WB/Panama: Improving Service Delivery for 30,000 Households and Social Protection for One Million Citizens

April 7, 2015

US$300 Million Loan Supports Reform Plan to Share Prosperity and Modernize Panama’s Fiscal Management

WASHINGTON, April 7th, 2015 – The World Bank Executive Board of Directors approved today a US$300 million loan to support Panama’s efforts to improve social protection for 962,500 Panamanians and to expand basic service delivery for more than 30,000 households, while strengthening financial planning of Government resources.

The “Programmatic Shared Prosperity Development Policy Loan” is the first of a planned series of loans to support the Government of Panama’s priorities to expand inclusion and generate more opportunities, in particular for the indigenous population and the youth. It will also seek to increase the provision and quality of energy, water and sanitation services.

“The support of the World Bank will be essential for Panama to implement a reform plan with goals for human development, sustainable economic growth and institutional strengthening. It will also support the ambitious strategic objectives that the Government has set for itself in terms of fostering wellbeing for all Panamanians,” said Dulcidio de la Guardia, Minister of Economy and Finance of Panama.

As part of its plan to build an inclusive society, the Government of Panama has made indigenous development a priority by creating a Vice Ministry of Indigenous Affairs and developing culturally appropriate social protection programs. The Government is also now providing US$120 per month to 100,500 people over 65 years old who have no pension, as part of the “120 a los 65” program. It will also continue to deliver cash transfers from “Red de Oportunidades” program to approximately 80,000 households (around 360,000 direct beneficiaries) in poor rural areas.

Moreover, the Government has taken on policies to tackle high drop-out rates from secondary education by launching the vocational training program “ProJoven”, which will place at least 2,000 students in their last year of technical high school as interns with private firms, and by increasing monthly transfers for half a million students who benefit from the “Beca Universal” program.

“The Government of Panama has swiftly started to implement a reform plan with a focus on sharing prosperity and reducing extreme poverty by prioritizing development in indigenous communities and by creating more opportunities for young Panamanians,” said Anabela Abreu, World Bank representative for Panama. “The reforms supported by this loan series address key development challenges in the country.”

In terms of service delivery, the Government launched an ambitious basic sanitation program with the goal to provide universal access to potable water and is adjusting electricity subsidies, which aims to reduce public expenditures by approximately US$100 million per year while maintaining assistance for the neediest consumers. The Government’s actions supported by the loan will provide basic sanitation to at least 30,000 households by 2017 and reduce the average hours of electricity outages per year from 53 to 36.7 in the following two years.

Furthermore, the loan will support the modernization of the Government’s fiscal management by strengthening the financial planning of its resources and increasing its ability to manage fiscal risks from disasters.


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