Home' Trinidad and Tobago Guardian : November 24th 2016 Contents NOVEMBER 24 • 2016 guardian.co.tt BUSINESS GUARDIAN
REGIONAL | A19
Panama needs to immediately boost
transparency and regulation of
its financial sector to shake off
its reputation---deepened by the
"Panama Papers" scandal---of
being a hub for tax evasion, a report released
"Decisions, investment, legislation and a
high degree of commitment by the authorities
and regulatory bodies of Panama" are needed to
keep Panama off lists that would punish it as a
designated tax or money-laundering haven, the
report by the government-appointed interna-
tional Committee of Independent Experts said.
Automatic sharing of tax information and
holding lawyers to higher standards were
among its key recommendations.
"The moment has come. The country can
no longer postpone decision-making in this
field," it said.
The panel was established by Panamanian
President Juan Carlos Varela in April, days after
the Panama Papers revelations showed how a
law firm in the Central American nation set up
companies to help the world's wealthy shield
their assets from scrutiny.
It was seen as an effort by Varela to limit the
damage from the scandal, which sparked tax
probes in several countries around the world,
protests that led to the resignation of Iceland's
prime minister, and prompted France to put
Panama back on its blacklist of uncooperative
Transparency International, a corruption
watchdog, said the experts' report "does not
go far enough."
It tweeted a reaction from its international
advocacy coordinator, Max Heywood, saying:
"Unless Panama decides to join the handful of
countries that have committed to creating a
public register that names the real owners of
all corporations and trusts, the criminals will
continue to win the fight against corruption."
Panama's services sector accounts for 83
per cent of its economy, which is rated a "star
growth performer" in Latin America by the
International Monetary Fund.
The seven-member Committee of Inde-
pendent Experts was initially headed by No-
bel-winning US economist Joseph Stiglitz.
But he and a Swiss anti-corruption expert
Mark Pieth resigned in August, saying Varela's
government was curbing their independence
in making the panel's findings public.
They released their own report which called
on the United States and Europe to lead a global
fight against financial centers seen to be lax
in cracking down on financial corruption and
Since the "Panama Papers," Panama has de-
clared itself committed to reforms to protect
its financial activities. It notably signed an
agreement last month with the Organisation
for Economic Cooperation and Development
for the multilateral exchange of tax informa-
Varela last week warned France of "diplo-
matic measures" from January 2017 if it kept
Panama on its blacklist. Panama's parliament
has already approved a law that, if approved
by Varela, would impose tax and migratory
penalties on France.
European Union finance ministers in early
November met to discuss drawing up a list
of countries deemed to be uncooperative in
sharing tax information.
"It's a big step towards an international
blacklist" that could emerge by the end of 2017,
Slovakian Finance Minister Peter Kazimir said
at the time.
Argentina's return to honest
accounting more than just numbers
Nearly four years after Argentina became
the first country to be censured by the Inter-
national Monetary Fund (IMF) for providing
inaccurate data on inflation and economic
growth, the international body on Novem-
ber 9 restored the country to good standing.
The move provided a win for the govern-
ment's reform agenda and offered a positive
sign for hesitant investors. But after years of
at times embarrassing statistical uncertainty,
the most significant effect of President Mau-
ricio Macri's overhaul of the National Institute
of Statistics and Census (INDEC) may be the
level of credibility it restores to government
"Rebuilding INDEC's reputation was fun-
damental to recreating the state's reputation
and rebuilding some of the confidence of the
state," said Sergio Berensztein, an Argentine
political analyst. "It's not just about statistics;
For Fiona Mackie, who focuses on Argenti-
na as a senior editor for Latin America at the
Economist Intelligence Unit, the importance
of official statistics to the country's economic
and political environment can't be overstated.
"If you can't rely on the statistics that the
government is producing, what does that say
about the strength of institutions? What does
that say about the credibility of government
in other areas?" Mackie said, noting that the
lack of reliable statistics has impeded investors'
ability to make informed decisions.
The Economist stopped using INDEC's con-
sumer price index back in 2012. At the time, the
publication wrote that the institute's efforts
to manipulate numbers appeared "to be a de-
liberate attempt to deceive voters and swindle
After taking office, Macri declared a "na-
tional statistical emergency" as he set about
restructuring the agency's data collection
methods under his predecessor Cristina
Fernández de Kirchner. During her presidency,
INDEC was accused of staffing the agency with
political supporters who allegedly tampered
with statistics to misrepresent uncomfortable
macroeconomic realities, including inflation
rates well above government targets.
In June, INDEC released its first inflation
figures during Macri's presidency, putting in-
flation of its consumer price index in May at
4.2 per cent. That monthly rate has come down
since, though annual inflation is expected to
end the year above 35 per cent, considerably
higher than the administration's early expec-
tations and the highest in the region outside
Still, taken together with government efforts
to restore Argentina's place in global capital
markets, early signs suggest that investors are
encouraged by INDEC's restart.
An inaugural business and investment forum
in September drew a crowd of nearly 2,000
potential investors in Buenos Aires, while
companies including Toyota and ExxonMo-
bil have pledged some US$30 billion in new
investments in the country.
But INDEC isn't out of the woods yet. The
Economist, for example, still hasn't returned
to publishing the official indicator, primarily
because the institute hasn't been producing
reliable numbers long enough for the data to
be useful. For Mackie, consistency should be
a key goal for INDEC going forward.
"The work on the part of INDEC isn't done,
and it's still a problem on the part of the gov-
ernment that it doesn't have a full set of ac-
curate statistics," Mackie told AQ, pointing to
"problematic" gaps in data for key indicators
such as producer prices, employment and in-
Mackie says this could make it difficult for
the government to shift the economic narrative
away from recession and toward the recovery
it is anticipating. Baby steps.
Experts urge Panama
reforms after 'Papers'
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