Panama Canal boss says MSC ports deal threatens neutrality, FT reports
June 10 (Reuters) - The sale of two ports near the Panama Canal to a global consortium led by Mediterranean Shipping Company (MSC) threatens the canal's principle of neutrality, the canal's head Ricaurte Vasquez told the Financial Times.
"There is a potential risk of capacity concentration if the deal comes the way it is structured as we understand right now,' Vasquez told the FT in a report published on Tuesday.
"If there is a significant level of concentration on terminal operators belonging to an integrated or one single shipping company, it will be at the expense of Panama's competitiveness in the market and inconsistent with neutrality."
MSC is one of the world's top container shipping groups. MSC and the Panama Canal Authority did not immediately respond to a Reuters request for comment.
CK Hutchison (0001.HK), opens new tab confirmed last month that MSC, run by the family of Italian billionaire Gianluigi Aponte, was the main investor in a group seeking to buy 43 ports, including the two ports in Panama, for $22.8 billion.
The clarification follows weeks of scrutiny and criticism in China over CK Hutchison's plan to sell the ports to a consortium, which was previously led by U.S. investment firm BlackRock (BLK.N), opens new tab. BlackRock remains part of the group.
The proposed sale has also drawn the attention of U.S. President Donald Trump, who has repeatedly expressed his desire to reduce Chinese influence around the Panama Canal and termed the deal a "reclaiming" of the waterway after it was first announced.
In April, China's top market regulator said it was paying close attention to CK Hutchison's planned sale and that parties to the deal should not try to avoid an antitrust review.
Vasquez added that the canal should use the ports deal as an opportunity to become a terminal operator itself by reactivating a project to build a terminal in the Port of Corozal at the Pacific end of the canal, according to the FT.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Telegraph
12 hours ago
- Telegraph
How banana worker strikes over pensions triggered a state of emergency in Panama
Workers have plunged Panama into crisis after the government announced plans to phase out a popular retirement scheme. The Latin American country has declared a state of emergency in the north western Bocas del Toro province after controversial pension reforms sparked widespread protests. The government temporarily suspended constitutional rights and imposed internet blackouts following more than a month of strikes and road blocks which led to clashes with police. Local reports suggest at least one person has died, more than 300 have been arrested and dozens injured. The protesters warn they face poverty in retirement because of a new pension law signed in March. Strikes began in April, initially led by banana workers. Bananas are one of Panama's main exports along with shrimps and copper ore. The crisis escalated earlier this month after banana giant, Chiquita, laid off all of its 6,500 workers in the country. Chiquita has said the protests cost the firm at least $75m (£55m), with almost one million boxes of bananas lost, causing 'irreversible damage'. The deep social unrest exposes the perils of reforming a generous pension system in a country with limited trust in the government. For years, Panama has tried and failed to overhaul its defined benefit scheme in order to tackle a deficit now worth over $650m. As far back as 2006, the International Monetary Fund warned the scheme was facing crisis due to an ageing population and the level of benefits which it described as 'among the highest in Latin America' – and generous even by European standards. Under the scheme, the pension contributions of the working population fund the benefits of current retirees, rather than their own future pensions. Both private and public sector employees are covered by the system. Those who have made 20 years of contributions are eligible for 60pc of their average monthly earnings in retirement based on their highest paid 10 years. But this system has become unsustainable due to an ageing population. The number of over 65s in Panama has tripled in the last three decades from just over 100,000 at the end of the 20th century to more than 400,000 today. This means a growing number of retirees are dependent on the pension contributions of a shrinking pool of workers. To stop the scheme from sinking further into the red, Panama created a new mixed pension system in 2008. But without further reform, the deficit was still predicted to reach almost 4pc of GDP by 2045. In March, President Jose Raul Mulino signed into law reforms merging the two systems into a state-managed defined contribution scheme. Under the reforms, employee contributions will remain unchanged at 9.75pc of wages, employer contributions will rise gradually from 12.25pc to 15.25pc by 2029 and the government will pay almost $1bn a year to address any shortfalls. In addition, workers are promised a minimum pension of about $145 dollars a month. The government has claimed this is generous compared to the universal basic pensions available in other countries in Latin America. But workers have said the pension reforms will leave them in poverty in retirement. This is because their income will depend on investment performance as well as their own contributions. Mariano Thompson, a Latin America pensions expert, of insurance company WTW, said: 'An individual account system requires consistent contributions and reduced volatility in both national and global financial markets to ensure a decent return, as the benefit depends on the funds accumulated by retirement.' Many Panamanian workers are employed in the informal sector for at least a portion of their working career, potentially limiting the number of contributions they can make, and therefore, the size of their pension pot. Low trust in the government is another reason why the reform has triggered social unrest. Mr Thompson said: 'While the government justifies the reforms due to the growing deficit of the system, union protests are driven by a lack of trust in the government's ability to fulfil its promised contributions and minimum benefits.' He continued: 'These groups do not trust individual account schemes and would prefer a defined benefit model, which they regard as a solidarity-based system.' Workers are also suspicious about future retirement age increases, he added. The reform maintained the retirement age at 62 for men and 57 for women – but scheduled a review in six years' time. Pension reform is not the only thing motivating the protests. President Mulino has become increasingly unpopular for signing a Memorandum of Understanding, which gives US military vessels free passage and allows US soldiers to train on Panamanian soil. The government has insisted this does not impact Panama's sovereignty or the neutrality deal. But it has provoked outrage from Panamanians who accuse the president of cosying up to President Donald Trump, who has previously threatened to seize back control of the Panama Canal.
Reuters
2 days ago
- Reuters
S&P cuts Colombia's debt rating to 'BB' over declining fiscal results
June 26 (Reuters) - S&P downgraded Colombia's debt rating by one notch to 'BB' from 'BB+', citing weaker fiscal performance, the ratings agency said on Thursday. Latin America's fourth-largest economy is facing deteriorating fiscal accounts amid lower tax revenues, high public debt and difficulties in reducing spending. The Colombian government last week suspended compliance with its so-called fiscal rule, to allow it to increase its deficit target for 2025 to 7.1% of gross domestic product from 5.1% of GDP. It said the goal was to boost the economy, especially agriculture and manufacturing. S&P said the combination of large fiscal deficits and weak economic performance had worsened Colombia's public finances and increased its vulnerability to external shocks. "Fiscal policy has also become less predictable, as highlighted by the government's recent decision to suspend the country's fiscal rule for three years," the agency said. The ratings agency assigned a negative outlook on Colombia's 'BB' rating, indicating the risk of a further downgrade over the next 18 months. It warned that steady fiscal deterioration in Colombia could persist over several years, along with the country's heightened security challenges, further worsening its credit profile. Colombia is weighing boosting its external and domestic debt by several billion dollars this year to cover a deepening fiscal deficit, Reuters reported earlier this month, citing three market sources with knowledge of the matter.
Reuters
2 days ago
- Reuters
Bank of Mexico cuts key interest rate to near three-year low
June 26 (Reuters) - The Bank of Mexico lowered its benchmark rate by 50 basis points on Thursday as largely expected, although the decision by the central bank's five-member governing board was not unanimous. The move brings the rate to 8.0%, the lowest since August 2022. Deputy Governor Jonathan Heath was the sole dissenter, voting to hold the rate at its previous 8.5% level. In prior decisions, he agreed with rate cuts by the board. Markets had largely expected the 50 basis point cut, with 21 of 26 analysts polled by Reuters expecting the decision. The Mexican peso strengthened just over 0.2% against the dollar after the central bank's decision. Heath told Reuters earlier this month he supported a "more cautious, more prudent" approach until inflation resumed a clear downward trajectory. Annual headline inflation in Latin America's No. 2 economy has ticked up in recent months and jumped above the central bank's target range in May. It cooled slightly in the first half of June from the second half of May, hitting 4.51%, but still outside the central bank's target range of 3% plus or minus a percentage point. In its statement on Thursday, the central bank raised its forecast for year-end average headline inflation to 3.7% from its May forecast of 3.3%, although the bank held its estimate that inflation will converge to 3% in the third quarter of 2026. Banxico, as the Bank of Mexico is known, is balancing dual challenges: It is seeking to bring down inflation while also stimulating the economy amid weak economic growth and uncertainty tied to trade tensions and geopolitical developments. The board said in its statement that its decision was "made considering the behavior of the exchange rate, the weakness of economic activity, and the possible impact of changes in trade policies worldwide." "Looking ahead, the Board will assess further adjustments to the reference rate," the statement said. Notably, Thursday's decision did not include language from the most recent three monetary policy decisions about considering future cuts of "similar magnitudes." Private sector analysts polled by Reuters in May projected that Banxico will downsize its rate cuts for the rest of the year. Their median forecast was that the central bank will end 2025 with a benchmark rate of 7.5%.
