Washington, DC, March 22, 2024. Panama will work with the World Bank to continue reducing emissions and adapting to climate change through a new project approved by the World Bank Group's Board of Executive Directors today. The Panama Second Climate Resilience and Green Growth Development Policy Loan (DPL) will bolster reforms to decarbonize the transport and energy sectors and support Panama in building the capacity to adapt to climate change and mitigate its effects, benefitting the most vulnerable populations.
This US$350 million project supports reforms organized under two pillars. The first focuses on promoting a clean energy transition, socially inclusive low-carbon growth, and technological innovations for disaster preparedness. Under this component, Panama will continue strengthening the regulatory and policy frameworks developed to reduce emissions in the energy and transport sectors. Decarbonizing these sectors is crucial to meet the country's climate change commitments. In addition, this pillar supports policy reforms for rural electrification through renewable energy and digital connectivity that will benefit women and indigenous territories.
The second pillar will help Panama further develop its capabilities to manage its natural resources in a sustainable manner and plan for climate change. This includes support for instruments that enhance climate planning and governance, such as the National Climate Change Adaptation System and the Climate Change Scenarios, which will inform public and private investment planning going forward.
The operation builds on the previous Climate Resilience and Green Growth the Development Policy Loan (DPL), approved by the World Bank in April of 2023, and underscores Panama's commitment to integrating sustainability and climate action in its economic and social policy management.
"The Government of Panama, during the period 2019-2024, has implemented policy reform actions and measures regarding energy transition and climate resilience, as part of the decarbonization process of the transportation sector, and in turn, mitigate the impacts negative effects of climate change on the national economy. These climate resilience actions as a development strategy will allow the country to contribute to the improvement of the environment, the quality of life of the population, and the revitalization of the economy in both the public and private sectors and must be a long-term sustainable transition; Simultaneously, it's crucial to emphasize that according to the Second Biennial Update Report on Climate Change, it concludes that, Panamanian forests capture more carbon than the total gas emissions that cause the climate crisis generated in Panama, rendering the country carbon negative", said Héctor Alexander H., Minister of Economy and Finance.
"Panama's ability to sustain rapid economic growth and to further reduce poverty is interlinked with its ability to adapt to, and mitigate, the impacts of climate change," said Michel Kerf, World Bank Regional Director for Central America and the Dominican Republic. "This project demonstrates the country's commitment to achieving a sustainable and resilient future in the face of climate change."
Climate change poses a significant threat to Panama's economic growth, affecting the most vulnerable communities. The country is among the most exposed in the world to climate-induced natural hazards and altered weather patterns, including increased frequency and intensity of El Niño and La Niña events, which result in severe droughts and floods. Indigenous territories face heightened climate-related challenges, including rising sea levels and other hazards.
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