Republic of Panama Fiscal Performance Third Quarter 2017

Transcription

1 Republic of Panama Fiscal Performance Third Quarter 2017 Dulcidio De La Guardia Minister of Economy and Finance Iván Zarak Vice Minister of Economy Eyda Varela de Chinchilla Vice Minister of Finance November 2017

2 LEGAL DISCLAIMER This presentation does not constitute or form part of, and should not be construed as, an offer or invitation to sell securities of the Republic of Panama ( Republic ), or the solicitation of an offer to subscribe for or purchase securities of the Republic, and nothing contained herein shall form the basis of or be relied on in connection with any contract or commitment whatsoever. Any decision to purchase any securities of the Republic should be made solely on the basis of conditions of the securities and the information to be contained in the prospectus, prospectus supplement or equivalent disclosure document produced in connection with the offering of such securities. Prospective investors are required to make their own independent investigations and appraisals of the business and financial condition of the Republic and the nature of any securities of the Republic before taking any investment decision with respect to securities of the Republic. The contents of this presentation should not be the basis for making investment decisions, nor should the presentation be construed as a recommendation to engage in investment transactions. This presentation is not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other related services, nor is a recommendation being provided to buy, sell or purchase any good or product. This presentation contains forward-looking statements, which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or including the words targets, believes, projects, estimates, expects, aims, intends, may, anticipates, would, could or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Republic's control that could cause the Republic s actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements speak only as at the date of this presentation. The financial information in this presentation should be used for reference purposes only with the understanding that market conditions may change and past performance is not an indicator of future performance. The Republic expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any of such statements are based. However, the Republic reserves the right to update, amend or delete information contained in this presentation without prior notice. The Republic, the Ministry of Economy and Finance (MEF) and the Public Financing Directorate of MEF do not assume legal responsibility nor will they be liable for the way that this information may be interpreted, including any inaccuracies, assumptions, or projections related to this information. The Republic, MEF and the Public Credit Directorate of MEF will not be liable for any loss or damage that directly or indirectly arises with respect to the use of this information. 2

3 Contents: 1 Macroeconomic Overview 2 Fiscal Performance 3 Debt Profile 4 Recent Events 3

4 Contents: 1 Macroeconomic Overview 2 Fiscal Performance 3 Debt Profile 4 Final Remarks 4

5 1 Macroeconomic Overview Panama s growth continues to be supported by a well diversified economy and is seen when compared to regional peers. GDP growth, as of August 2017 (%) Inflation(%) 5.8% % Increase driven by biennial adjustment of the minimum wage leading to increase in unit labor costs in 2016 August I SEM 2016 August I SEM Price controls scheme of President Varela comes into effect, helping to slow the rate of CPI growth sep-17 Source: INEC Source: INEC Real GDP Growth Expected as of October 2017 FDI Growth ( ) US$million FDI Growth 2Q ( ) US$million 2,845 4,458 4,494 5,225 2,589 2,689 1, % 5.3% 3.9% 2.7% 2.1% 1, IQ IQ I Trim I IQ Q I Q 2017 I Trim Source: IMF Source: INEC 5

6 3 1 Competitive Macroeconomic Advanteges Overview According to the World Economic Forum (WEF), Panama is ranked 11 out of 137 countries in macroeconomic environment. Total Poverty (USD MM) 21,809 9,467 Panama BBB Median Total Poverty (%) Source: World Economic Forum Open Unemployment (%) Extreme Poverty (%) Panamá Argentina Costa Rica Colombia Brasil Source: DAES

7 1 Macroeconomic Overview The fiscal year 2017 was a record year for the Panama Canal. It received a record million tons of cargo, the largest amount of annual tonnage ever transited in its 103-year history. Fiscal Year ,548 vessels Transited through the Panama Canal million Cargo tonnage record August 2016 August % 23.7% Panama Canal Economic Indicators August YoY 6.0% Source: ACP -7.0% -4.4% -10.6% Transit Panama Canal Revenues Cargo Volume 7

8 1 Macroeconomic Overview The 2018 Goverment Budget is part of an environment of economic growth of the country and meets the déficit limit of 0.5%. Law 72 of November 13, 2017: USD 23.8 Billion 2018 Goverment Budget USD 9.5 Billion 2018 Investment Budget 4th Bridge Over the Panama Canal Government Budget by Sector Development of Social Services Financial Services General Services Infrastructure Development Development and Promotion of Production Other 46.8% 13.3% 14.2% 11.0% 2.4% 12.3%

9 1 Macroeconomic Overview Selected economic indicators as of August 2017 National Banking System Internal Deposits 2.9% Loan Portfolio 1.3% Net Profit 17.4% Average Liquidity Index 60.7% Energy Delivered Generation 1.0% Power Supply 1.5% Power Demand 1.5% Consumption Industrial Tourist Expenditures 0.6% Chicken Production 2.1% Number of Visitors 0.4% Milk Production 2.5% Car Sales -13.1% Soft Drinks -9.0% Source: INEC 9

10 Contents: 1 Macroeconomic Overview 2 Fiscal Performance 3 Debt Profile 4 Final Remarks 10

11 2 Fiscal Performance The NFPS results showed an income of US$ 8,323 million, expenses of US$9,752 million and a deficit of US$1,430 million, or 2.4% of GDP. 55% of SNPF Expenditures increase was due to personal services special laws for teachers, doctors and security personnel. Deficit Personal Services by Category Sept 2016 Sept 2017 (USD mm) Main Investment Projects of the NFPS as of Sept mm 104 mm mm 27 mm 20 Source: MEF Education Security Health Judicial 128 mm 19 mm

12 Contents: 1 Macroeconomic Overview 2 Fiscal Performance 3 Debt Profile 4 Final Remarks 12

13 3 Debt Profile 29 Sep 2017 Changes outlook on Panama to positive from stable; Baa2 rating affirmed Source: MEF 13

14 3 Debt Profile Prudent debt management has helped achieve favorable debt cost trends Net Debt in $US million and as a percentage of GDP 22,000 21,602 21, % 21, % 20, % 38.0% 20,000 19,000 18, % 37.0% 36.0% 18, % 35.0% 17, % 34.0% 16, % (Real) (Projected) (Forcasted) Total Debt Net Debt/GDP Source: MEF Central Government Debt Interest as of Sep17 (US$millions) Q 2Q 3Q Interest Weighted average cost of debt (%) 5.6% 5.3% 5.1% 4.8% 4.8% 4.8% sep-17 while protected from a tightening global interest rate environment by a solid debt structure and composition, as reflected by low EMBIG spreads Debt composition by rate as of Sep17 (% of total) 350 Quarterly Comparison of Global EMBIG with Panama and Latin American peers July 2017 September 2017 EMBIG EMBIG PANAMA EMBIG COLOMBIA EMBIG PERU EMBIG MEXICO Fixed 17.2% Floating 82.8% Source: MEF Source: Bloomberg /6/17 15/7/17 30/7/17 14/8/17 29/8/17 13/9/17 28/9/17 14

15 Yield (%) (US$ million 3 Debt Profile Panama has developed a successful market makers programs, which has a positive assessment by multilateral agencies and credit rating agencies, enhancing our status as a country with investment grade Local Market Issuances 1835 (USD MM) Secondary Market (USD MM) TACC:74% 1, Since the launching of the Market Maker Program the Republic has issued approximately US$4,781 billion in the local market, excluding the T. Bills Sep T. Bills T.Notes T.Bonds Total sep-17 Panama Yield Curves vs UST External Curve Local Curve UST Tenor (years) Source: MEF 15

16 1 Macroeconomic Overview 2 Fiscal Performance 3 Debt Profile 4 Final Remarks 16

17 4 Final Remarks 1 Panama has fifteen years of sustained macroeconomic momentum supported by a strong track-record of economic growth, fiscal performance and debt management. 2 Panama s diversified economy and low inflation continue to support strong economic growth with 5.8% growth as of August Prudent debt management has helped achieved a constant weighted average cost of debt of 4.8% from 2015 to September Great fiscal performance as of September 2017, the Central Government revenues increased 1.6%, collecting 83 million dollars more compared to previous years. The implementation of various initiatives under the development of the domestic capital market, has allowed to close the spread among both curves of government debt securities. 17

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