The CAF – banco de Desarrollo de América Latina / Bank of Development in Latin America, has approved a massive new financing program for Panama. This three and a half billion dollar commitment aims to accelerate economic growth and job creation in the country. President Sergio Díaz Granados announced the strategic partnership during a launch event for the upcoming Panama 2026 International Economic Forum.
The new “Estrategia País Panamá” initiative represents a significant deepening of the 28 year relationship between the multilateral lender and the Central American nation. Over the next five years, from 2025 to 2029, these substantial credit lines will become available. They are designed to fund critical development projects across a diverse range of sectors.
“In 28 years of stable and fruitful relations, CAF has granted Panama credits totaling seven billion dollars,” stated Sergio Díaz Granados, President of CAF. [Translated from Spanish] He confirmed the new strategy would “reinforce the impulse of CAF to the Panamanian economy.”
This financial injection arrives as the government simultaneously implements its own major investment plans. Officials intend to channel the funds into infrastructure, logistics, and energy projects. Other priority areas include boosting financial inclusion, expanding the tourism sector, accelerating electric mobility, and driving a nationwide digital transformation.
A Collaborative Strategy for National Development
President Díaz Granados emphasized that the new country strategy resulted from extensive consultation. This process involved detailed dialogues with both government authorities and diverse private sector guilds. The collaborative approach ensures funded projects will directly address the nation’s most pressing economic needs.
This prioritization mechanism aims to elevate national productivity and competitiveness. The financing is not a simple loan but a tailored program aligned with Panama’s long term development goals. It will support specific, high impact ventures that can generate sustainable employment and stimulate broader economic activity.
The announcement was strategically timed with the reveal of the Panama 2026 International Economic Forum. Scheduled for January 28 and 29, 2026, the forum will convene at the Panamá Convention Center. The event expects to gather approximately 2,000 attendees and 150 international specialists.
Their collective focus will be analyzing pathways to stimulate economic growth and enhance welfare across Latin America and the Caribbean. Panama’s new partnership with the CAF – banco de Desarrollo de América Latina will undoubtedly serve as a central case study.
Massive 2026 State Budget Complements CAF Funding
This external financing boost coincides with Panama’s own record breaking fiscal plans. President José Raúl Mulino recently sanctioned Law No. 293, the Presupuesto General del Estado (state fund) for the 2026 fiscal year. The total budget amounts to thirty four billion, nine hundred one million dollars.
Nearly a third of this colossal sum is earmarked for public investment. An eleven billion, one hundred eighty eight million dollar investment program is embedded within the budget. Its stated goals mirror those of the CAF initiative, specifically to dynamize the economy, generate employment, and improve the quality of life for Panamanian citizens.
President Mulino explained the budget distribution possesses a social focus that prioritizes population needs and guarantees essential services. [Translated from Spanish] He also noted it simultaneously drives productivity and state fiscal sustainability.
The government’s spending plan allocates enormous resources to health and education. The health sector received an allocation of ten billion, forty nine million dollars. Education follows with five billion, six hundred ninety million dollars designated for its various institutions and programs.
Other critical sectors also see substantial funding. The agricultural sector is set to receive two hundred seventy nine point six million dollars. Public works, managed by the Ministry of Public Works, gets a seven hundred fifteen million dollar assignment. National security receives nine hundred eighty five million dollars.
Fiscal Responsibility and Economic Diversification
The 2026 budget projects a notable improvement in the nation’s fiscal deficit. It forecasts a reduction from four percent of GDP in 2025 to three and a half percent in 2026. This aligns with the mandates established in Panama’s Social Fiscal Responsibility Law.
This disciplined fiscal approach provides a stable foundation for the incoming CAF financing. It demonstrates a government balancing aggressive public investment with long term economic stability. The parallel moves signal a comprehensive national strategy for development that leverages both internal and external capital.
The budget’s composition reveals a focus on capital expenditures. Of the total thirty four point nine billion dollars, over fifteen billion is classified as capital spending. This indicates a significant portion of the budget is dedicated to long term investments in infrastructure and other assets, not just operational costs.
These projects could potentially dovetail with initiatives funded by the new CAF program. The government’s financial management, including its handling of revenues from sources like the copper mine mina cobre panam, will be crucial for maintaining this balance. The synergy between the state budget and multilateral lending creates a powerful financial engine for national projects.
Panama is now positioned with an unprecedented level of resources dedicated to its development. The combined force of a record state budget and a major new international credit line provides a unique opportunity. The effective execution of these funds will define the country’s economic trajectory for the next decade.