finance

Officials: Economy, banking system in fine shape

The officials said that financial woes in the U.S. will not be repeated in Panama.

Both men said that the local banking industry is strong, and there are no signs of any problems.

LA PRENSA

testimony: Both Ministro de Economía y Finanzas Héctor Alexander (left) and Comptroller Carlos Vallarino told the Asamblea Nacional yesterday that the country’s economy is in good shape.1098179

Ministro de Economía y Finanzas Héctor Alexander and Contralor General de la República Carlos Vallarino yesterday devoted a good portion of their presentation of the 2009 budget to the Asamblea Nacional to a discussion on the status of the country's banking industry.

Both men assured legislators that the economy and the banking system are fully healthy, and “have not been infected” by the financial crisis in the United States. “Our banking system is one of the strongest in the world," Vallarino said, using the facts that it currently has $63.6 billion in assets and a high amount of liquid assets to make his argument.

The officials also said that the investments of private banks operating in the country are safe because they are not in banks that have been affected by the financial crisis, such as Lehman Brothers and Merrill Lynch. “Our banking system has its deposits in banks that are solid, and they have not been touched by the contamination of the financial crisis,” Vallarino said. “These deposits are in HSBC, BNP Paribas, BBVA, JP Morgan and Wells Fargo, which have great strength.”

He also stressed the increased amount of oversight that has been developed by the Superintendencia de Bancos in recent years.

“Not that this will help us avoid 100 percent of the problems, but it is a guarantee that the risk is more controlled,” he said.

On Wednesday, a report was delivered to President Martín Torrijos which stated that there are no warning signs of impending problems with Panama's Comisión Nacional de Valores or the country’s brokerage firms.

Alexander told legislators that the Panamanian economy is continuing to enjoy good health, and that he expects the country's growth to be about 9 percent for the year.

“The investments made by the Banco Nacional, the Caja de Ahorros and the Caja de Seguro Social are fine,” the minister said. “In the case of the Fondo Fiduciario, only .3 percent of its investments are at risk, so the situation is not worrisome.”

Alexander said that he is not concerned about a warning issued yesterday by the consulting firm Indesa, which said that a U.S. recession could affect foreign investment in Panama.

Alexander said that he is hopeful that a proposed bailout plan being considered by the U.S. Congress will help that country avoid a recession.