MILAN, Italy – Panama and the Inter-American Development Bank today signed the contracts for two loans for a total $25.2 million to support a program for the sustainable development of the Bocas del Toro region and a program to strengthen the fiscal management of the public sector.
Panama Economy and Finance Minister Norberto Delgado Durán and IDB President Enrique V. Iglesias signed the documents in a ceremony held on the last day of the annual meeting of the Bank’s Board of Governors.
The two projects reflect the IDB’s strategies of supporting regional integration, the sustainable management of natural resources and environmental protection through community participation and public sector modernization.
Bocas del Toro Program
The IDB granted a $15.2 million loan to Panama to help finance the first phase of a $46.9 million program to promote sustainable development in Bocas del Toro, a region on the northwestern shore of the Panamanian isthmus, bordering Costa Rica.
Bocas del Toro comprises 12 percent of Panama’s territory but has only 89,000 inhabitants, of which 63 percent are indigenous. Although it is the second poorest province in the country, it has potential for growth because of its abundant agricultural resources and possibilities for eco-tourism.
The IDB loan will be used to strengthen the local government and regulatory agencies, encourage economic diversification, protect the environment and incorporate civil society participation in planning and carrying out economic and social development projects and conservation.
The program will include measures to promote rational and sustainable land use and funding for innovative pilot projects for economic diversification and conservation. Because of the ethnic and cultural diversity of the people of the region, emphasis will be placed on participation by the residents in the decision-making process and in the drafting of annual operating plans.
The program design incorporates lessons learned in previous projects directed at managing national resources and reducing poverty while promoting sustainable growth, in particular the IDB-financed program for sustainable development of Panama’s poor and ethnically diverse Darien region.
The IDB loan for the second phase of the program, which must be approved by the Bank’s Board of Executive Directors at the time the project qualifies for additional financing, would be of $27 million.
The project, which will be carried out by the Ministry of Economy and Finance, will contribute to the strategy of promoting the integration of the Mesoamerican region under the Puebla Panama Plan, particularly with respect to the integration of Panama and Costa Rica.
Fiscal and Economic Management
The IDB also approved a $10 million loan to Panama for a program to improve fiscal and economic management in the public sector.
The program, which will be carried out by the Ministry of Economy and Finance, is aimed at improving the quality of public investment, making tax collection more efficient and effective, expanding management and oversight capacity of the customs administration and strengthening the land registry.
The program will help authorities consolidate a management system as a tool for strengthening state modernization in the areas of integrated financial systems, tax administration and customs management.
By promoting more efficient governance, higher levels of tax collections, and lower costs for public administration, the program will make more resources available for financing the government’s social programs.