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Overview

  • Panama has been one of the fastest growing economies in the world, with an average annual growth rate of 4.6 percent over the last five years.

    Growth in Panama for 2020 is expected to contract significantly due to the COVID-19 (Coronavirus) pandemic, with major employment areas such as services and construction impacted. Although almost all sectors are hit, positive contributions are expected from public expenditure, but this will increase the fiscal deficit.

    In a competitive global context, the development model could be at risk, since the economy has been based on traffic through the Canal and investments in infrastructure.

    Panama has made significant progress in reducing poverty in recent years in part due to economic growth and public transfers. Between 2015 and 2018, poverty at US$ 5.5 fell from 15.4 to an estimated 12.5 percent while extreme poverty at US$ 3.2 declined from 6.7 to an estimated 5.1 percent. But poverty has only marginally decreased in 2019 and will expectedly increase in 2020 as a result of the COVID-19 outbreak, wiping out the gains in poverty reductions.

    Sharp regional disparities also predominate. Poverty prevails in rural areas, mainly inhabited by indigenous people and afro descendants. Access to basic services is not universal and remains linked to factors such as geographic location, education levels, ethnicity and income levels of households. For example, there are 11 years less in life expectancy for Indigenous women and men living in their territories (67.75) versus the overall population (79); and the maternal mortality rate is four times higher in Indigenous women who live in their territories versus the national average for all women (462 vs. 92 per 100,000 births).

    Sustaining high and inclusive growth over the medium to long term will require responding to historical limitations. These include improving education and skills, and the effectiveness of public institutions, as well as the provision of key infrastructure. Human capital must begin to play a bigger role.

    The World Bank in Panama is aimed at supporting the Government’s program, as the portfolio is being restructured to adjust to the impact of the COVID-19 crisis and its aftermath.

    Last Updated: Apr 16, 2020

  • The World Bank Group and the Government of Panama developed the Country Partnership Framework (CPF) 2015-2021 which defines the areas of Bank Group support in the country. A new Systematic Country Diagnostic (SCD) will be prepared to assess key development challenges and opportunities of the country and accompany the Government in their post COVID-19 reconstruction efforts.

    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

    · Bolstering resilience and sustainability

    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$ 326 million which includes five active projects focused on social protection, governance, disaster risk management, wastewater management, and support to the Indigenous Peoples Plan. 

     

    Last Updated: Apr 16, 2020

  • The World Bank (IBRD) financing helped achieved the following results from 2008 to 2020:

    Support for the National Indigenous Peoples Development Plan. Designed jointly with the Panama’s Indigenous communities and the government of Panamathis is a Project benefiting approximately two-hundred thousand Indigenous peoples, especially women and youth who are the most excluded populations. It supports the investments proposed by the traditional authorities focused on access, quality and cultural pertinence of service delivery in health, education, and water and sanitation. It also includes investments to improve governance capacity, planning and coordination between Indigenous Authorities and the Government of Panama with a vision to contribute to breaching some of the largest levels of ethnic based inequalities that exist in the region. Within the first months of implementation, two results are highlighted: first, passing an Executive Decree to legally formalize the National Indigenous Peoples Development Council; and second the acceptance by the traditional Indigenous Authorities to include a woman advisor as part of each delegation that participates on the Council.

    Economic Empowerment of Indigenous Women. The trust fund supported a demand and supply study for indigenous women's economic empowerment in Panama, as well as a pilot intervention that responded to the results of the study in six communities to support: (i) ecosystem development; (ii) financial inclusion; and (iii) technical assistance for women producers. The analysis demonstrated that, even though indigenous women earn 70 percent less than non-indigenous Panamanian women, there are no existing programs in their communities that target their economic empowerment. Numerous programs exist to support technical assistance for indigenous productive activities, and of these some have extended benefits to indigenous women, but none have been designed to address the unique realities and constraints faced by indigenous women who require access to internet, computers and the ability to spend significant time in Panama City.

    Increased Income and Productive Capacity of Small-Scale Producers. Financing and technical assistance for access to markets was provided to 152 productive alliances of small-scale producers in high-poverty areas, including indigenous areas. Producers benefitted from increased agricultural productivity and a 23 percent increase in sales. Around 4,600 producers (30 percent women) received investment and technical support through 130 sub-projects covering a range of agricultural activities.

    Improved Targeting of Social Transfer Programs and Increased Social Security Coverage. By improving the targeting of the Red de Oportunidades program (translated as “Network of Opportunities”), the Government channeled resources to the poor in remote geographic areas, largely excluded in the past, increasing coverage in the indigenous comarcas (50 to 70 percent from 2008 to 2014) which represented 46 percent of beneficiary households.

    Improved Households Access to Quality Basic Health and Nutrition Services. Through the provision of a basic package of health services under the Coverage Extension Strategy, mobile health units provided regular access to a basic package of health services to 149,028 beneficiaries from 47 poor rural communities by 2014, with 86 percent of pregnant women receiving at least three prenatal controls (compared to 20 percent in 2010), and 96 percent of children under age one receiving full vaccinations (compared to 26 percent in 2010).

    Increased access to sustainable water supplies and sanitation services for communities in rural and poor urban areas. More than 25,000 beneficiaries in rural communities got newly constructed latrines. In addition, the use of performance-based contracting helped improve quality, coverage, and efficiency of water supply services in lower-income neighborhoods in Colon – the continuity of service provision increased from 13 to 71 percent from 2014 to 2017), piped water services were extended to 2,115 households, and the commercial efficiency of the National Water and Sewer Agency’s Colon regional office improved.

    Enhanced Capacity for Disaster Risk Management and Adaptation to Climate Change. The Disaster Risk Management Development Policy Loan with a Catastrophe Risk Deferred Drawdown Option has been a quick and flexible instrument in addressing a national drought emergency triggered by El Niño phenomenon (2015-2016), including support to the Water Security High Level Committee in the development and implementation of the National Water Security Plan. Most of the World Bank disaster risk management support has been provided through technical assistance activities with key results including the development of the first Disaster Risk Finance and Insurance Framework in Latin America, and a strengthened emergency preparedness and response capacity at the subnational level. In March 2020, in support of the Panamanian government’s response to the Coronavirus (COVID-19) health emergency, the World Bank authorized the disbursement of US$ 41 million of a development policy loan that strengthens the disaster risk reduction agenda nationwide.

    Improved Budget Management Transparency. In 2016, the Government began channeling funds for 181 budgetary account of 21 central government entities through the implementation of the Treasury Single Account (TSA), and in 2017, incorporated 347 budgetary accounts of all 24 central government institutions. The consolidation of the TSA was complemented by the roll-out of a new integrated financial management information system, ISTMO (for its Spanish acronym), in all central government entities and its expansion to 32 of the 36 decentralized institutions. In addition, the WB Treasury’s support to Panama’s Sovereign Wealth Fund (Fondo de Ahorro de Panama) has built capacity and supported the development and approval of an investment policy for Panama’s sovereign assets that focuses on growth assets over the medium-to long-term.

    Improved effectiveness in the management of protected areas in Panama and the Conservation of Globally Significant Biodiversity. The project impact 118,490 direct beneficiaries through 30 sub-projects supporting income-generating and biodiversity-friendly production and marketing system implemented by producer associations. Management effectiveness was  improved in twelve protected areas with more than 554,501 ha brought under biodiversity protection and 1,534 hectares of cocoa, plantain, and coffee plantations of landscape certified by internationally/nationally recognized standards  An endowment fund to support sustainable management of protected areas was established and operating with an initial capitalization of US$ 5.0 million (now standing at US$ 22.6 million) to support sustainable management of protected areas, as part of one window of the broader national fund for water, protected areas and forest (“Super Fund”).

    Increased reliability of energy supply.  Using Development Policy Financing (DPF), the IBRD has supported a changing policy environment which ushered in new, better targeted tariff subsidies and established incentives to increase the share of renewable energy in the power generation matrix. These efforts were complemented by IFC’s advisory services to increase energy efficiency through the implementation of a Green Building Code, as well as investments and Technical Assistances (TA) to ramp up hydroelectric, wind, and Liquified Natural Gas (LNG) projects. Together, policy changes, TA, and investments, support efforts to improve the reliability of the energy system for Panamanians, while also displacing the use of heavy fuel and diesel and reducing carbon dioxide emissions.

    Last Updated: Apr 16, 2020

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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