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Fitch Upgrades Panama’s L-T Foreign & Local Currency IDRs to ‘BBB-‘; Positive Outlook Ratings

Fitch Ratings-New York-23 March 2010: Fitch Ratings has upgraded the Republic of Panama’s long-term foreign currency and local currency Issuer Default Ratings (IDRs) to ‘BBB-‘ from ‘BB+’. Both Rating Outlooks remain Positive. Fitch has also upgraded the short- term foreign currency IDR to ‘F3’ from ‘B’ and the country ceiling to ‘A-‘ from ‘BBB+’.

The upgrades reflect a sustained improvement in public finances, underpinned by recent tax reforms, and the economy’s resilience to the global financial crisis and associated recession. Although economic growth decelerated to 2.4% in 2009 from 10.7% in 2008, it was one of the strongest rates of growth in Latin America and among ‘BBB’ rated peers. Similarly, fiscal deterioration was moderate, especially by international standards while Panama’s general government debt/GDP ratio stabilized around 45%. The Positive Outlook reflects the expectation that government debt/GDP ratio will further decline as the growth accelerates and fiscal discipline is maintained despite an ambitious public investment program.

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