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PANAMA
>> Regional Overview >> Panama Overview 
Introduction
U.S. assistance to Panama contributes to the achievement of U.S. foreign policy objectives in the areas of economic growth, environment and democracy. The assistance program focuses on ensuring effective protection and management of the Panama Canal Watershed (PCW) through which significant amounts of U.S. (13%-14%) and world (4%) ocean-going cargo transit the Panama Canal. The protection of the watershed's natural environment is vital to safeguarding the fresh water resources upon which canal hydrology depends. USAID's assistance program also supports substantial improvements in the criminal and commercial justice systems of Panama, as a democratic, transparent and stable Panama will help ensure transparent treatment of U.S. citizens and businesses in Panamanian commercial and criminal courts, in addition to efficient canal operations.
The Development Challenge
During the past 50 years, massive deforestation has reduced the forest cover in the Panama Canal Watershed in the process eroded its river valleys and lake shores. Increasing rates of population migration into the watershed, with concomitant urbanization and economic activities, threatens its environmental health. As a result, the fresh water supplies of the watershed are increasingly vulnerable to agricultural and industrial pollution, siltation, sedimentation and a consequent reduction in storage capacity of the lakes. This is a serious problem, considering that gravity fed, fresh water provided by rain across the 326,000 hectare watershed powers the Panama Canal. The PCW is the only source of water to meet the needs of the Canal, as well as those of the fast growing population in the area. With USAID assistance, the Government of Panama (GOP) has embarked on a wide-ranging program to reverse the deterioration of natural resources in the PCW and encourage environmentally friendly activities in the area. USAID assistance has supported essential infrastructure and equipment management plans for the five national parks located in the watershed. USAID has also supported GOP efforts to establish a comprehensive monitoring program to measure changes in forest cover, hydrology, biodiversity and human settlements in the watershed. An Ecological Trust Fund that provides a permanent source of funds to finance environmental education and awareness activities offered by local NGOs and the country's environmental authorities, as well as related management and protection activities, was successfully established with USAID's assistance. USAID also provides assistance to improve the management and technical capabilities of key GOP institutions, local governments, non-governmental organizations and communities in order to help them better protect and conserve the natural resources of the watershed.
Development in Panama, including in the environmental sector, is affected by a justice system that is inherently slow, complex and non-transparent. The system is difficult to understand or access for both Panamanians and non-Panamanians, and it is highly susceptible to manipulation. USAID is providing technical assistance and training to support the consolidation of ongoing efforts by the GOP to implement critical reforms of both its criminal and civil justice systems. The assistance complements a larger effort supported by the Inter-American Development Bank (IDB) in criminal justice. USAID assistance is also providing additional resources to address issues in commercial justice, an area in which the IDB is not involved. In an effort to modernize the justice system, major efforts will focus on the application of internationally recognized commercial law tenets and legal practices, enforcement of environmental regulations and the active participation of civil society groups interested in improving the system.
The current GOP external public debt is $5.6 billion. Servicing of the external debt is 11.3% of the public sector budget. The U.S. Government has no plans for debt relief.
Other Donors
USAID is the major donor active in the watershed. Under the Common Agenda Initiative, the Government of Japan (GOJ) is providing assistance to the GOP and NGOs in activities complementary to the USAID program in the conservation and protection of the watershed. To date, GOJ assistance has been modest. It has awarded a $240,000 grant to a local NGO to establish a training center. However, beginning in FY 2000, Japan plans to expand its training and technical assistance activities and to assist in reforestation activities.
The World Bank is implementing a lending program to Panama of up to $225 million for the period 1999-2001. This nation-wide effort is concentrating on poverty reduction, economic growth policies, reforestation and selective activities focused on environmentally sustainable development. Planned activities in land administration complement watershed conservation.
The IDB has assisted the GOP to develop a National Environmental Strategy. The IDB recently approved a $15.8 million loan to the GOP to strengthen institutional management and implementing mechanisms to support community environmental mitigations. Assistance is also planned to aid in a process of conversion of destructive agricultural practices to environmentally friendly productive activities in the watershed. As stated earlier, the IDB is also the lead donor supporting a major GOP effort in the improvement of its criminal justice system. USAID administration of justice activities complement this effort.
Country Background Information Resources CIA Factbook
Library of CongressNational Geographic Country Maps
State Dept. Country Information
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Last Updated on: December 21, 2000 |
