PANAMA CITY, Panama -- President Guillermo Endara said that as talks with commercial banks are still in the initial stages, it would be "very optimistic" to expect an agreement this year on rescheduling debts.

"We have begun talks with the banks, but they are not intense. We're exchanging information and setting our positions, but I don't see an agreement this year," he said.

$2.7 Billion Owed to Banks

Panama's total foreign debt stands at about $4 billion, of which $2.7 billion is owed to commercial banks. The country rescheduled about $1.3 billion in debt with the World Bank and other international lending agencies earlier this year.

That agreement launched Panama's return to world credit markets and has opened up hundreds of millions of dollars in fresh loans.

But Panamanian officials have said payments to the international agencies have left a "social debt" that must be repaid before making serious commitments to commercial banks.

"We have to give certain, basic priorities to the people, but this doesn't mean that we're going to forget our external debt," Mr. Endara said at a breakfast with foreign correspondents.

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