Wednesday, March 24, 2010

Panama gets investment grade rating

Panama won the coveted investment-grade rating on its debt on 23 March. Fitch Ratings raised its credit rating for Panama by one notch to BBB-minus, putting it in a club of creditworthy countries. This is a reward to the Central American country for years of rapid economic growth, trim budgets and recent tax system overhauls. The other credit rating agencies are also expected to upgrade panama.

Brazil, Mexico and Chile are the other three Latin American countries with investment grade ratings.

The upgrade of Panama, coming at a time some Southern European countries are risking downgrades, is likely to attract more investment.

Panama uses the U.S. dollar as its currency and has emerged as a big winner from the growth in global trade , domestic construction boom and the vibrant banking sector. The average annual growth between 2000-09 was 8 percent, the fastest pace in Latin America.

About 4 percent of international commerce flows through the Panama Canal, which is now being widened to accomodate bigger ships with an investment of 5.25 billion dollars.

After running a deficit equivalent to 4.9 percent of GDP in 2004, Panama ran surpluses between 2006-08.

The country's debt as a percentage of gross domestic product has fallen to 45 percent in 2009 from 71 percent in 2004.

Congrats Panama... Keep going...

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