Fitch Downgrades Panama's IDR to 'BBB-'; Outlook Negative

• Fitch Ratings has downgraded Panama's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'BBB-' from 'BBB' and assigned a negative rating outlook.
• The downgrade reflects the severe weakening of public finances due to the economic disruption caused by the coronavirus pandemic, which has exacerbated underlying weakening fiscal trends predating 2020.
• The unprecedented GDP contraction and government revenue loss have prompted a material rise in public debt (estimated to have risen to 68% of GDP in 2020 from 46.4% in 2019).
• The negative outlook reflects risks to the government debt trajectory and uncertainty that the fiscal consolidation path set out in the revised Fiscal Responsibility Law can be achieved, given underlying fiscal challenges.
• A prolonged pandemic and delays in vaccination distribution are the main risks to the economic recovery, which will underpin fiscal consolidation over the coming years.

(Source: Fitch Ratings)