Panama To Join CABEI

by Mike Godfrey, Tax-News.com, Washington

08 September 2006

At a recent meeting between Panama's President, Martin Torrijos (pictured) and Harry Brautigam, Executive President of the Central American Bank for Economic Integration (Cabei), it was agreed that Panama will become an 'extra-regional' partner of Cabei before the end of 2006.

With this status, Panama will have access to funding of about US$60m to assist in improvement of living standards and for use in certain defined infrastructure projects, likely to include the widening of the Panama Canal, generation of alternative energy, and tourism.

Cabei was founded in 1960 by Guatemala, El Salvador, Nicaragua and Costa Rica to promote regional economic and social integration. Other extra-regional partners now include Mexico, China, Argentina, Colombia and Spain. Belize and the Dominican Republic are also in the process of joining.

The Panamanian legislature has approved the government's plan to widen the Panama Canal, but has made it subject to a binding nationwide referendum which is set to take place later this year. The cabinet approved the plan in July.

Under the expansion plans, two 3-chamber locks will be constructed at both ends of the canal. This will create a third lane of traffic wide enough to handle the largest of modern container ships and tankers. New approach channels will also be prepared, whilst existing channels will be dredged to ensure large craft can enter the system.

The $7.5 billion project will take about seven years and employ up to 8,000 people. Nearly five percent of total world trade transits the Panama Canal. Of this trade, 88 percent flows between the United States and Asia.

The canal is already operating near full capacity and forecasts are for increased demand from ever-larger vessels.

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