Press Release

The Supervisory Commission of the Fondo de Ahorro de Panama issues its Opinion Report for the Fiscal Year 2023

Panama | May 29, 2024

The Supervisory Commission (the "Commission") of the Fondo de Ahorro de Panama ("FAP" or "Fund") issued its Opinion Report for the Fiscal Year 2023 (the "Report") on May 23, 2024. 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 2023 Opinion Report here, in Spanish only).

In its Report, the Commission expressed that the management of the FAP has been prudent and based on professional criteria, remaining aligned with the objectives established by the FAP Law and the guidelines of the Ministry of Economy and Finance ("MEF"). Regarding the performance in the year 2023, the Commission opined that it was "exceptionally positive by achieving an annual return of 9.88% (+$122.9 million). This represented an approximate recovery of 95% of the loss experienced in the year 2022 (-$129.1 million)."

The FAP Supervisory Commission additionally stated, "We reiterate the call made to the MEF and the National Assembly, through a written note dated April 22 of this year, to achieve broad consensus, resulting from open discussions, before making changes to the FAP Law. We emphasize the importance of the National Government fulfilling the legal obligations contained in the FAP Law, highlighting that delays in fulfilling contributions to the Fund for six years have affected the Fund's ability to meet the objectives for which it was created. Additionally, we suggest alternatives to finance these obligations, such as the use of alternative state assets with a monetization perspective and/or the issuance of debt that allows maximizing profits through the FAP's structure."

The Commission, in its Report, based its opinion on six thematic axes that summarize its observations and/or recommendations which, although not exhaustive, would strengthen the management of the Fund.

  1. Compliance 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 2018-2023, which as of the end of 2023 are estimated at B/.1,312.9 million.

  2. Amendments to the FAP Law: The Commission urges the MEF, if it achieves political consensus to modify the accumulation rule (contributions) of the FAP, to consider the various alternatives presented by this Commission to meet the contracted obligations. These alternatives should, subject to a feasibility study, not affect the country's fiscal balances. It is reiterated that it is important for the MEF to promote a broad debate and consultations with civil society to ensure the long-term sustainability of the Fund.

  3. Promote the Role and Importance of the FAP: educate the country about the existence of the Fund, which is the heritage of all Panamanians, and its significance as a national savings instrument and as a fund to address unexpected economic problems.

  4. Protect FAP Assets: provide the FAP with its own legal personality.

  5. Strengthen the investment framework: expand the investment limit in alternative investments to enhance the efficiency and risk diversification of the FAP portfolio.

  6. Risk Mitigation / Catastrophic Insurance Procurement: provide more details on the operation of the contracted parametric insurance and its scope in the agreed-upon coverages.

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
 
 
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