IFC Board Approves $300 Million Financing to Support Panama Canal Expansion
Washington, D.C. — The Board of Directors of IFC, a member of the World Bank Group, today approved a $300 million loan to the Panama Canal Authority (ACP) to support the expansion of the Panama Canal, a project that will help strengthen global trade and expand government resources available for economic and social development.
The 20-year financing will support the $5.25 billion project to double the canal’s capacity to more than 600 million Panama Canal tons and allow it to handle large post-Panamax container ships that have become the new industry standard. The expansion includes construction of a new set of locks with water-saving basins and improvements to navigational channels.
“IFC’s participation in the Panama Canal expansion project, at a time of a global financial crisis, reflects our confidence in one of the most important infrastructure projects in Latin America and the Caribbean,” said IFC’s CEO Lars Thunell. “The expansion will be essential to support Panama’s international competitiveness and sustained economic and social growth in the country.”
Alberto Alemán Zubieta, Administrator and CEO of the ACP said: “We welcome the decision of the IFC Board and we are pleased by this development. Indeed, in the midst of the global financial and economic crisis, this approval signifies trust and confidence in the Canal, in the historic expansion project, and in Panama itself – a testament to the will and capacity of our people to undertake a project that will have a positive net impact in our country and in the world of shipping and trade.”
The Panama Canal is an important element of the global marine transportation industry, handling 5% of all maritime trade between all major economies in the world. It connects Central and South American economies with the U.S., Asia and Europe. It also generates significant revenue for the government, accounting for about 12 percent of the 2007 budget.
IFC will provide financing at tenors currently unavailable through private sector sources, and will support the best practices adopted by the ACP, including those in environmental and social management. The IFC loan to the ACP is part of a new line of business being jointly developed by IFC and the World Bank that provides financing without sovereign guarantees to well-run local governments and public enterprises for essential infrastructure investments.
IFC appraised the project in close cooperation with four other multilaterals that also have been selected by the ACP to co-finance the canal expansion project: the Inter-American Development Bank, the Japan Bank for International Cooperation, European Investment Bank and the Andean Development Corporation.
Support for the Panama Canal expansion is consistent with one of IFC’s strategic priorities in Central America — developing physical infrastructure to improve competitiveness and regional integration. IFC’s committed portfolio in Central America as of June 2008 was $644 million in 42 investment projects, a 19 percent increase in only one year.
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Our new investments totaled $16.2 billion in fiscal 2008, a 34 percent increase over the previous year. For more information, visit www.ifc.org.
About the Panama Canal Authority
The ACP is the autonomous agency of the government of Panama in charge of managing, operating and maintaining the Panama Canal. The operation of the ACP is based on its organic law and the regulations approved by its Board of Directors. For more information, please visit: www.pancanal.com.
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