Press Release

The Supervisory Commission of the Fondo de Ahorro de Panama issues its Opinion Report for the Fiscal Year 2022

Panama | June 28, 2023

The Supervisory Commission (the "Commission") of the Fondo de Ahorro de Panama ("FAP" or "Fund") issued its Opinion Report for the Fiscal Year 2022 (the "Report") on June 28, 2023. The Commission serves as the representative body of civil society within the governance of the Fund.

The Report, in accordance with the provisions of Law 38 of June 5, 2012, which establishes the FAP ("FAP's Law"), is released annually to evaluate the Fund and its management model, corporate governance, financial results, and main strategic goals (access the 2022 Opinion Report here, in Spanish only).

In its report, the Commission stated that the management of the FAP adhered to professional criteria of prudence, with economic and financial reasoning consistent with the objectives defined in the FAP's Law and the guidelines established by the Ministry of Economy and Finance (“MEF”).

The Commission emphasizes the need for the National Government to comply with Laws 38 of 2012 and 51 of 2018, which oblige it to contribute its share of the contributions made by the Panama Canal Authority (“ACP”) to the National Treasury. These contributions have accumulated a five-year delay, as they were not made during the entire period from 2018 to 2022. Failure to promptly make these contributions will result in the Fund not generating the necessary income flows to increase national savings or address negative financial consequences caused, for example, by natural disasters related to climate change or other serious disasters, future crisis situations like the COVID-19 pandemic, or economic slowdown resulting from adverse cycles.

The FAP Supervisory Commission stated, "The performance of the Fund in 2022 did not achieve the expected results; however, these results are not different from the context experienced by global capital markets due to the devaluations experienced by various asset classes as a result of the increase in interest rates implemented by major central banks to control the inflationary phenomenon. In this challenging context, the Fund was able to protect the value of its investment portfolio and generated a reasonable, relatively positive performance, surpassing the benchmark reference value by 79 basis points, which is a notable achievement."

The Commission, in its report, based its opinion on 5 thematic axes that summarize its observations and/or recommendations. While not exhaustive, these would strengthen the management of the Fund for the long-term benefit of current and future generations of Panamanians:

  1. Comply with Law 38 of 2012 and Law 51 of 2018: Transfer the pending contributions to the FAP resulting from the distributions made by the ACP to the National Treasury during the period 2018-2022, estimated at B/.970.2 million as of the end of 2022.

  2. Procure Catastrophic Insurance: Finalize the process of procuring catastrophic insurance that covers the contingency risk derived from the financial cost of potential natural disasters in the country.

  3. Protect FAP Assets: Provide the FAP with its own legal status.

  4. Promote the Role and Importance of the FAP: Educate the country about the existence of the Fund, the heritage of all Panamanians, and its importance as an instrument of national savings and as a fund to address unexpected economic problems.

  5. Ensure Accountability: It is imperative that the MEF reports to the country regarding the capital withdrawn to address the effects of the COVID-19 pandemic.

Members of the Commission
The Commission is composed of representatives of the following organizations:

  • The Association of Certified Public Accountants of Panama;

  • The Association of Economists of Panama;

  • The Ecumenical Council of Panama;

  • The National Council of Organized Workers; and

  • The National Council of Private Enterprise.

 

About the Fondo de Ahorro de Panama
The Fund was created by Law 38 of June 5, 2012, whose main objectives are:

  1. Establish a long-term savings mechanism for the Panamanian State; and

  2. Establish a stabilization mechanism in case of a state of emergency (declared by the Cabinet’s Council) and economic slowdowns.

Contact: Administration, +507-394-5776/5706, administrador@fondoahorropanama.com

For additional information visit www.fondoahorropanama.com
 
 
###