Panama to boost social inclusion and fiscal management with help from IDB

Country to support social inclusion of persons with disabilities and invest in digital transformation of its tax-collecting system in two operations approved by the IDB

The Inter-American Development Bank has approved two loans for Panama that are designed to help it make progress in the social inclusion of people with disabilities on one hand and also enhance the efficiency of its tax administration.

Including people with disability

The IDB approved a plan for Panama that supports inclusion of people with disabilities by improving the coverage and quality of health care and education and services that increase their autonomy. 

The loan will increase the efficiency of systems for identifying and certifying people with disabilities. It will also allow for an expansion of early diagnosis and rehab services, and improve the quality of education for students dealing with disabilities. Altogether, students with disabilities at 477 schools in rural areas of Panama will benefit from the loan.

An estimated eight percent of Panama's population has a disability of some sort. The incidence is higher in rural areas than in urban ones, greater among women than men, and affects those over age 65 in particular. People with disabilities suffer higher rates of poverty because they are less present in the work force and earn less, and due to the costs associated with their personal assistance, transport, health and technical support.  In Panama, households with at least one person with a disability have a greater possiblity of being in the bottom two income quintiles compared to those with no one who is disabled.

The IDB loan, which will be administered by the National Disability Secretariat,  (SENADIS), is for $40 million and has a reimbursement period of 15 years, a grace period of five and a half years and an interest rate pegged to the Libor. 

Digital transformation of the tax administration

Panama will invest in the digital transformation of its tax administration through an IDB loan that will help the country improve its tax revenue through more efficient inspection and collection and a reduction in costs associated with fulfilling tax obligations.

This project is part of the efforts that the General Directorate of Revenue ((DGI in Spanish) began to make in late 2019 to modernize its administration in a comprehensive way, in coordination with the IDB and the International Monetary Fund.  With IDB support, areas were identified to improve administration in the registry of tax payers, their division into tax brackets, risk profiles, management of tax assessment and collection, customer service and other issues.

The project calls for a thorough and systemic modernization of the DGI. The operation will boost the governance and human resource management model so that it can utilize efficiencies that will be gained through the use of digital tools for tax administration in the following areas: strengthening tax oversight, facilitation of compliance including  measures for comprehensive management of tax risk, taxpayer service and the extension of  electronic billing. Changes to the business model will be complemented by the modernization of technological infrastructure, improved planning and strategic management of information technologies and information security. 

This $40 million loan is over 15 years, with a reimbursement period of five years, a grace period of five and a half years and interest rate pegged to the LIBOR.