1. What is the Public Debt Panama?

A: Public Sector Debt of the Republic of Panama, contracted through borrowing and issuing of securities.

2. What is the public debt?

A: The public debt refers to any financial or economic obligation acquired by the State, arising directly or indirectly as a result of a loan or other credit instrument, whether internal or external, for obtaining capital, goods and complying with the laws and administrative provisions governing this matter services. The debt consists of funds obtained through loans from domestic or foreign sources, intended to finance state investments. The conditions of each borrowing operation are different and conform to the provisions of the relevant contract or agreement. The public sector debt comprises the financial or economic obligations of both the Central Government and decentralized entities.

3. What is Domestic Debt?

A: It is the debt owed to resident or domiciled in the Republic natural or legal persons and for which payment may be enforced within the national territory.

4. What is External Debt?

A: It is that debt to another state or international organization or any other natural or legal person without residence or domicile in the Republic and for which payment may be required outside its territory. The external debt of the public sector is composed of:

• public placements in the international capital markets corresponding to emissions of government bonds, medium-term notes and commercial paper.
• Financing of the International Financial Institutions.
• Resources obtained directly through commercial banks.
• Bilateral loans, which are loans between governments through official banks, or granted by commercial banks with the guarantee of an official body.
• Assumed debt, the debt is liquidated or merged entities which assumes the Republic.
• Restructured debt. It corresponds to those financings that were renegotiated in various programs in order to reduce the balance of the debt and its service.

5. What is the Direct and Indirect Public Debt?

A: Direct Public Debt of the Central Government is the one assumed by it as principal debtor. Indirect Public Debt of the Central Government is concerted by any natural or legal, public or private, other than the same person, but that has its guarantee, bond or guarantee.

6. What are the operations of public debt?

A: The Republic of Panama issued in the domestic market treasury bills representing short-term debt (12 months or less), placed at a discount and payable at maturity at face value. On the other hand, notes and treasury bonds which are debt instruments medium and long term are issued.

• Creating a liability: The creation or issue debt for the borrower assumes the emergence of a liability as a result of raising capital in compliance with legal regulations. The liability must simultaneously recognize the disbursement of capital by the lender and the maximum value of redemption public administration debtor agrees to pay to the expiration date.
• Remuneration or interest: The remuneration or interest are the liabilities and expenses resulting from the cost of borrowing money, which must be recorded on the due date and the accrued value.
• Amortization: Amortization poses to public entity debtor total or partial cancellation of liabilities arising at the time of the creation of debt
• Acquisition: The acquisition means that emissions of securities, public administration debtor can repay debt through the purchase of securities in which it is represented in the capital market. For this purpose, the redemption value at the time of redemption, is the acquisition value of the title in the capital market once the amount of accrued unmatured interest and included in it deducted.
• Conversion: Conversion of debt is the replacement thereof by another of different characteristics and conditions. The conversion consists of two simultaneous operations: the amortization of debt and creating a new one. Any differences that may arise between the redemption value of the debt and the value of amortized debt issuance that is created will be effective, as appropriate, in accordance with the provisions of clauses conversion.

7. How is the mechanism of foreign currency debt?

A: The foreign currency debt is that concerted currency and created both outside and inside externally and internally. The liability must simultaneously recognize the disbursement of capital by the lender, for the equivalent in national currency resulting from applying the prevailing exchange rate at the maximum repayment value in foreign currency, the public entity agrees to pay to date expiration of capital.

At the end of each year should be valued all liability for the equivalent in national currency resulting from applying the maximum values ​​repayment in foreign currency, the respective exchange rates in effect at that date.

The possible difference debt arising out of the application of the new exchange rates, either negative or positive as increased or decreased total liabilities. This difference is charged to the income statement.

At the time of maturity, liabilities subject to depreciation should be reduced by the equivalent in national currency with which appears valued in the financial statements. Simultaneously, it must be attributed to profit or loss the positive or negative difference resulting from applying the prevailing exchange rate on the due date.

8. What can be financed with debt?

A: With public debt the state can finance any activities previously defined in its annual budget and the law.

9. What are the titles of the Public Debt?

A: The government bonds are securities issued by the state, among which are the Letters, Notes and Treasury Bonds in compliance with applicable laws and procedures of the Republic. In that sense, the Republic issues in the domestic market treasury bills with maturities of 3, 6, 9 and 12 months, placed at a discount and payable at maturity at face value, being an important source of funding. On the other hand, notes and treasury bonds which are debt instruments in the medium and long term, in which the interest rate to be accrued and the date and other conditions for refund set are issued. In the case of treasury bonds thereof they are issued in the local and international market.

10. What size is the sovereign bond market in Panama?

A: With the implementation of Market Makers Program, which has a positive assessment by multilateral agencies and credit rating agencies, the Republic has strengthened its status as a country with investment grade. In accordance with financing strategies, auctions are held frequently recurring, increasing the volume of emissions; currently, the outstanding balance of the securities issued in the domestic market amounted to US $ 4,002.37 million. In this context the participation of government bonds in the local market have helped to diversify the sources of state funding.

11. Is there performance curve?

A: In fact the Republic of Panama has a curve of local and international performance forged through the implementation of various initiatives under the promotion of the market for government debt. On the international side, the Republic has instruments with maturities until 2053; while the local yield curve provides deadlines until 2024.

12. What is the average historical cost of public debt?

13. Financial leasing is a debt?

A: Although leasing is classified as a debt that accrues interest, is structured as a loan and its biggest advantage is a tax level.