New Government of Panama faces these economic and governance challenges

The new Government of Panama who will lead José Raúl Mulinowinner this Sunday in the general elections, will have to face economic and governance challenges that will require a “unit” national to overcome them, as the president-elect himself admitted.

“I commit to a unity government (…) a pro-private business government“, but without forgetting those most in need, he said Mulino64 years old, after receiving the call from the Electoral Tribunal (TE) to be notified of his victory at the polls, obtaining more than 34% of the votes with a count of more than 90%, which makes him virtual president-elect of Panama.

governance

Given the fragmentation of the vote between eight presidential candidates, four with a real chance of winning, among them Mulino as the leader of the polls prior to the voting, the thesis of local analysts was confirmed that the winner this Sunday would do so with around 30% of the electorate, which represents a governance challenge.

“I am not encouraged by confrontations of any kind.“, he claimed Mulino in his victory speech, specifying that he had already contacted Rómulo Roux, presidential candidate of the Democratic Change (CD) party that came fourth and a former co-religionist of his.

The second most voted (25%), the anti-system candidate of the Nobel Party Other Way Movement (Moca), Ricardo Lombana, proclaimed himself as leader of the Panamanian opposition in a speech to his followers, in which he warned Mulino that if “do things well you will find“in this political group a”outstretched hand“But if not, “will have the people in the street”.

It remains to be seen what the composition of the unicameral Parliament will look like, until now dominated by the ruling Democratic Revolutionary Party (PRD), which this Sunday suffered the worst defeat in its history with its candidate for president by obtaining less than 6% of the votes, and in the one that the independent forces grouped on a noble platform try to advance “Come on”.

The economy

The new Government finds Panama immersed in an economic crisis expressed in the fall in the growth rate of the gross domestic product (GDP), which is expected to be around 2.5% this year compared to 7.3% in 2023.

This slowdown is attributed to the consequences of the pandemic and its management, with an economy and employment that has not yet recovered after the 17.9% drop in GDP in 2020, and the water crisis in the interoceanic canal that will reduce the income of the road and its contributions to the State.

Also at the closure at the end of 2023 of the large Cobre Panamá mine, a subsidiary of the Canadian First Quantum Minerals (FQM) and whose activity represented close to 5% of the GDP, after the concession contract was declared, for the second time, unconstitutional by the Supreme Court, this time in the midst of the largest social protests in decades in rejection of mining.

In this stage Fitch It removed the investment grade from Panama, which still maintains it in two other rating agencies, Moody’s and S&Palthough they all agree on prescribing the country an adjustment that reduces the growing public spending, in the face of the increase in debt, promotes austerity and improves collection in the face of the large evasion that it registers.

“Have confidence that solutions will begin very soon.” through “Amongments that I will do with national and international private companies to move the dynamo of the economy“, said Mulino in his victory speech.

He asserted that his Administration will work to “pay, to restructure“public debt,”but always leaving the name of Panama high”.