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Panama: turbulent times

Thursday, May 17, 2012

WHAT On one hand, President Ricardo Martinelli wants to be re elected. On the other hand, critics want the Public Prosecutor to investigate him, for allegedly misappropriating funds in relation to several multi-million dollar deals done by the government, including the purchase of 18 Italian military helicopters, and the construction of three prisons.

WHY Panama's economy has during the past five years out-performed that of any other Latin American country. But many Panamanians dislike what they consider to be Martinelli's authoritarian style. In addition, several business groups resent the fact that the Martinelli administration this year got the National Assembly to start charging income tax on the profits of free zones - one of Panama`s most important economic sectors - which lease space to operating companies.

WHAT NEXT If he can persuade more members of the congressional opposition to join his party, Martinelli still has time to pass an amendment to the Panamanian constitution, which would let him run for President again in 2014. The constitution currently prohibits presidential re election, until a ten-year period has passed. Martinelli has in many ways been a productive president, allocating a significant percentage of the national budget to social spending, in a country which has a big rich-poor gap. For their part, the free zones have for decades benefited from a tax-free regime, not available to other economic sectors. At the same time, multiple allegations of serious scandals may create a significant problem for Martinelli, in persuading legislators that he merits the opportunity to try for another term in office.

For more information, please contact Esteban Alvarez, at [email protected]