Independent Country Program Review: Panama, 2021-2024

Abstract

This Independent Country Program Review (ICPR) assesses the relevance, implementation, and contribution of the Inter-American Development Bank Group's (IDB Group) country strategy and program with Panama from June 16, 2021, to June 30, 2024. The review informs the Board of Executive Directors in their consideration of the forthcoming country strategy and provides the Government of Panama and other stakeholders with an independent assessment of the IDB Group's engagement. The ICPR is based on a systematic review of documentation and triangulation with IDB Group specialists and external counterparts. The analysis follows OVE's Implementation Guidelines for Independent Country Program Reviews and examines the relevance of the country strategy, the alignment and feasibility of the country program, its implementation, and its contribution to strategic objectives and expected outcomes. Panama sustained high economic growth driven by the Canal and investment, but faces persistent challenges of inequality, productivity, and access to quality basic services, particularly in rural and indigenous areas. The country strategy defined eight strategic objectives across three priority areas: modernizing public management, improving the delivery of basic services, and reigniting and diversifying productive activity. While generally aligned with national priorities, the strategy showed weaknesses in strategic selectivity, design clarity, monitoring mechanisms, and risk identification, especially regarding institutional quality and productivity constraints. The program comprised 122 sovereign-guaranteed IDB and 38 non-sovereign guaranteed IDB Invest operations totaling US$3.49 billion. Alignment was strong in public management and basic services, but weaker in productive activity. Implementation faced persistent challenges, including ex ante controls by the Comptroller's Office, budget constraints, limited institutional capacity, and pandemic-related disruptions. The program made its strongest contributions to digital transformation of public administration, education quality and relevance, and access to credit for underserved sectors, while contributions to other objectives were limited due to weak alignment, low operational maturity, implementation delays, and insufficient evidence of results. The ICPR concludes that, although the IDB Group's program in Panama was broadly relevant and adaptable, limitations in strategic focus, operational feasibility, and implementation reduced its contribution to several key development challenges. Strengthening strategic selectivity, addressing structural implementation bottlenecks, and improving evidence generation will be critical to enhancing the effectiveness of future country strategies and programs.