Panama City – Expanding the Panama Canal will not require loans from international financial organizations such as the World Bank, the authority that manages the interocean waterway said Tuesday.
The Panama Canal Authority, or ACP, will seek foreign financing during the peak construction period of 2009-2011 for $2.3 billion of the total $5.25 billion it is estimated the project will cost, according to the proposal presented on Monday.
The plan rules out borrowing from multilateral financial institutions, said the ACP’s general administrator, Alberto Aleman.
The financing will be sought in the private market, but the names of the banks that will be approached still have not been made public, Aleman said in a meeting with the press along with other ACP officials.
According to the proposal, the Canal’s expansion is slated to begin in 2007 and to last until 2014.
Aleman defended the financial ability of the ACP, which is an autonomous state firm, to cover the project with its own resources generated from tolls charged to ships that traverse the waterway, a revenue source that also will allow the entity to pay off the loans in roughly 10 years without forcing the government to go into debt.
He said that the Canal takes in some $1.4 billion annually, which guarantees the ACP “its own repayment ability.”
With the expansion, the Canal “is going to attract additional (business)” by building additional sets of locks that will permit the passage of ships larger than those that currently can traverse it, thus increasing its overall traffic, Aleman said.
The ACP’s planning director, Rodolfo Sabonge, said that due to the economic impact of the Canal’s expansion on Panama’s economy, the country’s GDP could exceed $30 billion by 2025.
Panama’s gross domestic product was nearly $13.5 billion in 2004.
The proposal to expand the Canal, made public on Monday by the ACP, must be approved by President Martin Torrijos – son of late strongman Omar Torrijos, who negotiated the waterway’s transfer from U.S. control – and then by Congress, which will call a referendum so that the Panamanian public can express its wishes on the project. EFE
