Panama’s Lawmakers Approve Creation of Sovereign Wealth Fund
Panama’s Lawmakers Approve Creation of Sovereign Wealth Fund
By Eric Sabo - May 31, 2012 5:24 PM CT
Lawmakers in Panama approved the government’s plan to create the country’s first sovereign wealth fund with revenue from an expanded Panama Canal to help buffer Latin America’s fastest-growing economy in a downturn.
Lawmakers voted 41-19 today to approve the creation of the fund, which would take effect after the canal’s $5.25 billion expansion is completed in 2014. With at least $300 million to start, the government estimates savings will grow by about $1.5 billion per year from taxes on the canal, Finance Minister Frank De Lima told lawmakers before voting took place.
Panama joins countries including Chile and Trinidad & Tobago in managing wealth funds from surplus revenue, usually from commodity exports. Panama’s fund will allow it to improve control of canal resources and cover future debts, the International Monetary Fund said in an April report.
The fund would only be tapped during a recession or following natural disasters, De Lima said.
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