economy

Debt not likely to go down

Despite the government's excellent financial performance during 2007, in which it recorded a surplus of $683 million, it has no plans to use the money to reduce the country's deficit, said Héctor Alexander, the ministro de Economía y Finanzas.

Some of the money will be used to pay interest the government owes on its outstanding debt, but none will be used to pay down the the principal.

"The debt and interest payments will continue to lose their relative importance," the minister said.

Although the public debt has increased over the past three years, its ratio to the country's gross domestic product (GDP) has decreased substantially. In 2004, the debt was 70 percent of the GDP, while last year it was 56 percent.

The government wants to have the ratio below 50 percent by next year.

The country's debt was $1.6 billion in 1989. During the Guillermo Endara administration it increased $756 million. It went up a further $384 million when Ernesto Pérez Balladares was in power. Under the Martín Torrijos administration, debt has increased by $1.2 billion.

While the debt has gone up, the country's economy has grown in leaps and bounds.

Economists now think the government should focus on refinancing its outstanding debt because recent improvements in the country's bond rating mean it can get more favorable rates.