Panama will work in collaboration with the World Bank (WB) to continue reducing emissions and adapting to climate change through a new project that was approved on Friday, March 22, by the World Bank Executive Board.

The second development policy loan (DPP) on Climate Resilience and Green Growth will underpin reforms aimed at decarbonizing the transport and energy sectors, and will support Panama in generating the necessary capacities to adapt and mitigate the effects of climate change, which will benefit the most vulnerable populations.

This $350 million project supports the reforms established on two pillars. The first pillar focuses on promoting a transition to clean energy, low-carbon and socially inclusive growth, and favorable technological innovations for disaster preparedness.

In accordance with this component, Panama will continue to strengthen the regulatory and regulatory frameworks that were created to reduce emissions from the energy and transport sectors. The decarbonization of these sectors is essential to fulfill the commitments made by the country in the face of climate change.

Likewise, this pillar supports political reforms aimed at rural electrification through renewable energies and digital connectivity that will benefit women and indigenous territories.

The second pillar will help Panama continue to develop its capacities to manage its natural resources in a sustainable way and plan in the face of climate change. This includes support for instruments that contribute to improving climate planning and governance, such as the National Climate Change Adaptation System and Climate Change Scenarios, which will function as a basis for the planning of public and private investments for the future.

The operation is based on the previous development policy loan (DPP), on Climate Resilience and Green Growth approved by the WB in April 2023, and highlights Panama’s commitment to integrate sustainability and climate action into its political management at the economic and social level.

“During the period 2019-24, the Government of Panama implemented actions and policy reform measures related to the energy transition and resilience to climate, as part of its process to decarbonize the transport sector and, at the same time, mitigate the negative effects of climate change on the national economy. These actions in favor of resilience to climate as a development strategy will allow the country to contribute to improving the environment, the quality of life of the population and the revitalization of the economy, both in the public and private sectors, so they must become a long-term sustainable transition. At the same time, it is essential to emphasize that, as concluded in the Second Biennial Update Report on Climate Change, Panamanian forests capture more carbon than the total amount of emissions of gases that cause the climate crisis are generated in Panama, which makes the country a nation with a negative carbon footprint,” said Héctor Alexander H., Minister of Economy and Finance.

“Panama’s ability to support rapid economic growth and further reduce poverty is interconnected with its ability to adapt to climate change and mitigate its effects,” said Michel Kerf, regional director of the World Bank for Central America and the Dominican Republic. “This project demonstrates the country’s commitment to achieving a sustainable and resilient future in the face of climate change.”

Climate change poses a significant threat to Panama’s economic growth, which affects the most vulnerable communities. This country is one of the most exposed in the world to natural hazards induced by the climate and altered weather patterns, which includes the increase in the frequency and intensity of the El Niño and La Niña phenomena, which generate serious droughts and floods. For their part, indigenous territories face high climate-related difficulties, such as sea level rise, among other challenges.