The European Investment Bank (EIB) is providing USD 500 million to help finance the widening of the Panama Canal. The head of the EIB's department for lending operations in Asia and Latin America, Francisco de Paula Coelho, signed the corresponding finance contract in Panama today in a ceremony conducted by Panama's President Martín Torrijos and also attended by high level representatives of the other organisations financing the project: the Japan Bank for International Cooperation, Inter-American Development Bank, International Finance Corporation and Andean Development Corporation.
Mr Paula Coelho stressed that "the European Union is one of the points of departure or arrival of goods passing through the canal. This EIB loan clearly demonstrates the EU's interest in this project, which will foster international trade and help to reduce the distances and transport times of alternative routes with consequent environmental benefits".
The project consists of the construction of two new lock complexes and expansion of the canal's capacity in order to manage the forecast growth in cargo volumes and enable the passage of larger container vessels, generating economies of scale and increasing productivity. The canal is Panama's primary economic resource whose toll revenues are determined by the size of cargoes not the number of ships. Because of its importance to the country, the project was put to a referendum in October 2006 and approved by a large majority.
The Bank is granting this loan under the current lending mandate for Asia and Latin America (ALA IV). This is the EIB's fifth operation in Panama, where it has previously provided loans totalling EUR 172 million, accounting for 6% of its financing in Latin America - a large proportion considering the country's small size.
The EIB is the EU's long-term financing institution promoting European objectives. Created in 1958, it operates in the 27 EU Member States and more than 130 other countries in Asia and Latin America, eastern Europe, the Balkans, the Mediterranean region and Africa, the Caribbean and the Pacific. Its lending operations outside the European Union form part of the EU's cooperation policy with those countries.
The Bank began its operations in Asia and Latin America in 1993 and since then has completed three mandates. Under the current mandate (ALA IV), covering the period 2007-2013, it is authorised to lend up to EUR 3.8 billion to finance projects supporting the EU's presence in the region through direct investment and/or the transfer of technology or know-how, as well as investments aimed at mitigating the effects of climate change. The EUR 3.8 billion breaks down into indicative figures of EUR 2.8 billion for Latin America and EUR 1 billion for Asia.