Overview

  • Over the past decade, Panama has been one of the fastest growing economies in the world, with an average annual growth rate of 5.6 percent over the last five years.

    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 third Metro line, a fourth bridge over the Panama Canal, the Colón Urban Regeneration project and other investments. In addition, the expanded Canal has already seen a boost to traffic and, especially, toll revenues, albeit at a lower level than may have been hoped for. This, however, could be at risk from protracted international trade disputes or a global economic turndown. Private investment should also remain strong.

    Panama has made significant progress in reducing poverty in recent years. Economic growth and public transfers have helped reduce poverty substantially. Poverty continues to fall, irrespective of the poverty line (national or international) used. Between 2015 and 2017, poverty at US$5.5 fell from 15.4 to an estimated 14.1 percent while extreme poverty at US$3.2 declined marginally from 6.7 to an estimated 6.6 percent. 

    Despite the gains on poverty reduction, sharp regional disparities remain. Poverty prevails in rural areas, mainly inhabited by indigenous people. 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 five times higher in Indigenous women who live in their territories versus the national average for all women (462 vs. 80 per 100,000 births).

    Panama is well positioned to continue making progress towards the World Bank’s “Twin Goals” of ending extreme poverty and boosting shared prosperity, thanks to both growth prospects and the Government’s renewed attention to inclusion. Yet, sustaining high and inclusive growth over the medium to long term will require addressing some major blockages. These include improving education and skills in the country, as well as key infrastructure and the effectiveness of public institutions.

    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 22, 2018

  • 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. 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$435.59 million which includes seven active projects focused on social protection, governance, sustainable production, disaster risk management, wastewater management, and support to the Indigenous Peoples Plan. As of October 2018, the total undisbursed amount is US$ 263.14 million.

    Last Updated: Oct 22, 2018

  • The World Bank (IBRD) financing helped achieved the following results from 2008 to 2017:

    Pro-Inclusion

    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 agro 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.

    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 most decentralized entities.  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: Management effectiveness has been improved in six protected areas with more than 362,000 ha brought under biodiversity protection. A total of 1.056 hectares were improved with biodiversity-friendly production systems through the support to 20 grass-root organizations, benefitting 37,000 direct beneficiaries in 7 provinces, 21 districts, and 4 indigenous territories.

    Increased reliability of energy supply:  Through the use of 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: Oct 22, 2018

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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