Panama receives IDB support to contain the sanitary crisis and its macroeconomic impact

The Inter-American Development Bank (IDB) has approved a $400 million operation to help finance Panama’s efforts to contain the sanitary crisis, mitigate its impact on vulnerable households, and promote policies to reduce the pandemic’s short-term effects on the economy.

The budget-support loan will provide Panama’s government with rapid disbursement funds to finance emergency current expenses and generate a mid-term fiscal policy strategic framework to recover fiscal sustainability and ensure macroeconomic stability.

The IDB support complements a financial program approved in April by the International Monetary Fund aimed at providing rapid financial assistance to help combat the COVID-19 crisis in the country.

Under the Bank’s program, Panama commits to implement measures to ensure a stable balance of payments and a sustainable public debt-to-GDP ratio, as well as to resume a gradual fiscal policy agenda to ensure fiscal sustainability in the post-emergency period.

The IDB loan, which will be disbursed in a single tranche, has a seven-year amortization period, a three-year period of grace, and an interest rate based on LIBOR.