WASHINGTON DC, June 24, 2022 – The World Bank Board of Directors today approved a $250 million loan to support the Government of Panama’s program to protect and foster human capital accumulation during the COVID-19 crisis, while strengthening institutions for the delivery of a more inclusive and sustainable economic recovery.
The operation is the second in a series of two programmatic Development Policy Financing (DPF) loans, with the first operation approved by the Board in December 2020 for US$300 million.
“In a context where the adverse effects of the pandemic have led to fiscal deterioration and significant spending pressures, this funding complements our efforts to accelerate recovery and strengthen health, education and social protection services, as well as to promote transparency, inclusion and adaptation to climate change. , all of which are strategic priorities for the government,” said Finance Minister Héctor Alexander.
The series is organized around three pillars:
The first pillar focuses on protecting human capital during the pandemic and strengthening institutions during the recovery, by expanding the delivery of health, education and social protection benefits and services. Policy actions are envisaged to improve access, continuity and quality of health care service delivery through the addition of remote health services (telehealth). It also emphasizes the modernization of the education system through digital transformation; and support for vulnerable households still affected by the pandemic through the New Panamanian Solidarity Plan (Nuevo Plan Panamá Solidario). The reforms also aim to reduce the carbon footprint of the health and education sectors, while improving resilience to shocks such as natural disasters and pandemics.
· The second pillar focuses on strengthening institutions for a more transparent and financially sustainable economic recovery, including tackling illicit financial flows and improving public procurement. This pillar supports actions related to transparency and efficiency in the mobilization and use of public resources. These actions continue the implementation of key reforms, such as the regulatory framework for the creation of the Registry of Ultimate Beneficial Owners (Registro Único de Beneficiarios Finales) and a new public procurement law.
· The third pillar focuses on strengthening institutions to advance a more inclusive and environmentally sustainable economic recovery. The COVID-19 crisis has deepened pre-existing social gaps, with vulnerable groups in rural areas and indigenous populations being left behind even further. The reforms supported help address these challenges, for example, by benefiting family farmers, especially women, through the creation of the National Fund for Family Farming and by strengthening the agency and voice of indigenous peoples. This pillar also supports reforms on climate change adaptation and mitigation.
“This project will help steer the economy to build back better through critical policy and institutional reforms to benefit the most vulnerable, including indigenous peoples. By supporting a mix of policy measures to address Panama’s pressing needs, this crisis can be turned into an opportunity to strengthen services and institutions,” said Michel Kerf, World Bank Director for Central America and the Republic. Dominican.
The $250 million loan from the International Bank for Reconstruction and Development (IBRD) has a variable term of 20 years, including a two-year grace period.