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Pension Mess is Setback for Panama's Torrijos
ABC News, Mike Power
Panama
July 5, 2005
Panamanian President Martin Torrijos, son of populist dictator Omar Torrijos, began his term with diplomatic and fiscal successes but has run into stiff opposition to a plan to raise the retirement age for state workers.
After a month of strikes, riots and criticism from the influential Catholic Church, Torrijos backed down in a fight with unions and the opposition over a law that raised the retirement age for state workers by three years to 65 for men and 60 for women.
It also required state workers to pay into the pension fund for 25 years to qualify for a pension, up from 15 years now.
Torrijos was forced to ask parliament this week to freeze implementation of the law, which the national assembly passed in early June. Parliament is expected to do so this week. The decision to back down was his first serious setback since taking office last September.
The pension law was his key economic reform and he will now have to negotiate with the country's unions to see if he can save it. Panama's pension system has a $100 million annual deficit, say officials, and faces bankruptcy by 2012 if nothing is done.
Mario Rognioni, a Panamanian political commentator, blamed the president's troubles on inexperience. "The steps he has taken are difficult and dramatic, but the team, through lack of experience, did not know how to explain them to the nation," he said.
Political analyst Richard Millett added: "Unfortunately he listened to people who were good on economics and bad on politics."
Torrijos' rule started decisively when he restored diplomatic relations with Cuba, broken over Panama freeing four men jailed for plotting to kill President Fidel Castro.
Next, Torrijos quickly used his parliamentary majority to push a tough fiscal reform package through in January.
Wall Street welcomed the measures, which helped avert a foreign debt default and narrowed a 2004 budget gap of $700 million.
But Torrijos's political stock has plummeted in the botched pension reform as unions, the Church and foreign investors all question his rule.
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