BORROWER:

Republic of Panama

EXECUTING

AGENCIES:

Judicial Branch (JB), Procuraduría General de la Nación [Office of the National Public Prosecutor] (PGN) and Procuraduría de la Administración [Office of the Government Solicitor] (PA)

AMOUNT AND SOURCE:

IDB: US$18.9 million

Local counterpart funding: US$ 8.1 million

Total: US$27.0 million

FINANCIAL

TERMS AND

CONDITIONS:

Amortization period: 25 years

Disbursement period: 3.5 years

Interest rate: variable

Inspection and supervision: 1%

Credit fee: 0.75%

Currency: dollars of the United States of America

OBJECTIVES:

The program seeks to improve the quality of the country's legal and judicial services to strengthen the rule of law. This is a long-term objective and this operation constitutes the first stage.

To attain the objectives, the program has been divided into two subprograms with the following specific objectives:

a. The objective of subprogram A is to support the country in improving its judicial system to shorten response time, guarantee due legal process, and lower barriers to citizen access.

b. The objective of subprogram B is to support the country in enhancing the quality, efficiency, and transparency of the legal actions and proceedings of the government to improve relations between the State and civil society.

DESCRIPTION:

The proposed operation is stage one and will involve some activities that can be implemented at the national level in the short-term. Owing to their complexity and cost, the other activities included will be executed through two models for judicial management and reorganization, one in an urban judicial district and one in a rural judicial district, leaving their replication in the rest of the country for a second stage.

Subprogram A (US$19,340,000) includes the following components: (i) clearing the court backlog; (ii) strategic management and planning; (iii) training and a judicial career path; (iv) reorganization and management of judicial services (US$12,390,000); (v) strengthening of the investigative capacity of the PGN; (vi) procedural reform and access to justice; and (vii) citizen participation.

Subprogram B (US$1,567,000) includes the following components: (i) institutional restructuring of the PA; (ii) plan to expand the coverage of services; (iii) staff training; (iv) automation of management processes; (v) reform of administrative regulations; and (vi) legal training for public servants.

ENVIRONMENTAL

AND SOCIAL REVIEW:

No environmental impact assessment was required. Recommendations as to environmental and social impact are mirrored in paragraphs 2.13, 2.17, 2.18, 2.19, 2.21, 2.22, 3.20, 4.10, 4.14, 4.15, and 4.16.

BENEFITS:

The program will make a fundamental contribution to the rule of law and the consolidation of democracy: (i) by strengthening the system for enforcing the law, which is a crucial element of public policy and a basic condition for equality before the law; (ii) by reducing transaction costs; and (iii) by supporting the institution responsible for overseeing the legality and transparency of administrative acts.

The program will provide the public, regardless of social, economic, or ethnic status or gender, with more expeditious, less remote, and better judicial services.

RISKS:

The main risk lies in inadequate execution of the component for reorganization and management of judicial services, owing to its relative weight in the loan and its complexity. To minimize this risk, the executing units and the program coordination unit will be provided with specialized advisory services.

Since independent institutions are involved, there is also a risk of inadequate coordination. To minimize it, the coordination and execution mechanisms have been carefully designed. No turnover is expected among the senior staff of the participating entities during the program.

Last, the program provides for amendments to procedural law and there is a risk that their passage by the Legislative Branch will be delayed. The risk is mitigated by the will of the government and the judicial authorities to implement the proposed changes. Under the Constitution, the Executive Branch has the initiative in proposing procedural reforms, which generally do not cause national debate that would endanger their passage. The program includes activities to support the judicial institutions in applying this constitutional mandate.

THE BANK'S

COUNTRY STRATEGY:

The Bank's operating strategy for Panama (1997-1999) is to support the country in increasing the benefits of social policy, promoting sustainable development, encouraging private-sector participation, and improving governance. The proposed operation is consistent with this strategy. In addition, programs to modernize the Legislative Branch (923/OC-PN) and to modernize fiscal management (1004/OC-PN) have been approved and are under way, and a program to modernize the Ministry of External Affairs (PN-0103) is at the identification stage.

The national authorities are aware that a long-term commitment is required to remedy the country's problems in the administration of justice. They have assigned high priority to the program and have agreed with the Bank that the proposed operation will constitute the first stage in the process.

POVERTY

TARGETING:

Although the program will chiefly be carried out in geographic areas where the low-income population is large, it does not specifically target poverty reduction.

SPECIAL

CONTRACTUAL

CONDITIONS:

Conditions precedent to the first disbursement: (i) establishment of the executing units, including staffing and mechanisms to manage the program funds, under terms agreed upon in advance with the Bank (paragraph 3.16); and (ii) for subprogram A, selection of an international consulting firm and negotiation of its contract and terms of reference for the program's technical advisory services (paragraph 3.17).

Special conditions during execution: Presentation of the following to the Bank's satisfaction:

a. annual training plans describing courses, workshops, seminars, participants, and technical and material requirements (paragraph 3.20);

b. at the start of the third year of the project: (i) evidence that the budget approved for the judicial institutions contains a specific item for the Judicial School to cover the training requirements of the JB and the PGN (paragraph 3.21); and (ii) evidence that the budget approved for the PA contains a specific item to sustain the training activities financially (paragraph 3.21);

c. prior to carrying out the first stage in the plan to expand coverage of the PA, a copy of the interagency agreements entered into by the PA and the Ministry of the Interior and Justice for provision of the physical spaces required (paragraph 3.22); and

d. a contractual commitment by the borrower to provide funding for maintenance of the infrastructure and equipment (paragraph 3.24).

PROCUREMENT

POLICY:

The thresholds above which international competitive bidding will be required are US$750,000 equivalent for works and US$250,000 equivalent for goods and services procured using loan proceeds. It is recommended that ex post sampling be used to review local procurement procedures (paragraph 3.23).