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Panama, IDB sign $7.8 million loan for municipal modernization and decentralization

LIMA, Peru – Panama and the Inter-American Development Bank today signed the contract for a $7.8 million loan for a municipal modernization and decentralization program that will promote local development.

Panamanian Economy and Finance Minister Norberto Delgado Durán and IDB President Enrique V. Iglesias signed the document in a ceremony held during the annual meeting of the Bank’s Board of Governors, which is taking place in Lima March 29-31.

The IDB loan will help Panama modernize its municipal governments and improve their capacity to invest in public works such as storm drainage and flood prevention systems, public parks and squares, markets and abattoirs, and infrastructure for waste disposal and treatment.

The program will also support a process to build consensus and formulate a national policy for decentralization between the central government and municipalities, as well as studies to develop systems for financing, planning and service delivery at the local level.

The program is expected to foster a gradual and fiscally responsible decentralization process  and help municipal governments develop the institutional capacity to better respond to the demands of their population.

On the social side, the program will introduce participative planning methods that will help optimize the allocation of municipal resources for investments that reflect citizen priorities, leading to improvements in living standards, local development and poverty reduction.

The program reflects the strategy shared by the IDB and Panama of supporting institutional reforms to strengthen good governance and increase transparency. It will also complement other municipal strengthening projects supported by multilateral institutions and bilateral aid agencies in Panama