US$400 million loan for Panama Canal

(Caracas, October 23, 2008).- The Andean Development Corporation approved a US$400-million loan for the Panama Canal Authority (PCA), which will partially finance the integrated program to expand the capacity of the Canal.

This operation, explained Enrique García, president & CEO of the multilateral financial organization, is important backing from the Corporation for the nation’s domestic development and for regional integration, in benefit of key projects in the public and private sectors. It is also 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.

García said that Panama’s entry last July as full member of the Corporation and the opening, in January 2009, of a regional office of the Corporation in its capital opens the way for a substantial increase in financial and technical support to the country.

The Canal is the main economic resource of the Republic of Panama and its expansion, which these funds will speed up, is fundamental for the country and the region, since it will ensure the competitiveness of the Canal, the CAF chief said.

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

The PCA has obtained loans for US$2.3 billion from foreign institutions to finance expansion of this inter-oceanic link. The institutions which will participate in this project, in addition to CAF, are the European Investment Bank, Japanese Bank for International Cooperation, Inter-American Development Bank (IDB), and the International Financial Corporation (IFC).

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

The PCA is the legal entity responsible for managing, operating, conserving, maintaining and modernizing the Panama Canal and its related activities under constitutional and legal provisions, to ensure that it operates safely, continuously, efficiently and profitably. It is also responsible for the management, maintenance, use and conservation of the water resources of the canal basin formed by the lakes and their tributaries, in coordination with other state bodies.