Mulino Wins Panamanian Presidential Election

• Panama's former security minister Jose Raul Mulino stormed to victory on Sunday, May 5 in a presidential poll dominated by his old boss, the popular ex-leader Ricardo Martinelli, who buttressed his campaign, despite being holed up in Nicaragua's embassy.
• Mulino, 64, was one of the favourites for the presidency after he stepped in to replace Martinelli on the ballot when the former president was barred from running due to a money laundering conviction, which rendered him ineligible.
• With 95.9% of the votes counted and no runoffs, Mulino of the Realizando Metas party (centre-right) had won a simple majority of the vote (34.3%). In the national assembly, with 40.6% of the votes counted so far, the Realizando Metas had also won the largest unified bloc in the body 13 seats (out of 71 seats). The incumbent Partido Revolucionario Democrático (centre-left) won 12 seats. Independents (or undeclared) garnered the most votes with 21 seats.
• While the victory for Mulino was comfortable, he is entering a fraught situation regarding the economy, public finances, and internal politics. Growth is slowing due to sluggish traffic through the Panama Canal, the closure of the Cobre Panamá (3.0% of GDP) copper mine, and a structurally weak construction sector.
•  Meanwhile, slower revenues and persistent deficits in the Social Security Administration will reduce fiscal space for social and capital spending increases, and will likely prompt a push for fiscal reform.
• Finally, Mulino will likely have to balance pleasing his political benefactor, Martinelli, without appearing weak or subordinate in front of his electorate.

(Sources: Reuters and Fitch Solutions)