PEOPLE POWER

Panama 2017 | ECONOMY | VIP INTERVIEW

TBY talks to Gina Montiel, Manager, Central America, Mexico, Panama and the Dominican Republic Country Department and Country Representative in Panama, Inter-American Development Bank, on quality of life, logistics and infrastructure, and museums.

How are you improving the quality of life in Panama?

One of our main objectives here in Panama is to help Panamanians participate in sustainable growth. We are doing this by partnering with countries with leading public policy agendas. Working with them, we try to lay the foundation for inclusiveness and sustainable growth. With the Varela administration, we are trying to help them design a better education system and improve access to social services. Health and education ministries do not have services in remote areas where demand for social services is low because of the circle of poverty. They would rather put their children to work or stay at home than keep them in school. The policy of social protection is important because what you are trying to do is develop instruments that allow poor people to have the incentives and access to social services to develop their human capital. This is why we have the cash transfers program.

Why is it so hard in such a small country to divide the wealth more equitably?

The problem is not about using the rent from the Panama Canal or redistributing taxes; rather, it is that, institutionally, Panama is weak in many sectors, especially the social ones. If you do not develop human capital in these areas, people will not be productive or participate in economic growth. This is a major challenge because usually the institutions are bureaucratic and centralized and social expenditure is captured by the bureaucracy, whether is the health or education department. The main challenge—and this happens all across Latin America—is how to develop efficient institutions that provide services and give enough incentives.

What is the IADB's vision for boosting a balanced growth in the Panamanian logistics sector?

We are trying to help the government develop a logistics strategy with all the various actors because logistics as a means of development is not an end in itself. With the expansion of the canal and its strategic geographic location, the country is well positioned to play a larger role in the global logistics game. What it needs right now is to make the political decision to make the needed investments in ports and the airport. You first need to say what kind of economic activities you are going to develop in order to use that logistics capacity you have developed. We are working with the government under the leadership of Minister Aleman to launch the logistics development strategy.

What other segments have the potential to contribute to the growth of the economy?

Growth here still has to do with public investment, which continues to play an important role. Investment in the metro and the construction of new bridges will both be big boons. The challenge that Panama is facing is that our advantage in the financial sector is being threatened by all the transparency problems. If they follow up on and implement some of the recommendations of the commission, they will be able to convert this challenge into an opportunity.

Is the government making adequate efforts to distribute wealth across the entire country?

There is an important effort to decentralize more investment. This is clear in the social sector, particularly education and health, and some of the investments in infrastructure. The problem is that they are doing that part with a growth strategy. One of the other areas that Panama has a lot of potential to grow, but lacks a good strategy, is tourism. It is about how to connect the dots. We should be investing in Boca and doing the waste management, roads, and electricity; it is not a huge amount of money.

What should be done to boost the inclusion of women in Panamanian society?

One of the main issues that Panama must address is early pregnancy, particularly in adolescents. This is a major problem not only in Panama, but in the Dominican Republic and the rest of Central America. The opportunities for young women with children are low. This gets politicized and enters the ideologies and the church, but it is still a pending issue. We have been working with some of the main actors in society to try and generate a culture in which the women take a more active leadership role.

What are your main ambitions, goals, and targets for 2017?

We want to innovate Panama's growth agenda of Panama while still being more efficient and effective. One of the forgotten areas for growth potential is the orange economy; this is why we want to boost investments to establish Panama as a cultural center with a rich past. We are trying to develop a program with INAC in which we hope to reopen the theatre in the city center, the History Museum, and launch a film festival.