What happened to the 12 priority actions for Economic and Social Recovery of the national government due to the pandemic? Part 1

 The President of Panama, in his message to the nation on July 1, at the inauguration of the next Legislative period and celebrating his first year in government, announced 12 Priority Actions for the Economic and Social Recovery of the country after the pandemic. In this article, we are going to recall each of these 12 actions, and we will analyze the results that have been obtained to date. And because of the length of this analysis, we will do it in parts.

Let's look at three actions announced by President Cortizo and that has a lot to do with each other since they are closely linked with the Banking Sector.

• They have allocated US$20 million through the National Bank and the Caja de Ahorros to finance loans between US$2,000 and US$5,000 in comfortable terms of 84 months for Micro, Small, and Medium (MSM) sized companies.

• He also assured that for MSM enterprises, there is a fund of US$150 million for loans with soft interest rates and a term of 84 months and they also have a Guarantee Fund of US$50 million so that they can manage loans with the bank of your choice.

• For small agricultural producers, US$150 million will be allocated to be administered by the Banco de Desarrollo Agropecuario.

In our research, we found on the website of the Caja de Ahorros that they are promoting loans for MSMEs for the economic recovery and reopening of businesses affected by the pandemic. Among its requirements we find that they have to be an established business with 2 years of operations and more than 3 collaborators hired in it (obviously on the payroll); for commercial, industrial, and service activities they offer term loans (up to 84 months) and credit lines (one-year lines renewable at the bank's option). 

They also tell us that for microenterprises the amounts range from US$5,000 to US$25,000 with interest rates of 6% to 9%; for small business with amounts of US$25,000 to US$100,000 and interest rates of 4.5% to 10%; and for medium-sized companies from US$50,000 to US$250,000 with interest rates ranging from 4.5% to 10%. The requirements they are asking for these credits include: notice of operation, articles of incorporation and amendments, personal documents of dignitaries and shareholders, financial statements or income statements of the last 2 years, appraisals of the property to be used as collateral, and any other enforceable guarantee.

As I have said with previous administrations, the Caja de Ahorros is a bank based on very defined products and that has been its "bread and butter" over the years - mortgage loans and savings accounts. Going out of this comfort zone is a mistake, and the citizens who pay taxes are the ones who suffer when we see losses, embezzlement, and corruption. In this case, offering loans for which they are not prepared is a serious mistake, since in addition to not knowing how to grant, service, maintain or collect them, it will result in the program being a resounding failure.

In the case of the National Bank of Panama, they are not promoting these loans on their website in the same way as the Caja de Ahorros does, but they are promoting the program of Banca de Oportunidades. The National Bank of Panama is also not prepared to offer this type of loan to MSMEs, at most to medium-sized companies, since it requires different expertise from that of a commercial bank. We have tried to find an MSM entrepreneur who has been successful in requesting a loan of this nature, but we have not found anyone, which surprises me, especially since this is a relatively small country and we usually know each other well. But maybe my radius of action is not big enough so if anyone has had any experience, good or bad, I would like to hear about it.

The Caja de Ahorros does not mention anything about the Banca de Oportunidades, while the Banco Nacional de Panama does speak directly about the Banca de Oportunidades program. Moreover, we have entered the websites of several good-sized banks in the area (General, Capital, Global, Multibank), and none of them are promoting any type of loan guaranteed with any government fund to their clients.

According to the Banco Nacional website, the "Banca de Oportunidades is a program established in the Government Plan presented by the President of the Republic, Laurentino Cortizo. With it, it is sought to grant financing and support to new micro-entrepreneurs or those who are reinventing themselves." It has 3 types of loans: for entrepreneurs, term loans of US$2,000 to US$5,000 specifically for crafts, tourism, and technology; for Microenterprises, term loans of US$2,000 to US$5,000 specifically for crafts, tourism, and technology; and for agricultural entrepreneurs and microentrepreneurs, they offer term loans of US$2,000 to US$5,000 specifically for agriculture, livestock, and agribusiness.

To access the Banca de Oportunidades Program, you must meet the following requirements: if you are a Natural Person - Consumption and Agriculture, you need: Personal Identity document, Public Service receipt (water, electricity, telephone), Ampyme Training certificate (*), proof of Business Registration of Ampyme (*), Business Plan, certification of Compliance with AMPYME Requirements and good Credit References.

If you are a Legal Person - Commercial and Agricultural you need: Personal Identity document of the Legal Representative, receipt of Public Services (water, electricity, telephone), Ampyme Training certificate (*), Public Registry Certification, Ampyme Business Registry (* ), Business Plan, certification of Compliance with AMPYME Requirements, and Good Credit References.

(*) To complete the requirements for Training, Business Registration, Business Plan, and Certification of Compliance with Requirements, please contact AMPYME through the following channels: bancadeoportunidades.gob.pa

The requirements for the Banca de Oportunidades Plan are slightly better than for the Guarantee Fund loans. Regarding the US$150 million programs for small agricultural producers that are the responsibility of the BDA (Banco de Desarrollo Agropecuario – Agricultural Development Bank), we do not see anything on their website that specifically talks about it (if they have other programs that they are promoting).

The truth is that we have not seen any type of statistics that indicate the progress of any of these three actions, nor any type of political cackling by the government regarding them. This leads me to an unscientific conclusion that gets me to believe that none of these programs are working.

I think the idea of ​​the president for the Banca de Oportunidades is good, unfortunately, it is not being executed correctly. I have always believed that it should have been a separate financial entity, properly constituted, with a lot of technology, non-bureaucratic and non-political technical staff, and managed by someone I know from Microfinance. An excellent idea that we are letting go to waste.

If the Executive wishes, these three actions can be better directed, so that they have the effects that are wanted to help MSMEs to get through this bitter drink of the pandemic, survive for the next few months, and then re-emerge at the moment when the economy does too. In my opinion, and with the information available at this time, none of these 3 actions has met its objective, even when they have been launched.

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