As Panama's Economy Booms, So Do Concerns Over Debt And The Environment

As Panama's Economy Booms, So Do Concerns Over Debt And The Environment

9:44am Jul 01, 2015
Panama City's skyline.
Panama City's skyline.
Arnulfo Franco/AP

The 66th floor of Panama City's Trump Tower is a fine spot to experience Panama's booming economy. Beyond the building's windows, hundreds of skyscrapers stretch the length of the capital's skyline. Inside, a hand of blackjack will set you back $200, but all-you-can-drink champagne costs just $10.

On average, economic growth in Panama has topped 8 percent in the last five years, making the country the envy of its struggling Latin American neighbors.

Fueling the boom is Panama's little-regulated and prosperous financial sector, as well as the government's construction binge: a new subway, an oceanfront highway and the mother of all projects, the long-awaited $5.2 billion expansion of the Panama Canal. The wider and deeper canal will allow for more than double the current cargo passing through the country.

But while the economy continues its fast pace, critics are raising concerns.

On the far eastern edge of the capital, once-lush wetlands have been plowed under and covered by huge industrial parks, office buildings and gated communities.

People walk inside the expanded Panama Canal's new set of locks in May before they are flooded, in Cocoli, near Panama City.

People walk inside the expanded Panama Canal's new set of locks in May before they are flooded, in Cocoli, near Panama City.

Arnulfo Franco/AP

In the working-class area of Ciudad Radial, a new multi-use development called Metro Park is going up. A makeshift canal serves to funnel water out of its construction zone, routinely sending water flooding into the area's mostly poor, Afro-Panamanian neighborhood, even during the dry season.

Ricardo Mejia Miller, who has lived in Ciudad Radial for more than three decades, says that he remembers seeing monkeys and storks out his front door when he was a kid.

"The construction now is coming faster and bigger," he says. "But we'll keep fighting to try to stop it."

Mejia and other activists have a big struggle ahead of them. Environmental regulations were widely suspended under the past administration of President Ricardo Martinelli. The former president is accused of profiting personally from the construction boom to the tune of more than $100 million.

Law professor and longtime human rights activist Miguel Antonio Bernal says that Martinelli, who is reportedly living in the U.S., skimmed money off the top of nearly every project.

"He did more harm to the country than even the dictatorships of last century," said Bernal. "Even the militaries, they were not able to develop the degrees and the practice of corruption like Martinelli did."

A woman stands on the platform of Panama City's new subway.

A woman stands on the platform of Panama City's new subway.

Arnulfo Franco/AP

Martinelli, who has denied all allegations, was stripped of his criminal immunity earlier this year, and several of his closest advisers are either under arrest or being investigated. Bernal says that the former president left the country's financial future in shambles.

Bond rating institutions maintain that Panama's finances are stable for now, and will improve once the expanded canal comes on line next year. But the country's debt now tops $23 billion, a staggering amount for a country with fewer than four million people. Several international monetary institutions have warned officials to get Panama's finances in order.

While many Panamanians are grateful for the country's new sports facilities, highways and the capital's $1.7 billion subway, some express concern at the resulting debt.

"What we are paying for all this is nowhere near what it cost," says accountant Jorge Colon as he stepped off the new subway. "The bill is bound to come due soon, and it is us the regular guy who will get stuck paying it."

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Transcript

LINDA WERTHEIMER, HOST:

We head next to Panama. It's experiencing a big economic boom, but there are also downsides. Panama's growth has surpassed nearly every other Latin American country on average over the last five years. It's even kept pace with China. That's largely thanks to big government spending on public works projects. But there are concerns over the toll this growth has taken on the environment, plus there's the country's huge new debt. NPR's Carrie Khan reports from Panama City.

CARRIE KAHN, BYLINE: On the 66th floor of the Trump Tower, a hand of blackjack will set you back $200, but all you can drink champagne costs just 10 bucks.

NATALIE SOMECH: (Speaking Spanish).

ETTIE MEARAVE: (Speaking Spanish).

KAHN: Natalie Somech and Ettie Mearave, both from Israel, admire the oceanfront view with hundreds of skyscrapers stretching the length of the Panamanian capital skyline.

SOMECH: (Speaking Spanish).

MEARAVE: (Speaking Spanish).

KAHN: "What a change Panama has undergone," says Somech. She moved here more than a decade ago with her husband, who she says is in the export business. It seems like a new high-rise goes up every day, she adds. On average, growth has topped 8 percent in the last five years, making Panama the envy of its struggling Latin American neighbors. Fueling the boom is the country's little-regulated and prosperous financial sector, as well as the government's construction binge - a new subway, an oceanfront highway and the mother of all projects, the long-awaited $5.25 billion expansion of the Panama Canal. The wider and deeper canal will allow for more than double the current cargo passing through the country. But while the economy continues its fast pace, critics are raising concerns.

On the far eastern edge of the capital, once-lush wetlands have been plowed under and covered by huge industrial parks, office buildings and gated communities. In the working-class Ciudad Radial, a new multi-use development called Metro Park is going up. A makeshift canal serves to funnel water out of its construction zone, but also routinely sends water flooding into the mostly poor Afro-Panamanian neighborhood - even during the dry season. Ricardo Mejia Miller, who's lived in Ciudad Radial for more than three decades, says he remembers seeing monkeys and storks out his front door when he was a kid. The construction now is coming faster and bigger, he says.

RICARDO MEJIA MILLER: (Speaking Spanish).

KAHN: "But we'll keep fighting to try and stop it," says Mejia. Mejia and other activists have a big struggle ahead of them. Environmental regulations were widely suspended under the past administration of President Ricardo Martinelli. The former president is accused of profiting personally from the construction boom to the tune of more than $100 million. Law professor and longtime human rights activist Miguel Antonio Bernal says Martinelli, who is reportedly living in the U.S., skimmed money off the top of nearly every project. Bernal says he did more to harm the country than even the dictatorships of last century.

MIGUEL ANTONIO BERNAL: Even the militaries, they were not able to develop the degrees and the practice of corruption like Martinelli did.

KAHN: Martinelli, who's denied all allegations, was stripped of his criminal immunity earlier this year and several of his closest advisers are either under arrest or being investigated. Law professor Bernal says the former president also left the country's financial future in shambles. Bond rating institutions maintain that Panama's finances are stable for now and will improve once the expanded canal comes on line next year. But the country's debt now tops $23 billion, a staggering amount for a country with fewer than 4 million people. Several international monetary institutions have warned officials to get its finances on order.

UNIDENTIFIED WOMAN: (Speaking Spanish).

KAHN: Stepping off the immaculate modern $1.7 billion subway, accountant Jorge Colon hopes that housecleaning happens soon. While it's great to have a new Metro, sports facilities and highways, he says he's worried.

JORGE COLON: (Speaking Spanish).

KAHN: "What we're paying for all this is nowhere near what it costs." He says the bill is bound to come due soon and it's us, the regular guy, who will get stuck paying it. Carrie Khan, NPR News, Panama City, Panama. Transcript provided by NPR, Copyright NPR.

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