Competitiveness and Public Financial Management DPL 2

closed

This program document describes a single-tranche Second Competitiveness and Public Financial Management Development Policy Loan (DPL) Project to the Republic of Panama. This operation is the second in the programmatic series that continues to support the Government's program to consolidate fiscal discipline and increase public sector transparency and efficiency, as means for -inter alia- enhancing private sector competitiveness. These two sets of objectives are mutually reinforcing, as public financial management systems that contribute to fiscal discipline, operational efficiency and strategic allocation of resources are critical elements of public sector effectiveness, which in turn can positively influence the country's enabling environment for private sector development. Moreover, both are critical for achieving progress toward the Government of Panama (GOP's) overarching objective of increasing and sustaining broad-based economic growth in Panama, which would in turn contribute to continued fiscal stability. The medium-term outlook is not completely without risks, although macroeconomic vulnerabilities in Panama have fallen in recent years, as growth has accelerated, debt has declined as a share of GDP, and fiscal balances have improved. The proposed DPL program takes into account potential risks in three areas: economic, political and institutional strategy.