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Angela Maria Fonseca

PANAMA - Economy

Bright Future

Country Head Panama and Costa Rica, IFC

Bio

Angela Maria Fonseca is the head of the IFC office in Panama, the institution of the World Bank Group that provides financing to private sector companies and projects in emerging markets. She is responsible for the IFC’s business in Panama and Costa Rica, and has more than 20 years of professional experience in Andean Countries and in Central America. She began her professional career in Bavaria, one of the largest beer companies in Latin America which was later acquired by SAB Miller. She then joined Citibank Colombia as a relationship manager for public sector clients. In 2001, she joined IFC Colombia as an investment officer until 2012 when she was appointed head of the IFC in Panama.

“The representation of women on boards is extremely low across Latin America.“

Since Panama became a member of IFC in 1956, IFC has invested USD2 billion in the country. Which specific sectors of the Panamanian economy does IFC consider crucial for the growth of the country?

IFC was established in 1956, and over the past 60 years has participated in many of Panama’s most important projects. These include the Panama Canal expansion, the Manzanillo International Terminal in Colón, the Panama Canal Railroad Company, and the Corredor Sur toll road. We expect macroeconomic conditions to remain stable and positive in the country, with average GDP growth of 5% in the coming years. This will have a lot to do with the expanded canal. Major investments in infrastructure are also expected, such as the two new metro lines, bridges over the canal, and all the other roads and bridges planned in the last few years, not to mention the Minera Panama mining project. We think that those infrastructure, energy, logistics, and mining projects will support this macroeconomic growth in the coming four to five years. Most importantly for IFC is that these investments and this growth are also accompanied by social inclusion and environmental sustainability. The most important factor for Panama will be investment in education, both in terms of quality and access. Those are among Panama’s main priorities for now. Without a strong educational foundation the country will never reach the levels of social development and poverty reduction that remains the primary national goal. At IFC, we are also targeting investments in the financial sector that will help us to reach our inclusion targets. Most of our investments are aimed at improving access to finance or supporting the lower to middle-income mortgage market, which is underdeveloped. The credit lines we provide to banks are mostly for small and medium enterprises, micro enterprises, and poor people in Panama. That is part of our inclusion agenda. We are also helping the government mitigate environmental risks and develop new efficiency measures. For example, we recently helped launch a new green building code with Panama’s energy ministry. The objective is to reduce energy consumption by up to 20% in new constructions, thereby helping to curb greenhouse gas emissions.

The creation of an environmentally sustainable plan to be applied to the energy and construction sectors is one of the priorities of Varela’s Government. How is IFC working with other local institutions to instill awareness about this topic?

In the energy sector we have an integrated approach and are investing in cleaner technologies. For example, we recently completed a USD150 million financing package for the construction and operation of Central America’s first integrated liquefied natural gas (LNG) to power facility. The LNG terminal in Colón will ease the dependence on imported fossil fuels and help mitigate electricity shortages by introducing a clean, cost-effective, and reliable new energy source to the region. The facility is expected to displace at least 2,100 GWh of power currently generated from heavy fuel oil and diesel, thereby avoiding about one million tons of carbon dioxide emissions each year. That is roughly equivalent to taking more than 200,000 cars off the road. We also supported the largest wind generation project in Central America, located in the city of Penenomé. It is the largest grid-connected wind farm in Panama and will complement the country’s hydro-based generation since wind resources happen to be significantly stronger during the dry season when hydro production is at its lowest. We are supporting the energy sector with investments both in cleaner technologies and also by promoting energy efficiency initiatives, such as the advisory project we just completed with the Secretary of Energy for the green building code for Panama that focuses on reducing the energy consumption for new buildings. We have seen a committed administration led by the national Secretary of Energy, and it is part of the bigger strategy of the government which recently launched their long-term energy plan for 2050. The plan contains points and objectives regarding both a cleaner energy matrix with the inclusion of gas and renewables, the replacement of fossil fuels, more energy efficiency, and initiatives regarding transportation. The LNG project will help not only the power sector but other sectors be more environmentally friendly, including through the future use of gas for transport, for example. There will be other commercial and industrial uses as well, thus helping the country become more environmentally friendly, reduce its industrial and commercial footprint, and be more environmentally sustainable. In that sense, we are completely aligned with the government’s long-term energy plans. As for financial inclusion, we provide financing for local commercial banks to lend to small and medium enterprises, micro enterprises, and provide mortgages for the poor. We are also providing credit lines to banks to support solutions for smart climate projects. We are also considering projects to help the country’s capital markets through innovative financial structures. I would say that our plans in Panama complement both the financial and energy infrastructure as well as the real estate sector to create better, more sustainable, and more inclusive economic growth.

How can the LNG project you are undertaking help establish Panama as a regional hub in the energy and LNG sectors?

Given the strategic location of Panama, it will help the country launch new business opportunities in LNG and other energy projects. The project we just closed is at the Atlantic entrance of the Panama Canal and part of the LNG production will be used in another power plant project, a total of 380MW. Other power plants could be converted from fossil fuels to natural gas—there are many opportunities for this. If the economics makes sense, it could be great for the country—commercially, environmentally, and in terms of transportation. There are also other countries in Central America and the Caribbean, which might benefit from transshipping gas they need from here, taking it to their country, or re-exporting it from Panama. I do believe there is a huge potential for Panama to become an LNG hub for the Caribbean and Central America. In addition to its direct benefits, natural gas offers synergies with renewable energy. The LNG facility will provide cleaner and more affordable base load power to complement the inherent variability of wind and solar energy. This will make it possible to integrate more renewable power projects into the grid, while balancing electric system loads and ensuring a continuous supply of electricity.

Why is it so difficult for a small country with just 4 million people and with many opportunities and resources at its disposal to be able to distribute income more equally?

Poverty is mainly concentrated in indigenous communities, which are quite isolated from the rest of Panama’s urban population. That is where you see the greatest inequality, with insufficient water, electricity, education, and health resources. There is a lot of room for improvement and the government is working to help these communities and to create opportunities for them.

What are your targets and objectives for 2017?

We will continue concentrating on the financial sector, infrastructure, and energy over the coming year. We will continue to support our three pillars: SMEs, mortgages, and smart climate solutions, not to mention the electricity sector, with an emphasis on transmission. We will take advantage of the new opportunities that are on the way in the coming years. We will also explore new projects in ports and logistics that are extremely important for the country. Another priority at IFC is related to women: one of our commitments is to promote best practice in corporate governance in emerging markets, and one important element is gender diversity on boards. The representation of women on boards is extremely low across Latin America and for this reason we are supporting initiatives such as the Panama association of Corporate Directors, known as WCD Panama. WCD Panama is doing a great job of attracting talented women and encouraging companies to have more diverse boards, as a good corporate governance practice. It is proven that diverse boards are more effective and have a positive impact on companies.

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