Washington, D.C., December 18, 2025 - The World Bank's Board of Executive Directors approved today an innovative operation for Panama that combines three World Bank Group financial instruments to strengthen fiscal sustainability and facilitate the mobilization of private investment, contributing to economic development and job creation.
The operation includes a US$500 million Development Policy Loan for Fiscal Management and Growth, and two World Bank Group guarantees to back a commercial loan of up to US$1.4 billion. These consist of a US$600 million Policy-Based Guarantee from IBRD and a second-tier Sovereign Financial Obligation Guarantee from the Multilateral Investment Guarantee Agency (MIGA).
Together, the two guarantees cover 95% of the loan and interest, enabling the country to access financial resources on more favorable terms, generate fiscal savings, and strengthen public debt management.
In addition, the Development Policy Loan supports key structural reforms to boost investment, such as updating the Fiscal Responsibility Law, strengthening the pension system, improving tax administration, and developing the local debt market. It also supports reforms to facilitate public-private partnerships and expand capacity for 5G and broadband services in strategic areas of the country.
"The confidence that the World Bank Group places in Panama reflects our commitment to fiscal discipline and transparency. This operation allows us to access resources on favorable terms and strengthen the economy. It also sends a signal to international markets about the government's determination to advance structural reforms that improve people's well-being," said Felipe Chapman, Minister of Economy and Finance. "We will continue working hand in hand with our strategic partners to consolidate financial stability and create more opportunities for human development and employment for Panamanians."
"This operation marks a milestone for Panama and for the World Bank Group, reaffirming our commitment to support middle-income countries in key reforms and offer innovative financial solutions tailored to their needs," said Juan Pablo Uribe, World Bank Director for Central America and the Dominican Republic. "Moreover, the reforms supported by this operation lay the foundation for more efficient and sustainable public management, aimed at improving services and quality of life for people."
Panama is demonstrating how the innovative use of the World Bank Group Guarantee Platform can unlock significant financing in the markets to support the government's reform agenda," said Ariane Di lorio, Director for Financial Institutions Group at the Multilateral Investment Guarantee Agency (MIGA). "By combining a World Bank policy-based guarantee with MIGA's second-tier guarantee, we are helping to reduce the country's financing costs and supporting it on its path toward fiscal sustainability, which will benefit the entire population in the long term."
The US$500 million loan has 25-year maturity and includes a two-year grace period. The combined guarantee model represents a financial innovation that could be replicated in other countries and is part of the World Bank Group's Guarantee Platform, designed to expand financing options and attract private investment.
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