IDB Invest, Panama Support Tourism Recovery with Financial Guarantees
• Banistmo, the second-largest private bank in Panama, will be the first signatory
To facilitate and promote tourism, IDB Invest, in close collaboration with the Government of Panama, has created a risk mitigation facility to guarantee loan portfolios in the tourism sector.
The objective of the facility is the promotion of tourism by giving financial institutions a greater incentive to offer loans to the tourism sector, thereby helping the recovery of Panama's tourism industry. This will also help boost the country's general economic growth, given the relevant weight that the tourism sector has in the Panamanian economy. In 2019, before being hit by the pandemic, the travel and tourism industry accounted for 15.6% of the country's gross domestic product, according to the World Travel and Tourism Council.
Tourism loan portfolios will be originated and serviced individually by each participating financial institution in Panama. Banistmo, a subsidiary of Grupo Bancolombia and the second-largest private bank in Panama, will be the lead institution and the first signatory of the line of credit with a guarantee of up to $80 million. Banistmo's tourism portfolio will benefit from this joint guarantee, allowing the bank to support the recovery of its existing tourism clients and provide new access to capital. The agreement complements Banistmo's efforts to stabilize and grow its tourism portfolio to almost $200 million by 2025 and increase the number of loans to the sector, from 218 before the pandemic to approximately 290 by 2025.
As a pioneer in Panama and the region, the joint line of credit between IDB Invest and the Government of Panama will guarantee a tourism loan portfolio of up to $300 million through different financial institutions in Panama. IDB Invest anticipates engaging with other partner banks to assess their tourism portfolios better and provide them with the required guarantees, along with the Panamanian government, to encourage additional investment and growth in tourism.
IDB Invest will also provide advisory services to Banistmo to help it strengthen its offer to small and medium-sized enterprises (SMEs) within the tourism sector so that these companies can obtain broader access to credit products.
This agreement is expected to contribute to the United Nations Sustainable Development Goal of Decent Work and Economic Growth (SDG 8). It also promotes the 2025 Vision of the IDB Group, which aims to achieve recovery and sustainable and inclusive growth in Latin America and the Caribbean. Likewise, it is aligned with the Country Strategy with Panama of the IDB Group for 2021-2024, which considers the growth of tourism as a strategic objective for the recovery and diversification of the country's economy.
About IDB Invest
IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social, and environmental development in the region. With a portfolio of $14.1 billion in asset management and 325 clients in 25 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries.
About the Ministry of Economy and Finance (MEF)
Created by Law No. 97 of December 21, 1998, promulgated in Official Gazette 23,698 of December 23, 1998. Law No. 97 (December 21, 1998) for the purpose of transforming the Public Administration and giving greater coherence and comprehensiveness to the financial and budgetary management of the Republic of Panama, as well as to provide a greater definition and coordination of economic, fiscal, and social policies. The MEF oversees everything related to the formulation of economic policy initiatives; the programming of public investments and the social strategy, the design and execution of the general guidelines and the specific tasks of the Government on Finance and National Treasury; the elaboration, execution and control of the General State Budget, Public Credit, and modernization of the State, as well as the elaboration and execution of the Programming.
Banistmo is a leading financial institution in Panama with a proven history of stability and growth of more than 45 years. As a key player in the Panamanian banking system, it has a broad portfolio of products and services, with a diversified funding profile, managing more than USD 7.3 billion in customer deposits and nearly, USD10.3 billion in assets (as of March 2022) and strong capital support. Since its acquisition in 2013 by Bancolombia Group, which ranked number one as the most sustainable bank in the region and number five in the world according to the Dow Jones Sustainability Index, Banistmo has improved its efficiency and diversified its product offerings, consolidating its position as a top-tier bank in Panama.