Panama's Economy Going Strong with Many New Projects Underway
By Juan Carlos Martinez
The International Monetary Fund predicts that Panama's economy will grow 4.8% in 2010. In a report finalized on July 12th they indicate that the key to Panama's successful weathering of the 2008 crisis was its solid public finances and the strength of its banking sector. In early July officers of the IMF visited Panama to gather information in order to finalize their report. Inflation is expected to rise 3% due to the increase in the cost of petroleum however they give excellent grades to the fiscal reforms recently implemented which they indicate will help Panama's standing in the economic community in the form of sustained favorable ratings from international rating company's which Panama currently has.
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On other news still on the economic front Panama may soon be engaging quite strongly in a new industry: mining. The government has indicated that Panama has a great potential in terms of mining and that there are deposits just waiting to be exploited. They indicate that this activity may generate up to $1 billion in income in the next four years. Currently there are three copper mines in operation with reserves valued at $114.6 billion and the reference price for copper is $3.00 a pound. Barro Colorado a site with copper reserves is considered the largest unexploited copper site in the world. There are conversations underway with the Korean government regarding the exploitation of this site. There are also nine gold extraction projects underway with reserves estimated at 2 billion ounces with an approximate price of $2 billion. The government is considering the exploitation of these resources to finance its aggressive infrastructure plan. There is however opposition from environmental groups and indigenous inhabitants of the Barro Colorado area.
Early in August Panama's Cabinet also approved the creation of a Petroleum Free Zone which could begin to operate at the end of 2010. The infrastructure already exists and consists of four tanks plus pumps and pipes built by Colon Oil and Services S.A. (COASSA) at a cost of approximately $14 million. There are already negotiations underway with a European company for its operation. Currently the facility can store 300 thousand barrels of bunker fuel however the administration contract will include a clause in which the operating company must increase the capacity of the facility to 1.1 million barrels at a cost of $20 million. The contract is for 20 years. The facility is located in Colon between Manzanillo International Terminal and Colon International Terminal. It is estimated that 20% of the vessels that cross the Panama Canal refuel at the fueling stations located at both entrances of the Canal.
Another government megastructure moves one more step ahead. The Financial Tower that the Government plans to build on Avenida Balboa where the old US Embassy was located has already started requesting tenders for the preliminary architectural plans and construction plans for the building. The Request for this Proposal is on the government's bidding portal since the first week of August 2010. The preliminary concept was contracted to Skidmore, Owens and Merrill (SOM is an architectural and engineering firm that was formed in Chicago in 1936), who also designed the concept for the new convention center and the Burj Khalifa Tower in Dubai. The concept contemplates a 69 floor office tower, 333 meters high, 2,200 parkings and an observatory on the top floor of the building. The request for tender of a bid indicates that the company has the know how and experience to build a building at least 300 meters tall. The building usage will be mixed, having both government offices as well as commercial office space for sale (50% of the tower), which will help finance the construction cost. Some of the government offices that will relocate to this building are Banco Nacional de Panama, Superintendencia de Bancos, Comisión Nacional de Valores, Autoridad de Servicios Públicos, Autoridad de Turismo and the Secretaría de Energía.
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