Panama Votes for President as the Biggest Boom in the Americas Ends

(Bloomberg) -- A Texas-educated business leader is the front-runner to become Panama’s next president, as voters look set to punish the ruling party for corruption scandals and the weakest economy in a decade.

Laurentino Cortizo, 66, leads polls ahead of a May 5 general election and pledges to clean up government and revitalize what was, until recently, the top performing economy in the Americas. Cortizo is from the center-left Revolutionary Democratic Party.

In recent years, Panama’s growth rate has sometimes exceeded China’s, but slipped amid a slowdown in construction as major projects were completed and private investment also slowed. Panama inaugurated a new metro line and airport terminal last month and is planning a fourth bridge over the recently-expanded Panama canal.

Growth slowed to 3.7 percent last year, the slowest pace since 2009, though still more than twice the Latin American average.

Anger over a series of scandals including the Panama Papers and allegations of bribery has diminished support for President Juan Carlos Varela’s ruling party as voters turn to opposition candidates like Cortizo. Democratic Change party candidate Romulo Roux is polling second and independent Ricardo Lombana third, with the ruling Panamenista party fourth.

Polls open at 7 a.m. local time and close at 4 p.m, and the new president will take office July 1. Voters will also elect mayors and members of the 71-seat, unicameral congress.

Corruption Fight

"Panamanians are looking for a candidate who has a tougher stance against corruption," said Claudia Navas, a Colombia-based analyst for Control Risks. "There is a concern that the economy is not going as well as previous years.”

Cortizo, whose father was a Spanish immigrant, pledged during the campaign to boost investment in agriculture, technology and infrastructure. He studied business in the U.S., and was awarded a doctorate from the University of Texas at Austin, according to his resume filed with the electoral authority. He has led two construction companies and a livestock business since 1985.

The next president is likely to face a difficult task keeping public finances under control, said former Finance Minister Frank de Lima. The government has run up arrears with suppliers and, last year, reduced the property tax rate. Low water levels in the canal this year, due to dry weather, have led to a series of draft restrictions and could put a dent in revenues that the waterway pays the government, which totaled $1.7 billion in 2018.

Panama’s GDP per capita of nearly $16,000 is among the highest in Latin America, and has already surpassed some European nations including Hungary and Croatia. The next president will probably try to keep Panama on its business-friendly path.

“Policy continuity is likely," Eurasia Group analyst Risa Grais-Targow wrote in a note to clients. "Regardless of who wins, the election results are unlikely to lead to a meaningful shift in the country’s business-friendly macro-economic policy model."

The longing for a stronger economy had made former President Ricardo Martinelli, who oversaw growth rates above 11 percent, the top candidate for mayor of Panama City, even though he is in jail. But election authorities ruled last month that he does not meet residency requirements and will not appear on the ballot.

To contact the reporter on this story: Michael McDonald in San Jose, Costa Rica at mmcdonald87@bloomberg.net

To contact the editors responsible for this story: Matthew Bristow at mbristow5@bloomberg.net, Robert Jameson

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