The Executive Board of the World Bank approved a loan for development policies worth USD 150 million for Panama, which will contribute to promoting sustainable and low-carbon growth and, at the same time, to generating greater climate resilience and better climate management, both essential aspects for greater inclusion and promoting sustainable growth for the benefit of Panamanians, especially those living in vulnerable conditions. This is the first loan in a programmatic series of two operations for development policies that aims to support green growth, resilience and an inclusive development model in the country.

With this operation, measures will be supported to categorize public spending through climate change labels in order to improve its efficiency and strengthen institutional capacity to incorporate mitigation and adaptation criteria to climate change in management, budget and spending. In addition, this project supports the decarbonization of land transport, progress in the implementation of energy efficiency policies, the conservation of forests and the protection of the oceans.

The initiative seeks to increase the country’s resilience to climate change and protect its natural capital by supporting better forest management and watershed protection policies. It will also encourage the adoption of more demanding energy efficiency parameters. Finally, the operation will support the application of policies with a gender perspective in the areas of rural electrification, renewable energy and digital connectivity, making Panama a model within the countries of Central America and the region.

“Panama has a huge natural capital that, together with its social and cultural diversity and geographical location, offers great opportunities to promote integrated, inclusive and environmentally sustainable economic development,” said Michel Kerf, director of the World Bank for Central America and the Dominican Republic. “This new operation will help the country move towards its goal of building a more inclusive and resilient economy for the benefit of all Panamanians,” he said.

Héctor Alexander, Minister of Economy and Finance, said that “this financial operation will make it possible to redouble the efforts carried out by Panama to establish the regulatory bases that promote sustainable economic growth, with low levels of emissions and resilience to climate change. It also places Panama as one of the countries that promote the transition to clean energy, socially inclusive and low-carbon growth, and technological innovation to better respond to climate emergencies. Likewise, Panama supports efforts aimed at sustaining natural capital in favor of resilient growth by strengthening climate management and improving institutional capacity to move forward with its climate change mitigation and adaptation program,” Alexander concluded.

The loan for development policies was designed around two pillars:

• Pillar I: Support reforms to achieve the energy transition and socially inclusive growth with low carbon emissions.
• Pillar II: Establish the regulatory bases to sustain natural capital in favor of resilient growth.

The policy reforms included in the project are expected to generate results around 2025, among the expected results are that of maintaining Panama’s position as a carbon-neutral country, expanding access to energy and Internet services in remote regions and strengthening the control of deforestation in mangroves.