REPORT TO THE NATION

July 1, 2020

José Gabriel Carrizo Jaén, Vice President of the Republic; Marco Castillero, President of the National Assembly; Luis Ramón Fábrega, President of the Supreme Court of Justice; Deputies and Deputies.

Panamanian people:

Today it corresponds to me as president of the Republic, and by constitutional mandate, to render before the country the report of the first year of management.

I want to confess to you that when I started writing this report, many things went through my mind and many emotions through my heart.

I am the president – and one more human being – who faces, together with Panamanians, the deepest health, social and economic crisis that our country has experienced.

And as president, all Panamanians. they are also my responsibility. I suffer for the situation that those who fear for their health, for their employment, for their future are going through today.

I especially suffer for the relatives of the deceased who did not have the opportunity to hug, to take their hands; nor say goodbye to loved ones. Today as every day I unite in the pain of each one of you.

Under normal conditions, it would have used this space to inform the country, in detail, of our progress in the Joining Forces Plan, since, in effect, we have carried out 25 of its actions and are advancing in the fulfillment of another 35 more.

However, we are experiencing an exceptional episode in human history, and also in our homeland. So this report has to be different:

• – First, I will provide an executive summary of the management report for the first 8 months.
• – Secondly, I will report on the management we have given to the pandemic in the last four months and on the social and economic measures that we have implemented to mitigate its impact.
• – And thirdly, I will share the guidelines and concrete actions of our Economic Reactivation Plan.

Panamanians and Panamanians,

A year ago I promised to execute 17 priority actions in the first 6 months of government, of which I fulfilled 16. Today I will only mention a few:

• § The amendment to the Public Procurement Law that reduces the discretion of public officials and strengthens transparency.
• § The Public-Private Partnership Law (APP)
• § Law 115 of December 5, 2019, which guarantees the purchase of quality national products for food in schools, hospitals, law enforcement, penitentiary centers and the Study without Hunger Program.
• § The Preferential Interest Law was modified, increasing the ceiling of the corresponding homes from B / .120 thousand to B / .180 thousand.
• § The “First Job, Learning by Doing” Law was approved for our young people.
• § For the first time in the country, as part of the legacy that we want to leave in matters of justice, through objective evaluation and selection processes, we made the appointments of the Chief and Alternate Magistrates of the Supreme Court of Justice and, in the same way, of the Attorney General of the nation.

As I promised the country, I did not designate friends, or friends of friends, or partners.

Ladies and Gentlemen:

We assume the Government with a deficit of B /. 2,317 million from the 2019 budget and the responsibility to cancel accounts payable from previous administrations to suppliers and contractors for the amount of B /. 1,836 million.

In addition, in January 2020 we had the responsibility to cancel the maturity of debt bonds of past administrations in the amount of B /. 1,155 million.

These debts, not contracted by our government, total B /. 5,308 million. To face them, it was necessary to resort to external financing.

That is why this government, in a responsible way, went to the markets in July and November 2019 and March 2020, achieving the total sum of B / .5.8 billion; that is, we had to go to the market to pay inherited debts.

This successful decision, together with budgetary austerity measures applied between July and December 2019, allowed us to clean up public finances.

So much so, that by January and February 2020, budget revenues had already registered 11% above what was budgeted.

In other words, just eight months after starting our government, the country was on the way to its economic recovery.

Unfortunately, the pandemic took us out of the good course that public finances had already taken, bringing a drastic reduction in income that, in the three months of the pandemic, has fallen by around B /. 900 million; 50% below budget. In addition, revenue collection is expected to continue to decline until the end of the year.

Panamanians and Panamanians:

Then, the unthinkable happened. The pandemic shakes the entire world and attacks Panama.

A deadly virus that did not warn. Without an Instruction Manual to face it, much less a vaccine or an effective cure.

Panama faces THE most transcendent CHALLENGE in its history. The Economist defines it as a grim crossroads where life, death and economy intersect.

A month before the confirmation of the first case in our country, and in view of the development of events worldwide that report the advancement of the new coronavirus, on Sunday, February 2, I installed the Center for Emergency Health Operations (COES).

In recognition of this situation, from the beginning the Government determined that decisions would be made based on technical and scientific considerations; with the purpose of saving the greatest number of lives and avoiding the collapse of the health system, without making up figures.

We decided to run tests, identify positive cases, trace contacts, and isolate.

The goal has been and is to do as many tests as possible.

We start with around 400 a day and today we make an average of 2,500 daily, focusing on the neighborhoods with the highest contagion. Our goal is to reach 4,000 tests per day.

This places us as the third country in Latin America with the largest number of tests carried out, according to the population.

With this strategy we have achieved that Panama has an average case fatality rate of 1.9, much lower than the world average of 5.2

Ladies and Gentlemen:

In a technical report dated March 16 of this year, Panama was projected to have 5,019 patients in Intensive Care Units in the worst-case scenario, and 979 patients in the best-case scenario, when in At that time, our capacity was only 350 beds, of which 50% were already occupied by patients with non-COVID-19 pathologies.

That same report concluded that Panama needed – and I stress today, still needs – the URGENT RECONVERSION of beds for critical areas in hospital facilities both of the Ministry of Health and of the Social Security Fund.

Thus, we had to take difficult measures such as the quarantine, preventing the pandemic from reaching the worst scenario predicted of 122,000 positive cases for the mentioned month of May.

It has been four months of anguish, uncertainty and pain.

As President, I would like to tell you that this has already happened. But it’s not like that. We don’t have a vaccine yet. This battle continues. It is fought in hospitals, also in the community; in our neighborhoods, house by house; wearing the mask and maintaining physical distance.

Panamanians and Panamanians:

I want to acknowledge the effort of thousands and thousands of Panamanians who with courage and love for the country have participated and are participating in this enormous challenge.

Our thanks to that army of men and women of HEALTH, Public Force, Fire, SINAPROC; to the women and men of the countryside and the sea who assure us food; to the staff of the food logistics chain.

To the thousands of volunteers and officials of the Panama Solidarity Plan; Canal and port employees; Panama Metro and MiBus staff; transporters, supermarket collaborators, pharmacies and banks, hotel personnel, public toilet servers: To you, the Panamanian people, the families in the rigor of quarantine, we thank you for your solidarity, your sacrifice, the risk of your own lives.

All Panamanians:

The low tax collection and the growing need for resources to face the pandemic forced us to make budget cuts in the order of B /. 2,000 million.

This involved cuts in payroll, travel, per diem, vehicle purchases and investment programs, with the purpose of concentrating resources to reinforce the health budget and adopt social emergency measures.

The first of these was the Panama Solidarity Plan, which consists of the delivery of food bags, mega bags for the regions, bonds and digital vouchers.

This program benefits around 1,600,000 people and is run by a national team of almost 7,000 volunteers and officials.

In addition, and despite limited resources, we have maintained the payment of subsidies such as:

• § Opportunity Network. B / .40 per month.
• § National Secretariat for Nutrition B /. 40 per month,
• § Universal Scholarship. B / .40 per month, per student.
• § Excellence Scholarships. B / .100 per month, in advance.
• § Program 120 at 65. B /. 120 per month,
• § Guardian Angel B /. 80 per month.
• § Subsidy to electricity, from March to September. B /. 114 million, which covers 90% of households.
• § Subsidy of the gas tank.
• § Fuel and transport subsidy.

These subsidies total B /. 1,651 million a year.

Panamanians and Panamanians:

We established the conditions so that no Panamanian would have water and electricity services suspended.

I take this opportunity to announce that yesterday I passed the moratorium law that extends the suspension of payments until December 31, 2020, by way of:

• – Mortgages
• -​ Personal loans
• – Loans to small and medium-sized companies
• – Loans to the agricultural sector
• – Commercial loans
• – Loans to the transport sector
• – Auto loans
• – Credit cards

In this sense, and according to the Superintendency of Banks, as of June 25, bank loans have been modified in modalities such as changes in terms, extensions in the payment date and grace periods, benefiting 1,036,417 clients.

Similarly, the residential mortgage portfolio has benefited 148,000 families.

On the fiscal issue, we also approved the Tax Amnesty Law allowing taxpayers to make payment agreements until December 31, 2020 and the extension for the presentation of the 2019 income statement.

All Panamanians:

As for Education, we have turned a crisis into an opportunity. “Connect with the Star” has been our proposal to benefit students at home through radio and television, thanks to an alliance with 8 television channels and 13 radio stations with national coverage, reaching an audience of 969 thousand people.

210,358 students are connected through platforms, technological applications and print media with 831 schools in the official and private sectors, thanks to the support of 12,306 teachers.

How proud I am to see students from official schools in remote areas and from private schools sharing MOODLE, a first-world educational platform. This is an example of how poverty and inequality are fought; the Sixth Frontier.

Ladies and Gentlemen:

According to the World Bank, Coronavirus has caused the greatest collapse of the global economy since 1870.

In its forecast, the entity estimates that although Panama will decrease 2.2% in 2020, in 2021 we will have an economic growth of 4.2%, with reserves.

The COVID-19 pandemic leads us to develop an economic reactivation plan to keep jobs, put money into circulation and increase the consumption of Panamanian products.

This plan contemplates actions directed for the IMMEDIATE, SHORT and even MEDIUM TERM.

We cannot speak of an economic reactivation plan without attending to the process of reopening blocks.

We have established that the reopening policy, by block or by specific activities, will be gradual, with prudence. and DISCIPLINE, considering the infection rate of the province or region, the level of risk of the activity, the hospital capacity of the province or region, and establishing rigorous monitoring of compliance with the biosecurity measures ordered by the authorities.

At this stage of the evolution of the pandemic we all agree on the importance of finding a balance between health and economics.

Therefore, a space was needed in which the technical health team interacts. with other government authorities and representatives of the private sector.

The Reopening Working Group is responsible for examining activities, areas or projects that may be reopened and making specific recommendations for their adoption.

Panamanian people:

Next, I present 12 priority actions of the Plan for Economic and Social Recovery.

Micro, Small, Medium-sized Enterprises and Entrepreneurs constitute around 90% of the country’s companies and generate more than 70% of jobs nationwide.

For you we have specific programs:

1. Opportunity Banking is a program aimed at new microentrepreneurs, or ones that are reinventing themselves.

For example, those who are now dedicated to the mobile sale of fruits and vegetables, to Panamanian products and services businesses online. For you who have an inn, buhonería, beauty salon, barber, we have assigned B / .20 million through the National Bank and the Savings Bank to finance loans between B / .2 thousand and B / .5 thousand balboas, in comfortable 84-month terms. This program will start on Monday, August 3.

2. For micro, small and medium-sized companies, we have a B /. 150 million for loans with soft interest rates and a term of 84 months.

In order to guarantee its effectiveness and transparency, this program will be administered by the National Bank through the Savings Bank and other financial entities. Funds comprise the following segments:

• § Microentrepreneur: we have for you that you dedicate yourself to commerce, crafts, rural agribusiness, grocery stores or shops, among other businesses, loans of B / .5 thousand to B / .25 thousand balboas.
• § For Small Businesses that are dedicated to commerce, online commerce, internal tourism, restaurants, service companies, professionals and innovation, we offer loans from B / .25 thousand to B / .100 thousand balboas.
• § To the Medium-sized Companies, dedicated to tourism; industries and other economic activities, we provide loans from B / .100 thousand to B / .250 thousand balboas.

3. In addition, we have a Guarantee Fund of B / .50 million so that micro and small companies can manage loans with the financial entities of their choice, using this using said fund as a guarantee.
4. Panama Agro Solidarity Program, aimed at small agricultural producers, artisanal fisheries and family farming, with an amount of B /. 150 million administered in the first phase managed by the Agricultural Development Bank through simplified, agile procedures verified by their respective regional agencies.

The Agro Solidario Program loans have soft interests and are conditional on technical assistance, accompaniment; water harvesting and agrotechnology, that is, producing more with less.

5. Another action that I am announcing today is the Recuperando Mi Barrio Plan, which consists of the generation of temporary jobs through the rehabilitation and renovation of buildings and public infrastructure, with the participation of local labor.

This program begins in the Chorrillo neighborhood and will continue with Santa Ana, Barraza, Curundú, Los Libertadores, Tuira and Chucunaque, Guadalupe Complex, Paraíso, Los Abanicos, Casco de Colón, Irving Saladino, Río Alejandro, among others.

6. The acquisition of your home, which continues to be a necessity for Panamanian families, is another key sector for the Economic Reactivation Plan.

For this we have allocated B /. 80 million from the Panama Savings Fund, available by law, to reinforce the Housing Solidarity Fund that provides a bonus of B / .10,000.00 for the initial payment of the first home whose application value will now increase to B / .70,000.00 balboas .

7. Recognizing the importance of the banking system in the country’s economic recovery, we have allocated B /. 1,000 million to a Special Fund for Credit Strengthening.

From this fund, in this phase, B / .500 million will be allocated to guarantee the soundness of the Panamanian financial system and another B / .500 million to facilitate the financing of the most affected sectors of the economy, such as construction, commerce, restaurants , hotels, innovation, science and technology, agro-industries, industries, exports, warehousing and distribution, and tourism.

The main objective of these supports is economic recovery, maintaining the greatest number of jobs and increasing the national demand for goods and services by promoting national consumption. “Panamanian, proudly consume yours.”

8. Understanding the difficult situation that Panamanian companies that have suffered a fall in their income are going through, we have issued instructions to the Director General of Revenue so that all the applications that were presented and supported have a period of authorization not to pay based on the CAIR up to 3 years.
9. In this serious crisis, one of our great priorities is to recover and create jobs for Panamanians.

That is why I have made the decision that the State, through public infrastructure works, becomes a catalyst for economic recovery.

In this sense, the following works are already underway:

• § Rehabilitation and widening of the Arraiján-La Chorrera Highway.
• § Rehabilitation and widening of the La Concepción-Cuesta de Piedra highway, in Chiriquí.
• § Rehabilitation of the Pedasí-Los Asientos-Cañas Highway.
• § Rehabilitation of Streets in the Chitré District.
• § Design and construction of the El Jagüito-Calobre highway.
• § Rehabilitation of the Gualaca-Chiriquí Grande highway.
• § Almirante-Changuinola and Los Carretas highway in Bocas del Toro.
• § Roads of the Besikó District, in San Juan, Gnöbe Bugle Region.
• § San Andrés-Santa Cruz-Dominical-Caisán-Monte LirioHighway, in Chiriquí.
• § Paths of La Pintada, in Coclé.
• § Rehabilitation of streets of the District of Penonomé.

58 other educational infrastructure projects that are being evaluated by the Ministry of Health are also about to restart, such as:

• § Miguel Alba Educational Center in Soná, Veraguas.
• § Francisco Morazán School in David. Chiriqui.
• § Los Pozos Educational Center, Herrera.
• § José Daniel Crespo School, in Chitré, Herrera.
• § The IPT of Tonosí, Los Santos.
• § Cerro Puerco School, Munä Gnobe Bügle
• § Simeón Valderrama School, Natá, Coclé.
• § Basic Education Center, Vista Hermosa in Penonomé.

10. I confirm that we are making progress on the project for Line 3 of the Metro so that next summer of 2021 the works will begin.

It is an investment of more than B /. 2,500 million balboas that, in its construction phase, will generate more than 5,000 direct and indirect jobs and will benefit more than half a million residents of West Panama. 11. At its ordinary meeting in June, the ACP Board of Directors approved. the Water Resources Program. This program, with an investment of B / .2 billion, has the purpose of guaranteeing water for human consumption, food production and the operation of the Canal. 12. The Attraction of Foreign Investment will be one of the most important activities in our Plan for economic reactivation and job creation. Competing at the moment with the rest of the countries to access these investments is going to be a monumental task, but we are prepared. We have the best maritime and air connectivity in Latin America and the Caribbean, and a strategy to take the offensive. For this reason, we made the decision to unify the institutional framework for investments so that all this national effort is carried out and coordinated in a single entity, Pro-Panama. Pro-Panama will have a Board of Directors with the participation of representatives from the private sector, the Ministry of Economy and Finance, the Ministry of Commerce and Industries and the Ministry of Agricultural Development, which will be chaired by the Ministry of Foreign Relations. Panamanians and Panamanians: Within this investment strategy we also have bills that we will present to the National Assembly. . in this legislative period. • The Multinational Manufacturing Companies Bill (EMMA) to establish value-added companies, assembly, pharmaceutical industries, equipment and medical supplies, among others, benefiting from the comparative advantage of the country, its connectivity. • Additionally, we will present the project for the equalization of the Colon Free Zone with the benefits of the Panama Pacific Special Economic Zone in order to create jobs for colonists.

• We will also present a Draft Law on Tax Relief for Micro, Small and Medium-sized Enterprises that establishes a Special Reduced Income Tax Regime.
• Likewise, an AMPYME Bill to expand the Mejorando Mi Negocios program, increase the non-reimbursable seed capital from B / .1,000 to B / .2,000 balboas and reduce paperwork.
• We will also present a bill to encourage the development of agricultural parks, to give added value to agricultural production and thus contribute to generating development poles and jobs in our fields.

Additionally, our legislative agenda includes the following initiatives:

• Pronto Pago Bill, which contemplates a 10% discount to improve collection.

This is a bill that benefits those people who pay their taxes in advance.

All Panamanians:

I am pleased to share that the Tripartite Dialogue Table for the Economy and for Labor Development convened by the Government, and unique in the Continent, culminated its work with twenty-two agreements respecting the rights of workers and promoting the reactivation of companies.

Moderated by the Specialized University of the Americas, with the accompaniment of the University of Panama and the support of the International Labor Organization, the Mesa achieved a safe and reliable roadmap to improve working conditions during the pandemic.

The necessary bills, resulting from the agreements of the Tripartite Table, will be presented to the National Assembly.

We have to congratulate the country since, through dialogue, we have once again agreed.

Ladies and Gentlemen:

Solidarity is also essential to get ahead of this crisis.

Public servants have an ethical and moral responsibility to support Panamanian families who are in vulnerable conditions.

For this reason, I am presenting a bill so that from its sanction and for 6 months, the President and Vice President of the Republic cut our salaries and representation expenses by 50%.

Likewise, ministers, vice ministers, directors and deputy directors, managers and assistant managers, administrators and deputy administrators and advisers will have a cut in their salary and representation expenses of 25%.

Likewise, public servants who are members of the Boards of Directors of government institutions will not receive per diems during the same period.

Panamanian people:

In this accountability to the country I want to highlight the responsible management of the resources assigned to the attention of the health emergency.

Did we make mistakes? Of course yes. The circumstances are unique and exceptional since never in the history of the country have we faced a similar situation.

International and national catastrophic projections announced scenarios of death and health needs far beyond the countries’ capacity.

In Panama we had and we have to act decisively, quickly and transparently.

All the decisions that have been and will be made will be to save lives. Doing nothing was never and never will be an option.

Given the present and immediate needs, the country can rest assured that we have not only adopted rigorous procedures in order to prevent corruption, but also to ensure the widest transparency.

In this sense, in the acquisition of equipment or supplies required to combat Covid-19, no advance or payment was produced or will be produced without the countersignature of the Comptroller’s Office.

I fully understand and share the importance that resources to deal with the pandemic crisis and the necessary social reliefs be managed with full transparency and subject to accountability. Public funds are sacred.

I have instructed all institutions that make purchases of any nature, Covid or non-Covid, to keep the account status of all their transactions up to date. Along these same lines, we have created the Public Procurement Observatory to establish open data on purchases, the support and evaluation of reference prices and the annual purchasing plan. We adopted the Online Quotation system that allows all those interested in State purchases to participate in an open and transparent way, promoting competition and achieving better prices. We have created the pages “PanamaenObras” and “PanamaCompraenCifras”, to guarantee the availability and permanent access to information. As governor, I call on Panamanians to continue exercising all their rights and responsibilities of citizen oversight over the use of public heritage. Ladies and Gentlemen: I ratify and reiterate my commitment to freedom of the press and freedom of expression. The media are also called to serve the goals of transparency and accountability, as every government is obligated to do, and they are required to do so with a critical, balanced attitude, with respect to the presumption of innocence and due process. , sharing information that guides citizens. All Panamanians: We are currently waging a war against the pandemic and its effects on health, the social and the economic. Winning is the only option. The current conditions in the world and in Panama force us to think about the country after the pandemic. There is no other alternative to the need to agree. It is in everyone’s interest that the country do well. That is thinking in bright lights. Just as everyone in our homes, in our jobs and in our companies in the midst of uncertainty, we wonder what will happen, from now on as a country we have to do the same.

Panamanians are going to agree. Let’s avoid disagreements. No choice. For that purpose, they count on me. Today I invite you to start a consultation process towards a National Agreement to give us a new social pact within the framework of our Bicentennial. An unavoidable theme of this national agreement is finding a sustainable solution for the Social Security Fund that lasts over time. Panamanian people: As President of the Republic, I have a personal destiny under these circumstances. My mission is to lead Panama in an exceptional time of pandemic. Rest assured that I will do, together with the Panamanians, whatever is necessary to move Panama forward. I know that in circumstances like this there is no easy or perfect decision. But we will turn this disgrace into the opportunity that Panama requires to overcome inequalities and leave the foundations to transform what must be changed. So our duty is to stay united as a Nation. This crisis has brought out the noblest and the best of the majority of Panamanians. It is not the first time that we have faced adversity and we have always stood up. The effort to overcome the pandemic has to be shared by each of us with discipline and solidarity. This path is long and we will leave this monumental test. We have to do it together, with respect and in unity. From the hand of God we will resist and overcome this pandemic. We have not given up and we will not give up. That is the sense of duty for those of us who love Panama. 

Thank you very much.