00:00And we go now to Panama's soaring debt, a record budget, and warnings from international rating agencies are creating a perfect economic storm that is hitting Panamanians directly in the pocketbook.
00:13Our colleague Reka Chandiramani tells us more.
00:19The country's high level of debt has been setting off alarms for years, but with one aggravating factor, the trend has reversed.
00:26It is no longer debt for public works, but to pay current expenses.
00:30Next year, the Panamanian government will allocate a record $3.661 billion, just to pay off a debt that has grown by 152% in the last five years.
00:46An unprecedented increase in public debt has tripled the debt service, that is what we pay in interest, substantially reducing the resources available to the three branches of government and autonomous institutions,
00:58including the executive, legislative, and judicial branches.
01:01And that financial strangulation of the state means less money for essential services.
01:15It is resources that vanish from healthcare, classrooms, and public infrastructure.
01:20The 2026 budget is the highest in history, at $34.901 billion, a figure equivalent to six canal expansions, but at the same time it proposes the most severe cuts to social spending in years.
01:32In other words, the money, or Chen Chen, as the president calls it, is there, but not for Panamanians.
01:36But why does a growing economy not generate the resources to avoid this suffocation?
01:42ÂżPero por quĂ© una economĂa que crece no genera los recursos para evitar esta asfixia?
01:47Lo que pasa es que el crecimiento de la economĂa se da.
01:50The thing is that economic growth is fundamentally driven by the logistics sector, that is, the sector linked to the international market.
01:57This is not reflected in the domestic sector for several reasons.
02:00Firstly, because wages are artificially low.
02:03As they are artificially low, there is no demand.
02:06The serious problem in this country is demand.
02:08In other words, there is low demand.
02:10This economic model, with low domestic demand and dependent on a single sector, is extremely vulnerable, a condition aggravated by a historical dependency, the monopoly of the dollar since 1904.
02:28This makes the country hostage to external financing and the attraction of currency through investments, which in today's turbulent geopolitical context seems to impose more and more constraints than benefits.
02:39The Monroe Doctrine, throughout its history of more than 200 years, has simply not disappeared.
02:49It is the foundation, the pillar of us foreign policy, simply modified by certain names, and also from the perspective of each ruler.
02:57Why?
02:58Because when we look at the 19th century, we went from the big stick to dollar diplomacy.
03:02But it has not changed because dollar diplomacy, dollars instead of bullets, what it does is take greater advantage of the resources or raw materials of these underdeveloped countries, on the condition of applying trade measures to them.
03:19That is, I buy the raw material from you, but you buy the manufactured product from me.
03:23Having an economy that depends exclusively on foreign debt to function in something as basic as paying the state payroll is extremely worrying, and at this moment, when we are in a state of high tension with the United States.
03:41The impact on citizens would be seen in the increase in the cost of credit, an increase in interest rates would leave thousands of families and businesses outside the financial system, and almost half of the panamanian population, two million people, have debts that, in this scenario, could become partially or totally unpayable, according to data from the Panamanian Credit Association.
04:05Thank you very much.
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