How is the state budget structured for 2024?

The preparation of the draft General State Budget for the fiscal period 2024 is on hold government of President Laurentin Cortiz after Supreme Court of Justice declared unconstitutional the contract between Minera Panamá SA and the State of Panama.

The Court’s ruling forced the government to implement a significant $32,754.6 million budget adjustment that was presented last July and is being analyzed today under Bill 1041 in The Budget Committee of the National Assembly, amidst questions and multiple explanations by parts officials of the Ministry of Economy and Finance

Carlos González, Deputy Minister of Economy, pointed out that Project of the General State Budget 2024 adjusted corresponds to adjustments deemed appropriate as a consequence of the lower growth rate observed following the events that occurred in October and November culminating in the failure Supreme Court of Justice which declared the mining contract unconstitutional.

The original budget presented for 2024, which amounted to 32,754.6 million dollars, represented a percentage increase of 13.4% compared to the current budget for 2023 adjusted to 28,882.3 million dollars, supported by the strong process of GDP growth observed until in the third quarter of 2023, greater than 8%, with upward projections for the end of 2024, figures shared by international organizations and other organizations specializing in the subject, González said.

The negative effect of the closure, which caused a slowdown in economic activity, is evident obviously the need to change the macrofiscal forecast downwards, which is why it was necessary to reduce the amount of the General State Budget project, the official said.

This analysis resulted in a reduction of 6% in the original proposal, i.e. $2,064.2 million, adjusted to approx 30,690.4 million dollars, which still equivalent with an increase of 6% compared to the current budget for 2023.

According to González, this budget adapted fulfills mandate on Social fiscal responsibility and other regulations governing public administration.

This budget takes into account the participation of the education sector of 7% in relation to GDP, includes all obligations of special laws in force, collective agreements of public sector companies, payment of public sector employee contracts valid until now, obligations from work contracts and continuity of investment projects formalized with the Government, said González.

The general government budget project also includes debt service payments to keep Panama exposed to risk and maintain qualifications that allow for more affordable loans for public and private investment, he said.

Work and investments
The central government is responsible for about $15,881 million of the total general budget, of which $5,657 million is drawn for debt service, leaving $10,224 million for operations and investment, Minister of Economy and Finance, Héctor Alexander.

Of those 10.224 million dollars, it is only Ministry of Education (Meduca) and Ministry of Health (Minsa) They take 53%, including the Ministry of Public Security (Minseg) which amounts to 63% of the budget Central government.

For Aleksander, it is good to know where most of the state budget goes. “Only a third of the general state budget corresponds to the central government for business and investments, and of that third, two institutions (Meduca and Minsa) spend 53 percent,” he pointed out.

settings
The project includes the reduction of all vacant positions in the personnel structure, which is equivalent to savings of $113 million, which includes salaried positions that appeared in the structure with the ability to order salary increases in cases of positions that do not correspond to special laws.

“Low special law payments are included in the state’s general budget to ensure that changes in categories, stages and seniority adjustments are respected,” he noted.

The task funds to maintain an investment program of more than 3 billion dollars, which is financed by a significant percentage of current savings, which represents for Panama, in accordance with the fiscal deficit established by the Law on Social Fiscal Responsibility, which is set at 2% next year.

It is also considering social investment projects, such as the establishment of a new Oncology Hospital and the Metetí Hospital in the first phase. It does not include new works alongside previous ones, González insisted.

The Budget Committee of the National Assembly declared a recess until next Tuesday, December 26 at 10:00 a.m. for the continuation of the debate on Bill 1041.