Tariff Increase To Bolster Fiscal Accounts

Panama's government will experience a sustained rise in revenues over the medium term in our view, following the recent confirmation of its plans to increase tariffs for the Panama Canal, which will be implemented from January for the majority of passing maritime trade. Given that the Panama Canal represents a significant portion of the government's revenues, we believe that the price rises (at approximately 12% to 16%) bode well for the nation's fragile fiscal accounts going forward. We project government revenues coming in at US$6.26bn by end-2010.

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