Officials attribute the downturn primarily to the public sector. New placements to government entities fell 19.3 percent, sliding from $1,199.3 million to $968.3 million. When excluding institutional lending, private sector credit remained nearly flat at $7,638.8 million, down just 0.1 percent from $7,646.2 million.<\/p>\n Superintendent Milton Ay\u00f3n Wong defended the system’s health during a presentation of the quarterly results. He said banks continue to serve households and businesses through selective allocation. Commerce captured 45.5 percent of all new loans, totaling $3,918.6 million. Personal consumption rose 17.9 percent, and industrial lending jumped 45.4 percent.<\/p>\n “The construction and mortgage sectors are in a recovery period after a severe downturn. Consumer banking and industry leveraged the sectoral growth so the total ended in an increase,” said Javier Motta, director of Financial Stability at the Superintendency of Banks of Panama. [Translated from Spanish]<\/p><\/blockquote>\n Motta also pointed to rising interest rates as a factor. Mortgage rates climbed from 6.25 percent in April 2025 to 6.50 percent in April 2026. That increase has cooled demand for home loans.<\/p>\n Not everyone shares the regulator’s optimism. Rolando Gord\u00f3n, dean of the Faculty of Economics at the University of Panama, offered a starkly different interpretation. He called the stable private credit figures a symptom of economic paralysis.<\/p>\n “If credit remained stable in the private sector, that stability shows people are not requesting loans, just the same amount, a smaller amount that fell compared to last year. So it shows us that in the first four months the country’s economic situation has not been good,” Gord\u00f3n warned. [Translated from Spanish]<\/p><\/blockquote>\n Gord\u00f3n linked the public sector credit collapse to weak tax collections. He argued the government cannot borrow because it cannot collect. He predicted further declines if revenue does not improve.<\/p>\n “If the economic collection does not improve, credit will continue to fall, and it will fall to the extent that the State does not have many faculties. Perhaps in this situation, even if the State wants to borrow from the national banks, it will have problems because people will not want to lend to it because they know the economic situation it is in, or they would lend at high interest rates,” Gord\u00f3n said. [Translated from Spanish]<\/p><\/blockquote>\n The economist described the banking data as a mirror of internal realities. He cited a lack of foreign investment, persistent informal employment, and public uncertainty about future improvement.<\/p>\n The sector breakdown from the Superintendency reveals double-digit contractions in the most vulnerable segments. New construction loans fell 25.3 percent during the January to April period. Mortgage originations dropped 23.5 percent.<\/p>\n Superintendent Ay\u00f3n Wong acknowledged the construction sector has been slowing for years. He said the real estate boom created an oversupply of projects in Panama City, beach areas, and the interior. That overhang continues to suppress demand for new financing.<\/p>\n “That boom came back to haunt us. Today the sector does not show the dynamism of before and the banks have had to adjust their financing policy,” Ay\u00f3n Wong stated. [Translated from Spanish]<\/p><\/blockquote>\n He also cited uncertainty from the recent approval of the Preferential Interest Law. That legislation forced banks to maintain subsidized conditions for debtors even after the subsidy period expired. Lenders have since tightened their underwriting standards.<\/p>\n The near-zero movement in private sector lending raises questions about investment and job creation. While the regulator frames the stability as a sign of normalcy, critics see a lack of economic traction. The Panama bank<\/strong>ing system credit data<\/a> shows no expansion in financing for businesses or households outside of specific sectors.<\/p>\n Commerce remains the dominant recipient of new loans. But even that sector’s $3.9 billion in originations reflects existing operations rather than new expansion. The industrial segment saw a 45.4 percent jump, but from a relatively small base.<\/p>\n Consumer lending grew 17.9 percent, suggesting households are borrowing for day-to-day needs rather than large investments. That pattern aligns with Gord\u00f3n’s assessment of economic stagnation rather than recovery.<\/p>\n The coming months will test both the banking system’s resilience and the broader economy. If tax collections remain weak, public sector borrowing will likely contract further. That would pull down aggregate lending numbers even if private credit holds steady.<\/p>\n![\"Panama](\"https:\/\/expat-times.com\/panama\/wp-content\/uploads\/2026\/02\/panama-banking-1080x720-1.webp\")
Regulator Says Banks Still Have Capacity to Lend<\/h2>\n
Economists Warn of Stagnation and Risk<\/h2>\n
![\"mortgage\"](\"https:\/\/expat-times.com\/panama\/wp-content\/uploads\/2026\/06\/mortgage-1200x800-1.webp\")
Construction and Mortgages Hit Hardest<\/h2>\n
Private Sector Credit Shows No Growth Momentum<\/h2>\n
Outlook Depends on Fiscal Health and Investor Confidence<\/h2>\n
![\"panama](\"https:\/\/expat-times.com\/panama\/wp-content\/uploads\/2025\/10\/panama-banking-1200x800.webp\")
<\/p>\n","protected":false},"excerpt":{"rendered":"