Clarifications to the Article, “Fondo de Ahorro de Panama Falls for Second Year in a Row”, Published by the Newspaper ‘La Estrella de Panama’
Panama | May 15, 2017
The Fondo de Ahorro de Panamá ("FAP" or "Fund") considers making the following clarifications to the article published by the newspaper ‘La Estrella de Panama’ on May 15, 2017, regarding the financial results of the Fund for 2016.
The News on ‘La Estrella de Panama’
‘La Estrella de Panamá’ states in its article that, according to a report from the Ministry of Economy and Finance, the “patrimony” of the FAP fell by USD 5 million from 2015 to 2016, and USD 21 million between 2014 and 2015.
We would like to inform to the public that this article excludes information contained in the notes of the audited financial statements and results published on our website. This article does not reflect the current and relevant situation of the Fund.
Performance of the Fund
For the year 2016, the Fund generated a gross return of 3.45%. In terms of net income, the Fund closed the year at USD 40.1 million. More specifically, the Fund generated USD 26.1 million in interest and dividend income (2015: USD 24.4 million) and a net gain on securities of USD 17.4 million attributed to its investments in global financial instruments. Operational and administrative costs for the year came in at USD 3.4 million (2015: USD 3.5 millions), as several cost reduction initiatives were implemented.
As a result, the FAP closed the 2016 period with net asset (patrimony) of USD 1,265, USD 41 million higher than the previous year (see the Fund’s audited consolidated financial statements). The FAP’s financial results are largely associated with benchmark performance and its strategic asset allocation (diversification), which seeks a balanced risk and return long-term profile.
Changes in the Level of Certain Assets
Decrease of USD 5 million: It’s important to clarify that this decrease, stated in the article, is offset by a decrease of USD 46 million in short-term liabilities of the FAP, and consequently resulting in an increase in of net assets, due to the net income, which amounted to USD 40.1 million.
Decrease of USD 57 million in investments in securities: Similar to the explanation above, the decrease is due to accounting classification of assets, in connection with investment movements. This amount is not related to losses or deterioration of the Fund’s investments.
Our Investment Principles
FAP’s investment management is characterized as prudent and long-term, with 100% of the fixed-income assets invested in securities with high credit quality (“investment grade”), and in strict adherence to the Fund’s guidelines and regulations. In addition, it is important to note that the FAP has been recognized as the second most transparent sovereign wealth fund in the world by the Sovereign Wealth Fund Institute (“SWFI”), for four consecutive quarters, highlighting our commitment to high levels to a high disclosure standard.
About the Fondo de Ahorro de Panama
The Fund was created by Law 38 of June 5, 2012, whose main objectives are:
Establish a long-term savings mechanism for the Panamanian State; and
Establish a stabilization mechanism in case of a state of emergency (declared by the Cabinet’s Council) and economic slowdowns.
For additional information visit www.fondoahorropanama.com
*It is understood by Financial Statements “Consolidated” the set of accounting records that make the Fondo de Ahorro de Panama as they are: i) the Technical Secretariat / Budget of the FAP and ii) the FAP Trust Agreement, using as reference the established in the Article No. 23 of Law 38 of June 5, 2012, and not a consolidation as defined in NIIF 10 for the preparation of financial statements.