Overview

  • Over the past decade, Panama has been one of the fastest growing economies worldwide. Average annual growth was 7.2 percent between 2001 and 2013, more than double the regional average. The Panamanian economy grew by 6.1 percent in 2014, coming down slightly to 5.8 and 4.8 percent in 2015 and 2016, respectively. By 2017 and 2018 the forecast remains at 5.4 percent, the highest in Latin America.

    In the medium term, Panama’s growth is likely to remain one of the highest in Latin America. Public investments should also remain high, with planned construction of the second Metro line and expected additional traffic generated by the expanded Canal. Private investment should also remain strong. Prospects for high growth in the coming years are also supported by emerging opportunities for private sector-led growth in key sectors, such as transport and logistics, mining, financial services, and tourism.

    Panama has made significant progress in reducing poverty in recent years. If we use the international poverty line of US$4 a day, it would result in a general poverty reduction of 21 to 17 percent between 2011 and 2015. In addition, the economy has generated 280 thousand new jobs.

    Despite the gains on poverty reduction, sharp regional disparities remain. Poverty prevails in rural areas, mainly inhabited by indigenous people. Regarding extreme poverty, for example, while in urban areas it is below 4 percent, in rural areas it is about 27 percent.

    Moreover, in indigenous territories, known as “comarcas”, poverty is above 70 percent and extreme poverty above 40 percent. Lack of services, particularly access to water and sanitation, and health continues to be a constraint in the comarcas.

    Panama is well positioned to continue making progress towards the twin goals, ending extreme poverty and boosting shared prosperity, thanks to both growth prospects and the Government’s renewed attention to inclusion. Yet sustaining growth over the medium to long term will require addressing some structural constraints that may become binding as the country continues developing. A number of priority structural areas, if left unaddressed, could hamper growth in the coming years. They include: infrastructure, education and skills, and the effectiveness of public institutions.

    The Administration of President Juan Carlos Varela took office on July 1, 2014. The Government’s 5-year Strategic Development Plan 2015-2019 rests on two pillars of inclusion and competitiveness and includes five themes:

    • Enhancing productivity and diversifying growth
    • Enhancing quality of life
    • Strengthening human capital
    • Improving infrastructure, and
    • Improving environmental sustainability, including management. 

    Last Updated: Oct 10, 2017

  • The World Bank Group and the government of Panama developed the Country Partnership Framework (CPF) 2015-2021 which defines the areas of Bank support in the country. In 2015, a Systematic Country Diagnostic (SCD), titled Locking in Success, was published as an evidence-based diagnostic that integrates analysis of growth, poverty, inclusion and sustainability, and as input for the CPF.

    The CPF is based on three pillars for the World Bank Group engagement:

    • Supporting continued high growth
    • Ensuring inclusion and opportunities for marginalized and indigenous groups, and
    • Bolstering resilience and sustainability.

    These themes are highlighted as priorities in the Government’s 2015-2019 Strategic Development Plan (SDP) and in the SCD.

    The objectives of these pillars include improving access to water and sanitation, strengthening resilience to natural disasters, supporting integrated water resources management in priority areas, supporting enhanced logistics and connectivity and increasing reliability of the energy supply, improving budget management transparency, and complementing social assistance with productive inclusion.

    The World Bank’s portfolio in Panama totals US$ 595.6 million. Includes a development policy financing in fiscal management, transparency and shared prosperity worth US$ 300 million. There are also six active projects focused on water and sanitation, social protection, biodiversity, disaster risk management, and public sector efficiency

    Last Updated: Oct 10, 2017

  • Pro-Inclusion

    The Government launched the “Red de Oportunidades” conditional cash transfer program in 2006. The World Bank provided financial backing support for the initiative through a Social Protection Project, which covered around 11 percent of the population and exceeded the original target of 60,000 poor households with children.

    With the Metro Water and Sanitation Improvement Project, more than 550,000 beneficiaries now have access to a reliable water supply and around 30,000 people have access to improved sanitation facilities.

    A new financial management information system to strengthen performance-based budgeting, ISTMO (for its Spanish acronym), has been rolled out in all central government entities through the Enhanced Public Sector Efficiency Technical Assistance Project, and is being expanded to decentralized entities.

    The Health Equity and Performance Improvement Project increased access of rural communities to quality basic health services for improving maternal and child health. More than 203,000 people in rural areas received health services from this project.

    The Water Supply and Sanitation in Low-Income Communities Project increased access to sustainable water supplies and sanitation services for communities in rural and poor urban areas. Access was improved for more than 25,000 beneficiaries in rural communities and more than 15,000 people got newly constructed latrines.

    Through the Disaster Risk Management Development Policy Loan with a CAT-DDO the Government of Panama has undertaken relevant activities to strengthen Panama’s financial protection policies, strategies and instruments with the development and approval of a Disaster Risk Financing and Insurance Strategic Framework.

    Pro-Growth

    The Rural Productivity Project and its matching GEF grant supported the conservation of globally important biodiversity and protected forest, mountain, coastal and marine ecosystems in Panama. More than 36,000 hectares of forest are protected and nearly 3,000 small producers are involved in partnerships financed by the project.

    In the energy sector, the Bank is providing technical assistance to support the modernization of the sector, increasing Panama’s capacity on the regional integration of variable renewable energy, supporting the introduction of natural gas, and assisting the implementation of Geothermal plants.

    Last Updated: Oct 10, 2017

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LENDING

Panama: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

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Additional Resources

Country Office Contacts

PANAMA +507 831-2000
Avenida Aquilino De La Guardia y calle 47 Marbella, Edificio Ocean Business Plaza, Piso 21, Oficina 2111. Panama City
cfloresmora@worldbank.org
USA +1 202 473-1000
1818 H Street NW, Washington, DC 20433
cfloresmora@worldbank.org