s Investors Service has upgraded Panama’s sovereign ratings to investment grade of BAA3 from BA1, also citing improvement in the country’s fiscal and debt positions.
The International Monetary Fund is predicting up to 5% growth for Panama’s economy this year, with the Panama Canal expansion project promising to fuel growth into the future.
The Central American country plans to cut its public debt to 35% of gross domestic product from 45% by 2014 as an expansion of the Panama Canal boosts tax revenue and growing investment in the mining industry buoys royalties.
