Fri Jun 20, 2008 8:25pm BST
REUTERS UK
PANAMA CITY, June 20 (Reuters) - Panamanian President Martin Torrijos said on Friday he would boost subsidies on gasoline and electricity in a bid to prevent further price increases and stem inflation.
Panama will spend at least $40 million in the next six months to blunt the impact of further international price increases, protecting consumers who have seen retail fuel costs rise more than 24 percent in the last 12 months, Torrijos said.
With presidential elections scheduled for May next year, the government has been keen to underline the global causes of the crisis and keep demonstrations by students, transport workers and unions from leading to widespread unrest.
Like many import-dependent countries Panama has been hit hard by high global prices for oil and food, but consumers have also seen living costs rise as a result of the country's economic boom.
With 12-month inflation running at a historically high rate of 8.8 percent, the rising cost of living has become a major election issue.
This week, Panama City was paralyzed by transport strikes, with bus drivers blocking roads and setting vehicles alight in protest against the rising cost of fuel and reforms to the public transport system.
Torrijos' announcement follows a decision on Wednesday to spend an additional $10 million to subsidize the price of diesel for bus owners from now until September.
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