Interview with Laurentino Cortizo, President of Panama
How will your government be different from its predecessors?
President Cortizo: Our aims are clear: transparency and combatting corruption. We have always said: ruling is a serious business. Our goal is to profoundly transform our political, economic and social institutions. We want to build a new Panama by improving the quality of life for Panamanian families. It will be an efficient leadership in service of all the citizens, especially those most in need. Those 777,000 Panamanians that are still trapped in poverty and have been left behind.
Panama city’s real estate sector is in freefall; what will your government do to save the sector?
PC: Our priority has been to reduce the inventory of unsold residential properties and commercial sites. We realise this also impacts the construction sector, which creates employment and generates tax revenues. In fact, each $1million invested in the real estate/construction sector, generates 66 direct jobs and 34 indirect positions. The multiplier effect is 2.4 for every dollar invested.
As a result, the construction and real estate sectors are pillars of the Panamanian economy and generate employment and investment. In 2018 they created more than 200,000 jobs and made up 22.5% of GDP. To counter the slowdown, we modified the Law of Preferential Interests. That amendment opened up the benefit to more houses, bringing in properties worth between $120,000 to $150,000 and $150,000 to $180,000. We also included houses with permissions dating from the 1st of January 2018, with the aim of clearing the high inventory of already-built properties.
This measure will attract investment to new properties that wouldn’t have received the preferential rates previously. Between April 2018 and April 2019, 10,150 houses were built whose prices ranged between $120,000 to $180,000, so it’s a considerable segment of the market.
Panama’s economic growth is slowing; how will this government fix that?
PC: One of the priorities for this administration in its first 100 days was to limit the economic slowdown and clear the state’s backlog of debt and payment obligations. In July 2019, when we assumed control, the state owed $1.2billion in late payments to the private sector. To pay the creditors, we issued $2billion worth of sovereign debt and achieved the lowest interest rates in the history of the country.
We believe that it’s fundamentally important to fix public finances. Through the Ministry of Public Works, passed the first Panamanian Public Private Partnership (PPP) law, which will boost infrastructure investment. The PPPs don’t only guarantee quality and excellence in public works but also form part of a financial and economic strategy that looks to optimise public spending and improve the execution of the state’s general budget.
We believe that it’s fundamentally important to fix public finances. …
We expect growth to get a boost from some big projects coming online soon. Line 3 of the Panama Metro will begin construction in 2020. Together with the 4th bridge across the Canal, these projects will generate employment and investment during its construction. Then, once finished, it will have a big impact on our productivity, helping more than 500,000 Panamanians who commute to and from West Panama daily.
Panama has long had many advantages, such as its economic stability and its geographic position. But now it needs to develop an economic base, capable of adapting itself to the rapid technological changes that characterise our era. That’s why our government plan, includes policies to boost the digital economy and nurture digital technologies such as Fintech. Moreover, we’re creating scientific poles and promoting research and development by bringing key components, such as investors and academic centres, to strengthen our capabilities as a digital hub.
Panama built lots of infrastructure under the old model; why did your government pass PPP legislation?
PC: As a country we had to modernise our regulation for two main reasons: to improve the state’s role in these projects; and encourage the private sector to invest in Panamanian infrastructure. I think the law has already been successful on both counts. For example, it specifically introduces eligibility criteria that measures the social good of a proposed project. While on the second point, the creation of new technical bodies, such as the PPP National Secretariat, will reassure investors.
Indeed, Panama’s PPP law is recognised as one of the best in the world. It is innovative, transparent and aims to benefit all Panamanians. It’s a great achievement to have approved the law in the first 100 days of government. It will attract investment, generate employment, reactivate the economy and position Panama as the best international market for investing in large infrastructure works in a transparent, efficient and secure way.
How will you improve the bilateral relationship between the UK and Panama?
PC: Principally through an open, frank and mutually-respectful relationship between both countries that always protects our national interests. On the political front we need to kickstart the agenda. In particular we can work together on the fight against corruption, drug smuggling, people trafficking and illegal finance.
When it comes to trade and investment, we are relaunching ProPanama as the agency responsible for attracting investment and promoting Panamanian products abroad. We want to hold events in the UK that showcase our competitive advantages. Panama has grown and is now a perfect destination for British investors. We want to remind UK business associations that Panama has enormous advantages, such as its geography, solid financial conditions and the excellent incentives that we offer international investors.
We will encourage trade delegations so that British financial firms visit Panama and get to know the advantages of our country in person. We will also be using the Association Agreement signed between the UK and Central America to ensure free trade between our countries after Brexit.
You have just been elected president; how will you improve the country?
PC: Leading the nation needs commitment, character and knowledge. It’s a monumental challenge, with the future of the country at stake. Our commitment is to unite forces, bringing together Panamanians to achieve consensus and advance as a country.
We are transparent – the best example is the historical appointment of the magistrates on the 25th of November – and we are committed to balancing the books and telling the truth so that Panamanians can regain confidence in their institutions.
During the 20th century, generations of Panamanians fought an epic battle for national dignity that eventually brought great rewards: winning control of our Canal. Becoming truly independent was an extraordinary feat. The ‘Fifth Frontier’ that divided the country was torn down in the historic process that finished with the Torrijos-Carter Treaty.
Now, we must unite all of our forces for the historic challenge that will bring another epic fight: this time against poverty and inequality. This is the ‘Sixth Frontier’. Social justice and equality of opportunity. The Sixth Frontier is not just our vision – it’s our mission. We will find consensus for Panama to win back its self-esteem and national pride. We will stop the corruption and the cost overruns that steal the resources needed for a better future. The objective is a just country. And we will pull our people out of the misery they find themselves in. Panama will become a country where the corrupt have nowhere to hide. A country with justice and without impunity.