PA Third Programmatic Development Policy

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The development objective of the Third Programmatic Fiscal Management and Efficiency of Expenditures Development Policy Loan Program is to support the Government of Panama in improving fiscal management and strengthening social transfer programs. The four pillars of this operation are: 1) mobilizing domestic tax revenue and increasing tax transparency; 2) modernizing public procurement practices; 3) improving the institutional arrangements for debt management; and 4) expanding social transfer programs and improving the capacity of institutions for targeting. This document presents a Development Policy Loan (DPL) in the amount of US$200 million for the Republic of Panama, the final in a programmatic series of three. Economic growth and public transfers brought about an important reduction in poverty, which has almost halved over the decade. Strong economic growth in Panama has been pro-poor and contributed to prosperity being more widely shared. Panama's economic growth has been one of the fastest in Latin America over the past decade, a trend that has even accelerated in recent years. The country has done well in integrating into the global economy and has leveraged its geographical position, transforming itself into a well-connected logistics hub. Yet inequality remains in the mid-range for Latin American countries and challenges persist in the public provision of social services. The strong growth performance during 2011-2012 has started to moderate; yet it remains at high levels. After the 2009 economic crisis, economic growth in Panama has exceeded the pre-crisis pace, with growth rates of over 10 percent in 2011 and 2012. The overall preparation risk is rated as moderate. All prior actions have been completed and proven with evidence. The Government has shown strong commitment to support the DPL preparation and is willing to share all necessary information.