In Panama the COVID-19 crisis is not yet over. In fact, we have not even reached the peak. However, as in a good chess game, it is important to move our pieces with the endgame in sight. We need to start preparing for a return to normality, and we should preferably avoid doing anything that would make our return to normality more difficult.

The Panamanian government is generally doing a good job addressing the crisis, to the point that it has been commended internationally. However, the government is now embarking on a line of action that, although it is clearly rooted in good intentions, will probably create difficulties when the state of emergency is lifted. This line of action relates to interfering with the commercial relations between private parties. In particular, a new law has been passed by the legislature (at the time of this writing it is still awaiting presidential sanction for its effectiveness) that permits certain customers to defer the payment of their bills for electricity, telephone and internet services for a period of four months. Another law has passed the second debate at the legislature (a third debate and its presidential sanction are necessary for it to come into effect) that defers the payment of bank loans (residential and commercial), of school monthly fees, of school transportation fees, of lease payments (residential and commercial), and also bills for electricity, telephone and internet services.

Besides the overlap between the two laws, and the different criteria for the payment deferral, these laws will make our return to normality more difficult, not only because of their immediate effects on the Panamanian economy and its use of resources, but also because of its longer-term effects when the health emergency is over.

The laws are not specific as to who makes the determination of whether a specific customer satisfies the conditions to defer payments. It could be the government, or it could be the services providers (including banks). It would avoid duplicative work if the determination was made by the government because, if it is made by the services providers, then one single customer would need to qualify for each of the services providers (and the case could arise in which a customer qualifies for one services provider and does not qualify for another). Therefore, the government will need to set up an office which will make this type of determinations. That will take some time to complete, it will require new regulations, and also training of people to make the determinations. In summary, it will withdraw resources from the fight against the virus. And, once the crisis is over, the government employees in that office will need to find new employment or be reassigned to new post-crisis offices.

In addition, the services providers may face financial difficulties if the proportion of customers who satisfy the conditions is sufficiently large. For a period of three or four months, depending on the law, their cash flows could be severely affected. With enough bad luck, this could result in bankruptcies. And the suppliers of these services providers might also be adversely affected if they do not receive payments that they are entitled to. All this could be avoided if the government uses public funds to support the services providers during the deferral period, in which case it will be necessary to expand the governmental office to deal with the actual effects of the deferral on the services providers, further withdrawing resources (money and people) from the fight against the virus.

Once the crisis is over, it will be necessary to implement a system of control of the return by the services providers of any public funds that they may have received, to keep track of each customer whose payments were deferred, and to determine the aggregate amount that they need to pay over the three-year period (one of the laws does not even discuss how the deferred amounts will be paid). The customers need to remain with the same services providers during that period, which is not difficult in the case of the electricity distribution companies (because each has a territorial concession), but may be complicated in other cases (e.g., schools, telephone and internet services providers). It may be necessary to issue regulations covering these types of situations and other types that may occur and we cannot foresee right now.

It appears that these laws are the first of a few more to come, all based on excellent intentions. But I believe that the temporary relief that these laws will provide will not compensate for the difficulties that these laws will cause when the crisis is over. If, instead of “protecting” customers in this one-size-fits-all manner, interfering in the relation between private parties under very difficult circumstances, the Panamanian government let customers and their providers address their specific situations on terms that they find mutually agreeable, not only would it result in less bureaucracy and more resources remaining available for the fight against the virus, but also in a more efficient problem resolution approach that would prepare our society for a smoother return to normality.