Why the Dollar is Good for Panama

by Knightsbridge Investment Group

         The weak U.S. dollar is not a bad thing for companies and individuals looking to invest or relocate business to Panama. It makes investing here more affordable than ever.

       Investors, tourists and executives visiting Panama do not have to worry about the currency conversion; the government of Panama uses the U.S. dollar as its core national currency. However, the government calls the currency Balboa for keeping the nationalistic flavor on the notes.

         The U.S. dollar has been Panama’s prime currency since 1904, following an agreement between the U.S and the Panama government. Since than, the U.S. dollars dominated Panama’s overall macroeconomic policy instruments.

         In a way, Panama’s economy is unique. Panama does not print its own paper currency because it does not have a central bank. Government spending and investments largely depend on tax revenues, non-tax revenues and borrowings. Thus, creditworthiness of the Panama government is directly linked to the public finances.

         Since Panama has a small economy, not having a self-governing monetary policy does not create much of a problem. The government handles the situation effectively. Moreover, in the time of ‘dollarization’, this became a huge advantage in favor of Panama.

          Because Panama uses the U.S. dollar as the legal tender, chances of currency exchange risk are eliminated.

         As a result, foreign companies do not hesitate in investing here. When investing in Panama, foreign companies do not have to convert the currency twice. Additionally, Panama has no restrictions on the outflow of capital or outward direct investment, making it an ideal place to invest.

         It has been proven that Panama’s economy is one of the healthiest in Latin America and its economy has stood strong during the past financial crisis throughout the continent. Panama has managed to maintain an annual inflation rate of below two percent for the last 40 years. In 2005, the inflation was 2.3 percent, one of the lowest in many years.

         All these factors make Panama an ideal place for investment and a great place for relaxing.
For more information on Panama investments, please go to: http://www.knightsbridgeinvest-panama.com