White House Fact Sheet on the Partnership With Panama: Action Plan To Foster Economic Recovery

The President today announced the following action plan to foster economic recovery in Panama:

I. Humanitarian Assistance

The Agency for International Development (AID) will initiate a $42 million humanitarian assistance program for Panama, covering:

replacement housing for the former residents of the Chorillo area;

an emergency public works program, principally for Panama City and Colon, but also including rural areas;

small business rehabilitation to assist those businesses affected by the looting; and

technical assistance to Government of Panama (GOP) agencies.

The Departments of the Treasury and Defense will develop ways to assist U.S. firms wishing to donate products to Panamanian businesses.

II. Loans, Guarantees, and Export Opportunities to Strengthen Panama's Private Sector and to Create Jobs

The Export-Import Bank (Exim) will provide up to $400 million in short-term and medium-term guarantees, through Exim and its affiliate, the Foreign Credit Insurance Association, to finance sales of American products.

AID will use $15 million in Trade Credit Insurance Program funds authority to support additional Exim lending to private sector borrowers.

The Overseas Private Insurance Corporation (OPIC) will reopen its insurance and finance programs to support American private investment in Panama. This program is valued at $50 million.

The Department of Agriculture will initiate a $15 million P.L. 480 title 1 program and a $15 million Commodity Credit Corporation program for Panama.

The United States Trade Representative will:

restore Panama's suspended 1990 sugar quota and, consistent with U.S. policy, compensate Panama for its foregone 1989 quota. This is estimated to be worth a total of $28 million;

initiate an educational program to ensure Panama makes full use of trade benefits under the CBI and GSP programs; and

remove the quota on cotton pants.

The Department of Transportation will arrange for the Federal Aviation Administration to negotiate a Memorandum of Agreement with the GOP on the provision of technical assistance in order to ease air travel to and from Panama.

The Department of State will, if the GOP so wishes, arrange that the already-negotiated bilateral investment treaty be resubmitted to Congress.

The Department of the Treasury will:

discuss with the GOP the conclusion of a Tax Information Exchange Agreement (TIEA), thus permitting U.S. firms, under established tax guidelines, to deduct expenses of conventions held in Panama. A TIEA would also make Panama eligible for section 936 funds;

working with other interested agencies and organizations, offer technical assistance to the Panamanian banking sector; and

initiate discussions with the GOP with the view toward concluding an agreement pursuant to section 4702 of the Anti-Drug Abuse Act of 1988 for the exchange of large currency transaction information.

The Department of Commerce will lead a business development mission to Panama and undertake other efforts to stimulate trade and investment with Panama.

The Department of Defense will:

resume promptly preferential buying of Panamanian goods and services by U.S. military authorities in Panama, the Panama Canal Commission, and all other U.S. entities, in accordance with the provisions of the Panama Canal Treaty of 1977; and

authorize the return of U.S. military dependents to Panama when the military situation permits.

In addition, Panamanian flag vessels will continue to have full access to U.S. ports.

III. Promoting Sustained Economic Recovery

Significant but temporary external economic assistance will be required to assure that Panama's economy returns to a sustained growth pattern. This undertaking will be a partnership involving the United States, Panama, other donor countries, and international financial institutions (IFI's).

The administration will seek an additional $500 million in FY '90 for U.S. assistance to Panama. This amount shall be offset from other programs. The $500 million would be used to help Panama normalize relations with the IFI's, for balance of payments support and business credit, for a public investment program, for public-sector restructuring, and for development support.

The Administration will also:

work to establish a support group of friendly donor countries to help clear Panama's arrears to the IFI's;

seek an early and generous rescheduling of Panama's debt to foreign governments under the auspices of the Paris Club; and

take steps to assist the conclusion of a satisfactory financing package for Panama's commercial bank debt that addresses the amount of debt and the level of debt service payments in the context of the strengthened debt strategy.