The World Bank Group reported on Friday that it has approved a $500 million credit for Panama, along with two guarantee instruments to support up to $1.4 billion in a commercial loan, all aimed at strengthening fiscal sustainability and facilitating private investment mobilization.
The $500 million Development Policy Loan for Fiscal Management and Growth has a 25-year term and includes a two-year grace period. It is intended to support 'key' structural reforms to boost investment, such as updating the Fiscal Responsibility Law, strengthening the pension system, improving tax administration, and developing the local debt market, among others.
In turn, the two guarantees support a commercial loan of up to $1.4 billion, covering 95% of the credit and interest, which opens access for Panama to financial resources on more favorable terms, generates fiscal savings, and strengthens public debt management.
'By combining a World Bank policy-based guarantee with MIGA's second-level guarantee, we are helping to reduce the country's financing costs and supporting it on its path to fiscal sustainability, which will benefit the entire population in the long term,' stated MIGA's Director of Financial Institutions Group, Ariane Di lorio.
The World Bank's Director for Central America and the Dominican Republic, Juan Pablo Uribe, highlighted that 'the reforms supported by this operation lay the foundations for a more efficient and sustainable public management, aimed at improving services and the quality of life for the Panamanian population.'
The Minister of Economy and Finance of Panama, Felipe Chapman, emphasized that this combined operation allows the country 'to access resources on favorable terms and strengthen the economy,' and 'sends a signal to international markets about the government's determination to advance in structural reforms that improve the population's well-being.'
