Contact
In Washington: Stevan Jackson (202) 458-5054
sjackson@worldbank.org
WASHINGTON, October 5, 2006 – The World Bank’s Board of Directors today approved a $60 million loan for Panama to support the Government’s public finance reform program, which represents an important step in a long-term partnership between the Bank and the Government of Panama.
“Panama’s economy has grown at a rate of more than 6 percent during the past three years, and the growth rate is expected to reach 7 percent this year,” said Jane Armitage, World Bank Director for Central America. “This excellent growth performance in part reflects the past efforts by the Government of Panama to restore greater fiscal discipline and thereby strengthen the overall foundation for sustaining broad-based economic growth.”
The Public Finance and Institutional Development Loan will support the implementation of the initial phase of the Government’s development program, as described in its Strategic Vision document, with a focus on restoring fiscal sustainability and improving fiscal transparency and public financial management. This one-time operation is based on the passage and implementation of key fiscal and public financial management reforms in 2005 and 2006.
Actions supported by this loan are expected to benefit Panama by helping to create a more stable macroeconomic environment, introducing greater transparency into public financial management, and contributing to improved efficiency of public spending. As direct benefits, the loan is also expected to help Panama obtain better financial terms for public borrowing and to diversify its external sources of public finance.
Specific actions supported by this loan are likely to have overall positive poverty and social impacts. “Improving the quality of public financial and expenditure management is critical for reducing poverty given the large share of GDP allocated to the social sectors in Panama,” said Ulrich Lächler, World Bank Lead Economist and co-task manager of the project.
The new DPL is a key component of the World Bank’s two-year Interim Assistance Strategy for Panama and the first International Bank for Reconstruction and Development (IBRD) loan to be approved under that strategy.
The $60 million fixed-spread loan is repayable in 18 years and includes a two-year grace period.
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For more information on the Public Finance and Institutional Development Loan, please visit http://web.worldbank.org/external/projects/main?pagePK=64283627&piPK=73230&theSitePK=40941&menuPK=228424&Projectid=P098376
For more information on the World Bank’s work in Panama, please visit www.worldbank.org/panama
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