A container ship waits to cross the Gatun locks near Colon at the Panama Canal in this file photo. - file

The International Financial Corporation's board has signed off on a US$300 million loan to the Panama Canal Authority (ACP), the agency overseeing expansion of the maritime landmark.

The canal project, valued at US$5.25 billion, is expected to not only double the canal's capacity to to 600 million tons of cargo, but also retrofit the facility to handle large post-Panamax container ships that have become the new industry standard.

The facility is undergoing its biggest facelift in its 92-year history under a plan to widen and deepen the waterway.

The expansion includes construction of a new set of locks with water-saving basins and improvements to navigational channels, the IFC said.

The loan to the ACP, which is run by administrator and chief executive officer Alberto Alemén Zubieta, is for 20 years.

Funding

The IFC said the funds would be issued under a new line of business being jointly developed by IFC and the World Bank "that provides financing without sovereign guarantees to well-run local governments and public enterprises for essential infrastructure investments," and would be priced in line with private capital.

"IFC's participation in the Panama Canal expansion project, at a time of a global financial crisis, reflects our confidence in one of the most important infrastructure projects in Latin America and the Caribbean," said IFC CEO Lars Thunell in a statement from the agency.'

"The expansion will be essential to support Panama's international competitiveness and sustained economic and social growth in the country."

Contribution to budget

Earnings from the Panama Canal, said the IFC, represent some 12 per cent of that country's revenue budget.

The facility handles five per cent of all maritime trade between all major economies in the world, connecting Central and South America with the United States, Asia and Europe.

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