The Government Will Lend Money to Contractors to Build Homes and Other Infrastructure After the Earthquake.
To speed up the reconstruction of areas devastated by the October 9, 2026 earthquake, the Panamanian government has modified an emergency trust fund to provide direct financing and capital advances to contractors.
The amendment to Article 5 of Cabinet Resolution No. 108 of October 10, 2026, which declared a national state of emergency following the earthquake of October 9, seeks to facilitate the financing of companies in charge of carrying out reconstruction work.
With the modification, the possibility of financing contractors during the execution of the works is incorporated, instead of limiting disbursements to the payment of completed works, as explained by the general manager of the National Bank of Panama, Javier Carrizo Esquivel.
“The main change that has been made to the trust, as instructed by the President of the Cabinet Council, is that the payment was made once the contracts were completed and it had to go through the entire bureaucratic process” explained Carrizo Esquivel. The new system will allow loans to be granted through the trust and that an inter-institutional committee will be formed for its implementation. The goal is to accelerate the start of housing projects, preventing companies from having to wait until the conclusion of contracts to access resources.
The Minister of the Presidency, Juan Carlos Orillac, confirmed that the modification responds to the need to incorporate a financing method for the companies that will carry out the works. The modification to article 5 of the trust which specifically refers to the possibility of the trust financing the contractor was not included in the first cabinet decree.
The Ministry of Economy and Finance (MEF), the National Bank of Panama, and the Comptroller General of the Republic have the express authorization to sign the necessary documents of the trust agreement. This will guarantee the timely execution of the contracts to carry out works, acquire goods and provide services related to the contracts authorized to address the emergency.
Once the state of emergency, the contracting period, and the payment of authorized obligations have concluded, the available balances of the trust must be returned to the National Treasury.
The incorporation of financing for contractors raises questions about the loan conditions, the guarantees that companies will have to provide, the criteria for allocating resources, and the oversight mechanisms that will be applied before and after disbursements. At this time, it is not known what recovery mechanisms will be applied in case of non-compliance with the projects.
