Termination of work Panamanian copperthe fourteenth largest copper mine in the world by production and the largest in Central Americarepresents a heavy blow to the country’s economy right on the threshold of 2024, an election year and therefore full of uncertainty, analysts told EFE.
Experts have assessed that the Panamanian economy is very involved in the international scene, which gives it the capacity for recovery, which, however, in the current situation, will need impulses, such as e.g. drastic reduction and redirection of inflated public spendingimprove collection and policies that attract investment that generates employment, which is one of the weaknesses of this country 4.2 million population with a service-based economy.
2024, a “tight” year
“Next year we will be tight, the first months will be very difficult, as always. And until the elections are over (in May) there will be no investment, that is the reality. The election uncertainty will have an impact,” he told EFE the dean of the Faculty of Economics of the State University of Panama Rolando Gordon.
In 2024, there will be “less money for the state,” Gordon said, because of less work on Panama Canal due to drought, which will reduce 200 million dollars fiscal year collection, in the budget 4,776.5 million dollars.
To that has now been added the cessation of work Panamanian copperthe inevitable consequence of the ruling he issued this week Supreme Court of Justice which declared unconstitutional the legal contract, approved by the Government on October 20, which renewed the exploitation of Minera Panamá, a subsidiary of the Canadian First Quantum Minerals (FQM).
Credit agency Moody’s He said the executive expects Cobre Panamá to “become the second largest source of revenue after the Panama Canal,” with projected revenue of $770 million or 0.9% of gross domestic product (GDP) in 2023 and $375 million annually starting from in 2024
But without those revenues, he added, the government will have a hard time reaching the “target deficit limit of 3% of GDP” in 2023, and will likely “exceed the upper limit of 2% in 2024.”
Impact of mines in the present and future
The rejection of a mining contract plunged Panama into a social crisis last month that left losses of 1.7 billion dollars.
The expected 6% GDP growth for 2023 has already been reset to between 4% and 5%, Dean Gordon said.
For its part, Moody’s noted that the “possible negative impact on investor confidence” as a result of the mining issue would “reduce investment”, which could push “GDP growth below the estimated 4% trend in the coming years”.
Resistance
Gordon emphasized that Panama had already experienced and overcome, despite the difficulties of the case, this type of conflict: cWith the departure of US military bases in 1999, 7,000 direct jobs and more than 20,000 indirect jobs were lost.and in that same decade, when the country entered the World Trade Organization“the clothing market was to be opened and 10,000 jobs were lost.”
Analyst José Eugenio Stoute He added that Panama’s economy is very resilient given that it is dollarized, has a powerful international banking center and other attractions “that have nothing to do with mining.”
“Whatever it is, we will get through it. How much will it cost? There is no doubt. A cost that is the responsibility of this government because it signed a terrible contract,” which violated 25 articles of the Constitutionwhich is a “scandal,” he said.
What Copper Panama stands for
Copper Panama, with investment from 10,000 million dollars creating 40,000 direct and indirect jobsaccording to FQM, it is the only copper exploitation in the Central American country.
It began production in 2019, and by 2022 it was ranked as the fourteenth largest copper mine in the world by production, according to data provided to EFE by the International Copper Study Group (ICSG).
In the first 9 months of 2023, the mine produced around 268,000 tonnes of copper contained in concentrates, representing 2% of global production, according to ICSG.
The mine, which exports mainly to Asia (China, Japan, South Korea and India)According to what the ICSG told EFE, it is an operation that represents 4.8% of Panama’s GDP and 75% of the country’s exports, according to FQM.
Source: Panama America
I am Jason Root, author with 24 Instant News. I specialize in the Economy section, and have been writing for this sector for the past three years. My work focuses on the latest economic developments around the world and how these developments impact businesses and people’s lives. I also write about current trends in economics, business strategies and investments.
