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Getting a great steak in La Pintada, Panama

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     Happy wife, happy life.


     Roberto Chocolaté

      "Map? I don't need no stinkin' map"

      Panama Star PANAMA.

According to my wife, we are lost.

“Don’t be ridiculous. I don’t do lost. I drove the entire North and Central American continents without a map. Map? I don’t need no stinkin‘ map. Just point the high beams south and keep on ‘til Christmas. That’s my style. Besides, I maintain, since we are driving around with no particular destination, we cannot possibly be lost.”
She thinks we are out for a pleasant drive. She doesn’t suspect a thing.

I check in the mirror. I look good, my Ray Bans glistening in the setting sun, my sleek Montecristo Panama hat perfectly shaped, sunroof open to catch the breeze, my mind fixed on the succulent reward awaiting us at our undisclosed destination.

It’s hard to see at dusk with Ray Bans on, and I remove them just in time to avoid a gigantic pothole that would have swallowed our minivan whole.

Panama does have unique driving challenges. It seems that putting up a directional sign or a street name is perhaps illegal or some sort of mortal sin. To make my life as a travel writer more of a challenge, there are towns with the same name all over the country, and the capital city, district, province and country share the same name.
My wife reminds me that in Canada every town name seems taken from a village in England, and how many Springfield’s or Riversides are there in the USA? “Touché,” I submit.

I glance over at my bride, remembering my father-in-law’s advice on the day of our wedding. “For a happy marriage,” he said, “learn these three phrases: ‘Yes Dear,’ ‘I’m sorry,’ and ‘You’re Right’. Add to this the words ‘I love you’ and you have found life’s most precious secret— happy wife, happy life. “

In the spirit of maintaining my bliss, I break down and ask directions. “Donde La Casa Vieja Steak House?” I pray silently that I understand the response. “La Pintada, directo, diez kilometros,” he helpfully replies. “Gracias,” I respond, and drive off smugly.

“I am not lost. You are just a tad impatient,” I explain, violating one of my father-in-law’s keys to happiness. Appearing lost was my first mistake, arguing only amplified the gravity of the error. If I didn’t buck up this dinner would cost me a lot more than money.
The town of La Pintada appears on the horizon. We park in the town square and walk across to the restaurant. La Casa Vieja has a quaint Western cowboy feel to it, a fitting for a steakhouse. As an Irishman, I eat both kinds of foods – meat and potatoes, so I am packing my carnivorous appetite. With its authentic décor, and the best steaks in Panama, it is well worth the drive.

For an unforgettable, authentic steakhouse experience, take the direct route through Penonome to La Pintada. A sign in the town square even points to La Pintada.
The name La Pintada came from this house. Over two hundred years ago, when most homes in the area were made of straw, this stone and plaster house was “la casa pintada” (The painted house).

The decor is reminiscent of its New Mexico owner’s home state. Ted Apolaca’s family has been in the hospitality business for decades and it shows in the service and style of this authentic steakhouse.

If you love meat, sink your fangs into the Asado de Tiras – a thick, juicy New York strip grilled and spiced to perfection. $14.95. Leave room for the flan.

Sunglasses and Panama hat optional. Appetite required. Happy life secured.

August 8, 2009 article in the Panama Star

Last Updated on Tuesday, 04 May 2010 19:05

Santa's on his way

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 It's beggining to feel a lot like Christmas...

It's that time of year once again, when Santa (Roberto Chocolaté last year - and his brother Dan this year) dons his trusty sleigh and visits the little children of Guzman, one of Panama's poorest villages.

. Roberto Chocolaté on his way to Guzman last year

Last Updated on Thursday, 16 December 2010 00:42

Living on a boat in Panama

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 This is an enquiry e-mail via from: L. O'M 
I will be visiting Panama in Dec. for nine days to see if it is a place where I may want to retire in the next year. I am not that interested in purchasing real estate in Panama at this time since I live on a 42 foot trawler and would hopefully continue to do so in Panama. Most of the information I am finding about visiting the area is focused on purchasing real estate. I realize nine days is a short amount of time to experience a culture, but I am hoping you may have some suggestions for areas I should make an effort to see. I will be flying into Panama City.  Should I book a hotel in the City for the full time and explore from there, or would you suggest I try to stay in several locations? I would appreciate any ideas. Thanks.
L. O'M, Olympia, Washington

Dear L. O'M,

Irish perchance? My ancestors are one of the thirteen tribes of Galway - Mary Brown's front door arch is the oldest remaining structure in the town. 
Nine days is twice the time most people give themselves, and half the time you really need. However you can get a pretty good feel for the place in that time.

 I am looking into buying a boat to use as a writers studio and weekend retreat, so I'll share what I have found out so far;


There are still pirates in Panama, mostly involved in the drug trade on the Caribbean side, so my recommendation is to stick to the Pacific side (which is also much drier by the way). If you are intent on the Caribbean side, check out Cristobal Yacht Club. There is also a new marina at Shelter Bay, Fort Sherman near Colon.
There is a marina in the city of David which is either another flight or a five to six hour drive away from Panama City in the western end of Panama. 
The majority of yacht clubs or marinas are in Panama City, but docking is not cheap. The best in my mind is Flamenco Marina on the Amador causeway. They  sell a four year dock lease for $45,000 which works out to $800 a month but that does not include water or electrical which works out to another $1,000 a month for a total of $1,800/month instead of the $3,500/month they charge for transient docking. This is based on a 65 foot Viking motor yacht with no-one living on board, but a lot of equipment and fridges/freezers running. The owner of the Viking has been there four years, and says they have never had anything stolen, and that the security is excellent. There is a Bennegans (US Style restaurant chain) at the foot of the docks and four other restaurants right near the marina, a shopping plaza including a tax free shopping just center steps away and all boat repair services nearby. 
There is also The Miramar Yacht Club right downtown Panama, but during low tide it is a mud flat and the traffic, noise and diesel pollution and smell makes it unappealing.
I am looking into anchoring out either near The Decameron or near Playa Blanca (Pacific beaches area where I live) where I can moor and dinghy out for about $200 - $300 a month. I will hire a security guard to watch my boat every night for another $300 a month. Breaking and entering and petty theft is a problem in any Latin American country and in fact everywhere you have very poor next to comparatively wealthier people. That is the bad news. The good news is personal safety is not as serious a problem as most places in the world. Mooring out will mean no docks and I will be on generator power but it is a lot cheaper, and for me, closer to home. The dry arch as they call this area has the best weather in Panama, the  most beautiful beaches, it is a short cruise to The Pearl Islands, to Panama City, to the Panama Canal and to Costa Rica to the west.
If you obtain a Pensionado Visa you are entitled to bring a vehicle into Panama tax free every two years, so your boat would be duty free. You are also permitted to bring in $10,000 in personal effects duty free. 
To fully cover the country I would stay in Panama City at one of the following:
-  the Fuerte Amador Resort and Marina (507) 314- 0932 (check and see if the resort/hotel is finished yet)
-  the County Inn & Suites Amador www. (NOT the downtown hotel - ask for water-view room) (507)  211- 4500 E-Mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
-  Hotel Amador Ocean View   (507) 314- 3333
 Stay for three or four days to check out the Amador Yacht Club, the Flamenco Yacht Club, and take a cab to check out the Balboa Yacht Club (moorings only) (507) 211- 0827 or 228- 2313.
I would then book yourself into either The Royal Decameron Resort ( (507) 993- 2255) or the Barcelo Playa Blanca (507) 264- 6444 (both all-inclusive beach resorts very near each other) for two or three days, check out the Pacific beach/dry arch area, take a side trip to the beautiful El Valle mountain town.
Then rent a car (National car rental office onsite at The Decameron - check and see if you can drop off the car at the airport - drive yourself to your flight) and drive to David to check out Boca Chica Marina (very rustic) and the port in the city of David. Say at the Gran Hotel David E-Mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it (507) 775- 2221)
Hope this helps. Roberto
PS: See my "101 Exciting Things to Do In Panama" article (Go to Destinations - Panama section). At the end of the article is a resource section which lists yacht clubs, marinas, boating equipment and supplies. 
Last Updated on Tuesday, 04 May 2010 18:48

In Panama, carry ID or get fined

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Published in a February 2009 issue of the Panama Star.

"Last year, the immigration laws of the country suffered a drastict transformation and as a consequence, from February 22, all foreigners who are visiting or living in Panama must carry at all times a validI.D. It could a passport, copy of that document or in the case of residents their "cedula", otherwise they will be fined $10.00.


The Immigration Department director, Clovis Sinisterra said that the authorities are not discriminating against foreigners, just trying to control the wave of illegal immigrants coming from different parts of the world, looking for a better life in Panama.

According to Sinisterra last year four million foreigners entered the country, some as tourists who overstayed their visas. Others entered illegally, and some came under false pretences. However the great majority were bona fide visitors who came to spend their holidays in Panama.
The director said that the Panamanian law is very specific with regards to identification and even nationals have to carry their "cedulas" at all times.
The problem with tourists being fined for not carrying passports came to light last weekend, when four foreigners who were staying at the Decameron Resort in Farallon, were detained by the police and when they failed to produce an identification were fined $10 each, although they were wearing the bracelets from the resort."

Announcement dated Feb. 16, 2009.

Under the recently enacted Panamanian Immigration Law all foreign visitors to Panama "must" carry their passport as identification at all times, a copy is not accepted. Foreign legal residents of Panama may carry their temporary resident permit or cedula in lieu of their passport as identification in Panama.


Last Updated on Tuesday, 04 May 2010 18:48

Panama Star article - The Pacific Beaches

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Vista Mar’s inviting patio/1 Fotos


A perfect destination for an anniversary getaway

This e-mail address is being protected from spambots. You need JavaScript enabled to view it

My wife lets out a blood-curdling shriek. Wine bottles clank together as I slam down on the brakes. Horns blare. A diablo rojo narrowly misses smashing in our front passenger door. Nerves frazzled, we carry on. We are headed out of town to celebrate our 10th anniversary, our destination an oasis of fresh air, cool breezes and soft sand. In a mere hour and a half we will be breathing in the salt air of Panama’s Riviera – the Pacific beaches.

We stop near Capira at Los Arrieros roadside fonda for their famous smoked BBQ chicken, and again along the main highway in Chame, for the best key lime pie south of Key West at Amarilis Restaurant, and our picnic lunch is complete.

Finally in Santa Clara we pull into Las Sirenas, a cross between a cozy motel and a hilltop ocean inn. I have reserved the best room, right on the ocean. A friendly greeting, a quick arranging of our ocean-side feast, and we’re on our way to the best beach in Panama! Santa Clara Beach, with miles of pristine white sand, gentle waves, crystal clear waters and best of all, it awaits us, virtually deserted. The sight of this private paradise takes my wife’s breath away when she steps out onto its immaculate expanse. A dip in the ocean and a picnic lunch with chilled wine under the umbrellas later, we are lulled to sleep by the soft rolling of the waves.

The city feels a million miles away. As the sun sets, we retreat to our room, shake off the sand and prepare for a night on the town. I have made reservations at Terrazas del Mar, an elegant, sexy restaurant inside Vista Mar Golf and Beach Resort. Chef Pascal Finet greets us warmly. We stroll the grounds of this spectacular resort. We meander through the meditation gardens, past a glistening ocean side swimming pool and a stunning patio overlooking a perfectly groomed beach.

Our tour is curtailed by the arrival of our appetizers. Like an old married couple, we dip into one another’s bowls without having to ask. My sea bass carpachio is a complex cross between a ceviche and sushi. My wife’s shrimp bisque is light and healthy, scented with Pernod. Her gigantic seafood casserole main course brims with octopus, shrimp, lobster and succulent fish. I devour one of the best bacon-wrapped fillet mignon dinners I have had in Panama.

Instructed to leave room a mystery dessert, we have the copious remains of the seafood casserole packed for take-out. The mystery dessert – a frozen chocolate, coconut, and nut concoction anointed with an extraordinary blend of liquors — restores our fading energies, and so we leave this most sensuous of restaurants and head out in search of Saturday nightlife. We stumble onto a lively karaoke night at the XoKo, where we party until two am.

The next day, we check into the luxurious Bristol Hotel inside the Buenaventura Resort at Farallon for a day of lounging in poolside cabañas, walking the beach, massages in the spa, and dinner on the patio. In the morning, as we leave through the entry gates, she leans over and kisses me on the cheek. A perfect 10 ending to an anniversary getaway.


Amarilis Restaurant, in Chame on the westbound side of the Interamericana highway, next to Summer House Furniture. Tel: 6511- 4028

Los Arrieros Grill, just past Capira on the westbound side of the highway. Look for the smoking grills beside the road.

XoKo’s Restaurant, Santa Clara, This e-mail address is being protected from spambots. You need JavaScript enabled to view it Tel: 993- 3876

Terrazas del Mar at Vista Mar, This e-mail address is being protected from spambots. You need JavaScript enabled to view it Tel: 6612- 0095


Las Sirenas, Online reservations: English Tel: 6747- 1772, $110 – $140 for an oceanfront room.

Bristol Hotel Buenaventura, This e-mail address is being protected from spambots. You need JavaScript enabled to view it Tel: 264- 0000, $235 -$435.





Last Updated on Tuesday, 04 May 2010 19:06

Flooding death toll rises to 10

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 The rains have stopped, but the flood waters continue to rise as the rain water makes its way down the mountains to the flooded areas. Over 5,000 men women and children are homeless, right before Christmas. Roberto

Here  is a report with photos from

Last Updated on Saturday, 11 December 2010 11:50

Obtaining your Panamanian driver's license

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 Obtaining a Panamanian driver’s license is required after being in Panama for 90 days.


First, go to the SERTRACEN office nearest you (or go online at or call 315 - 0000 to find out what the current requirements are. 

NOTE: If you do not have a valid license or yours has expired, go to the office or go online and look for the requirement for an Extranjero Temporal Sin Licencia A, B, C section. Article 110.


Like in Canada and the USA you will need to take an eye exam and pass both a written and a practical driving exam (a driving test in the car).  All of this will be done IN Spanish. You will also need a blood test and medical exam showing you are in good health.


It is much easier to renew your licence in your home country and get a new one issued here. Here is how to apply for your Extranjero Temporal Con Licencia A, B, C Article 110:


As of August 2009 you needed to:


- get an authenticated copy of your (current and valid) driver’s license from your Embassy. The Canadian Embassy, located in the World Trade Center on Calle 53 Este (a one way going north) just south of Calle 50 They charged $43 (US$), and suggested it would take one working day to stamp it. However  they were very kind. I got mine in a half-hour when I explained how far away I lived.



- Take this document to The Ministerio de Relaciones Exterior is in the Edison Plaza (Look for a tapered, round, white bank building) located at the junction of Tumba Muerto and El Paical (Via Brasil). You need to get the Canadian Embassy’s signature authenticated here. NOTE: In this Panamanian government office, no-one spoke English. I brought a Panamanian friend along to help translate.


- Buy two (2) one dollar ($1.00) stamps from the person standing outside the office to attach to your document. Passports and other documents cost more. Just buy two one dollar stamps.


-  line up inside the office in the Reception de Documento line-up (white sign, not the green sign) Obtain a slip of paper/invoice which you take to the Banco National (That round, tapered white building with Edison Plaza on the top).  Pay the $2.00 and get it stamped by the teller, and bring this back to the office.


- this time, stand in the Retiro de Documento (green sign) line-up. Again they told me to come back tomorrow until I pleaded that I had driven all the way form Santa Clara. I waited about an hour for my now authenticated, stamped, document.


- Now you need to get a blood test - the doctor knows the forms - One is a general health certificate, the other the result of a blood test showing sugar levels, blood type, etc. This is called “tipo de sangre si licencia no la tiene” (show this to your doctor if they don’t speak English  - Make SURE your blood type is on the certificate). 


NOTE: If your blood sugars are too high, as mine were, you will need to re-test or get a note from your doctor that this condition is being treated, otherwise your application for a Panamanian driver’s license will be rejected. Drink lots and lots of water the day before your test, make sure you fast the full 24 hours or more - and don’t drink alcohol the day before your test.


- Bring your originals and the certified copies back to Sertracen offices to apply for your license - Good luck!!! Roberto Chocolate

Last Updated on Tuesday, 04 May 2010 18:49

Murder rates in Panama July 2009

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Weekend crime spree in Panama 


07-28-2009 | ANA BOLENA AYARZA

Panama Star PANAMÁ. Even with a strong push to end the horrors in Arraijan and Colon, the national police could do little to stop more homicides from occurring in the area, which have risen to 70 cases this year. Among the 70 victims, six more were added over the weekend in a span of just less than 7 hours. Six men were either fatally shot or stabbed between 8:00 pm Saturday and 2:30 am Sunday.

The first murder occurred in Sector 5 of Alcalde Diaz, where 18 year-old Jose Javier Herazo was shot to death after receiving two bullet wounds. An hour and a half later in Colon, Luigi Boyce Melendez, 28, was shot six times in the area known as “El Vaticano.” Testimonies state Melendez was leaving a store with some friends when a hooded male pulled out a gun.

Merely 15 minutes later, 15 year-old was murdered during an attempted robbery in Santa Ana.

Three more murders occurred within the next few hours. At 9:55 pm, a man was murdered on the streets of Chorillo, at 11:00 pm, David Grimaldo’s body was found underneath a car in David and at 2:30 am, Angel Abadia was found dead in Vacamonte.

NOTE: Panama City has 1.3 million people. Compared to Wasghington, D.C. 70 murders is very low. These murders took place in notoriously bad areas, and should be avoided. 


Last Updated on Tuesday, 04 May 2010 18:49

Food Costs in Panama

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Here is a sample of typical food costs. These prices are from Rey Supermarket - an upscale, modern grocery store geared to foreigners and wealthy Panamanians.

Common Grocery Basket

  • Domestic Beer $0.55
  • Club Soda .55
  • 600 ml water .48
Last Updated on Tuesday, 04 May 2010 18:54 Register to read more...

Bringing Pets to Panama

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Here is an information request from a member about bringing pets to Panama. Roberto Chocolate


I met senor chocolate in a line at El Rey, Coronado back in Mar/April 2009. I believe our conversation involved the authenticity of an Oreo in Panama. My family and I live in NL, Canada. We are returning to Panama in the fall and this time we will bring our mini-schnauzer. I know I have to arrive during business hours at pty but the I'm not sure about the papers I need, ie: do I need a health certificate notarized? Do I need papers stamped by the panamanian consular? I hope you can give me some advice. Thanks! I'll be sure to pack some Oreo's in my suitcase! Rochelle

Roberto’s Response:

Dear Rochelle,

Sure! Bring the diabetic Oreo’s! (actually what I need is Becel Margarine!!!).

Lord ‘tunderin Jesus my girl - from Newfoundland you say? I lived above The Circle Lounge on Water Street in St. John’s while I was training with The Memorial University wrestling team. I also spent two years in Goose Bay, Labrador (Can you say brass monkey’s??)

OK, “How to Import a pet to Panama” by airport (we did both - flew in and drove in. The first time we flew in we used a service, then did it on our own after that)

First, check with the airline - that will be your biggest challenge. If the pet is small, they may allow a carrier cage in the cabin with you. If not, it will have to go in cargo (pressurized/air conditioned/heated)

The airport code for Tocumen Airport where all international flights arrive is PTY. Tel: (507) 238- 4322 (when calling from Canada, start with dialing 011 then the area code, then the number. Cell phone numbers in Panama are eight digits and start with a 6.

NOTE: The cage must be an airline approved carrier cage by Pet Cargo or similar - we re-enforced the screws with rope - they rattled off the first time. We also used doggie pee pads, but weren’t needed.

To drug or not to drug.

Our vet suggested we NOT drug the dogs - and they seemed fine. Our older dog (Berkley the 13 year old Black Lab) was not too happy, but not too stressed either. The puppy Lucky-Lucky (1 1/2 year old Golden-doodle) was totally fine). We were delayed 12 hours in Toronto - and had to walk the dogs multiple ties waiting.

Be prepared for delays!! Bring extra food, water, treats, etc.

The dog will need a ticket (it was $200 each when we flew with out with two dogs on Air Transat in 2008) and a sign on the outside of the cage with the dog’s photo, the dog’s name and breed, and your info.

NOTE: You must have a home address in Panama where the dog is going to be home quarantined for 30 days.

NOTE: They will ask if you live near a farm or if your pet has been near cows, pigs or sheep. If the answer is yes,  your pet will be denied entry into Panama.

You will need a Cuarentena Para Animales Menores (Permission for Home Quarantine for Domestic Animals) form, filled out and notarized. (sent in 10 days prior to arrival)

Once this is submitted, you will receive a letter from The Minister of Health including the owners full name, passport number, the pet’s name, type, breed, sex, age and weight of the animal, and where it will be residing in Panama. Also it will include the arrival time, date and airline.

To get the Home Quarantine form, e-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it or Washington DC Telephone: (202) 483- 1407

Send this form (WITHIN 10 DAYS OF TRAVEL) along with:

1) Signed, stamped and notarized International Health Certificate For Dogs and Cats from the Canadian Food Inspection Agency. (CIFA)

2) Certificate of rabies vaccination (vaccination must have been done within 30 days and 6 months - no sooner, no later)

3) Money order $30 payable to: Consuado General de Panama (everything in Panama is in US Dollars)

4) Self-addressed stamped envelope (we did all ours by E-mail so this was unnecessary)

Send/Fax these forms to  to Ministry of Health:  FAX: (507)  212- 9449 or (507) 238- 4059. Hours: Mon. - Friday 9 a.m. - 3 p.m. and 7:00 P.M. - 10:00 P.M.

Contact: dcontreras@minsa,

All forms for the Panamanian government must be notarized, and get the notary authenticated (find out where the nearest Canadian Office of Government Forms Authentication is)  and then stamped by the Panama consulate.  There are fees for each of these stamps/approvals.

Call/e-mail your nearest Panamanian consulate for help, or go on their website.  E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it or the website


On arrival, go immediately to the Banco National branch just outside Customs at the airport and pay $21 to MIDA and $130 to Ministerio de Salud Control de Alimentos y Vigilancia Vetrinaria (The Minister of Health) Bring the receipts of payment to the Customs and Immigrations staff along with all your original paperwork and get your pet.

The Direccion de Salud Animal del Ministerio de Desarrollo Agropecuario (animal health minister) in Panama’s number is (507) 266- 2303 E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

NOTE: If you arrive after 4 P.M. or on a weekend, your pet will need to stay in Quarantine at the airport. The cost in 2008 was $12/day. (the airport vet staff were really nice. They walked the dogs, fed them, gave them water and played with them).

Due to the times most Canadian flights arrive in Panama, you may have to stay at airport overnight - make a reservation at the only airport hotel, Hotel Riande Aeropuerto. It is worn and musty, but clean and serviceable, and they have an airport shuttle.

Pet Relocation Services

If you want to use a service, we used This e-mail address is being protected from spambots. You need JavaScript enabled to view it - In 2008 the cost $200+ for 2 dogs. Mario and his staff speak excellent English and can also help you get your own medical certificates, Immigration Visa’s, etc.

Another service is Rana Dorada Movil Intl, Jose Saenz E-Mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it or This e-mail address is being protected from spambots. You need JavaScript enabled to view it

All of this is worth it when you see your pet racing around on the beach, or chasing iguanas and butterflies and having a ball in Panama.

Roberto Chocolate

PS: Write and tell us how it goes - bring us up to date on the latest fees/forms etc.


Last Updated on Tuesday, 04 May 2010 18:49

IMF Report on Panama's Economy

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The following article is reprinted from The Panama News, Erik Jackson, Editor  -

IMF Executive Board concludes 2009 Article IV consultation with Panama

by the International Monetary Fund

On June 1, 2009, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Panama.


Strong economic fundamentals helped contain the adverse impact of the global economic downturn and financial turmoil. Real GDP in 2008 grew by 9.2 percent, following an annual average growth of 8.8 percent in 2004-07. However, a decline in global trade and tighter credit conditions are becoming evident and real growth in 2009 is projected to slow to 3 percent. The high-growth period has led to a significant fall in poverty and a sharp decline in the unemployment rate, from 10.9 percent at the end of 2003 to 4.2 percent in August of 2008. Inflation, after peaking at 10 percent in September 2008, driven by the spike in international food and fuel prices and demand pressures, has declined rapidly and reached 3.7 percent in March 2009. The external current account deficit widened to 12.5 percent of GDP in 2008, as imports continued to increase at a relatively fast pace while exports slowed reflecting lower trade in the Colon Free Zone and a decline in external demand.

Panama’s large banking system has weathered the global financial crisis relatively well. The system is well-capitalized, highly liquid, and has strong financial soundness indicators. In addition, recent assessments by the Superintendency of Banks has not revealed exposure to complex structured assets. Following the intensification of the global financial crisis in September 2008, access to foreign credit lines declined, but the situation stabilized, and deposits and credit have been broadly stable. At the same time, banks have increased their holdings of liquidity partly to self insure and in response to higher perceived risk.

Public finances remained on strong footing and the nonfinancial public sector had a positive balance for the third subsequent year, albeit more modest than in 2007. Excluding the Panama Canal Authority (ACP), the nonfinancial public sector surplus in 2008 was equivalent to 0.4 percent. Continued robust revenues enabled a further large increase in public investment --- from 5 percent of GDP in 2007 to 7 percent in 2008 --- and allowed for an increase in social spending of about 1 percent of GDP to partially offset the rapid increase in the cost of living. The rapid GDP growth, combined with the fiscal surplus, led to a further decline in the public debt-to-GDP ratio to 39 percent by end-2008.The Panama Canal expansion, estimated to cost US$5.3 billion, is broadly on track, and the external financing for the project has been secured on very favorable terms. A new Social and Fiscal Responsibility Law (SFRL) --- enacted in June 2008 --- and a Public-Private Partnership (PPP) draft law that is being finalized, are important reforms that will further strengthen fiscal management over the medium term.

Executive Board assessment

Executive Directors noted that Panama is facing the global economic crisis from a position of strength, with sound economic fundamentals helping to contain the adverse impact of the world economic downturn and financial turmoil. In particular, directors commended the well-regulated banking sector, sustained fiscal consolidation, and canal expansion project, which will allow Panama to preserve macroeconomic stability and continue growing during 2009, albeit at a slower pace than in recent years.

Directors noted the widening of the external current account deficit and the rise in inflation during 2008 was influenced by transitory factors. High imports and weak export performance were partly a reflection of the world food and fuel shock and the slowdown of external demand. Buoyant capital inflows, including foreign direct investment, more than financed the current account deficit, and inflation fell rapidly as world prices normalized. Looking forward, directors noted that downside risks remain given the difficult global environment.

Directors commended the authorities for the fiscal consolidation of recent years and the associated rapid decline in the public debt-to-GDP ratio. They welcomed the continued strong revenue performance and one-off factors that had allowed a substantial increase in capital spending and social programs, which had supported activity and helped protect the poor despite the deterioration in the external environment. Directors also commended the authorities for securing external financing for the Panama Canal expansion project on very favorable terms, and for making good progress in the implementation of the project.

Directors welcomed the effective adoption of the Social and Fiscal Responsibility Law (SFRL) to help strengthen fiscal discipline, and enhance transparency and accountability. While recognizing the challenges of adhering to a fiscal deficit target of 1 percent of GDP during 2009, directors encouraged the authorities to persevere in their efforts to comply with the target stipulated in the SFRL in order to bolster credibility of Panama’s new fiscal framework. Directors recommended that the authorities quickly adopt guidelines that would allow rapid modification of the fiscal deficit target should growth decelerate more rapidly than envisaged.

Directors welcomed the resilience of Panama’s financial system to the global financial crisis reflecting, in part, the relatively strong liquidity position of banks. They noted that reduced access to external credit lines had not unduly hampered the normal functioning of the system, and that while deposit and credit growth had slowed, they remained positive. Directors welcomed the steps taken to allow more timely monitoring of banks’ liquidity, asset quality, and risk management practices, as well as the rapid resolution of Stanford Bank-Panama. They also welcomed the timely adoption of the new Bank Law that will enhance cross border supervision and improve the bank resolution framework.

In light of ongoing external vulnerabilities and the absence of a lender of last resort, directors encouraged continued vigilance and further strengthening of the banking system. They noted the authorities’ interest in creating a mechanism to provide emergency liquidity support for transitory liquidity shortages, which could reduce the banks’ need to self-insure.

Directors observed that the inclusion of Panama in a list of tax havens released by the OECD presented additional challenges. They welcomed the authorities’ intention to respond constructively, and called upon them to reach agreement on the steps needed to normalize its status.

Last Updated on Tuesday, 04 May 2010 18:50

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