[NYTr] Serious Jitters in Panama over Dollar's Weakness
 
Date: Wed, 14 Nov 2007 21:11:12 -0600 (CST)

Via NY Transfer News Collective  *  All the News that Doesn't Fit
 
Prensa Latina, Havana
http://www.plenglish.com

Jitters in Panama over Dollar Weakness

by Leonel Nodal

Panama, Nov 14 (Prensa Latina) Panamanians woke up today to new danger
signals for their pockets due to the bondage of the national economy to
the US dollar, currency circulating freely in the country.

For the first time, businesspeople, economists and consumers begin to
seriously question the alleged advantage of using the dollar all the
time and operate with the same currency of that world power.

The devaluation of the US greenback facing the euro, 45 cents more
valuable than a dollar, the hike in oil prices and of all imported
inputs due to the loss of purchasing power, give people a headache.

According to knowledgeable sources, Panama is on the verge of the most
violent price increase of fuels this year.

"We have no confirmation, but the trend points to an increase in
gasoline of over 25 cents and of 20 cents for diesel," Hugo Cuellar,
president of the Gasoline and Oil Derivatives Distributors Association.

Francisco Ycaza, spokesperson of oil wholesale companies, stressed
that, according to projections, the barrel of oil will keep ranking
from 95 to 100 dollars over the next few months.

Most of the promotion to sell the countryB4s image abroad as a
privileged site to invest, buy a second residence, travel or have fun
at the casinos, is based on dollar circulation "as in the United
States."

"The dollar is in trouble," warned Wednesday the largest circulating
newspaper in Panama and everyone knows what the common reaction is when
a partner is in trouble. "Let loose as soon as possible", experts
recommend.

All products and services are more expensive by the day. Rice and milk
up now, in a few days ham, turkey and pork favorites for Christmas,
comment analysts who blame oil first until another comes along and
points to the downfall of the dollar.

In the opinion of economist Aristides Hernandez, the consequences of
monetary change always end up hurting the poorest countries like
Panama, he explained to the daily La Prensa.

The problem is Panama lacks its own monetary policy, said Hernandez and
indicated the country depends on international money markets and
directly on the dollar.

Among the visible consequences there is the hike in prices of imported
products from Europe as high-tech equipment for the electric, transport
and communications sectors.

The advantage of selling cheaper is lost because most of the raw
material is imported at higher prices.

After an eight-month growth, exports fell 9.6 percent in September,
when they reached 74.7 million dollars, eight million below the figure
the same month of 2006.

The Balboa, national currency named after the Spanish conqueror that
broke his way to the Pacific, is taken as official accounting unit,
equal in value to the dollar, but circulates only in coins of up to 50
cents.

The use of the greenback goes back to 1904, when an agreement was
signed between both nations after Panama separated from Colombia and
was proclaimed an independent republic.

ef ln

PL-33

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