Government rejects international loan

06-03-2009 | MARIJULIA PUJOL LLOYD

The extra $400 million will help to stabilize Panama’s economy

Panama Star PANAMA. A loan from the Inter-American Development Bank has been rejected by the Panamanian government because the terms were too onerous.

The National Bank is going to make available to local businesses $400 million to stimulate the economy.

An additional $230 million will be made available to local banks to maintain their liquidity.

The funds will be additional to the $1.1 billion stimulus package that President Martin Torrijos said had been set aside to support the national economy, and will form part of that plan.

The Minister of Economy and Finance, Hector Alexander said that $230 million was for loans of up to six months, but they will have the advantages of the long term ones.

Alexander added that it is important to protect the local economy at a time of a global financial crisis.

JPMorgan has lowered its 2009 GDP growth forecast for Panama to 1.5% from 4.0%, saying the collapsing global demand will have a negative effect on the country's transportation sector.