Martinelli in serious money trouble

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Panic already in the government now that they can't sell state assets such as the shares in companies like Cable & Wireless. Martinelli & Co wanted that money, and ministers are already threatening budget cuts and austerity and doom if the "dialog" doesn't result in them being allowed to have their yard sale anyway. A bit like how they were threatening daily power outages if they couldn't build a gazillion hydroelectric dams everywhere.

Except that this time they really need that money. Martinelli has been overspending dramatically on his mega-projects and corruption. Our friend Ricardo Ernesto Soto, Public Policy Advisor at Goethals Consulting, did the math for us.

The budget for next year is $15 billion. Now, according to Transparency International, in Latin America about 30% of public spending on contracted work is lost in corruption - in other words, officials steal that money. Inflated prices (radars, helicopters), payments under the table, skimming funds, etc. So, of that $15 billion budget, a couple of billion will be stolen.

Even if that number seems high - it's from the nineties - a 2004 study by the Inter-American Development Bank found that about 10% of GDP is eaten up by corruption. That's about three billion dollar in Panama every year.

Now here's Martinelli's problem: He faces a deficit of about $2.5 billion.

What can he do? He can issue bonds, but more debt will probably cost Panama its investment grade, make borrowing more expensive. Plus, investment grade or not, Panama isn't that hot anymore thanks to Martinelli's capers. So this is not really an option.

He could theoretically sell off each and every state asset and hope that that'll be enough to keep up with his spending until he's out of office in 2014/15. But Panamanians don't accept that, as recent events have shown.

He could reduce his kleptomania to the levels of the developed world, which would mean that very little of the budget disappears through corruption. Together with some minor budget cuts this would be a relatively easy way to balance his budget without the need for controversial measures.

But here's the problem: Martinelli's political and legal survival depends on corruption. Monica Palm Flor Mizrachi reported today that one of the reasons Martinelli backed down Tuesday was that his own legislators demanded $5,000,000 for their votes to pass the laws he wanted. Martinelli doesn't have friends or fans; he has associates who want to be reimbursed for their support and who are getting more expensive as Martinelli's insanity and greed increase. In other words, Martinelli can not afford to reduce looting of public coffers even if he wanted to.

So what can Martinelli do? A diversion would of course be great, but unfortunately for him we don't have disputes about some islands with the Brits. Similarly, he can't just abandon the dollar and start printing balboas - not if he wants to keep his coveted investment grade.

He could of course pull a Noriega and have the narcos come up with the money he needs. But he would have to become a really big player to make the kind of money he needs to keep his illusion of government afloat.

So we'll either see some of these mega-projects slow down significantly or even be cancelled, or Martinelli is gonna go all-out to amass enough power to be able to sell assets of the state, like the shares of C&W, electricity companies, land owned by the state and so on. Then he'll probably dip into pension funds and whatever else he can get his hands on.

Despite all the political posturing of "opposition" charlatans lately, the protests yesterday and today have accomplished one important tactical victory against Martinelli: His funding has been cut off. This means that he won't be able to deliver on his promises. That leads to further loss of legitimacy. He gets isolated, and his government will fragment, lose its moral cohesion. It will then all disintegrate - a process we have been watching in slow motion for almost a year now - or he'll do something erratic and stupid. Bottom line is that it's all downhill from here.

6 thoughts on “Martinelli in serious money trouble

  1. The financial ruin and Looting of Panama!

    The Corruption has only grown under the Criminal Martinelli your Fraudulent Felonious savior of Panama!

    This torrid over the top Criminal Martinelli government debt is tearing apart Panama by civil strife sudden Moral, Ethical, Legal, and Now Economic catastrophic failure!

    The only thing this Martinelli Criminal Government is good at is buying the voters and opposition Politicians, hiring CD Party members then adding them to the Government payroll at taxpayer expense, all the while paying off his personal cronies, their criminal associate, friends with all the ill gotten gains skimmed, embezzled, and stolen from the peoples of Panama!

    If you cut through all the Ministries cooked books accounting garbage they put out, illegal off the book purchases by the Finance Minister, Commerce Minister, Education Minister, Health Minister, MOP, ATTT, Martinelli and his criminal Cabinet you would quickly realize Panama is over $60 Billion in debt and growing Daily!

    Just do your research and it all adds up pretty fast!

    Over half of the peoples of Panama still do not have clean safe drinkable water on a daily, weekly, monthly, and into years now!

    Over half of the schools in Panama still do not have electricity, clean safe drinkable water, or usable toilets!

    All most every street, road, & Highway in Panama still have gaping potholes, broken uneven pavement, shoulders that would swallow a bus.

    Over 90% of the Panamanian Infrastructure is still in shambles.

    Water and sewer systems still in complete disarray.

    As for the poor and the underprivileged what has Martinelli done but to raise the price of food, Shelter, and stop any efforts at bringing a fare living wage to Panama!

    The only thing this Criminal Martinelli Government has accomplished is to Bleed Panama Monetarily dry!

    When will Martinelli’s economy reign of terror end against the People of Panama in 2014?

    All this bough to you by the “Martinelli, Panama’s Fictitious, Fraudulent, Felonious savior of Panama!”

  2. Pingback: Mayin Correa wants to die | Bananama Republic

  3. The ideals of truth and service in politics were, are, will never be true. As long as there is something valuable, be it money or resources, greed will always be part of this endless zero sum game.

    We are a developing nation and others such as the US are developed. The only difference between them and us is:

    – They are very smart and advanced enough to create and innovate. They are already too big to be broken. In developed countries petty corruption does not exists, because it happens on the highest levels.

    – In countries like Panama, where education is clearly shit, petty corruption is prevalent and the same on the highest levels. Bottom line, we are fucked because aside from corruption, crime, wrongly planned development, and many other problems, we now got Toxic Debt.

    Whose gonna pay for the broken plates?

  4. Vacationed in Panama fell in love with it and it’s people made a lot of frdiens decided, This is the place I want to retire. Entered a real estate contract and now it’s a night mare 3 diffrent attorneys 3 years large down payment run around from developer Destiney who lied to me mis led me in contract. Nikki Beach playa Blanca has made me sick. Purchased what I thought according to my broker developer and the attorny was a residence to live in for retirement is only a time share. I found this out after a year of run around from a new sales person that the developer made a mistake and the gov,t said that because this was really a hotel and I could really stay there for only 7 months a year. TIME SHARE not what I signed a contract for. Now the country I told everyone I love I am beggining to hate. Consumer protection Panama tried to help and was lied to given the run around for months,and they just gave up. Destiney Real Estate has a family member as a attorney and they uses the Panama system to their benifit. Think Three Four Five times before buying Real Estae here. YO ODEIO NIKKI BEACH PLAYA BLanca. I still love Panama and my frdiens I hope I can still resolve the problem here and I would probably THINk about it and still buy a property in Panama.

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