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Red flags flying over Panama’s economy - analyst

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“Red flags everywhere." Juan Carlos Hidalgo, public policy analyst for Latin America at the Cato Institute sees Panama’s economy.

 For Hidalgo, the fact that an economy growing at 11% in fiscal deficits incurred is a true reflection of that "there is an important cyclical inbalance."
Panama closed 2012 with a fiscal deficit of 2.1% of gross domestic product (GDP). But that didn’t impress Hidalgo who said that "perhaps the deficit is small and debt under control, but that was also so in Spain, which had a surplus in 2007." However, when the economy stops, "the deficit iceberg comes out."
In Panama, he said, "the government is spending lavishly" when the economy and reduce the growth rate, "we will see a drop in revenue and a serious fiscal situation."
The government, for its part, argues that the deficit is a result of infrastructure investments that are running, these are necessary for the development of the country, and its conclusion must adjust capital spending and increase productivity.

Hidalgo, who participated in a Panama forum "The progress and the future of freedom in Latin America", organized by the Freedom Foundation, put i questioned the arguments of Panama’s authorities and doubted the need for certain investments. "The Metro can be a jewel of Latin America, but how necessary is it?" he said, and went on to question the nationalization of the Northand South. corridors.

He also warned of high inflation that the country "should not have this kind of price hikes. This means that there is a significant imbalance ". As have other economists, Hidalgo advised contain spending and allocate resources to populist policies. "There is a stream of money flowing into the economy via government spending that is inflating the prices," he said.