PANAMA CITY -- Panama cannot make paymets on its $ 4.01 billion debt for at least the next several years, Controller General Ruben Dario Carles said this week.
The government owes nearly $ 2.21 billion to 187 private banks around the globe, including banks in the United States, Canada, Japan, Hong Kong, Europe, and Latin America. Panama owes $1.8 billion more lending to foreign governments and international lending groups.
Hangover from Noriega's Reign
Panama's chief accountant attributed the problem to obligations the government inherited from deposed dictator Manuel Antonio Noriega.
In 1991, debt service consumed 34% of the government's income. Panama has one of the highest per capita national debts in the world, and the debt service has been a crushing burden. In the late 1980's, Panama suspended foreign-debt payments.
In January, the government normalized its relations with international lenders by paying $ 645.4 million in principal and interest, accumulated from 1987 to 1989, to the Inter-American Development Bank, World Bank, International Monetary Fund, and the Inter-American Fund for Agricultural Development.
The payment was facilitated by donations from the United States and France, and loans of nearly $190 million from Japan and the IMF.
Mr. Carles said he was looking to reduce the portion of the debt owed to commercial banks through selling it at a discount, refinancing and restructuring it, or having it forgiven.
Corruption and special interests continue to suck away the nation's wealth, Mr. Carles said, and that and the huge debt payments take resources from investment and social services.