On December 1, 2015, Moody’s Investors Service affirmed Panama’s Baa2 (investment grade) issuer and senior unsecured ratings, as well as (P) Baa2 shelf ratings. Moody’s based their rating affirmation on Panama’s continued strong economic performance and fiscal metrics that remain in line with its Baa peers.

Moody’s reported the following factors as the major drivers of their rating decision:

• GDP growth averaged 7.3% in 2012-14, which is well above the Baa group median of 2.9% during the same period

• A well-developed services sector, accounting for about 79 percent of GDP, includes services such as the Panama Canal, banking, the Colon Free Zone, insurance, container ports, and air transportation

• Panama does not rely on commodities like other regional peers, making it largely resilient to market volatility

• Panama's economic performance has been driven by infrastructure investment that amounted to 47% of GDP in 2014

• Panama's debt metrics remain below the Baa median, which stood at 40% of GDP last year

• Panama’s debt affordability, as measured by the ratio of interest payments to government revenues, is aligned with its Baa peers

Moody’s rating action report indicates that Panama’s Baa2 rating could be upgraded in 12-18 months if the government demonstrates fiscal discipline by adhering to their Social and Fiscal Responsibility Law that caps deficit spending.