Panama should follow more effective deficit controls, an International Monetary Fund (IMF) commission said late on Friday, citing waivers and extensions that could threaten to undo recent gains in reducing the country's debt. Valerie Cerra, head of the IMF commission meeting in Panama this week, proposed a new fiscal council or independent body to supervise a law that sets tougher limits on the public finances of the Central American country.
"It's necessary to have a more effective accountability framework ... and make it more binding to safeguard financial stability," Cerra said. Last year, Panama's fiscal deficit was revised upwards to 2.8 percent of gross domestic product, according to the country's economy and finance ministry. The deficit had been trending lower in previous years, and the IMF encouraged the government to stick to limits that the law requires and avoid legislative extensions. The IMF estimates that Panama will grow 6.1 percent this year, while its mid-term GDP growth forecast for the country is between 6 and 7 percent.