The European Investment Bank (EIB) is providing a USD 40 million loan to the Republic of Panama for the improvement of sanitation and environmental conditions in Panama City and bay area through wastewater treatment.

The overall project will be cofinanced by the EIB, the Inter American Development Bank (IADB) and  the Japan Bank for International Cooperation (JBIC), and is part of Panama’s Government investment programme to improve sanitary and environmental conditions in Panama City, which will be implemented during the 2006-2015 period, at an estimated cost of EUR 200 million (USD 284 million)

The Bank's loan is intended to part-finance the construction of the Balboa wastewater interceptor, as well as the Las Lajas and the East wastewater collectors. In adition, the Bank’s loan comprises a technical assistance contract which will improve the efficiency of the water networks in the capital city through water demand management measures, thereby having a demonstration effect on other cities in Panama.

The project will have substantial environmental and social benefits for the Panama City and bay area. By increasing the proportion of wastewater treated from less than 5% to close to 50%, the project will improve the quality of life of local residents, in particular in poor areas that so far have not beig served with sanitation services, reduce sanitary and health hazard, and develop tourism and fishing activities in the region.

The loan is provided in the context of the EU co-operation policy with third countries. Since 1993 the EIB has carried out four successive lending mandates for Asia and Latin America. Under the current mandate (ALA IV), covering the period 2007-2013, the EIB is authorised to lend up to EUR 3.8 billion for financing operations that contribute to environmental sustainability and support the EU presence in those regions through Foreign Direct Investment, transfer of technology and know-how.

This is the fourth loan provided by the EIB in Panama. In 2004, the Bank part financed the Second Panama Canal bridge project (the “Centenial Bridge”), with a loan of EUR 43 million to the Ministry of Finance, and in 1997 and 2000 respectively, it financed two network expansion projects of Cable & Wireless, for a total amount of EUR 104m.