Development Policy Loan

closed

The current administration took office in July 2009 following a landslide victory in the last presidential elections. President Martinelli won the elections with over 60 percent of the vote. This was the largest margin since the 1989 elections and has been interpreted as giving his administration a strong mandate for reform. Soon after taking office, the new administration announced a set of goals to be achieved 'without excuse' (las metas imperdonables), aimed at improving economic efficiency, enhancing competitiveness and protecting the poor and vulnerable. The administration also published a 5-year strategic plan, which lays out a roadmap for the Government's reform program. The Government's majority in congress means that the administration has been able to swiftly pass a number of important laws and advance on several of its public policy objectives. This document describes a first programmatic fiscal management and efficiency of expenditures development policy loan in the amount of US$100 million for the Republic of Panama. Subsequent operations are expected to be for US$50 million each. The programmatic series, which includes three additional loans, is designed to accompany the administration's reform program over the next three years, supporting the overall objectives of creating fiscal space, strengthening fiscal management, enhancing transparency, improving the efficiency of public spending and strengthening social programs. Specifically, the operation supports four areas that are central to the reform program: (a) tax reform, including closing loopholes, widening the tax bases, improving tax administration and improving tax information sharing; (b) procurement reform, focusing on the consolidation and further development of public procurement practices; (c) debt management reforms, including strengthening the institutional capacity of the public credit unit and developing the domestic bond market; and (d) social protection, focusing on strengthening the targeting of existing social transfer programs.