Investment Climate and Trade Adjustment

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The operation addresses some of the factors necessary for sustained, higher economic growth. Evidence shows that achieving higher growth depends not only on creating the appropriate macroeconomic conditions and trade openness, but also on initiatives that enhance the economy's supply capacity. Taking this into account, the operation is divided into two pillars: (i) fiscal stabilization, and (ii) improvements in the investment climate and trade adjustment. The first pillar of the operation recognizes the advances made in stabilizing the fiscal deficit and debt as a result of recent reforms introduced by the Torrijos administration. The second pillar focuses on creating an investment climate conducive to greater private sector participation in infrastructure provision (airports and ports); lower transactions cost (improvements in market competition and institutional reforms); raising labor productivity and innovation; developing a strategic framework to adjust to free trade (energy, investment, and trade); and addressing corruption and transparency issues.