Press Release No. 04/249

The following statement was issued today in Panama City at the conclusion of a visit by an International Monetary Fund (IMF) staff mission:

"A mission of the IMF has visited Panama City since November 8 to hold the annual economic surveillance discussions under Article IV of the IMF's Articles of Agreement. The mission welcomed the rapid growth of the economy, and noted that output would likely grow by about 6 percent in 2004, led by export-oriented services and a boom in construction that has been stimulated by temporary tax incentives.

"The mission commended the authorities for the emphasis that the new administration has placed on strengthening public finances and improving fiscal transparency. Early steps were taken to contain the fiscal deficit for 2004; the recently approved budget for 2005 calls for expenditure restraint; and a tax reform bill is expected to be presented soon to the National Assembly. The mission also welcomed the authorities' plan to address the need for reform of the social security system.

"The mission observed that the government's commitment to prudent fiscal policies is part of a broader strategy for promoting sustained economic growth, including policies for good governance, further integration in the regional and global economy, and improving the international competitiveness of Panama, particularly in the export-oriented service sectors.

"Discussions for the Article IV consultation will conclude in the first half of December 2004 in a meeting to be held with the Minister of Economy and Finance, Dr. Ricaurte Vásquez. The mission would like to take this opportunity to thank the authorities of Panama for their hospitality and open dialogue."