Panama has made significant progress in reducing poverty in recent years. Between 2007 and 2012, a period including the global financial crisis and recession, Panama managed to reduce poverty from 39.9 percent to 26.2 percent, and extreme poverty from 15.6 percent to 11.3 percent. This means that, of a population of about 3.6 million people, an additional 150,000 Panamanians overcame extreme poverty while close to half a million citizens got out of poverty during that period.

Poverty reduction in Panama was greater than the Latin American and Caribbean average. The rise in the middle class, seen in many countries in the region, was particularly marked in Panama and there has been an overall decline in inequality.

A key factor in this remarkable poverty reduction has been economic growth. 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 an estimated 6.2 percent in 2014 and will grow an estimated 6.2 percent in 2015.

Looking ahead, there are good reasons to expect that growth will continue to be strong in Panama (around 6 percent) in the near future. Even if public investment will be lower in the coming years after the completion of major infrastructure projects such as the Canal expansion and the first Metro line; the planned construction of a second Metro line is underway and the expanded Canal will generate additional traffic. In addition, there is no indication of a downturn in private investment and Panama continues to be an attractive country for foreign direct investments. The prospects of sustained high growth are also supported by emerging opportunities in transport and logistics, mining, financial services, and tourism.

Despite the gains on the poverty front, challenges remain. Poverty in Panama is a rural and indigenous territories phenomenon. While in urban areas extreme poverty is below 4 percent, in rural areas it is about 27 percent. Moreover, in the Indigenous Peoples’ territories, the comarcas, poverty is above 70 percent and extreme poverty above 40 percent. Despite strong and fairly inclusive growth at the national level, differing rates of poverty reduction have led to the poor becoming more concentrated in specific geographic areas. Lack of services, particularly access to water and sanitation, continues to be a constraint in the comarcas.

Over the long term, certain structural areas require attention to ensure that Panama continues a strong and inclusive growth: infrastructure, particularly energy, education and labor skills, and public sector institutions.

A new Administration took office on July 1, 2014, with President Juan Carlos Varela running on an anticorruption platform of restoring credibility to the country’s institutions and improving the efficiency of Government. The Varela Administration has also committed to upgrading quality of life through better access to services and expanding economic opportunities for the poor.

Last Updated: Aug 18, 2015

The World Bank and the government of Panama developed the Country Partnership Strategy (CPS) (FY2011-FY14), which aims to strengthen the World Bank-Panama partnership.

This Country Partnership Strategy is characterized by a results oriented approach and is built around three pillars aimed to support Panama in confronting its development challenges:

  • Economic growth that builds on the country’s competitive advantages,
  • Providing greater opportunities for all, and
  • Transparent and efficient public sector that provides returns to society.

The third pillar is cross-cutting and helps support growth and provide for a more efficient and effective public sector.

In total, the World Bank’s portfolio in Panama includes ten projects focused on health, social protection, rural development, environment, infrastructure and efficiency in the public sector, for US$633.06 million. Another project financed by a US$6 million grant for rural productivity and environmental conservation complements these investment operations. Active projects include:

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

The objective of the Water Supply and Sanitation in Low-Income Communities Project is to increase access to sustainable water supply and sanitation services for communities in rural and poor urban areas. To date, access to water supply and sanitation services has been improved for more than 25,000 beneficiaries in rural communities and more than 15,000 people have newly constructed latrines.

The Enhanced Public Sector Efficiency Technical Assistance Loan aims to assist public agencies in producing, using and disseminating information for a more efficient and transparent use of public funds.

The objective of the Disaster Risk Management Development Policy Loan with a CAT DDO is to enhance Panama’s capacity to implement its Disaster Risk Management Program and provide immediate liquidity in case of a catastrophic disaster.

The Metro Water and Sanitation Improvement Project will help increase the quality, coverage and efficiency of water supply and sanitation services in low-income neighborhoods of the Panama Metropolitan Region. More than 380,000 of beneficiaries have now access to reliable water supply and improved sanitation facilities.

Last Updated: Aug 18, 2015

The Government launched the Red de Oportunidades conditional cash transfer program in 2006 and the World Bank provided financial backing for the initiative through the Social Protection Project, which covered around 11% of the population and exceeded the original target of 60,000 poor households with children. A series of Development Policy Loans have also helped to improve and strengthen the Red de Oportunidades program and other social protection programs.

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, which together with the Basic Education Quality Improvement Project were critical in helping to design and establish systems to effectively target and monitor the conditional cash transfer program.

The Water Supply and Sanitation in Low-Income Communities Project increased access to sustainable water supply 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.

The Rural Productivity Project supplied US$39.4 million to conserve 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. Another result from this operation was progress in the land administration reform: 51,876 parcels were surveyed and 12,422 titles were issued in the provinces of Chiriquí, Veraguas, and Bocas del Toro.

The World Bank provided additional financing to two key projects –Basic Education (US$5.4 million) and Public Policy Reform Technical Assistance Project ($6 million)– to scale-up activities and enhance their impact. In education, the preschool coverage of 4-5 year-old children increased from 31% in 2001 to 61% in 2007, while the enrollment of these children increased from 55,369 to 92,900 in the same period. During 2000-2007, net enrolment in secondary school also increased from 58.5% to 64.6%.

A study by the World Bank yielded a development strategy to maximize the long-term social and economic potential of the “Reverted Areas”, covering almost 580 square miles between the Atlantic and Pacific oceans. The Strategy for the Enhancement of the Reverted Areas evaluated development options for these lands, to attract more investments and generate more jobs without overlooking environment impact.

For more project results, see Panama: Creating Greater Opportunities for All.

Last Updated: Aug 18, 2015


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

*Amounts include IBRD and IDA commitments