Panama Refinances 1.7 Billion Euro Loan to Improve Financing Terms

Panama's Ministry of Economy and Finance (MEF) has finalized terms for a new loan facility of up to 1.7 billion euros. This strategic move aims to enhance the state's financing conditions, mitigate market risks, and refinance previously acquired debt.

The resolution, officially published, details that the Republic of Panama, through the MEF, has entered into this agreement with The Bank of New York Mellon as the agent and Merrill Lynch International as the coordinating agent and lender. This new financing package will enable the early repayment of a 1.2 billion euro loan originally signed in March 2025. Additionally, it will provide 500 million euros in fresh funds, to be disbursed in U.S. dollar equivalents.

According to the MEF, the operation is designed to reduce market risks and improve the financial terms of the existing debt. The new loan features a fixed interest rate and a five-year amortization period. The allocated funds will be used for several key purposes: settling the outstanding balance of the March 2025 loan, providing partial financing for the 2025 fiscal year budget and future budgets, including investment projects and commercial financing, and covering all fees, costs, and expenses related to securing this new loan.

This refinancing effort aligns with the government's broader strategy to manage public debt effectively. Previous government decrees between 2024 and 2026 had progressively increased the authorized limit for such financing operations, raising the maximum amount for state financing structures to $12 billion.