Summary.
The draft bill aims to ensure that retirees, pensioners, survivors and beneficiaries receive most of the face value of the Negotiable Payment Certificates for the second installment of the thirteenth month payment (CEPADEM) and the Negotiable Payment Certificate for Interest on Late Payment (CEPANIM), issued by the Panamanian State. It defines both certificates, identifies a beneficiary as a retiree, pensioner, survivor or legally recognized heir, and defines the exchange rate as the rate used for their early exchange. It then provides that the discount rate applied to the early exchange of a CEPADEM or CEPANIM certificate may not exceed ten percent (10%) of its face value.
The National Bank of Panama (Banco Nacional de Panamá), as paying entity, could establish rediscounting, financing, purchase or liquidity programs for these certificates. The bill connects those programs to reducing the financial cost borne by beneficiaries when they negotiate the certificates. The Ministry of Economy and Finance (Ministerio de Economía y Finanzas) could, in turn, include in the General State Budget the resources needed to subsidize all or part of the financial cost of that negotiation, with a view to keeping the effective discount borne by the beneficiary at the level established by the draft bill. These provisions assign different roles to the two public entities in financing certificate transactions.
Banks, local businesses, securities firms, savings and credit cooperatives and multipurpose cooperatives, finance companies, legal persons and companies legally authorized to negotiate these certificates in the Republic of Panama (República de Panamá) would have to disclose the economic terms of a transaction beforehand and in writing. The disclosure would cover the certificate’s face value, the amount the beneficiary will actually receive, the discount percentage applied, the amount discounted and the total financial cost. The draft bill also prohibits direct or indirect additional charges that increase the discount rate applicable to early exchange. The discount cap and the prior disclosure requirement thus apply to the same certificate transaction.
The text declares its provisions to be of public order and social character, assigns the Ministry of Economy and Finance responsibility for overseeing compliance, and directs the Executive Branch (Órgano Ejecutivo) to issue implementing regulations within sixty (60) days following promulgation. It makes no express amendment to another enactment. The public entities involved are the National Bank of Panama, the Ministry of Economy and Finance and the Executive Branch. The sectors and groups that its provisions could concern or affect include retirees, pensioners, survivors, legally recognized heirs, banks, local businesses, securities firms, cooperatives, finance companies and other authorized certificate traders.
What it proposes.
- Discount cap for early exchange of CEPADEM and CEPANIM.
- Liquidity mechanisms and subsidies for certificate financing costs.
- Prior disclosure and charges in certificate transactions.
Who it would affect.
- Retirees, pensioners, survivors and legally recognized heirs.
- Entities authorized to negotiate CEPADEM and CEPANIM.
- The National Bank of Panama and the Ministry of Economy and Finance.
Key points.
- The bill seeks to ensure that beneficiaries receive most of the face value of CEPADEM and CEPANIM.Art. 1
- It defines the certificates, the beneficiary and the rate used for early exchange.Art. 2
- It caps the discount for early exchange at ten percent (10%) of face value.Art. 3
- It allows the National Bank of Panama to establish rediscounting, financing, purchase or liquidity programs.Art. 4
- It allows the Ministry of Economy and Finance to budget resources to subsidize all or part of the financial cost of negotiation.Art. 5
- It requires authorized traders to disclose in writing beforehand the face value, actual payment, discount and total financial cost.Art. 6