government

Public revenues up 26 percent

The government received $514 million more than it anticipated in the first half of the year.

Jorge Fernández/La Prensa

Héctor Alexander1073851

Government revenue totaled more than $1.9 billion in the first half of this year, according to preliminary figures released by the Dirección General de Ingresos (DGI).

This amount is $514 million, or 37 percent, higher than the government anticipated when it passed the 2008 budget. It is $392 million, or 26 percent higher, than revenues received in the first half of 2007.

“It's a very positive signal, which speaks of sound public finances and that Panama is successfully confronting the global economic crisis,” said financier Domingo Latorraca, a consultant for Deloitte.

Tax revenue continued to grow at a strong pace, increasing 19 percent. And that, in the view of economist Aristides Hernández, president of the firm Latin Consulting, can no longer be linked to fiscal reform, but rather the good performance of the economy. “This high level of revenue puts the government in a position to have a fiscal surplus for third consecutive year,” he said.

Experts estimate that the surplus in 2008 will range between 0.5 percent and 1.7 percent of the country's Gross Domestic Product (GDP). Analysts agreed that surplus should be used to reduce the balance of the public debt and to increase investments in infrastructure, social programs that fight poverty and encourage education and public transportation.

“If this surplus is not used to solve problems of substance, and is wasted on election year political gimmicks, it would be greatly irresponsible,” Latorraca said.

Ministro de Economía y Finanzas Héctor Alexander explained that the surplus is mainly due to the granting of telecommunications licenses, which added $172 million to the country's revenues, as well as the sale of reverted land, which generated $32 million. The government also realized $22 million from renegotiating its outstanding debt.

The minister said implementing social interest projects is the government's current priority.

“We are taking steps to help Panamanians face the rising cost of living, and this revenue surplus will be used to strengthen existing plans and assist with the implementation of projects without resorting to new loans,” Alexander said.