Events - 12.05.2016 - 00:00 

Calming talk about hot papers

On the third day of the St.Gallen Symposium, Panama’s Vice Minister of Finance Eyda Varela de Chinchilla responded to BBC anchorman Stephen Sackur’s questions and tried to put the problem of international tax evasion in her country in perspective.

13 may 2016. “Panama is not just papers,” Eyda Varela de Chinchilla made clear from the start. Panama is one of the fastest-growing economies in Latin America. Inflation is less than 1 percent. Moreover, the money mentioned in the Panama Papers is spread across the world. The vice minister of finance emphasized more than once: “The money is not in Panama, but in Europe or other countries.”

Laws for more transparency

However, Panama facilitates the system of money laundering through its nontransparent financial system, moderator Stephen Sackur said in response. Eyda Varela de Chinchilla replied that, since the new government’s inauguration two years ago, Panama has constantly improved and introduced laws that ensure more transparency. It is imperative for countries to work together to uncover and avoid weak spots in the financial system, she said. Panama is prepared to address global problems and offer cooperation.

Stephen Sackur responded that according to the Organization for Economic Cooperation and Development (OECD), that is not yet enough. Unlike Switzerland, Bermuda, Luxembourg and other tax havens, Panama does not do enough to prevent money laundering. “We committed to bilateral automatic exchange of information,” de Chinchilla replied. That is an improvement from the bilateral agreements that existed previously, under which information was surrendered only on request. Stephen Sackur called for more and asked why Panama did not enter into multilateral agreements. “That’s not enough. OECD wants you to sign multilateral agreements.” Eyda Varela de Chinchilla did not respond to that, however.

Just an image problem?

She said Panama’s problem was its bad reputation as a tax haven. There is no systemic problem. Tax evasion is a worldwide problem: “There is a global problem of money laundering and taxation that involves many countries whose legal and financial structures are vulnerable to those practices.” Panama is not the only place where money is parked.

Panama’s other factors of success

Eyda Varela de Chinchilla stressed that Panama’s success rests not only on the financial industry, but also on a very multi-layered economy. The financial sector constitutes only 10 percent of the gross domestic product. The Panama Canal, trade and tourism also are important pillars of Panama’s prosperity.

But despite continuing growth, Panama still has problems with corruption and poverty, noted Stephen Sackur. Eyda Varela de Chinchilla sees education as an important key to evenly distribute the growing wealth in her country. But the government also invests in a well-functioning health-care system and the water supply. In contrast to the past 25 years, many cases of corruption are now investigated and pursued.

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