December 4, 2002

IDB APPROVES $15.2 MILLION FOR SUSTAINABLE DEVELOPMENT OF BOCAS DEL TORO REGION OF PANAMA

Support for governance, economic diversification, environmental protection

The Inter-American Development Bank today announced the approval of a $15.2 million loan to support the first of two phases of a $46.9 million program to promote the sustainable development of the Bocas del Toro region of Panama.

The Bocas del Toro Region on the northwestern shore of the Panamanian isthmus, bordering Costa Rica, comprises 12 percent of the country’s territory but has only 89,000 inhabitants, of which 63 percent are indigenous.

Although it is the second poorest province in the country, it has the potential for growth because of abundant agricultural resources and possibilities for eco-tourism.

The IDB loan will be used to strengthen the local government and regulatory agencies, encourage economic diversification, protect the environment and incorporate civil society participation in planning and carrying out economic and social development projects and conservation.

The first phase of the program will lay the foundation for carrying out the Development Strategy adopted by the government. It will focus on strengthening the management capacity of institutions and governments at the regional and local levels to enable them to undertake sustainable development activities in the second phase of the project.

The program will include measures to promote rational and sustainable land use and funding for innovative pilot projects for economic diversification and conservation.

Because of the ethnic and cultural diversity of the people of the region, emphasis will be placed on participation by the residents in the decision-making process and in the drafting of annual operating plans.

An investment component of Phase I of the program will finance basic services - such as water, sanitation and energy - and transportation and other infrastructure to improve the quality of life for the people of the region. It will also fund the construction of a bridge over the Changuinola River and a solid waste management and disposal system on Isla Colón.

The Bocas del Toro project will contribute to the strategy of promoting the integration of Mesoamerica in the Puebla Panama Plan, particularly with respect to the integration of Panama and Costa Rica, and it will further the environmental and sustainable development goals in the framework of the Mesoamerican Development Initiative.

The program design incorporates lessons learned in previous projects directed at managing national resources and reducing poverty while promoting sustainable growth. Of special importance is experience gained in the IDB-financed program for sustainable development of Panama’s poor and ethnically diverse Darien region.

The total cost of Phase I of the program for the development of Bocas del Toro is $16.9 million. The IDB loan is for a 20-year-year term, with a three-year grace period, at the variable interest rate, now 5.39 percent. Local counterpart funds total $1,700,000.

The IDB loan for phase II of the program, which must be approved by the Bank’s Board of Executive Directors at the time the project qualifies for additional financing, will be $27 million. Local counterpart resources will be $3 million.

The project will be carried out by the Ministry of Economy and Finance, through the Regional Planning Directorate.*