US$2.30 billion loan agreement signed for Panama Canal

With Panamanian President Martín Torrijos as witness of honor, the administrator of the Panama Canal Authority (PCA), Alberto Alemán Zubieta, signed the agreement with CAF President & CEO Enrique García; the director of the Asia and Latin America department of EIB, Francisco de Paula Coelho; IDB President Luis Alberto Moreno; World Bank Managing Director Juan José Daboub, on behalf of the IFC; and JBIC Vice President Yoshihiko Morita.

President Torrijos signed as witness of honor in the presence of the members of the cabinet and the PCA Board of Directors headed by Minister for Canal Affairs Dani Kuzniecky.

The signing of the agreement reflects the Corporation's backing for the internal development of this nation, and regional integration, benefiting key projects in the public and private sectors. "The operation – García said – is evidence of the excellent level of bilateral relations and symbolizes CAF’s commitment to deepening Panama's role as hub of the Meso-American, Caribbean and South American integration schemes currently under way." In January 2009, the Corporation plans to open a regional office in Panama City, he added.

The Canal is one of the main economic resources of the Republic of Panama and its expansion, which will be completed earlier with these funds, is fundamental for the country and the region, since it ensures the canal’s long-term competitiveness.

The total cost of the project is estimated the US$5.25 billion and consists of an integrated program for expansion of the capacity of the canal, whose main components are: construction of two lock complexes, excavation of access channels to the new locks, and widening of the existing navigation channels.

The PCA has obtained loans for US$2.30 billion from foreign institutions to finance the expansion of this inter-oceanic route. The institutions which will participate in this project are CAF (US$300 million), European Investment Bank (US$500 million), Japanese Bank for International Cooperation (US$800 million), Inter-American Development Bank (US$400 million), and the World Bank’s International Financial Corporation (US$300 million).

Since becoming a shareholder in 1997, Panama has maintained close relations with CAF, which have led to approvals for US$600 million in favor of its development, mainly in the infrastructure sector, together with a series of non-reimbursable funds granted to various environmental and competitiveness programs.

The PCA is a legal entity charged with the administration, operation, conservation, maintenance and modernization of the Panama Canal and its related activities, in the framework of the constitutional and legal provisions in force, in a way that is safe, uninterrupted, efficient and profitable. It is also responsible for the administration, maintenance, use and conservation of the water resources of the canal basin formed by the lakes and their tributaries, in coordination with other state agencies.