Panama: end of party

By: Beatrice E. Rangel - 30/04/2024

Panama has been one of the stars of growth since 1977 when it began a new stage in its history by assuming the responsibility of managing the Interoceanic Canal. The management of the canal facilitated access to investments that transformed its civil and commercial infrastructure as well as the profile of its capital. It stopped being a picturesque Latin American city in which slums mixed with housing estates and commercial establishments to become a kind of tropical Singapore.

The globalization of the world economy and the consolidation of its democracy since 1989 fueled the development of Panama, creating a powerful middle class that today seeks leadership other than that which initiated the transformations of which it is a beneficiary.

This middle class is made up of young people (25-40 years old) for whom the exploits of the canal and the institutionalization of democracy are an acquired right not attributable to any leadership. And this new middle class aspires for the economy to continue growing; the country is isolated from the Latin American catastrophe and the opportunities that open the need to develop infrastructure works to support the canal and sustainable industries linked to the development of the digital economy are better exploited.

With this backdrop, to which is added a citizen consensus on the need to combat corruption, the presidential and parliamentary elections of May 5 will be held, whose leader seems to be Jose Raul Mulino, who is favored by the tailwind generated by former president Ricardo Martinelli who was disqualified for being involved in common crimes. Second place seems to go to Martin Torrijos, Ricardo Lombana or Rómulo Roux.

Everyone will have to face the terrible reality of containing a fiscal deficit of 4.7% of GDP, an inflationary beast about to break loose, slow growth and the absolute need to invest in the canal's auxiliary works and in the pension system.

This leads to increasing taxes, reducing public spending and facilitating foreign investment. Hence, the leader who emerges from the elections must be clear about the mechanisms that facilitate or hinder the creation of links in the international value chain. This requires a new vision of development and a firm willingness to practice fiscal virtue.

And judging by the results of surveys and focus groups, the population is willing to accept correction policies. However, he calls for severe punishments for corruption in return. Therefore, many of the cases that are currently being heard in the Prosecutor's Office could take off with their own forces and affect the forces of stability. Because to govern Panama well, parliamentary consensus is needed because no political group enjoys a simple majority. The anti-corruption measures will necessarily reach the officials of the current government whose party seems to be anointed as the largest political force within the Assembly.

And that is where the big dilemma is. To rebuild the economy and relaunch it, it is necessary to be severe with corruption. But this policy would directly affect Mr. Mulino since his political manager is sub judice for money laundering. Furthermore, assuming that the PRD is a majority force in the Assembly, the cases that the Prosecutor's Office accumulates today could put several members of the current cabinet behind bars. And a scenario could then materialize where the forces that support corruption use the correction of the economy as a political excuse to cause the failure of the Mulino administration. This would be a reenactment of the drama that occurred thirty years ago in Venezuela where the government of Carlos Andres Perez was deposed by a coalition of forces in which corruption was established for whom fiscal virtue meant the end of the party.

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