The European Investment Bank (EIB) has signed $50m loan to support an investment programme to improve water quality and sanitation conditions in the Burunga, district of Arraijan (province of Panama).

Supporting the national Panama Sanitation Project (PSP), the loan will enable the construction of a wastewater collection and treatment system, sewerage networks, pumping stations and new household connections. This will be the first water project under the PSP in the Panamanian Western province, and the third including the two previous operations in the Panama Metropolitan Area.

It forms part of the Panamanian Government’s five-year strategic plan (Plan Estrategico Quinquenal 2015-2019), which highlights the water sector as one of its priority areas, including drinking and waste water treatment and improving the availability, quality and management of water services. The project provides the district of Burunga with full wastewater collection and treatment services.

The project is co-financed by the World Bank (WB), which acts as the leading international financial institution (IFI) in this project, the Development Bank of Latin America (CAF) and the Republic of Panama. 

Commenting on the financing operation, Vice-President Román Escolano said: “The European Investment Bank is pleased to support this project in Panama that will improve environmental and social infrastructure, bringing better quality water to over 80,000 residents in the city.  This project marks a crucial step forward in addressing environmental challenges in the country. In addition, this operation will help to reduce greenhouse gas emissions thereby contributing to climate change mitigation, one of the EIB’s strategic operational priorities.”

The project will lead to a significant reduction of pollution in a growing area and will contribute to reducing health related risks associated to the lack of adequate sanitation services. It will also reduce methane emissions from septic tanks thus contributing to climate change mitigation. The Bank granted the loan to the Republic of Panama under the Climate Action and Environment Facility (CAEF). This is the EIB’s eight operation in Panama, in a country where the EIB has provided loans totaling EUR 760 million to support investment projects.

The Bank began its operations in Latin America in 1993. Under the current External Lending Mandate for Latin America, covering the period 2014-2020 (ELM), it is authorised to lend up to EUR 2.3 billion to finance projects supporting the development of economic, environmental and social infrastructure; climate change mitigation and adaptation or local private sector development, in particular SMEs.