Conclusion
Panama has a foreign debt that represents 81.2 percent of GNP. In absolute terms, this is not large by the standards established by countries such as Mexico. For countries like Panama, which are not in the severely indebted middle-income countries, there is a tendency to overlook them with debt assistance programs. In 1989, the Brady Initiative recognized the need to help SIMICs and the Paris Club also stepped in with rescheduling agreements primarily for SIMICs with high official debt. In the 1980s, Panama rescheduled $594 million in debt.
That does not reduce the debt; rather, it gives the country more time to pay it off. Exports (or income) growth, if used exclusively to repay the debt, could accomplish that goal in 39 years. But the relationship between existing interest rates and export growth cannot be expected to endure for so long. In fact, it might be impossible for Panama to ever pay off its debt, particularly when its long-term and short-term sum exceed its GNP. If the ratio of debt-to-exports is indeed constant, then Panama will be able to outgrow the debt as long as export growth is greater than the cost of servicing the debt.
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Patterson, S. Panama's exports and its sovereign debt. Atlantic Economic Journal 20, 90–93 (1992). https://doi.org/10.1007/BF02298880
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DOI: https://doi.org/10.1007/BF02298880