Contact:
Karina Manasseh
(202) 473-1729
Kmanasseh@worldbank.org WASHINGTON, October 5, 2005 – To support Panama in its efforts to reduce poverty, the World Bank’s Board of Executive Directors discussed yesterday an Interim Strategy Note (ISN) for the country. The strategy presents a program of stepped-up engagement for the World Bank at the request of the administration led by Martin Torrijos, who took office in September 2004. It provides for engagement with the country over the next two years with a strong emphasis on preparation and discussion of analytical reports in key areas of public expenditure management, poverty reduction, trade and competitiveness. It also includes a policy-based loan and three poverty-focused investment projects totaling US$160 million.
“Panama has made substantial progress in the past year, notably in reestablishing fiscal discipline and increasing transparency,” said Jane Armitage, World Bank Country Director for Panama and Central America. “The Bank’s strategy for the country was prepared in record time to ensure that the whole array of the Bank’s services is available to assist the Government. Our strategy aims to contribute by responding to the Government’s request for significant analytical and advisory work and by providing financial resources and technical assistance for targeted poverty reduction activities.”
The ISN aims to deepen the Bank’s role as a development partner in Panama. During FY06, the Bank will develop a series of analytical reports: a Public Expenditure Review, a Poverty Assessment, a Country Financial Accountability and Procurement Assessment report, Poverty and Social Impact Analysis, and an Investment Climate Assessment. In addition, a US$60 million Development Policy Loan will be prepared to support the Government’s efforts to improve fiscal sustainability and transparency. For FY07 the Bank is planning a water supply and sanitation project for low income communities, a social protection project, and a rural poverty project totaling US$100 million. The interim nature of the strategy provides a bridge in the World Bank Group’s assistance to the country until a new Country Assistance Strategy is developed.
In Panama, despite continuous economic growth averaging 3.5 percent between 1997 and 2003, moderate and extreme poverty rates remained practically unchanged. This suggests that the country’s high levels of income inequality and structural issues in economic and social policy are preventing growth from reducing poverty in the country. Roughly half of the moderate poor live in urban areas and the vast majority of extremely poor live in rural and indigenous communities. Armitage agrees with the Panamanian Government’s assessment of the need to target interventions to rural and indigenous poor. “With as much as ninety percent of the population in indigenous areas living in destitution, we are pleased that the Government has asked us to ensure that planned World Bank interventions are targeted to areas of extreme poverty,” she added.
Due to low level of recent engagement, the World Bank’s current portfolio in Panama comprises only three active projects with US$93 million in commitments, of which US$63 million have still to be disbursed.
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