The Inter-American Development Bank today announced the approval of a US$51,323,000 loan for the first phase of a broad competitiveness program in Panama, which has reached several trade accords in recent years to expand its access to international markets.
To take advantage of opportunities created by these pacts, Panama needs to boost its competitiveness and increase the efficiency of public sector agencies responsible for promoting exports.
The competitiveness program will strengthen the public sector’s capacity to negotiate and manage trade agreements and increase its ability to implement plans to foster exports and attract foreign investments. An electronic platform will be developed to provide services, information and data on trade and simplify procedures for exporters and investors.
To take advantage of Panama’s competitive conditions for exporting fruits and other farm products, the program will stimulate technological innovation and strengthen the government-run animal and plant health services and the new food safety agency.
Under the program a loan guarantee trust fund and medium- and long-term lines of credit will be established to expand access to financing for Panamanian companies, especially exporters and their suppliers.
The US$10 million trust fund will provide guarantees for up to 80 percent of loans issued by local banks and other financial institutions. Two separate lines of credit will be created, one for large and medium-sized companies and another one for small businesses and microenterprises.
The program will also support export promotion services such as the identification of new markets and business opportunities, the preparation of business plans, marketing strategies, technological upgrades, the development of alliances and specialized technical assistance. These services will be available for all types of businesses.
A grant from the Japan Fund will help finance studies and activities to foster entrepreneurial development in indigenous regions, enabling their participation in export deals while ensuring that these processes do not diminish their cultural identities, natural resources or autonomy.
“This component will help link enterprises from these communities to local and international markets under conditions established by the indigenous peoples and their own organizations,” said IDB project team leader Martin Chrisney.
The new loan is for 20 years, with a four-year grace period and a variable interest rate. Panama will invest US$37,136,000 in first phase of the program while the private sector will contribute US$7,614,000. The IDB could consider a US$20 million loan for the second phase.