Panama will receive US$300 million from the World Bank to strengthen inclusive, sustainable economic recovery
New Delhi: The World Bank Board of Directors approved on December 8th a US$300 million loan to strengthen the Panamanian government’s health crisis response and economic recovery efforts. The financing will support the country’s efforts and initiatives to invest in people through better health and education services, in institutions that are key for transparency and proper management of public finances, and in a robust post-pandemic recovery with an inclusive, environmentally responsible approach.
This is the first of two programmatic development policy loans to help cover the budgetary needs of the government during the health crisis. The loans prioritize the protection of the most vulnerable populations and the promotion of key public policies for inclusive economic recovery.
“The health and well-being of the population are our priority. We are pleased with the effort made to obtain the resources needed to support the fiscal year, which was severely affected by the sharp decline in revenue and economic activity resulting from the pandemic,” said Finance Minister Héctor Alexander.
As part of the human capital focus, the operation will support the government’s priority policy actions. In the area of education, for example, by 2022, at least 50,000 public school students within the Colmena Plan are expected to use one of the educational technology solutions provided by the government to support learning during the school year. In the area of competitiveness and job creation, it will seek to improve the agricultural sector and food security and will prioritize the implementation of the Family Farming Law, with a focus on women farmers and on making the voice of indigenous peoples heard. The Government of Panama had been working on all these initiatives before the pandemic and continues to do so during the pandemic.
To reduce poverty and inequality, among other actions, the loan will be used to improve access to medicine by expanding the use of generic drugs, strengthening the social protection system and improving inclusion programs for indigenous peoples. It will also support the development of the strategy to distribute, prioritize and finance the COVID-19 vaccine when it becomes available, with a focus on safeguarding the health of high-risk groups. Additionally, the funds will be used to adapt the legal and institutional framework for the creation of public-private partnerships, and to implement improvements of the public procurement system to expand its efficiency and financial management.
With this operation, Panama, a key international actor, will continue to advance its efforts for transforming financial integrity and fiscal transparency, renewable energies, the future of the carbon market, and the incorporation of environmental criteria in public procurement processes. For example, once the registry of final beneficiaries of legal entities is adequately implemented and verified –which this operation will support — it will constitute a major stride forward in terms of transparency and an important tool in the country’s fight against money laundering, tax evasion, corruption and other illicit financial flows. This loan will also support the national Reduce Your Footprint (Reduce Tu Huella) program led by the Ministry of the Environment enabling the creation of a national system for monitoring, evaluating, reporting and registering emissions, as well as the incorporating energy efficiency and sustainability criteria into public procurement processes.
“This operation supports the efforts of the Panamanian people to recover from the social and economic impacts of the pandemic while advancing structural improvements associated with competitiveness and inclusion,” said Abel Caamaño, World Bank Country Manager for Panama. “We will continue our joint work to combat poverty and reduce inequality to benefit the population that requires adequate access to healthcare services, quality education for all and decent jobs.”
The US$300 million fixed-margin loan from the International Bank for Reconstruction and Development (IBRD) has a nine-year maturity period, in addition to a three-year grace period.
This operation is part of a financial and technical support package that the World Bank made available to Panama in 2020 to help mitigate the health and economic crisis. In March, Panama disbursed US$41 million of World Bank financing from the mechanism known as the Development Policy Loan with a Catastrophe Deferred Disbursement Option (CAT DDO), a loan that allowed the immediate injection of liquidity into the country while arrangements were being made for additional resources to assist the population. Last June, Panama also received a US$20 million loan for COVID-19 prevention, detection and response and national public healthcare system preparedness.
The response of the World Bank group to Covid-19 (coronavirus)
The World Bank Group, one of the largest sources of funding and knowledge for developing countries, is taking broad, fast action to help developing countries strengthen their pandemic response. It is supporting public health interventions, working to ensure the flow of critical supplies and equipment, and helping the private sector continue to operate and sustain jobs.
The World Bank Group is making available up to US$160 billion over a 15-month period ending June 2021 to help more than 100 countries protect the poor and vulnerable, support businesses, and bolster economic recovery. This includes $50 billion of new IDA resources through grants and highly concessional loans and US$12 billion for developing countries to finance the purchase and distribution of COVID-19 vaccines.