If you have read the latest report on the Panamanian economy, as reported this month by the International Monetary Fund, concerning its most recent assessment, everything looks good. The problem is, that may not necessarily be true. Unofficially, some sources are saying that a few Panamanian financial institutions are undercapitalised, and at present unable to raise sufficient capital to lift themselves up by their own bootstraps. Is there financial trouble in paradise, and why did the IMF not raise an alarm ?
The core problem appears to be the fact that the Republic of Panama has no central bank to oversee the country's financial institutions, and some are in need of funding. One bank that is linked to the country's president, Ricardo Martinelli, is said to be sorely in need of recapitalisation. Without an effective governmental regulator, there is no gatekeeper in Panama.
Whilst Country Risk for Panama has remained low this year, this column will be closely monitoring the health of the Panamanian financial industry, and shall report any relevant facts to our readers. Panama is booming, but there may just be a few problem banks in Panama City, hoping that nobody notices their deficiencies.