Panama: 2024 Article IV Consultation-Press Release; and Staff Report

GDP growth in 2023 was strong (7.3 percent), exceeding expectations for the third year in a row since the downturn in 2020. Unemployment is near pre-crisis levels while inflation has moderated. Government bond spreads increased in the second half of 2023 as markets became concerned that failure to meet the fiscal targets would lead to a loss of investment grade status. However, the overall fiscal deficit dropped from 4.0 percent of GDP in 2022 to 3.0 percent in 2023, and the Social and Fiscal Responsibility Law (SFRL) target was met. Following a Supreme Court ruling that the new contract with copper mine Minera was unconstitutional, the government ordered the closing of the mine. Banks are, on average, well capitalized and liquid, and stay broadly resilient in an adverse scenario.