Venezuela Cuts Ties with Panama

[COUNTRY EXPERT- JESSICA RAMESCH]

Hello everyone,

You may have heard in the news that Venezuelan head honcho Maduro recently announced he was severing ties with Panama.

There’s no doubt that Panama’s economy is affected by what happens in Venezuela and to the large Venezuelan community/diaspora that does business/funnels cash into Panama. The Colon Free Zone (CFZ), a major contributor to Panama’s GNP, is perhaps the worst hit…something that has been true the entire time the Venezuelan economy has been flailing.

That said, Venezuela has recently reaffirmed its intention to pay the multi-million dollar debt its businesses hold with the CFZ. The other great contributors to Panama’s GNP…the Panama Canal, Tocumen International Airport, Panama Pacifico (a Special Economic Area, or SEA), the International Banking District, and the tourism and conventions industry, to name a few, are thriving and/or growing. Amazingly, international organizations agree with Panama government projections about the economy’s growth. Since 2007 Panama’s has been one of the fastest growing economies in the world, and this year growth is expected to be excellent…in the 6 to 7% range.

What does all this mean for you, as potential expats planning to live here (or already living here?) It means Panama is likely to remain stable. And that’s of the utmost importance to everything from the direct flights we enjoy from here to the U.S. and other countries to the bank accounts we rely on to conduct our daily business here. That’s down to not only a strong economy but also to sound banking practices. Take for example this article that ran in the news today, highlighting exactly why banks should maintain high liquidity (there’s a very good reason Panama was one of the fortunate countries that did not have banking crises in 2008-09):

http://www.kcba.com/2014/03/12/superintendent-panamas-banking-crisis-discarded-with-venezuela-affects-iwc/
excerpt/machine translation:
the [banking] Superintendent maintains a strict supervision of the system, so that “there is no bank in danger” by the debt of more than $500 million that entrepreneurs of Venezuela have with their Panamanian peers.

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