The decline in the number of companies setting up in Panama has accelerated

Oliver Gill
Follow Oliver
Panama City
Government officials say that Panama's economy has not been adversely impacted by the revelations in the Panama Papers (Source: Getty)

The number of new companies incorporated in Panama is likely to drop by a fifth following the leak of financial information earlier this year known as the Panama Papers.

While there has been a falling trend in the volume of companies setting up on the isthmus since 2008 – at a rate of around 7.5 per cent a year – Panama’s finance minister Dulcidio De La Guardia told an investment forum that this trend had accelerated in 2016.

“If the current trend continues, the portfolio of companies incorporated in Panama is going to drop by about 20 per cent this year,” he said.

Read more: Panama's banking system grows by more than $4bn in first half of 2016

De La Guardia added that the downward trend since 2008 was as a result of increased demands on transparency and despite the news, the Panamanian economy had not been affected.

The news comes as the office of Brazil’s top prosecutor hit out at Panama for failing to deliver information on banks in relation to its corruption investigation into stated-owned oil company Petrobras.

Prosecutors suspect that banks and other financial institutions were used to move millions of dollars of cash in relation to bribes to Brazilian politicians and voiced their frustration at the lack of co-operation from Panama authorities.

Read more: Petrobras to get a new boss tomorrow

Brazil’s prosecutor-general said that Panama had failed to comply with international conventions on penal co-operation and stressed the “need for a rapid reply to the requests made to Panama”.

It is not the first criticism of Panama by Brazilian authorities in connection with their investigations.

“Panama is our biggest problem to tell you the truth. There have always been obstacles to working with them,” said Carlos Lima earlier this year, who is the lead investigator into the Petrobras scandal.