The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) FOR OFFICIAL USE ONLY Report No: ICR00005450 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD 8087-PA) ON A LOAN IN THE AMOUNT OF US$66 MILLION TO THE REPUBLIC OF PANAMA FOR A Disaster Risk Management Development Policy Loan with a Cat DDO April 25, 2022 Urban, Resilience And Land Global Practice Latin America And Caribbean Region The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) CURRENCY EQUIVALENTS (Exchange Rate Effective February 28, 2022) Currency Unit = Balboa (B/.) US$1.00= B/. 1.00 GOVERNMENT FISCAL YEAR July 1 - June 30 Regional Vice President: Carlos Felipe Jaramillo Country Director: Michel Kerf Regional Director: Anna Wellenstein Practice Manager: David Sislen Project Team Leaders Haris Sanahuja, Mirtha Escobar ICR Team Leader: Rodrigo Donoso ICR Main Contributor: Luis Corrales The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) ABBREVIATIONS AND ACRONYMS ANAM National Environmental Authority (Autoridad Nacional del Ambiente) CAPRA Central America Probabilistic Risk Assessment Cat DDO Catastrophe Deferred Drawdown Option CC Climate Change CCA Climate Change Adaptation CCT Conditional Cash Transfer CCRIF-SPC Caribbean Catastrophe Risk Insurance Facility Segregated Portfolio Company CEPREDENAC Coordination Center for the Prevention of Natural Disasters in Central America and the Dominican Republic (Centro de Coordinación para la Prevención de los Desastres en América Central y República Dominicana) CMU Country Management Unit CPF Country Partnership Framework CPS Country Partnership Strategy CODES Center of Emergency Operations in Health (Centro de Operaciones de Emergencia de Salud) COMISCA Council of Ministers of Health of Central America and the Dominican Republic (Consejo de Ministros de Salud de Centroamérica y República Dominicana) COSEFIN Council of Ministers of Finance of Central America (Consejo de Ministros de Hacienda o Finanzas de Centroamérica, Panamá y la República Dominicana) COVID-19 Coronavirus disease 2019 (COVID-19), a disease caused by the SARS-CoV-2 virus CPF Country Partnership Framework CPS Country Partnership Strategy CRRH Regional Committee of Hydraulic Resources Comié Regional de Recursos Hidraúlicos) CSO Civil Society Organization DICRE Directorate of Investment, Concessions and Risks of the State (Dirección de Inversiones, Concesiones y Riesgos del Estado) DFP Directorate of Public Financing (Dirección de Financiamiento Público) DPI Directorate of Investment Programming (Dirección de Programación de Inversiones) DIPRENA Directorate of the National Budget (Dirección Nacional de Presupuesto) DPL Development Policy Loan DRF Disaster Risk Financing DRFIP Disaster Risk Financing and Insurance Program DRM Disaster Risk Management DRMNP Disaster Risk Management National Plan DRR Disaster Risk Reduction EID Emerging Infectious Disease ENSO El Niño-Southern Oscillation GDP Gross Domestic Product The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) GFDRR Global Facility for Disaster Reduction and Recovery GoP Government of Panama GRS Grievance Redress Service HFA Hyogo Framework for Action HSNP Health Sector National Policy IBD Inter-American Development Bank IBRD International Bank for Reconstruction and Development IDA International Development Association IDAAN National Aqueducts and Sewers Institute (Instituto De Acueductos y Alcantarillados Nacionales) IFI International Financial Institution IMF International Monetary Fund IP Indigenous Peoples ISR Implementation Status Report LA Loan Agreement LAC Latin America and Caribbean M&E Monitoring and Evaluation MEDUCA Ministry of Education (Ministry of Education) MEF Ministry of Economic and Finance (Ministerio de Economía y Finanzas) MIAMBIENTE Ministry of Environment (Ministerio de Ambiente) MIDES Ministry of Social Development (Ministerio de Desarrollo Social) MINGOB Ministry of Government (Ministerio de Gobierno) MINSA Ministry of Health (Ministerio de Salud) MITRADEL Ministry of Labor (Ministerio de Trabajo y Desarrollo Laboral) MIVIOT Ministry of Housing and Territorial Management (Ministerio de Vivienda y Desarrollo Territorial) NAPHS National Action Plan for Health Security NPDRR National Platform for Disaster Risk Reduction NMHS National Meteorological & Hydrological Service PAD Program Appraisal Document PAHO Pan American Health Organization PCGIR Central American Comprehensive Risk Management Policy (Política Centroamericana de Gestión Integral del Riesgo) PDO Program Development Objective PEG Government’s Strategic Plan (Plan Estratégico de Gobierno) PNGIRD Comprehensive National Disaster Risk Management Policy (Política Nacional de Gestión Integral de Riesgo de Desastres) PNGR National Disaster Risk Management Plan (Plan Nacional de Gestión de Riesgo) PPE Personal Protective Equipment The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) PPP Purchasing Power Parity RdO Opportunity Network (Red de Oportunidades) SBP Superintendence of Banks of Panama (Superintendencia de Bancos de Panamá) SFRL Social and Fiscal Responsibility Law SFDRR Sendai Framework for Disaster Risk Reduction 2015-2030 SICA Central American Integration System (Sistema de la Integración Centroamericana) SINAPROC National Civil Protection System (Sistema Nacional de Protección Civil) SINIP National Public Investment System (Sistema Nacional de Inversiones Públicas) UNDRR United Nations Office for Disaster Risk Reduction WB World Bank WHO World Health Organization The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) TABLE OF CONTENTS DATA SHEET ...................................................................................................................... 2 I. PROGRAM CONTEXT AND DEVELOPMENT OBJECTIVES ............................................ 6 II. ASSESSMENT OF KEY PROGRAM DESIGN AND OUTCOMES ..................................... 13 III. OTHER OUTCOMES AND IMPACTS ......................................................................... 19 IV. BANK PERFORMANCE ............................................................................................ 21 V. RISK TO SUSTAINABILITY OF DEVELOPMENT OUTCOMES ....................................... 23 VI. LESSONS AND NEXT PHASE .................................................................................... 24 ANNEX 1. RESULTS FRAMEWORK ..................................................................................... 27 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES .. 31 ANNEX 3. BORROWER, CO-FINANCIERS, DEV. PARTNERS’/STAKEHOLDERS’ COMMENTS .. 33 ANNEX 4. DETAILED DESCRIPTION OF ACTIVITIES CARRIED OUT UNDER THIS PROGRAM .. 35 ANNEX 5. DETAILS ABOUT THE TECHNICAL ASSISTANCE PROVIDED TO GOVERNMENTS INSTITUTIONS RESPONSIBLE FOR FORMULATING DISASTER RISK REDUCTION AND CLIMATE CHANGE POLICIES ............................................................................................................ 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) . . DATA SHEET BASIC INFORMATION Product Information Project ID Program Name P122738 Disaster Risk Management Development Policy Loan with a CAT DDO Country Financing Instrument Panama Development Policy Lending DPF Options Programmatic Regular Deferred Drawdown Option Catastrophic Deferred Drawdown Option No Yes Yes Crisis or Post Conflict Sub-National Lending Special Development Policy Lending No No No Organizations Borrower Implementing Agency Republic of Panama Ministry of Economy and Finance Program Development Objective (PDO) Program Development Objective (PDO) The overall development objective of the proposed operation is to enhance the GoP's capacity to implement its Disaster Risk Management Program for natural disasters. PROGRAM FINANCING DATA (USD) FINANCE_TBL Approved Amount Actual Disbursed World Bank Administered Financing Page 2 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) 66,000,000 66,000,000 IBRD-80870 Total 66,000,000 66,000,000 KEY DATES Concept Review Decision Review Approval Effectiveness Original Closing Actual Closing 13-Apr-2011 19-Jul-2011 18-Oct-2011 07-Mar-2012 30-Nov-2012 30-Jun-2021 RATINGS SUMMARY Program Performance Overall Outcome Relevance of Prior Actions Achievement of Objectives (Efficacy) Satisfactory Satisfactory Satisfactory Bank Performance Satisfactory RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 13-Feb-2012 Satisfactory Satisfactory 0 02 03-Oct-2012 Satisfactory Satisfactory 0 03 24-Apr-2013 Satisfactory Satisfactory 0 04 01-Dec-2013 Satisfactory Satisfactory 0 05 05-Jul-2014 Satisfactory Satisfactory 0 06 (MTR) 29-Dec-2014 Satisfactory Satisfactory 0 07 23-Jun-2015 Satisfactory Satisfactory 0 08 31-Dec-2015 Satisfactory Satisfactory 0 09 29-Jun-2016 Satisfactory Satisfactory 25.00 10 20-Dec-2016 Satisfactory Satisfactory 25.00 11 27-Jun-2017 Satisfactory Satisfactory 25.00 Page 3 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) 12 25-Jul-2018 Satisfactory Satisfactory 25.00 13 23-Dec-2019 Satisfactory Satisfactory 25.00 14 25-Sep-2020 Satisfactory Satisfactory 66.00 SECTORS AND THEMES Sectors Mitigation Co- Adaptation Major Sector/Sector (%) benefits (%) Co-benefits (%) SECTOR0_TBL Public Administration 50 0.00 50.00 Central Government (Central Agencies) 50 0 100 SECTOR0_TBL Water, Sanitation and Waste Management 50 0.00 50.00 Other Water Supply, Sanitation and Waste 50 0 100 Management Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Finance 25 Finance for Development 25 Disaster Risk Finance 25 Urban and Rural Development 75 Disaster Risk Management 75 Disaster Response and Recovery 25 Disaster Risk Reduction 25 Disaster Preparedness 25 Environment and Natural Resource Management 100 Climate change 100 Adaptation 100 Page 4 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) ACCOUNTABILITY AND DECISION MAKING Role At Approval At ICR Regional Vice President: Pamela Cox Carlos Felipe Jaramillo Country Director: Carlos Felipe Jaramillo Michel Kerf Director: Carlos Felipe Jaramillo Anna Wellenstein Practice Manager: Guangzhe Chen David N. Sislen Armando Eduardo Guzman Haris Eduardo Sanahuja, Mirtha Task Team Leader(s): Escobar Liliana Escobar Saenz . Page 5 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) I. PROGRAM CONTEXT AND DEVELOPMENT OBJECTIVES A. Context at Appraisal Macroeconomic Context 1. At the time of approval of the Disaster Risk Management Development Policy Loan (DPL) with a Catastrophe Deferred Drawdown Option (Cat DDO) operation in October 2011, Panama was an upper-middle-income country with a dollarized economy and a per capita gross national income (GNI) of US$6,990. The country had about 3.5 million people, nearly three-quarters of whom lived in urban areas, mostly around the Panama Canal. An estimated 10 percent of the population was of indigenous origin, primarily residing in remote rural areas. 2. Amidst the 2007-2008 global economic crisis, Panama’s macroeconomic performance remains among one of the strongest in Latin America. The direct effects of the global crisis were modest, and the financial system remained stable. However, the economy was indirectly affected through declines in credit growth, reduced trade financing and a halt in new real estate construction, all of which were felt in the agriculture, transport, trade, and construction sectors. 3. At appraisal, based on the IMF’s assessment of Panama’s macroeconomic framework, the Bank concluded that the framework was adequate for this operation. Panama’s performance in the context of the global economic crisis was strong, and a continuation of the positive performance trend was expected, while the country’s fiscal sustainability was supported by the Social and Fiscal Responsibility Law.1 Sector Context 4. Geological and climate-related risks have posed major challenges to Panama’s efforts toward sustainable and resilient development and poverty reduction. According to the World Bank’s Natural Disaster Hotspot study in 2005,2 Panama had the 14th highest economic-risk exposure to multiple (i.e, three or more) natural hazards. Due to its geographic location and its tectonic characteristics, the country remains exposed to a variety of natural hazards, including those of hydrometeorological and geophysical origin. The exacerbating effects of climate variability and change were expected to manifest as an increased frequency and intensity of extreme hydrological and weather-related events, including the El Niño/La Niña Southern Oscillation (ENSO) phases. Furthermore, Panama is located in one of the most seismically active regions on earth, the Circum-Pacific Belt (also known as the “Pacific Ring of Fire”), where a large number of active volcanoes are located and about 80 percent of the world’s earthquakes take place. Due to rapid urban population growth and the dense concentration of physical assets, the human and economic toll of a major earthquake could cripple the country’s social fabric and economy. 5. During the last few decades, Panama’s population became increasingly concentrated in cities, with an associated increase in infrastructure and in the production of goods and services. It was 1 Law No. 34 of 5 June 2008, Social and Fiscal Responsibility Law (SFRL, de Responsabilidad Social Fiscal), published in the official Gazette (Gaceta Oficial Digital) No. 26056 of 6 June 2008. 2 Maxx Dilley et al.,2005. Natural Disaster Hotspots a Global Risk Analysis. The World Bank. (See page 4). Available at http://documents1.worldbank.org/curated/en/621711468175150317/pdf/344230PAPER0Na101official0use0only1.pdf Page 6 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) estimated that 65 percent of the Panamanian population lived in urban areas in or around the Canal Zone3, and migration from rural areas continues. In 2009, due in part to the concentration of physical assets around the Panama Canal area, the Inter-American Development Bank (IDB) estimated that the occurrence of a 100-year catastrophic event (i.e., probability of occurrence of 1 percent in any year) would result in losses equivalent to between 5 and 9.05 percent of GDP. The IDB’s assessment identified inefficient enforcement of national and local land use regulations, uncertainty about compliance with building codes, rapid demographic growth and unplanned urban and industrial expansion, along with inadequate resources to immediately cope with the financial impact of disasters, as key drivers of Panama’s increasing levels of vulnerability. 6. The Government of Panama has steadily shifted its focus from a centralized disaster response towards more prospective and comprehensive disaster risk management (DRM) by integrating disaster risk reduction in the country’s development and planning policies. The DRM framework has relied on the National Civil Protection System (SINAPROC), under the Ministry of Government (MINGOB), in place since 1982. SINAPROC’s original mandate was to oversee disaster preparedness and response. A reform to the SINAPROC Law, enacted in 2005, established the first step towards a more proactive approach to DRM, giving SINAPROC the authority to coordinate measures implemented by multiple agencies, aimed at preventing, reducing, and responding to the impacts of climate and multi-hazard induced disasters. Nevertheless, this policy reform maintained SINAPROC at a low institutional profile within the government hierarchy, and with limited decision-making capacity. In 2009, the Government created the Ministry of Housing and Land Use Planning (MIVIOT), tasked with reducing the country’s physical vulnerability to natural hazards by carrying out a series of interventions, including the development of a comprehensive nationwide regulatory framework for urban and rural zoning, and an update of urban development guidelines for the Metropolitan Areas of Panama City and Colón. 7. When this DPL with Cat DDO was approved in 2011, Panama had already been engaged for several years in implementing its DRM framework through the adoption of regional and international commitments aimed at reducing the impacts of natural disasters. One of the most significant international commitments was the signing of the Hyogo Framework for Action 2005-2015: Building the Resilience of Nations and Communities to Disasters (HFA), 4 adopted during the World Conference on Disaster Reduction, held in Japan in January 2005. After the adoption of HFA, Panama was the first country in Central America to develop a National Platform for Disaster Risk Reduction (NPDRR), chaired by the head of SINAPROC.5 The creation of the NPDRR provided a participatory space for SINAPROC’s member agencies to discuss disaster risk reduction-related policy and institutional issues. At the regional level, Panama adopted the Central American Comprehensive Risk Management Policy (PCGIR)6, approved at the 35th Regular Meeting of the Heads of State and Governments of Central American Countries, held in June 2010 in Panama City. 3 The World Bank, 2009. https://data.worldbank.org/indicator/SP.RUR.TOTL.ZS?locations=PA 4 United Nations Office for Disaster Risk Reduction (NDRR). Hyogo Framework for Action 2005-2015: Building the resilience of nations and communities to disasters- full text. Available at: https://www.undrr.org/publication/hyogo-framework-action- 2005-2015-building-resilience-nations-and-communities-disasters 5 The National Platform for Disaster Risk Reduction (NPDRR) was created through Executive Decree No. 41 in January 2013. 6 https://ceccsica.info/sites/default/files/docs/Politica%20Centroamericana%20de%20Gestion%20Integral%20de%20Riesgo.pdf Page 7 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) Rationale for Bank Assistance 8. The World Bank Group’s Panama Country Partnership Strategy (CPS) for the FY2011– FY2014 period envisaged the DPL with Cat DDO operation as a key commitment to the Government. The DPL was consistent with the Bank’s Panama CPS for the FY2011–FY2014 period (discussed by the Executive Directors on September 21, 2010, Report No. 54265-PA). The CPS identified the management of natural disaster risk and adaptation to climate change (CCA) as key areas for Bank support.7 The CPS also indicated that the DPL with Cat DDO operation would offer Panama a rapid source of funds in the event of a major natural disaster, enabling the Government to quickly respond to emergency needs. 9. The operation was also aligned with the Government’s Strategic Plan (PEG) for the 2010- 2014 period. The PEG’s investment strategy addressed challenges related to the negative impact of climate change on the country’s natural resources. It also highlighted the importance of having a sound sovereign risk financing strategy and saw the DPL with Cat DDO as a key instrument of that strategy. The instrument’s soft triggering feature and targeted technical assistance were seen as highly relevant to the country’s disaster risk profile, socioeconomic context and need for capacity building. The Preparation of the Five-year PEG8 is mandated by the Social and Fiscal Responsibility Law (Ley de Responsabilidad Social Fiscal, SFRL). Original Program Development Objective(s) (PDO) (as approved) 10. The Program Development Objective (PDO) was “to enhance the Government of Panama’s capacity to implement its Disaster Risk Management Program for natural disasters.”9 Original Policy Areas/Pillars Supported by the Program (as approved) 11. Under the overarching policy area of “Strengthening of the institutional and legal frameworks for disaster risk management”, three priority policy issues were supported by this operation. The operation focused on strengthening the Government's policy and institutional frameworks for DRM by strategically supporting interventions aimed at improving its capacity to fully implement its DRM program. 7 IBRD and IFC. Progress Report on the Country Partnership Strategy for the Republic of Panama for the period FY2011-2014. (Report N: 74314-PA), dated February 13, 2013. See Table ES.1. Priority Areas and Opportunities: Improving fiscal management, incl. … fiscal risk from disasters; modernizing mining regulatory framework to promote oversight, benefit sharing, and environmental/ social sustainability; enforcing consistent social and environmental safeguards, regulations, and standards; implementing integrated water resources management plans in selected priority basins outside Canal watershed; scaling up integrated disaster risk planning coupled with climate adaptation measures. 8 The SFRL’s indicates (Chapter IV, "Multiannual Financial Programming") that “the PEG shall be aligned with national development goals as outlined in the country’s National Concerted Dialogue for Development (Concertación Nacional para el Desarrollo) agreements.” The council, established through Law No. 20 of February 25, 2008 (published in the Official Digital Gazette No. 25986 of February 26, 2008), is a deliberative platform where Panama's government and private sector stakeholders converge, working in a collaborative manner to reach agreement and consensus on relevant national issues. 9 The Disaster Risk Management Program was described in the Loan Agreement (LA)'s Section I of Schedule 1 by reference to the Government’s Letter of Development Policy, included as part of the Program Document (PD), in which the Government expressed its commitment to the DRM program. The LA explicitly defines the Program as follows: “’Program’ means the program of actions, objectives, and policies designed to enhance the capacity of the Borrower to implement a disaster risk management program for adverse natural events and set forth or referred to in the letter dated July 25, 2011 from the Borrower to the Bank declaring the Borrower’s commitment to the execution of the Program and requesting assistance from the Bank in support of the Program during its execution.” Page 8 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) 12. Policy Issue 1. DRM Policy framework and guidelines need to be updated. This policy issue was addressed through the adoption of the Comprehensive National Disaster Risk Management Policy (PNGIRD).10 The PNGIRD takes a holistic disaster risk management perspective toward sustainable development, based on the principles of gender and social inclusion and empowerment, multisectoral coordination and interculturalism. The PNGIRD also identifies processes, tools, and mechanisms for its implementation. It delegates to the Ministry of Economy and Finance (MEF) the responsibility for developing a robust disaster risk financing strategy; and for collaborating with SINAPROC to implement actions that contribute to the protection of public investments. 13. Policy Issue 2. An adequate institutional framework is needed to efficiently implement the DRM National Policy. This policy issue was addressed through the adoption of the National Disaster Risk Management Plan (PNGR) for the 2011-2015 period. The PNGR is the main tool for the operationalization of the PNGIRD and further consolidation of the country’s DRM Program. It provides directives and actionable guidance for the implementation of sectoral Disaster Risk Reduction (DRR) interventions identified in the PNGIRD. 14. Policy Issue 3. A clear mandate is needed to fully address the Government of Panama (GoP) responsibilities for financial protection against disasters as dictated by the DRM National Policy. This policy issue was addressed through updating of the DRM responsibilities of the Ministry of Economy and Finance's Directorate of Investments, Concessions and Risks of the State (DICRE). DICRE’s expanded responsibilities facilitate MEF’s ability to fulfill its mandate of developing a robust disaster risk financing strategy. 15. The three DRM policy issues addressed by this DPL with Cat DDO were reflected in the selection of the operation’s three Prior Actions and in the design of the Results Matrix. The operation’s Policy Matrix, as presented in the Program Document,11 is shown in Table 1. 16. Prior Action 1. Adoption of the Comprehensive National Disaster Risk Management Policy (PNGIRD) by Executive Decree No. 1101 of December 30, 2010, published in the National Gazette (Gaceta Oficial Digital) No. 26699-B, on January 11, 2011. Key Outcome Indicators: ➢ Increased GoP capacity for disaster risk reduction • Disaster risk criteria incorporated in the National Public Investment System (SINIP)12 (baseline: no; target: guidelines incorporated into the SINIP). • Increased number of provinces with updated protocols for disaster preparedness and response (baseline: 1; target: 4). 10 The PNGIRD was approved by Executive Decree No. 1101 of 30 December 2010 and published in the Official Gazette (Gaceta Oficial) No. 26699-B of 12 January 2011. 11 World Bank. 2011. Panama - Disaster Risk Management Development Policy Loan with a Catastrophe Deferred Drawdown Option (CAT DDO) Program. Washington, DC: World Bank. Report No.60719-PA. Page 49. 12 Observatorio Regional de Planificación para el Desarrollo de América Latina y el Caribe. "Sistema Nacional de Inversión Pública de Panamá" https://observatorioplanificacion.cepal.org/es/sistemas-planificacion/sistema-nacional-de-inversion-publica-de- panama Page 9 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) 17. Prior Action 2. Adoption of the National Disaster Risk Management Plan 2011–2015 (PNGR). Completed by SINAPROC on August 10, 2011. Key Outcome Indicators: ➢ The 2011-2015 PNGR is being implemented by key stakeholders. • At least three [3] ministries (e.g., MEF, MIVIOT and ANAM13) have carried out DRR priority actions identified in the 2011-2015 PNGR (baseline: 0; target: 3). 18. Prior Action 3. Proposal to expand the functions and responsibilities of the MEF Directorate of Investment, Concessions, and Risks of the State (DICRE). Key Outcome Indicators: ➢ Under its expanded role, DICRE is developing financial protection policies, strategies, or instruments. • DRM financial management program developed (baseline: no; target: yes). Table 1. Panama DPL with Cat DDO’s Policy Matrix. Policy Area Policy Issues Prior Actions Key Outcome Indicator Strengthening of DRM Policy Adoption of the Increased GoP capacity for the institutional framework and Comprehensive National disaster risk reduction and legal guidelines need to Disaster Risk (DRR). frameworks for be updated. Management Policy -Disaster Risk criteria disaster risk (PNGIRD) by Executive incorporated in the National management. Decree No. 1101 of Public Investment System The Government has December 30, 2010, (SINIP) (target, guidelines fully implemented a published in the National incorporated in the SINIP). comprehensive and Gazette (Gaceta Oficial -Increased number of provinces integrated disaster Digital) No. 26699-B, on with updated protocols for risk management January 11, 2011. disaster preparedness and program. response (baseline 1, target 4). Law 7 of February An adequate Adoption of the National The 2011-2015 PNGR is 11, 2005, institutional Disaster Risk being implemented by reorganized the framework is Management Plan 2011- key stakeholders. National Civil needed to 2015 (PNGR). -At least three [3] Protection System efficiently Completed by SINAPROC ministries (e.g., MEF, (SINAPROC). implement the DRM on August 10,2011. MIVIOT and ANAM) have National Policy. carried out DRR priority Law 7 was a key step actions identified in the to strengthen the 2011-2015 PNGR (baseline institutional and 0, target 3). 13 Panama's NationalEnvironmental Authority (ANAM) was created in 1998 through Law No. 41 of July 1 of 1998, which created the General Environmental Law. On February 20, 2015, ANAM was elevated to Ministry of the Environment (MIAMBIENTE). Page 10 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) Policy Area Policy Issues Prior Actions Key Outcome Indicator legal frameworks A clear institutional Proposal to expand the Under its expanded role, for disaster risk mandate is needed functions and DICRE is developing management in the to fully address the responsibilities of the MEF financial protection country. GoP responsibilities Directorate of Investment, policies, strategies, or for financial Concessions, and Risks instruments. protection against (Dirección de Inversiones, -DRM financial management disasters as Concesiones y Riesgos del program developed. dictated by the DRM Estado, DICRE). National Policy. Completed by MEF on August 10, 2011 19. This operation’s Theory of Change (TOC), shown in Figure 1, was developed ex post, based on information provided in the Program Document, the Legal Agreement (LA) and in amendments introduced to the LA during implementation. Figure 1. Theory of Change Assumptions: The Government of Panama is fully committed to strengthening its DRM capacity through improved regulatory and institutional frameworks to build the country’s overall resilience against the adverse impacts of materialized natural hazards. The adoption and implementation of the PNGIRD provides the policy framework that promotes enhancements to the cou ntry’s regulatory and institutional frameworks as well as to carry out sector specific DRR interventions that substantially contribute to reduce or mitigate the adverse impacts of natural hazards in sensitive sectors. Increasing the authorities of DICRE contributes to create the enabling regulatory and institutional frameworks for building and implementing a comprehensive Disaster Risk Financing (DRF) strategy. Through well-targeted Technical Assistance (TA) and adequate supervision of this operation, the World Bank and the Government maintain an effective DRR policy dialogue, which in turn contributes to ensure that DRR actions carried out by relevant government agencies complement each other and contribute to creating positive synergies aimed at building resilience of public assets, populations, and the economy against the adverse impacts of materialized natural hazards. Page 11 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) B. Significant Changes During Implementation 20. Neither the PDO nor the Key Outcome Indicators (KOI) were revised during implementation. The DPL with Cat DDO was a single tranche operation, in the amount of US$66 million, approved by the Bank’s Board of Directors on October 18, 2011, with the Loan Agreement signed on January 4, 2012, and declared effective on March 7, 2012. The operation’s closing date was renewed three times: on May 1, 2014; May 27, 2017; and October 27,2020. During the second renewal, the Government and the World Bank agreed to expand or establish new, non-binding targets under the same Key Outcome Results Indicators established in the original Policy Matrix, shown in Table 1. The targets of the expanded Results Indicators are shown in Table 2. 21. In April 2016, the Government requested a first withdrawal in the amount of US$25 million (or 38 percent of the total loan amount) to respond to the severe 2015-2016 El Niño-triggered drought. A withdrawal of US$25 million was used to partially capitalize an emergency fund aimed at financing urgent water-provision interventions in the areas most affected by the drought 22. In March 2020 the Government requested the withdrawal of the remaining US$41 million (or 62 percent of the loan amount) to cope with the effects of the evolving COVID-19 pandemic. A restructuring of the Loan Agreement (LA) was needed to allow drawdowns based on public health- related emergencies, due to the explicit exclusion of pandemics14 as potential disbursement triggers, as indicated in the original LA. The restructuring was approved by the Bank on March 19, 2020, through a Management Letter that specified the relevant changes to the LA.15 23. The third renewal of the operation was approved on October 27, 2020, after the entire amount of the loan had been disbursed. This was the first time that a Bank’s client government requested a renewal of a fully disbursed DPL with Cat DDO operation. Both the Government and the Bank agreed on the benefits of the loan remaining active to provide a suitable forum to continue the DRM/CCA policy dialogue and supervision of the progress of the country’s DRM program. The request prompted a series of consultations among managers of several Bank departments, including Legal (LEG), Development Finance (DFI), Operations Policy and Country Services (OPCS), Finance and Accounting (WFA) and Treasury (TRE). It was agreed that the Bank’s policies and operational procedures allowed for the renewal of the withdrawal period for a fully disbursed DPL with Cat DDO operation. 24. Since approval of the DPL with Cat DDO operation in 2011, several Government administrations have taken office in Panama, and a new Country Partnership Framework (CPF) for FY2015–2021 was agreed with the Government. Given the potential longevity of a DPL with Cat DDO operation, which can be extended up to 15 years, it was expected that this operation would remain active during multiple administrations, as well as beyond the time horizon of the CPS under which the operation 14 During the operation’s preparation phase, GoP authorities considered that the country had adequate access to technical and financial resources to finance any potential public health-related emergency, and explicitly requested the exclusion of said emergencies as drawdown triggers, limiting the types of declared national emergencies that could qualify as drawdown triggers to geophysical and hydrometeorological events. 15 Paragraph 9 of the Appendix to the Loan Agreement was modified to read: “State of Emergency" means a declaration by the Borrower, through a Cabinet Resolution (Resolución de Gabinete), of a state of emergency (Estado de Emergencia) due to a catastrophic disaster generated by natural phenomena or health-related events, pursuant to the Borrower's Law No. 7 of February 11, 2005 and any other legal instrument, compatible with the existing regulation of a State of Emergency, that the Borrower may introduce from time to time with the previous agreement of the Bank.” Page 12 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) was originally approved. This operation remained active under the CPS and the new CPF for almost 10 years. 25. Panama has been severely hit by the COVID-19 pandemic. As of November 22, 2021, there were 475,577 confirmed cases of COVID-19, with 7,350 deaths.16 In response, the Government prepared and implemented an Operational Plan for the Prevention and Control of COVID-19, costed at US$2.1 billion. The Government declared a state of national emergency on March 13, 2020, which triggered the withdrawal of the remaining US$41 million of undisbursed funds in the operation to support the response to the public-health crisis. II. ASSESSMENT OF KEY PROGRAM DESIGN AND OUTCOMES A. Relevance of Prior Actions Rating: Satisfactory 26. The relevance of the Prior Actions is rated Satisfactory. The Prior Actions were clearly linked to the Government’s DRM program as well as to the operation’s PDO of strengthening the Government’s capacity to implement its DRM Program for Natural Disasters. The Prior Actions were strategically selected and designed to advance the policy issues that the Government had identified as critical for the further implementation of its DRM Program. The Prior Actions were linked through policy dialogue and targeted TA to create positive synergies and promote collaboration, coordination, and coherence among the agencies responsible for the development and implementation of national policies and regulations for DRM and CCA. 27. Prior Action 1: Adoption of the Comprehensive National Disaster Risk Management Policy (PNGIRD)17. The formulation of the PNGIRD benefited from the thorough preparation and adoption of the PCGIR by the Central American Integration System (SICA) member states. The PCGIR provided a sound theoretical framework for incorporating internationally accepted practices for comprehensive DRR, as well as the cumulative experiences of SICA member countries in formulating policy and institutional frameworks for DRR. The PNGIRD, adopted by Executive Decree No. 1101 of 30 December 2010, identified concrete roles for different government agencies and civil society organizations (CSOs) based on five pillars: (a) disaster risk reduction for public and private investments to help ensure the sustainability of economic development; (b) development and social compensation for vulnerability reduction; (c) climate change and environment; (d) land use and governance; and (e) disaster management and recovery. The PNGIRD thus provided an adequate policy environment for the implementation of this operation and the successful achievement of its PDO. 28. Prior Action 2: Adoption of the National Disaster Risk Management Plan (PNGR) for the 2011-2015 period. The revised PNGR was adopted by SINAPROC on August 10, 2011. Under SINAPROC’s oversight, the National Platform for Disaster Risk Reduction (NPDRR) completed the updating of the PNGR for 2011-2015. As planned, the PNGR became the roadmap for operationalizing key sector sensitive DRR actions defined in the PNGIRD, including the promotion of a multisectoral approach to 16 WHO. 2021. Panama. https://covid19.who.int/region/amro/country/pa. Accessed on November 27, 2021. 17PNGIRD-https://www.sinaproc.gob.pa/wp-content/uploads/2020/06/POLITICA-NACIONAL-DE-GESTION-DE-RIESGO- APROPADA-2010.pdf Page 13 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) DRM policy harmonization and coordination. Guided by the PNGR, , several government agencies, including MEF, MIVIOT, MEDUCA, MINSA, MIAMBIENTE and IDAAN prioritized and carried out key DRR interventions toward the achievement of the operation’s PDO, creating positive synergies across sensitive sectors. 29. Prior Action 3: Proposal to expand the functions and responsibilities of the MEF Directorate of Investment, Concessions, and Risks (DICRE). This Prior Action, completed by MEF on 10 August 2011, was highly relevant to the Government’s efforts to promote and facilitate the development and operationalization of the country’s Disaster Risk Financing (DRF) Strategic Framework.18 The DRF Strategic Framework, adopted in November 2014, set out a systematic approach that has enabled the Government to: (a) maintain a sound fiscal position at the national level, which is necessary to support long-term rehabilitation and reconstruction needs; (b) develop cost-effective and accessible financing mechanisms for immediate liquidity that can be rapidly channeled to priority institutions and sectors; and (c) reduce the impact of natural disasters at the individual, community and national levels. 30. The DRF Strategic Framework provided a roadmap for managing fiscal risk in the event of disasters under five strategic pillars: (a) identification, quantification, and understanding of fiscal risk due to disasters; (b) incorporation of risk analysis in the planning of public investments; (c) formulation of components for risk retention and risk transfer instruments; (d) development of the domestic insurance market; and (e) strengthening the capacity of DICRE to design and implement financial protection strategies. In addition, the Government formally adopted, by Ministerial Resolution No. 001 on 2 March 2016, a Five-Year Operational Plan which establishes key activities and actions to be implemented under the DRF Framework’s strategic pillars. 31. As shown in Table 2, all targets were achieved. Table 2 also includes a brief description of the increased values of several key outcome indicators (KOI)’s targets, as agreed during the second renewal of the operation. Furthermore, Annex 4 includes a table that provides detailed information about all the activities carried out under each of the operation’s Key Outcome Indicators (KOIs). Table 2. Policy Areas, Prior Actions, Results Indicators and Targets Policy Area: Strengthening of the institutional and legal frameworks for disaster risk management Original Key Outcome Revised KOI targets (as agreed during Policy Area Issue Prior Action Indicators (KOI) the second renewal) KOI: Increased GoP capacity for disaster risk reduction (a) Disaster risk criteria 1) DRM Policy Adoption of the incorporated in the Framework and Comprehensive National Public guidelines need National Disaster Risk Investment System to be updated Management Policy (SINIP) (target: guidelines (PNGIRD) incorporated into the SINIP). Status: Achieved 18 TheDisaster Risk Financing Strategic Framework was adopted through MEF’s Decree No. 578 of November 13, 2014, “which adopts the Strategic Framework for Financial Management of Disaster Risk"; published in the Official Digital Gazette No.27662- A of November 17, 2014. https://www.gacetaoficial.gob.pa/pdfTemp/27662_A/48878.pdf Page 14 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) (b) Increased number of Consolidated new protocols and provinces with updated increased number of protocols protocols for disaster Target: 6 (i.e., 2 more than the preparedness and original target of 4). response (Baseline: 1, Final value: 10 Target: 4). Status: Achieved Status: Exceeded (c) Develop emergency protocols for the recently inaugurated Panama City (subway) metro. Status: Achieved. KOI. The 2011-2015 PNGR is being implemented by key 2) An adequate stakeholders institutional (d) At least 3 ministries Government agencies carrying out framework is Adoption of the (e.g., MEF, MIVIOT and DRR priority actions identified in the needed to National Disaster Risk ANAM) have carried out 2011-2015 PNGR efficiently Management Plan DRR priority actions Target: 6 (i.e., 3 more than the original implement the 2011-2015 (PNGR). identified in the 2011- target of 3) DRM National 2015 PNGR (Baseline: 0; Policy Target 3). Status: Achieved Status: Achieved. 3) A clear KOI. Under its expanded role, DICRE is developing financial institutional protection policies, strategies, or instruments. mandate is (e) DRM financial Disaster Risk Financing and needed to fully Proposal to expand the management program Insurance (DRF) Strategic address the GoP functions and developed. (Baseline: no; Framework formally adopted. responsibilities responsibilities of the Target: yes). (Baseline: no; Target: yes). for financial MEF Directorate of Status: Achieved. Status: Achieved. protection Investments Operational Plan for the DRF against Concessions, and Risk Strategic Framework drafted and disasters as (DICRE). formally adopted. dictated by the (Baseline: no; Target: yes). DRM National Status: Achieved. Policy. 32. The first outcome indicator, increasing the Government’s capacity for disaster risk reduction, was achieved in 2011, when DPI prepared a roadmap to ensure that disaster risk criteria were incorporated in the SINIP.19 19 MEF’s Directorate of Investment Programming (DPI) aims to promote the planning, monitoring and evaluation of non- financial public investment through the National Public Investment System (SINIP), to contribute to the achievement of the Government's development objectives as set out in its Strategic Plan (PEG). In its capacity as the managing entity of SINIP, DPI supervises and advises on the formulation of investment projects. Once projects are registered in the SINIP database, DPI verifies their compliance with existing regulations as a condition for granting the respective technical Guarantee. During the project implementation phase, DPI supervises the projects’ physical and financial implementation progress, and, for major investments, it also carries out on-the-ground supervision. Source: Observatorio Regional de Planificación para el Desarrollo. Page 15 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) 33. The second outcome indicator, which focused on implementing strategic DRR actions in disaster-sensitive sectors identified in the PNGR, was achieved. MEF, MIVIOT and MIAMBIENTE were the first agencies in implementing the selected interventions. In 2014, additional strategic DRR interventions identified in the PNGR were added to the targets of the Results Indicators. In addition, emergency response protocols in six provinces were updated after the National Disaster Emergency and Response Plan was approved in 2016; and the General Directorate of SINAPROC, guided by the National Emergency and Response Plan,20 has continued to strengthen the country’s preparedness and response capacities, achieving additional results. SINAPROC is also working on the PNGR 2019-2030, which was initially discussed in June 2019 during an ordinary meeting of the DRM Platform.21 The new PNGR was expected to be adopted through Executive Decree during 2021. However, its adoption has been temporarily delayed due to the ongoing response to the COVID-19 pandemic and the need to review and consolidate within the PNGR the lessons learned from implementation of MINSA's National Operational Plan of the Health System for the Prevention and Control of the Novel Coronavirus (Plan Operativo Nacional del Sistema de Salud para la Prevención y control del nuevo Coronavirus). A growing number of other government agencies responsible for disaster-sensitive sectors, which are also institutional participants of the NPDRR, have implemented DRR interventions in their respective sectors, using their own budgetary resources. 34. The third outcome indicator, the development of DRM financial protection policies, strategies, or instruments, was achieved with the adoption of the Strategic Framework for the Financial Management of Disaster Risk in 2014 and approval of its Five-Year Operational Plan22 in 2016 (DRM Financial Management Program in the original matrix). In the context of the Operational Plan, the MEF’s DICRE continues to make progress on implementing the Strategic Framework. During the second renewal, as part of the Bank’s implementation support and DRM/CCA policy dialogue, DICRE and the Bank defined several technical assistance activities to incorporate climate and disaster risks in a more comprehensive fiscal risk management strategy, including promoting the efficiency and transparency of post-disaster spending, and enhancing DICRE’s institutional knowledge of parametric insurance. 35. Technical assistance provided to the Government, with support from the Bank's Disaster Risk Financing and Insurance Program (DRFIP), 23 included the preparation of a Disaster Risk Financing Profile for Panama. The analysis, based on historical as well as probabilistic data, helped senior authorities at the Ministry of Finance to better understand the Government’s potential contingent 20 The National Emergency and Response Plan incorporates the legal framework established through Law No. 7 of 2005, along with the country's disaster risk scenarios. It also includes the Plan's scope and implementation mechanism, along with clarifying the roles of relevant stakeholder agencies, both at the national and provincial levels, while emphasizing sectoral organization, improved preparedness, and response capacity, supported by continued monitoring measures. The Plan also defines initial actions for proper response to extreme events, including administration, coordination, and logistics protocols, and the operations control system that must be in place. The Plan is designed to be periodically updated to properly reflect the country’s evolving disaster risk profiles as well as changes in the country’s DRM capacity. 21 The multi-sectoral DRR platform was created through Legislative Decree No. 14 dated January 25, 2013. The platform, led by SINAPROC, was originally composed of 13 institutional members. Currently, the NPDRR is composed of 40 representatives of government agencies, relevant private sector stakeholders, as well as representatives of civil society organizations, all of them committed to work collaboratively with the goal of addressing challenging issues related to effective DRR. 22 Based on the DRF Strategic Framework, the Government formally adopted, by Ministerial Resolution No. 001 on March 2, 2016 (published in the Official Gazette, Gaceta Oficial Digital, No. 27991-A on 17 March 2016), a Five-Year Operational Plan which establishes key activities, and actions to be implemented under each strategic pillar, as well as the institutions responsible for each deliverable. https://www.gacetaoficial.gob.pa/pdfTemp/27991_A/55029.pdf 23 https://www.worldbank.org/en/programs/disaster-risk-financing-and-insurance-program Page 16 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) liabilities resulting from disasters triggered by natural hazards. The analysis provided scenarios of potential direct financial losses due to damaged physical infrastructure and the cost of rehabilitation or reconstruction, along with the indirect costs of maintaining and scaling up social protection programs and carrying out rescue and recovery operations. These indirect costs were estimated to amount to about 15 percent of the total cost of the damaged infrastructure. This newly acquired knowledge motivated the Government to fast-track the operationalization of the Disaster Risk Financing (DRF) Strategic Framework, which is a key outcome of the operation. The DRF Strategic Framework incorporates two layers of protection: (a) a risk retention layer, with instruments such as the Panama Savings Fund (FAP), this DPL with Cat DDO operation, the IDB’s Parametric Contingent Credit Line, as well as potential ex post budget reallocations and access to additional sovereign debt; and (b) a risk transfer layer, which currently includes compulsory insurance of critical government buildings, and the adoption of the Caribbean Catastrophe Risk Insurance Facility (CCRIF)’s parametric insurance coverage against earthquakes and excess rainfall. 36. After the DPL with Cat DDO operation was approved in 2011, several major emergency situations linked to hydrometeorological hazards materialized in Panama. The dry season during the 2015-2016 ENSO event caused major economic losses as well as loss of Panama Canal revenues. This catastrophic event led the GoP to trigger the Cat DDO instrument for the first time. During the first half of 2019, the El Niño-triggered drought caused economic losses estimated at US$15 million in Canal revenues, as well as a significant loss of crops and an alarming decline in the availability of fresh water for human consumption and Canal operations. In 2020, Hurricane Eta, despite not making landfall in Panama, caused heavy rainfall, widespread floods and landslides, resulting in 17 deaths and more than 3,300 people severely impacted, 1,000 homes damaged or destroyed, and agriculture sector losses of US$11 million.24 The Government was able to finance the emergency response to this and several extreme hydrometeorological events using funding that became available through the national DRF Strategic Framework, which was developed as part of the Government’s commitments under the DPL with Cat DDO. 37. The operation’s PDO continues to be highly relevant to the World Bank’s engagement in Panama and supports key objectives of the FY2015-2021 CPF. In particular, the DPL supports CPF Pillar 3: Bolstering Resilience and Sustainability. The CPF recognizes that Panama needs to continuously improve its capacity to quickly adapt its fiscal and policy management to respond to natural disasters. It also recognizes that prudent fiscal management and a comprehensive risk management strategy are prerequisites for adapting to shocks. Furthermore, acknowledging the Government’s measurable progress on fiscal management, promoted by the adoption of the Fiscal and Social Responsibility Law (Law No. 34 of June 2008), the CPF underscores the importance of mainstreaming risk management in public policy, and of actively protecting critical infrastructure and services. 38. The policy area and policy issues supported by this operation continue to be relevant to the Government, as expressed in the five-year Strategic Development Plan for 2019-2024 (PEG-2019- 2024). PEG 2019-2024 warns about Panama's increasing exposure, and the vulnerability of its physical assets and populations, to floods and landslides, as well as the country’s high levels of seismic risk. It also stresses Panama’s cumulative loss of life and damage to assets due to unresolved DRM capacity constraints. The PEG’s investment strategy aims at implementing CCA activities to mitigate the impact of climate change, and capacity building to cope with the effects of climate change. 24 IFRC. 2020. Panama: Hurricane Eta. https://reliefweb.int/report/panama/panama-hurricane-eta-dref-operation-n-mdrpa013 Page 17 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) B. Achievement of Objectives (Efficacy) Rating: Satisfactory 39. Overall, the operation’s efficacy is rated Satisfactory as it has successfully contributed to strengthening the Governments DRM Program and enhancing its capacity to efficiently respond to disasters. Under the DPL with Cat DDO program, the Government carried out actions that: (a) strengthened the legal and institutional frameworks for DRR, including building the regulatory framework for financial and fiscal resilience against extreme natural events and public health emergencies; and (b) integrated disaster and climate risk considerations in the investment planning processes of sensitive sectors. Therefore, this operation substantially contributed to strengthening the Government’s capacity to implement its DRM program by promoting a comprehensive, multisectoral approach to increasing resilience to natural hazards and the exacerbating effects of climate change. Additionally, the actions carried out by the Government, under this operation, have contributed to macroeconomic sustainability and the protection of the country’s social development gains. 40. A high-level objective of the DPL with Cat DDO instrument was to promote DRR awareness and build resilience, including fiscal and financial resilience, to the effects of extreme natural events. The Government demonstrated its increased capacity for DRF by adopting a comprehensive DRF Strategic Framework, developed with technical support from the Bank. The adequate use of the contingency financing provided by this loan enabled the Government to trigger two withdrawals to help bridge the liquidity gap, in amounts proportional to the size of the corresponding national emergencies. The availability of this contingency funding reduced the Government’s need to rely on unplanned budget reallocations and contributed to preventing disruptions to social protection and economic programs aimed at addressing the needs of vulnerable groups and communities. Furthermore, as a policy instrument, the DPL with Cat DDO provided a solid foundation for the country’s DRM program, by supporting: (a) the updating of the DRM policy framework and guidelines through the enactment of the PNGIRD; (b) development of a planning instrument to efficiently implement the PNGIRD; and (c) the establishment of an explicit institutional mandate for MEF to fulfill its legal role and responsibilities related to financial protection against disasters. 41. The value-added of the DPL with Cat DDO operation goes beyond its adequate design as a source of quick liquidity in the aftermath of a catastrophic event. Equally important has been its contribution to advancing Panama’s DRM and CCA agenda, including by leveraging the Bank’s global technical expertise and convening power to break through knowledge and technical silos that may exist in the country. The policy dialogue held in conjunction with the supervision of the operation promoted effective internal communication among government agencies and other relevant DRR stakeholders. During the operation’s design-to-Board-approval process, as well as throughout its almost ten-year implementation period, the DRM policy dialogue contributed to the promotion and inclusion of DRM/CCA considerations in the country’s public investment planning and prioritization processes. It has also encouraged senior government authorities to tackle important development policy issues, enact enabling regulations, and strengthen the institutions needed to ensure that social and economic programs are inclusive, well targeted, and environmentally sustainable. Beyond the development of institutional capacities for emergency preparedness and response, the Bank's DRM/CCA dialogue with MEF and other government agencies has promoted a culture of resilience building, with the aim of ensuring the protection of the country’s social and economic gains. Page 18 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) 42. In the context of the ongoing COVID-19 pandemic, increased coordination among MEF, SINAPROC, MINSA and MEDUCA, facilitated and promoted by the DRM policy dialogue, contributed to the Government's readiness to take proactive measures to slow the spread of the virus. As designed, the DPL with Cat DDO played a significant role in bridging the immediate financing gap created by the public health emergency. The disbursement of the remaining US$41 million in March 2020 helped the Government to finance urgent containment and mitigation measures. While the liquidity provided by this contingency loan had the expected impact of helping to reduce the Government’s need to reallocate funds from ongoing social programs, the DRM policy dialogue related to the operation also measurably contributed to creating an enabling environment for a well-coordinated and inclusive multisector emergency response. Moreover, the Government requested three new operations to meet expected medium- and long-term financial requirements: (a) an emergency loan for US$20 million under Fast Track COVID-1925; (b) a DPL operation for US$300 million aiming to support the post pandemic recovery agenda26, and (c) a second DPL with Cat DDO for US$100 million. C. Overall Outcome Rating and Justification Rating: Satisfactory 43. The overall outcome of this operation is rated Satisfactory, based on the satisfactory rating of the operation’s Prior Actions, the alignment of the PDO with Government priorities and the achievement of the Outcome Indicators. Throughout the life of this operation, implementation remained on track, and the overall progress of the reform program (both Progress with Implementation and Achievement of Program Objectives) was deemed Satisfactory. As designed, the DPL with Cat DDO operation contributed to measurably increasing the Government’s capacity to implement and strengthen its DRM program. III. OTHER OUTCOMES AND IMPACTS A. Poverty, Gender and Social Impacts 44. This operation was not designed to directly support policies related to poverty reduction or social impacts. However, the overall poverty and social impacts of the policies supported by the DPL with Cat DDO were, at appraisal, expected to be positive, and that assessment did not change during implementation. Indeed, the operation had positive indirect effects on the poor by supporting policies that help to alleviate poverty through more effective disaster risk management. For instance, the activation of the Cat DDO during the severe drought of 2015-2016 contributed to the continuity of social development plans targeting the poor, and to ensuring that resources were quickly available to respond to the needs of the affected population. 25 On March 17, 2020, the World Bank Group’s Board of Directors announced the approval of an emergency US$14 billion package of fast-track financing (Fast Track COVID-19) “to assist countries and companies in their efforts to prevent, detect and respond to the rapid spread of COVID-19." 26 On December 08, 2020, the World Bank Group’s Board of Directors announced the approval of a US$300 million DPL for Panama aiming to protect human capital during the COVID-19 crisis, while strengthening institutions to foster human capital accumulation and support a more inclusive and sustainable economic recovery. Page 19 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) 45. The DRM/CCA policy dialogue promoted by the operation has continued, after the close of the operation, to open opportunities and entry points for addressing issues related to poverty reduction; gender inclusion; financial, environmental, and social sustainability; and shared prosperity. The DRM/CCA dialogue has also guided the Government in its efforts to meet international commitments under the Sustainable Development Goals (SDGs), the Sendai Framework, the Paris Agreement, and the New Urban Agenda. It has also informed Panama’s active participation in regional integration, environmental sustainability, and social development goals under the Central America Integration System (SICA). In this regard, Panama has become increasingly integrated in regional efforts aimed at creating a more sustainable, inclusive and gender-informed Central America, as demonstrated by the Government's enthusiastic support for regional DRR activities. The Government has also hosted technical meetings such as the conference on resilience organized by the World Bank and SICA in February 2019.27 46. As planned, the policy dialogue also supported Government’s efforts to improve knowledge of the country’s disaster risk profile. The successful evaluation of earthquake and flood risks in several regions of the country incorporated the CAPRA platform, which substantially improved the understanding of such risks, and promoted the adoption of risk mitigation interventions by the agency responsible for drinking water production and distribution. B. Environmental, Forests and Natural Resource Aspects 47. At appraisal, the policy actions supported under the operation were not expected to have a significant impact on Panama’s environment, and that assessment did not change during implementation. However, the polices supported by the operation have had positive indirect effects on the environment and on natural resources. The operation provided critical funding to implement measures that reduce the risk of environmental degradation, including by reducing the need of the poor and the vulnerable to rely on environmentally unsustainable strategies to cope with the adverse effects of disasters on their lives and livelihoods. C. Institutional Change/Strengthening 48. The ongoing DRM/CCA policy dialogue between the Government and the World Bank, along with well-targeted technical assistance, promoted a series of incremental steps that helped to significantly increase the capacity of relevant agencies to implement DRR and CC-related policies and on-the-ground interventions. Table 2 summarizes the key areas in which Government agencies have improved their technical capacity for DRR/CC-related planning and interventions, including through improved interagency collaboration and coordination in the design of multisectoral DRR-related activities from the national to the local levels, including at individual educational and health-related facilities. See Annex 5 for more details about the technical assistance provided to critical governments institutions responsible for formulating disaster risk reduction and climate change policies. D. Other Unintended Outcomes and Impacts 49. An unintended positive outcome of the operation has been Panama’s increased participation in regional efforts to coordinate disaster risk preparedness and emergency response. 27Towards a More Resilient Central America, Panama City, February 2019. https://blogs.worldbank.org/latinamerica/what-are- key-areas-resilience-central-america; https://www.sica.int/noticias/hacia-una-centroamerica-mas-resiliente_1_116787.html Page 20 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) Recognizing that Panama alone cannot address the multi-jurisdictional impacts of climate change, particularly in the isthmus, the Government, with technical support from the Bank, has taken important steps to: (a) better integrate national DRR efforts with those of SICA’s specialized DRR body, the Coordination Center for the Prevention of Natural Disasters in Central America and the Dominican Republic (CEPREDENAC); and (b) increase its participation in the regional activities of other specialized SICA bodies, particularly the Council of Ministers of Finance of Central America (COSEFIN) and the Regional Committee of Hydraulic Resources (CRRH). Further, in the context of the DRM/CCA policy dialogue and in light of similar operations in other parts of the region, Panama has also substantially increased its efforts to develop more inclusive social safety net programs that can be easily scaled up to address vulnerable groups, including Indigenous communities, during emergencies. IV. BANK PERFORMANCE Rating: Satisfactory During Preparation 50. Before this operation was conceived, the Bank team responsible for its design had already started a DRM dialogue with senior representatives of key Government agencies, including MEF, SINAPROC, and disaster-sensitive line ministries, as well as with international development partners operating in Panama, such as the IMF, UNDRR, and IDB. The resulting design focused on addressing policy issues that the Government had identified as critical for improving its DRM capacity and its efforts to build resilience against natural hazards and the effects of climate change. 51. During the preparation phase, the Government and the Bank took into consideration the findings of IDB’s vulnerability assessment, and the Government committed to carrying out the recommended sector specific DRR interventions aimed at addressing the identified drivers of vulnerability. This commitment was formalized during the preparation of the operation’s results framework under Prior Action 2. 52. The Bank team prepared this DPL with Cat DDO taking into consideration the lessons learned from previous contingency financing operations.28 The beneficiary countries for the previous operations were Costa Rica, Colombia, and Guatemala (approved in 2009); Peru and El Salvador (2011); and the Philippines (2012). Among these operations, the Panama DPL with Cat DDO operation had the longest implementation period: almost 10 years. Expertise in designing these operations was developed in an ad hoc manner and was concentrated in a small number of DRM experts within the Central America Region, who later shared their experiences with colleagues from other Bank regions and subregions. 53. The Bank team also considered Panama's growing engagement in DRR at the global and regional levels, as reflected in its adoption of the Hyogo Framework for Action (HFA) and the Central American Comprehensive Risk Management Policy (PCGIR). Key analytical underpinnings of the DPL with Cat DDO included the Panama Disaster Risk Profile prepared by GFDRR, as well as the international best practices for DRR promoted by GFDRR and UNDRR. Taken together, the risk profile and DRR best 28 The contingent loan instrument was recommended for adoption by the Bank through a memorandum from the President of the World Bank to the Executive Directors, dated January 29, 2008. Page 21 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) practices provided clear guidance for the design of a robust DRM operation that was fully aligned with Government priorities. 54. The operation’s PDO was fully aligned with both the CPS for FY2011–2014 (which envisaged this operation as a key commitment between the WBG and the Government); and the priorities reflected in the Government Strategic Plan 2010–201429 (including investments aimed at mitigating the impacts of natural disasters and climate change). The Government and the Bank agreed that this operation would be a key component of its emerging sovereign risk financing strategy and expected that it would be included in the portfolio of operations to be financed during the CPS period. 55. The Bank properly assessed the different categories and levels of risk for this operation and built adequate risk mitigation measures in the project’s M&E systems, to be monitored throughout the life of the operation. Multiple comprehensive progress reports were submitted to the Bank as part of the Bank’s supervision of this operation. 56. The outcome indicators were clearly linked to the Prior Actions and the policy reforms supported by this operation. The results indicators were appropriately formulated, and data for monitoring progress towards the achievement of the targets were made readily available by the Government, which proactively provided and facilitated access to relevant information related to program implementation. During Implementation 57. The Bank Team provided a comprehensive support across sectors and carried out frequent supervision and technical missions involving experts from several of the Bank’s Global Practices, as well as international experts. There were also other types of interactions, including the participation of senior Government staff in Bank-sponsored regional technical meetings and workshops, which allowed the Bank team to advance the DRM/CCA policy dialogue. 58. The progress of implementation was properly reflected in multiple Aides Memoire and Implementation Status Reports (ISRs), which included comprehensive narratives and monitoring data based on progress reports from MEF, SINAPROC and other participating agencies. These reports allowed for a candid evaluation of progress and identification of potential issues that could hinder implementation of the operation or related TA activities. The Bank’s effective supervision promoted the Government’s timely submission of comprehensive progress reports. 59. Effective collaboration and coordination between the Bank teams and the Government contributed to the identification of emerging needs and the timely response to those needs. This was reflected in the two instances in which the Cat DDO was triggered. In the second instance, the Bank team was able to swiftly obtain Bank Management approval for the removal of the LA constraint that limited the Government’s ability to withdraw funds to address public health emergencies.30 29 The PEG-2019-2024 was adopted through Executive Cabinet Resolution No. 149 of December 30, 2019. The Cabinet Resolution was published in Panama's Official Gazette (Gaceta Official Digital) No. 28931-A, on December 31, 2019. 30 At the time of signing of this DPL with Cat DDO operation’s Loan Agreement, the Government considered that it had adequate resources for financing any potential public-health emergencies, and requested their exclusion as drawdown triggers, limiting Page 22 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) V. RISK TO SUSTAINABILITY OF DEVELOPMENT OUTCOMES 60. The risk to the sustainability of Development Outcomes is rated Negligible. There is no discernible risk to the PDO, as the Government continues to be strongly committed to the DRM program. The Government has achieved the targets established under the Loan Agreement and continues to work towards further strengthening its DRM policy and institutional frameworks. As documented in this report, the areas of engagement supported by this operation continue to be relevant, as expressed in the Government’s Five-Year Strategic Development Plan 2015-2019 and in the Bank’s Panama CPF for the FY2015-2021. Furthermore, the Government is continuing to strengthen its DRM framework, including by: (a) updating the SINAPROC Law of 2005, which created the National Civil Protection System; (b) updating the PNGR to incorporate key lessons learned from the COVID-19 emergency response; (c) designing a new National Meteorological and Hydrological Service (NMHS); and (d) strengthening the Territorial Development Directorate within MEF with a strong emphasis in incorporating DRR/CCA to coordinate territorial development at all administrative levels, with a strong emphasis on incorporating DRR/CCA considerations into subnational development planning to ensure more resilient communities. 61. Throughout the life of this operation, the Government demonstrated strong political commitment to the DRM Program. In addition, the operation’s development objective and the DRM/CCA policy dialogue related to implementation continue to be aligned with Government priorities, particularly in supporting the PEG’s Comprehensive Disaster Risk Management Strategy Area’s Priority Action 93 (Prevent and reduce natural disaster risks) and the Environment Strategic Area’s Priority Action 92 (Implement agreed-upon strategic environment protection and climate change frameworks). 62. Further, on August 24, 2021, the Government approved, through Executive Decree No. 251,31 the creation of the Cabinet for Comprehensive Disaster Risk Management (GIRD Cabinet) as a high-level policy coordination entity and advisory board under the direct oversight of the Presidency. The GIRD Cabinet has a clear mandate for ensuring the effective implementation of the DRM agenda in the country. The Cabinet, focused on DRR and resilience building, complements and expands on the existing structure of SINAPROC and the NPDRR. The creation of the GIRD Cabinet further demonstrates the Government's commitment to actively incorporate DRR and climate change considerations into its national development policies and provide a forum for convening political and policy decisionmakers at all levels of the public administration. 63. The COVID-19 pandemic has further highlighted the importance of multisectoral policy reforms to ensure that countries are better prepared for emergencies. In the context of the ongoing pandemic, the continuity of policy reforms and institutional strengthening in support of comprehensive DRM has become more urgent. There is a need to continue supporting forward-looking policy reforms aimed at ensuring that critical government operations and basic services are not interrupted during the definition of qualifying national emergencies to natural hazards, such geological or hydrometeorological events. However, since the inception of this contingent credit line, the country has faced several public health crisis situations, including the 2016’s Zika outbreak, which the Government has been able to address with its own financial and technical resources and PAHO/WHO’s support. 31 Executive Decree No. 251 of 24 August 2021l, published on Panama's Official Gazette ( Gaceta Oficial Digital) No. 29364 on 30 August 2021. https://www.gacetaoficial.gob.pa/pdfTemp/29364/86940.pdf. Page 23 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) emergency situations, including under complex risk scenarios with differentiated vulnerabilities, such as public health-related emergencies and the concurrent impacts of natural hazards. VI. LESSONS AND NEXT PHASE 64. Several factors contributed to the operation’s successful achievement of its PDO. The presence of a strong institutional champion from the start of the preparation phase was crucial. In this case, MEF, due in part to its substantial weight and convening power within the Government, played a leading role in ensuring the preparation was adequate and the implementation remained on track. The establishment of DICRE within the MEF played a pivotal role in ensuring that changes in Government administration did not diminish the importance of the DRM policy dialogue between the Bank and Government agencies responsible for carrying out key sector specific DRR activities, as mandated in the PNGR. These agencies included MEF, SINAPROC, MIVIOT, MEDUCA, MIAMBIENTE, MINSA and IDAAN. 65. Another key lesson was the importance of properly managing expectations about the use of the DPL with Cat DDO funds once they are disbursed. The Bank team, from the start of the preparation phase and throughout implementation, made a particular effort to remind senior authorities from sector-sensitive government agencies that DPL with Cat DDO funds are not earmarked to address emergency sector needs, but are provided to the Government as unrestricted budget support, and the Government determines how the funds will be used. This understanding facilitated the transfer of funds to relevant agencies as the Government deemed necessary (IDAAN and MINSA, respectively) during the two national emergencies (the drought and the pandemic) that triggered the withdrawals. 66. A successful DPL with Cat DDO operation should be designed with a clear understanding of the Government's critical DRR priorities and its immediate and longer-term policy commitments. As documented in this report, even before the start of the preparation phase, the Bank team engaged in a productive DRR policy dialogue with key Government authorities. In line with the National Development Plan and other policy instruments, the dialogue facilitated a proper identification of policy areas that were most important to the Government. Accordingly, during preparation, the Bank team ensured that the operation's Results Framework reflected those priorities. The team ensured that agreed Prior Actions, as well as the outcome indicators and targets, would support the Government's own efforts to monitor progress toward achieving its priorities. These efforts included adoption of the PNGIRD, implementation of the DRR activities delegated to line ministries and agencies, and the development of the Disaster Risk Financing Strategic Framework. Choosing the right indicators and targets also contributed to improving program supervision, as the periodic progress reports fit well with the Government’s internal M&E needs. 67. In the event of a renewal of a DPL with Cat DDO operation, it is a good practice to carry out, at the time of a renewal, an assessment of progress towards the achievement of the operation’s key Results Indicator targets. Such a review may uncover new areas for Bank support or identify changes to the Results Framework that may encourage the Government to remain focused on strengthening its DRM capacity. For example, for the second renewal of this operation, considering that the Government had already met the targets for each of the results indicators, it was agreed to adopt non-mandatory expanded values for some targets. This expansion helped to advance the DRM policy dialogue and maintain the Government’s access to the Bank’s specialized technical assistance. However, the experience of Bank staff in expanding the results indicators, and addressing changes in the Borrower’s Page 24 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) DRR regulatory and institutional environments, suggests that the renewal process could be simplified. Currently, changes to the Results Framework can only be introduced through a formal restructuring of the operation. 68. The third renewal of the DPL with Cat DDO presented a challenge for the Bank, as it was the first time a renewal was requested after the loan amount had been fully disbursed. The request was motivated in large part by the Government’s desire to continue the DRM/CCA policy dialogue and TA associated with the Bank’s supervision activities even in the absence of additional funds. The Bank team carried out a series of internal consultations with relevant Bank units and Management, before Bank Management confirmed that applicable Bank Policies and Operational Procedures allowed for the renewal of the fully disbursed DPL with Cat DDO loan operation. This experience highlighted that in addition to the financial function of the instrument, Borrowers value the policy advice and TA provided as part of the operation. 69. It is good practice for all new DPL with Cat DDO operations to include public health-related emergencies as drawdown triggers. In the context of the ongoing COVID-19 pandemic, the difficulties experienced in Panama due to the explicit exclusion in the LA of public health as a drawdown trigger demonstrate the need to explicitly indicate in the operation’s Legal Agreement that certain public health- related emergencies can qualify for drawdowns. The conditions could indicate, for instance, that the Health Ministry has provided evidence that compels the Government to issue a declaration of a State of Emergency in the country, supported by documentation acceptable to the World Bank. Next Phase 70. There is a strong rationale for continuing the World Bank’s DRM engagement in Panama, given the challenges from the COVID-19 pandemic and the increasing climate change-related hazards. To address the impacts of the pandemic, the Government has been compelled to disburse most of the resources available from the financial toolbox of its DRF Strategic Framework, including funds from this operation. There is a clear need to replenish and recapitalize Panama’s depleted disaster risk financing instruments, as well as adopt additional ones, including contingency financing instruments that can offer a reliable source of quick liquidity in the event of a major shock. In managing the COVID-19 response, the Government has identified the need for a new DPL with Cat DDO, which is expected to contribute substantially to strengthening its capacity to respond, in an effective and timely manner, to any potential shock triggered by a materialized climate or natural hazard, including a public health emergency for which the Government issues a declaration of a State of Emergency. 71. The Government has submitted a formal request to the Bank for a second DPL with Cat DDO operation. This proposed second operation, like the first, would need to meet two requirements: (a) an adequate macroeconomic framework; and (b) a national DRM program that is acceptable to the Bank. The second DPL with Cat DDO is expected to support forward-looking policy reforms aimed at further consolidating key components of the country’s comprehensive DRM program. The reforms include the revision of the Disaster Risk Financing Strategic Framework to integrate financial protection against both catastrophic events triggered by materialized natural hazards and public health-related emergencies. The reforms will also strengthen the technical capacity for multi-hazard risk identification at all levels of government. Page 25 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) 72. As a policy instrument, the first Cat DDO provided a solid foundation for developing and strengthening the country’s DRM program. This was achieved by: (a) updating the DRM policy framework through the enactment of the Comprehensive National Disaster Risk Management Policy (PNGIRD); (b) developing a planning instrument to efficiently implement the PNGIRD; and (c) establishing an explicit institutional mandate for the Government to fulfill its legal role and responsibilities related to financial protection against disasters, as mandated by the National DRM Policy. While the Government has achieved great progress in the implementation of its DRM program, it is becoming increasingly evident that the current legislative and institutional framework needs to evolve to respond more efficiently to a dynamic and more complex disaster risk profile and enhance the territorial responsibilities for DRM within the country’s new decentralization framework. Specifically, the legislative and institutional framework needs to provide more support to the poorest and most vulnerable segments of the population, focusing on people living in extremely vulnerable areas, including women, children, and Indigenous Peoples. 73. A critical next step is to ensure that in the context of increasing climate-related hazards, climate considerations are embedded within multisectoral reforms and the Government’s institutional framework for DRM. The COVID-19 pandemic has highlighted the importance of multisectoral policy reforms that effectively reach territorial management levels, to ensure that countries are better prepared for emergencies and can respond more effectively. The pandemic and the recent hurricanes revealed the need to foster closer integration of the general emergency response and the health response systems, and to put in place systems to better quantify the impacts of disasters on the population’s well-being. The new DPL with Cat DDO would help to increase the country’s capacity to identify, monitor and address, in a gender-sensitive manner, the different vulnerabilities of poor communities and populations whose well-being is disproportionately affected by all types of shocks. Page 26 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) ANNEX 1. RESULTS FRAMEWORK . RESULTS INDICATORS Pillar: Strengthening of the institutional and legal frameworks for disaster risk management. Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Indicator 1.1 Disaster risk Text NA Guidelines incorporated Guidelines incorporated into the criteria have been incorporated into the SINIP SINIP into the National Public Investment System (SINIP) 18-Oct-2011 31-Dec-2012 30-Jun-2020 Comments (achievements against targets): Result Indicator 1: Increased GoP capacity for disaster risk reduction (DRR) has been fully completed satisfactorily: • Indicator 1.1 Disaster risk criteria have been incorporated into the National Public Investment System (SINIP) was fully met in 2012, by the Directorate of Investment Programming (DPI) within the Ministry of Economy and Finance (MEF), with the development of a roadmap to incorporate disaster risk criteria into the National Public Investment System (SINIP). Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Indicator 1.2 Number of Number 1.00 4.00 4.00 provinces with updated protocols for disaster 18-Oct-2012 31-Dec-2014 30-Jun-2021 preparedness and response Page 27 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) Comments (achievements against targets): • Indicator 1.2 Number of provinces with updated protocols for disaster preparedness and response was fully met with the update of the Disaster Preparedness Protocols completed for the provinces of Chiriquí, Bocas del Toro, Veraguas, Los Santos, and Herrera. • Indicator 1.3 New consolidated protocols and an increase to 6 provinces (an increase from the initial target of 4 to 6 under indicator 1.2), was completed in 2016 with the preparation and adoption of the National Preparedness and Emergency Plan that incorporates the protocols for all provinces of Panama (ten provinces). • Indicator 1.4 Develop emergency protocols for the recently inaugurated “metro of Panama City” was completed in 2017 with the development of emergency protocols for the Panama City metro, by the Panama Metro. Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Indicator 2.1 At least three Number 0.00 3.00 6.00 ministries (e.g. MEF, MIVIOT and ANAM) have carried out 18-Oct-2012 31-Dec-2013 30-Jun-2021 DRR priority actions identified Comments (achievements against targets): Result Indicator 2: Disaster Risk Management National Plan (DRMNP) implemented by 3 key sectors is advancing satisfactorily: Indicator 2.1 Key ministries carried out DRR priority actions identified in the 2011-2015 DRMNP has been fully completed. Priority DRR actions identified in the DRMNP 2011-2015 have been executed by the Ministry of Economy and Finance (MEF), Ministry of Housing and Territorial Planning (MIVIOT) and Ministry of the Environment (MIAMBIENTE). These priority actions include: • The creation of a specific DRM budget code within National Budget, which allows the Government to tag and track investment proposals and channel resources for ex-ante DRM initiatives (Resolution No. 030, March 2013); • Endorsement, by the Vice Ministry of Land Management, of a proposal for the National Budgetary Classification System, which includes explicit references to DRM Criteria (February 2013); Page 28 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) • Update of the National Policy for Integrated Water Resources Management and the "Regulatory Body for the Water Law" under the leadership of ANAM, (Executive Decrees No. 479 and 480 respectively, April 2013), introducing key elements of DRM in the water management sector. Indicator 2.2 Key ministries carried out DRR priority actions identified in the 2011-2015 DRMNP (3 additional ministries added to the original target of 3) is advancing satisfactorily. The 3 additional sectors are: Ministry of Education (MEDUCA),Ministry of Health (MINSA) and The National Water and Sewerage Institute (IDAAN). Activities during November 2019 - August 2020 Period: • MINSA: Despite the difficulties caused by the COVID-19 pandemic, MINSA has (i) created a team for dissemination of information, establishment of functions and operating protocol, approved by the Ministry’s authorities; (ii) strengthened regional structures for comprehensive management of disaster risk in the health sector. These activities include trainings for the teams assigned in the different regional offices. These activities contribute to the advancement of results under Indicator 2.2. • IDAAN: As part of the process to identify risks to critical infrastructure, IDAAN carried out structural evaluations of three water treatment plants in the country in 2020: (i) Centenario Water Treatment Plant (Pacora ), (ii) Jaime Diaz Quintero Water Treatment Plant (Chorrera), and (iii) Chame Water Treatment Plant. This activity contributes to the advancement of results under Indicator 2.2. • MIVIOT: MIVIOT has made progress in the preparation of a proposal for a Partial Plan of Territorial Development for the Portobelo District, in the Province of Colon. This includes incorporating DRM considerations related to exposure to natural hazards in accordance with MIVIOT’s November 2015 Resolution 732-2015 and the development and explanation guide for the incorporation of comprehensive disaster risk management in land use plans and schemes. This activity contributes to the advancement of results under Indicator 2.1. Indicator Name Unit of Measure Baseline Target Actual Achieved at Completion Yes/No No Yes Yes Page 29 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) Indicator 3.1 DRM financial 18-Oct-2012 31-Dec-2013 30-Jun-2021 protection policies, strategies, or instruments developed. Comments (achievements against targets): Result Indicator 3: DRM financial protection policies, strategies, or instruments developed has been fully completed satisfactorily. This results indicator was achieved with the adoption of the Strategic Framework for Disaster Risk Financing in 2014 and the approval of the Five-Year Operational Plan in 2016. Additionally, a cost-beneft analysis was carried out for the strategy and in 2018 the GoP diversified the instruments under its strategy with the purchase of a parametric insurance with CCRIF SPC for excess rain. • Indicator 3.1 Development of DRM financial protection policies, strategies, or instruments has been fully completed. • Indicator 3.2 Adoption of the Strategic Framework and the approval of the Five-Year Operational Plan has been fully completed. Activities during November 2019 - August 2020 Period: • DICRE, with the support of the World Bank, carried out the Virtual workshop called ‘Strategies and Instruments to strengthen Panama's fiscal resilience to disasters. This event is part of the work plan agreed with the MEF for the implementation of Technical Assistance from the World Bank to support the strengthening of financial management of disaster risk in Panama. This activity contributes to the advancement of results under Indicator 3.1 and 3.2. • MEF, through DICRE, renewed the insurance policy for excess rain that was contracted with CCRIF SPC for the period 2019-2020. This initiative is part of the implementation of the Strategic Framework for Disaster Risk Financing, which includes the development and implementation of risk retention and transfer tools. Additionally, the renewing of the excess rain policy for the period 2020 – 2021 is in process. This activity contributes to the advancement of results under Indicator 3.1 and 3.2. . Page 30 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES A. TASK TEAM MEMBERS Name Role Preparation Supervision/ICR Haris Sanahuja, Mirtha Liliana Escobar Saenz Task Team Leader(s) Rodrigo Andres Donoso Arias ICR Team Leader Luis Corrales ICR Contributor Maria Camila Padilla Gomez Procurement Specialist(s) Alejandro Roger Solanot Financial Management Specialist Eric R. Lancelot Team Member Alexandra Ortiz Team Member Claudia Ruth Soto Orozco ICR Peer Reviewer Ignacio Urrutia Duarte ICR Peer Reviewer Melanie Simone Kappes ICR Peer Reviewer Oyebimpe Olufunmilayo Adepoju Team Member / Senior Operations Officer Meilyn Gem Team Member / Operations Officer Jimena Jesus Mejia Team Member / Operations Officer Piers E. Merrick Team Member / Senior Operations Officer Rajagopal S. Iyer Team Member / Quality team Diana Cubas Team Member Rafael Chelles Barroso Team Member Sara Gey Feria Team Member Claudia Patricia Pacheco Florez Team Member Alessandra Treuherz Spadafora Team Member Page 31 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) . B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY11 18.429 195,897.92 FY12 19.593 193,778.92 FY16 0 1,002.00 Total 38.02 390,678.84 Supervision/ICR FY12 9.382 109,904.56 FY13 9.833 263,662.32 FY14 13.948 113,426.51 FY15 28.407 191,284.73 FY16 17.316 140,546.77 FY17 8.825 62,019.55 FY18 12.840 109,310.17 FY19 9.039 63,491.39 FY20 9.761 78,002.89 Total 119.35 1,131,648.89 . Note – The FY16 preparation cost of US$ 1,002.00 is an error. It should be allocated under the supervision stage. It cannot be adjusted since past Bank Budget expenses cannot be corrected. Page 32 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) ANNEX 3. BORROWER, CO-FINANCIERS, DEV. PARTNERS’/STAKEHOLDERS’ COMMENTS A draft of the ICR for Panama’s Disaster Risk Management Development Policy Loan with a Cat DDO (P122738) incorporating recommendations of the World Bank Decision Review meeting (on December 16, 2021) was shared with the MEF (Borrower) for final review. The MEF approved and confirmed it had no additional comments to the revised final version of the World Bank ICR on February 18, 2022. The GoP formally submitted their comments32 to the ICR in the attached official letter33 (in Spanish) on February 21, 2022. The following information summaries the key messages included in the Panama Cat DPL with DDO’s project completion report, prepared by the senior staff of the Ministry of Finance’s MEF’s Directorate of Investment, Concessions, and Risks of the State (DICRE), with input from other MEF’s directorates and relevant Government agencies, involved in the implementation of this operation. The following paragraphs summarize the Government’s feedback and comments: General comments: • The DPL with Cat DDO operation, in the amount of US$66 million, had a positive impact on the Government of Panama (GoP) ’s capacity to manage the financial impacts of catastrophic events caused by extreme natural hazards. • World Bank’s Technical Assistance to the Government of Panama, in the context of the implementation of the DPL with Cat DDO operation, promoted the country’s development of a comprehensive Disaster Risk Financing Strategic Framework, of which the contingent loan operation became a key component. • The DPL with Cat DDO was successfully triggered in two occasions upon the enactment by the Government of two state-of-national-emergency declarations, according to the Law 7 of February 11, 2005 (Law of the National Civil Protection System, SINAPROC). o The Government requested a first withdrawal, in the amount of USD $25 million, to address the adverse impacts of the widespread 2015-2016’s dry season. Funds were transferred to IDAAN (National Aqueducts & Sewerage company) to help finance water-provision interventions in the drought-affected areas. o In March 2020, in the context of the ongoing COVID-19 pandemic, the Government requested a second withdrawal, for the remaining US$41 million of the DPL with Cat DDO operation, to help finance public-health mitigation measures. However, due to the exclusion of pandemics as potential disbursement triggers, restructuring of the Loan Agreement (LA) was needed to allow drawdowns based on public health-related emergencies. Approval of the restructuring was internally expedited by the Bank, and the requested funds were made readily available to the Government in record time. Outcomes • In order to successfully implement this operation, senior staff of DICRE, responsible for the execution this operation, worked in close coordination with senior authorities of other MEF's directorates, as well as with representatives from other relevant Government agencies, creating positive synergies 32 MEF verbatim version report - https://wbdocs.worldbank.org/wbdocs/drl/objectId/090224b088d015aa 33 Official letter - https://wbdocs.worldbank.org/wbdocs/drl/objectId/090224b088d015a9 Page 33 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) that contributed to the successful completion of all expected outputs, outcomes and the achievement of this operation's Program Development Objective (PDO). • The continued dialogue between the DICRE and Bank staff played a critical role in the successful completion of all project activities. • The Government report highlights, as a situation to be improved, the length of time elapsed between the Bank's identification mission for this DPL with Cat DDO operation, carried on July 18-23, 2010, and the signing of the operation’s Loan Agreement, on January 4, 2012. Sustainability of the operation's development outcomes • Panama has, since 24 August 2021, a new high-level Cabinet for Comprehensive Disaster Risk Management (GIRD Cabinet), created by the Executive Decree No. 251 of August 24, 2021. The GIRD Cabinet has been delegated the responsibility of ensuring the effective implementation of the country’s DRM agenda. Lessons Learned • In the context of the ongoing COVID-19 pandemic, and taking into consideration the experience of Panama, the Government’s team suggests that for future operations, public health-related emergencies (pandemics)shall be included as triggers of DPL with Cat DDO operations. However, it is also relevant to think beyond known hazards and allow for some kind of flexibility in the wording of the Loan Agreement (LA) clauses related to which events are considered acceptable as triggers for withdrawals, as there is always the possibility of an unthinkable extreme event to materialize that has not been considered explicitly in the LA. Page 34 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) ANNEX 4. DETAILED DESCRIPTION OF ACTIVITIES CARRIED OUT UNDER THIS PROGRAM Policy Area: Strengthening of the institutional and legal frameworks for disaster risk management Prior Action 1 Adoption of the Comprehensive National Disaster Risk Management Policy (PNGIRD) Original Key Outcome Indicators (KOI) KOI 1. Increased GoP capacity for disaster risk reduction (a) Disaster risk criteria incorporated in the National Public Investment System (SINIP) (target: guidelines incorporated into the SINIP). Status: Achieved (b) Increased number of provinces with updated protocols for disaster preparedness and response (Baseline: 1, Target: 4). Status: Achieved Revised KOI targets Consolidated new protocols and increased number of protocols Target: 6 (i.e., 2 more than the original target of 4). Final value: 10. Status: Exceeded (c) Develop emergency protocols for the Panama City (subway) metro. Status: Achieved. • (a) Since 2011, the Directorate of Investment Programming (DPI),34 a specialized unit within MEF, engaged in building Panama's roadmap to incorporate disaster risk analysis in public investment programming. With technical support from the World Bank/GFDRR, the DPI developed a DRM budget classifier to improve the Government’s capacity to track and report expenditures in DRR-related activities and investments. • MEF approved the creation of the new DRM budget identifier as part of the National Budget’s classification system, which allows government agencies to track investment proposals, as well as the resources earmarked for ex-ante DRM interventions (Resolution No. 030, March 2013). The DRM classifier and the methodology for its implementation were piloted in 2017 as part of the redesign of the National Public Investment System (SINIP) and have been used in budget preparation cycles since 2018. The DPI has also incorporated disaster risk analysis guidelines into the SINIP Procedures Handbook and developed directives for integrating disaster risk considerations into public investment assessments. • As part of the DPI’s approval process for new public infrastructur e projects, DPI developed guidelines describing the official methodology35 for registering new public investment proposals in the SINIP in the context of its redesign. The guidelines were developed with targeted support for capacity building, provided by UNDRR, the Economic Commission for Latin America and the Caribbean (ECLAC) and the World Bank. The new guidelines aim at mainstreaming disaster risk analysis in public investment processes, focusing on incorporating prospective and corrective DRR/CCA considerations in the pre-investment phase of all new public infrastructure projects, and enhancing the supervision of works during implementation. Applying the guidelines is a requirement, and each new public infrastructure project proposal must meet certain sustainability and disaster resilience criteria to get DPI approval for registering in the SINIP’s Investment Project Database, which is needed to obtain government funding. 34 Source: Observatorio Regional de Planificación para el Desarrollo. Marcos Legales. https://observatorioplanificacion.cepal.org/es/sistemas-planificacion/sistema-nacional-de-inversion-publica-de- panama#content-marco-legal 35 The DPI Guidelines use the DRM definition adopted by the PNGIRD, which defines DRM as the capacity of the government and civil society to transform and avoid the conditions that generate disaster situations, acting on the underlying causes of existing vulnerabilities. In this context, managing disaster risk should be understood as an intrinsic characteristic of development that is present at all levels of development planning rather than as a separate management activity. The guidelines also indicate that DRM can be addressed according to the timing of the execution of a given DRR intervention, either to prevent, reduce, or mitigate risk levels. Source: MEF-DPI.2019. Guía Metodológica General para la Formulación y Evaluación de Proyectos de Inversiones Pública. Panamá. https://www.idaan.gob.pa/wp-content/uploads/2016/04/Guia-Metodologica-General-2019- Proyectos.pdf Page 35 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) • (b) The target for the Result Indicator aimed at measuring progress towards updating the response protocols in six provinces was exceeded. The approval of the National Disaster Emergency and Response Plan in 2016 triggered the update of the disaster emergency protocols of each of the country's ten provinces. Guided by the PNGR, SINAPROC continues to strengthen disaster preparedness and emergency response capacities across the entire country. During its inaugural session held in June 2019, Panama's National Platform for Disaster Risk Reduction, led by SINAPROC’s Director General, discussed the advanced draft of a proposed new National Disaster Risk Management Plan for the 2019-2030 period. SINAPROC also reviewed the country's regulatory framework for DRM as part of its efforts to introduce improvements to the current SINAPROC Law. SINAPROC’s senior authorities supported an amendment 36 to the SINAPROC Law to allow a roadmap for the professionalization and incorporation of its Civil Protection staff into the Civil Service. In 2019, DICRE initiated a multi-sectoral consultation process, supported by the Bank’s technical team, which aimed at developing a standardized tool for assessing damage and losses caused by disasters. The tool is being customized to meet the country´s particular reporting needs, taking into consideration Panama’s disaster risk profile. The consultation process involves seven disaster-sensitive government sectors. • (c) Panama Metro Security Management (PMSM) published and broadly disseminated a set of comprehensive safety and security directives and guidelines that regulate the use of Metro facilities, including how to safely ride trains and what activities and behaviors are prohibited within Metro facilities.37 Metro Panama has a team of communications staff charged with posting easy-to-understand informational posters as well as online publishing of videoclips regarding safety and security within Metro, including what to do during an evolving emergency and how to use the alert system available throughout the Metro system. Additionally, Metro Panama has established its own Emergency Brigades, 38 composed of first responders trained in emergency preparedness and response, first aid, evacuation and rescue, and firefighting. Furthermore, in response to the evolving COVID-19 pandemic, Metro Panama updated its emergency protocols and is enforcing additional public health measures to mitigate the risk of spreading the virus within its facilities. Prior Action 2 Adoption of the National Disaster Risk Management Plan 2011-2015 (PNGR). KOI 2. The 2011-2015 PNGR is being implemented by key stakeholders (d) At least 3 ministries (e.g., MEF, MIVIOT and ANAM) have carried out DRR priority actions identified in the 2011-2015 PNGR (Baseline: 0; Target 3). Status: Achieved Revised KOI targets Government agencies carrying out DRR priority actions identified in the 2011-2015 PNGR Target: 6 (i.e., 3 more than the original target of 3). Status: Achieved. • (d) This target was achieved in 2011, when MEF, MIVIOT and MIAMBIENTE carried out relevant DRR priority actions as mandated in the 2011-2015 PNGR. The selection and prioritization of the DRR interventions considered the IDB assessment of key drivers of Panama’s vulnerability to natural hazards and the actions needed to reduce or mitigate natural disaster risks. By 2014, three other government agencies (MEDUCA, 36 Soon after the closing of this operation in June 2021, the National Assembly approved Law No. 233 of 24 August 2021, "That creates the Civil Protection Career and amends and adds articles to Law 7 of 2005, which reorganizes the Civil Protection System," published in the Official Gazette (Gaceta Oficial Digital) No. 29361-A of 25 August 2021. Law 233 authorized the professionalization of SINAPROC's first responders and offered them the option of becoming civil Service employees, ensuring professional-development opportunities, shielded from unwarranted political influence. https://www.gacetaoficial.gob.pa/pdfTemp/29361_A/86903.pdf 37 www.facebook.com/watch/?v=1416481248382226 38 https://www.elmetrodepanama.com/metro-de-panama-conforma-brigadas-de-emergencias-en-evacuacion-y-rescate- primeros-auxilios-prevencion-y-extincion-de-incendios/ Page 36 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) MINSA, and IDAAN implemented priority DRR interventions within their respective sectors, significantly contributing to the mitigation of identified vulnerabilities in their sectors. MIVIOT, in close collaboration with the Panamanian Institute of Geosciences 39 and the participation of technical representatives of MEDUCA and MINSA, carried out several probabilistic assessments of earthquake and flood risks in key cities. The Bank-funded TA generated critical earthquake and flood risk information that was widely disseminated through training workshops attended by technical staff from the local government agencies responsible for land administration, as well as through technical publications and reports.40,41,42 Technical information from these studies was shared with the respective local government authorities as inputs to their urban planning and land management activities. MIVIOT has also made significant progress towards the adoption of Panama’s National Land Management Policy, the supporting Implementation Plan, and the Territorial Management Instruments. A key step to improving territorial planning was the approval of Ministerial Resolution No. 732-2015 on 13 November 2015, which updated the regulatory framework for local land use planning. Resolution 732-2015 mandates the incorporation of DRM and CCA criteria in local territorial development planning processes. 43 Under the leadership of MIAMBIENTE, and through a participatory and comprehensive nationwide consultative process, the GoP updated the National Policy on Integrated Water Resources Management and the regulation of the Water Law (Executive decrees No. 479 and 480, respectively, April 2013), and thereby introduced key DRM considerations in water management activities. MIAMBIENTE updated the National Policy on Climate Change in February 2013 to include a component on DRM. In addition, MIAMBIENTE assumed the rotating presidency of the DRM Platform’s Steering Committee in 2019. The Ministry is playing a key role in promoting an update of the PNGR to reflect the country’s evolving disaster risk profile, the observed climate variability, and the expected adverse impacts of climate change. MIAMBIENTE’s National Directorate for Climate Change is collaborating with several Directorates within MEF (DPI, DICRE, the Directorate of National Budget (DIPRENA) and the Directorate of Public Financing (DFP) to support building internal technical capacity among the MEF units responsible for the selection and financing of public investments. Such collaboration includes technical support to MEF's ongoing training of its technical staff on DRM- and climate change-related issues, as part of MEF's commitment to mainstream DRM and climate change considerations in the selection, prioritization, and financing of public investments in disaster-sensitive sectors. 39 https://www.panamaigc-up.com/ 40 Modelación Probabilista del Riesgo Sísmico para la Ciudad de David. Resumen Ejecutivo. Proyecto de Asistencia Técnica CAPRA (Comprehensive Approach for Probabilistic Risk Assessment). Julio de 2012 https://ecapra.org/sites/default/files/documents/Resumen%20Ejecutivo%20TAP%20David%2C%20Panama%20%28CAPRA%2 9.pdf 41 Modelación probabilista de riesgo sísmico para la ciudad de Panamá (Panamá), portafolios de educación y salud . Ciudad de Panamá, República de Panamá. Marzo de 2015. https://urbanriskcenter.org/wp-content/uploads/2019/02/informe-final-capra-panama_-cuarta-version-1.pdf 42Catalina Elvira Espinosa-Vega; Tapia-Espinosa, A.A.; Camacho-Astigarrabia, E.; Sánchez-Sánchez, Y.; Physico-geographical characterization of the system that influences the multi-hazards in the sub-basin of Caldera River, Panama. CienciaUAT, vol. 11, núm. 2, pp. 6-23, 2017. https://www.redalyc.org/journal/4419/441949672001/html/ 43 MIVIOT's Resolution No. 732-2015 of November 13, 2015, published in the Official Digital Gazette No. 27910 of November 18, 2015, "By means of which the requirements and procedures for the preparation and processing of Territorial Planning Plans and Urban and Rural Development Schemes, at the local level, are established, adding disaster risk management and adaptation to climate change criteria that allow a sustainable development Page 37 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) MEDUCA continues to implement the regulations that require the incorporation of DRM in educational curricula at all levels. As part of its DRR commitments, MEDUCA continues to mainstream the DRR recommendations provided in the Handbook for General Basic Education Teachers (preschool, primary, and pre-middle levels44). The handbook, developed in close collaboration with SINAPROC, presents key disaster risk management concepts, and provides an assessment of the underlying vulnerability factors that affect the levels of disaster risk to multiple hazards, with a focus on educational facilities. The handbook provides actionable guidance on useful elements for risk assessment and risk reduction interventions in school settings, including through the development of disaster risk maps and inventories of available resources, and also makes recommendations on the organizational structure, at the school facility level, needed for implementing DRR measures and effectively respond to emergencies. IDAAN developed an inventory of the critical water network infrastructure between the cities of Chilibre and Las Cumbres as an input for the assessment of seismic risk levels of the Federico Guardia Conté water treatment plant (Chilibre). IDAAN’s Risk Management Office, in collaboration with other IDAAN units, is implementing the “National Plan for Water Security 2015-2050 Water for All.” The Plan recognizes a series of underlying factors that contribute to water-related disaster risks, including unplanned urban growth, deforestation, and soil degradation, as well as pollution of underground aquifers. These compound factors affect available water sources and increase the cost of producing drinking water (due to the need for additional inputs during the processing of raw water (coagulation and flocculation, sedimentation, filtration, and disinfection), with adverse effects on public health and community well-being. IDAAN is carrying out key improvements to the physical infrastructure for water collection, processing, and distribution, aimed at ensuring adequate drinking water supply, both in quantity and quality, to the communities in and around the Metropolitan Area of Panama (AMP) as well as in other regions of the country. SINAPROC, through the country’s Emergency Operations Committee (COE), developed a National Preparedness Framework for Post-Disaster Recovery and began implementation of a National Prevention Plan for Tourist Destinations in 2016. SINAPROC also carried out disaster risk reduction awareness workshops aimed at local communities in urban/suburban areas (e.g., Chepo District, San Miguelito's Victoriano Lorenzo District, and Juan Díaz District), as well as in Indigenous Peoples' communities of the Ngäbe Bugle region. SINAPROC is also supporting the Association of Municipalities of Panama (AMUPA) in its efforts to strengthen the DRM and Community Development Offices/Departments established in each municipality. AMUPA recently published a Handbook,45 aligned with the Sendai Framework, that describes the roles and responsibilities of the Municipal Disaster Risk Manager. These include developing and implementing the municipal disaster risk management plan, working in consultation and coordination with local government agencies, the private sector and CSOs involved in development activities in the municipality. MINSA established an Office of Comprehensive Risks and Disasters in Health46 with the objective of "developing and coordinating institutional, sectoral, and interagency activities aimed at strengthening and mainstreaming prevention, mitigation, preparation, response, and rehabilitation actions in emergency situations and disasters triggered by natural and man-made phenomena, including epidemics, which cause negative effects on public health, the environment, and sustainable development.” The Office of Comprehensive Risks and D isasters in Health is responsible, among other functions, for establishing and maintaining effective communication and coordination mechanisms with SINAPROC and other relevant Health Sector entities, which operate at different administrative levels from the national to the community, addressing issues related to prevention, mitigation, preparation, response, rehabilitation, and reconstruction in emergency and disaster situations. 44 shorturl.at/fuIK1 45 https://amupa.org.pa/wp-content/uploads/2019/03/Manual-GMRDDC.-NUMERADO-final-Aguadulce.pdf 46 http://www.minsa.gob.pa/oficina/oficina-integral-de-riesgos-y-desastres-en-salud Page 38 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) In addition, the Office of Comprehensive Risks and Disasters in Health, with technical support from WHO, developed a Multi-hazard Emergency and Disaster Response Plan, through which the MINSA coordinates critical health sector interventions with other government agencies (including Panama’s Social Security Fund, IDAAN, MIAMBIENTE, the Waste Management Authority of Panama and the Panama Canal Authority), as well as the Red Cross and other non-government health sector stakeholders, in order to establish responsibilities and coordination mechanisms for effective emergency response and recovery if a catastrophic event occurs. Another key activity of MINSA is the implementation of the Safe Hospitals Program, which focuses on ensuring that health facilities, at the three levels of care, maintain the necessary conditions to adequately care for the population before, during, and after the materialization of a catastrophic event. In this regard, the GoP established a National Commission for “Hospitals Safe from Disasters,” through Executive Decree No. 1199 on 17 November 2015. The National Commission has an explicit nationwide mandate to monitor and evaluate the integrity and sustainability of health facilities and promote the incorporation of DRR interventions in strategic and operational plans of other health-related institutional stakeholders, in order to ensure the continuity of operations during and after an extreme event. In the context of the evolving COVID-19 pandemic, as of November 2021, MINSA is implementing a National Operational Plan of the Health System for the Prevention and Control of the Novel Coronavirus. However, the experiences of several emergencies, and particularly COVID-19 and climate emergencies such as hurricanes, revealed the need to enhance the health preparedness and response mechanism to address emerging epidemics and pandemics, including those exacerbated by climate change and complex multi-hazard disasters. The lack of plans and specific protocols hinders a rapid and effective response, and the lack of proper preparation often results in disorderly control measures, confusion about how to manage the response, 47 and poor communication and targeting. 48 Simulation exercises are an effective way to test existing plans and protocols and propose timely adjustments to ensure that the right institutional arrangements are in place for effective monitoring and planning for disease outbreaks, to prevent them from becoming public health emergencies. Some diseases, including vector- and water-borne illnesses, are expected to become more widespread due to climate change impacts such as higher temperatures, increased flooding, hurricanes, and food insecurity.49 Increasing health preparedness and response will help the country to better adapt to these emergencies in the future. Lessons learned from the implementation of the COVID-19 pandemic response plan are being shared with SINAPROC, as they are expected to be incorporated in the revised PNGR, to improve interagency coordination and response capacity in complex emergency situations involving public health-related catastrophic events. Prior Action 3 Proposal to expand the functions and responsibilities of the MEF DICRE. KOI 3. Under its expanded role, DICRE is developing financial protection policies, strategies, or instruments (e) DRM financial management program developed. (Baseline: no; Target: yes). Status: Achieved. Revised KOI targets Disaster Risk Financing and Insurance (DRF) Strategic Framework formally adopted . (Baseline: no; Target: yes). Status: Achieved. Operational Plan for the DRF Strategic Framework drafted and formally adopted . (Baseline: no; Target: yes). Status: Achieved. 47 Lim, Sue, Tom Closson, Gillian Howard and Michael Gardam. 2004. Collateral damage: the unforeseen effects of emergency outbreak policies. The Lancet Infectious Diseases. 4. 697‐703. 10.1016/S1473‐3099(04)01176-4. 48 Crosier, Adam, Dominic McVey and Jeff French. 2015. By failing to prepare you are preparing to fail: lessons from the 2009 H1N1 ‘swine flu’ pandemic. European Journal of Public Health, Volume 25, Issue 1 (February). https://doi.org/10.1093/eurpub/cku131 49https://documents1.worldbank.org/curated/en/552631515568426482/pdf/122328-WP-PUBLIC- WorldBankClimateChangeandHealth DiagnosticMethodologyJan.pdf Page 39 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) • (e) Through its specialized units, Panama developed the following financial protection policies, strategies, and instruments: Disaster Risk Financing Strategic Framework, which was formally approved in November 2014 through an Executive Decree No. 578 on November 13, 2014, making Panama the first country in the Central American region to establish a legal framework for the adoption of a DRF strategy. The DRF Strategic Framework comprises five strategic pillars: (i) improving risk identification capabilities for better decision- making, using complete and clear information, including by carrying out probabilistic disaster risk analyses; (ii) carrying out risk assessments during the pre-investment phase of public investments, making risk analysis a mandatory step in the process of selection, prioritization and financing of public investments; (iii) sources of financing, including budget reallocations, extraordinary credits, use of resources from the Panama Savings Fund (FAP), contingent lines of credit (e.g., DPL with Cat DDO operations), post-disaster loans and co- insurance schemes (e.g., CCRIF's sovereign catastrophic disaster risk insurance products); (iv) strengthening the domestic insurance market, including agricultural insurance and micro-insurance schemes; and (v) strengthening of DICRE to ensure MEF's capacity to discharge its responsibilities for the design and implementation of financial protection strategies. MEF, with technical assistance from the World Bank, adopted a Five-year Operational Plan to Implement the DRF Strategic Framework, which was approved through a Ministerial Resolution in March 2016. With technical support from the WB, MEF conducted a cost-benefit analysis of potential disaster financing strategies. As part of this assessment process, the GoP joined the Caribbean Catastrophe Risk Insurance Facility -– Segregated Portfolio Company (CCRIF-SPC). With the Bank’s technical support, Panama also assessed which sovereign insurance strategy would provide the optimal catastrophic insurance coverage/cost ratio for the country. As part of this assessment, the GoP opted for purchasing CCRIF -SPC sovereign risk protection products to strengthen its DRF Strategic Framework’s risk transfer layer. Page 40 of 41 The World Bank Disaster Risk Management Development Policy Loan with a CAT DDO (P122738) ANNEX 5. DETAILS ABOUT THE TECHNICAL ASSISTANCE PROVIDED TO GOVERNMENTS INSTITUTIONS RESPONSIBLE FOR FORMULATING DISASTER RISK REDUCTION AND CLIMATE CHANGE POLICIES 74. This DPL with Cat DDO operation was complemented by well-targeted technical assistance (TA) provided to critical government institutions responsible for formulating DRR and climate change policies, as well as by the prioritization of DRR interventions on the ground. Related to the policy dialogue on DRM interventions, several TA activities were carried out to support the responsible ministries and government agencies, including MEF, MIVIOT, the Ministry of Education (MEDUCA), the Ministry of Health (MINSA) and the National Aqueducts and Sewers Institute (IDAAN). TA interventions and analytical work were focused on key DRR areas, including: (a) enhancing the country’s capacity for risk financing and insurance; and (b) improving the country’s understanding of its evolving disaster risk profile, including the increasing risk posed by public health emergencies. Particularly relevant were several seismic and flood risk studies carried out using the Probabilistic Risk Assessment (CAPRA) 50 platform, as well as the extensive technical support provided for the development of the country’s DRF Strategic Framework. The TA included the modeling of sovereign risk scenarios and the assessment of different risk financing instruments as potential components of the strategy's risk-retention and risk- transfer layers. These TA activities contributed to increasing awareness among the responsible government authorities of the importance of incorporating DRM considerations in public investment planning, and of fully integrating a comprehensive financing strategy in the Government’s DRM program. 75. The DRM/CCA policy dialogue and technical support provided by the Bank informed and promoted Panama’s active participation in regional and international DRR/CCA forums. This participation, in turn, increased the relevance of the Government’s DRM program and the institutional profile of the DRR implementing agencies. The Government has continued to actively participate in global and regional DRR/CCA forums and has joined several major international agreements on sustainable development, DRR and climate change. These agreements include the Sendai Framework for Disaster Risk Reduction 2015–2030 (SFDDR)51; the 2030 Agenda for Sustainable Development52; and the Paris Agreement on Climate Change53; as well as regional sustainable development commitments under the aegis of the Central American Integration System (SICA) and its specialized technical bodies. The DRM/CCA policy dialogue promoted by the DPL with Cat DDO also informed the preparation of the Bank’s 2015 Systematic Country Diagnostic (SCD) and the current CPF. 50 The CAPRA initiative started in January 2008, as a partnership between CEPREDENAC, the United Nations International Strategy for Disaster Reduction (UN ISDR) and WB/GFDRR, aimed at raising disaster risk awareness among client countries in Central America by providing tools to better understand the levels of risk resulting from natural hazards. The CAPRA initiative promotes the integration of disaster risk information into development policies and programs. The CAPRA platform addresses specific disaster risk information needs through specialized software applications, extensive documentation, consultancy and advisory services, hands-on practical training, and other complementary services. Since January of 2017, The University of the Andes, in Colombia, manages the CAPRA platform. https://ecapra.org/projects. 51 United Nations Office for Disaster Risk Reduction.2015. Sendai Framework for Disaster Risk Reduction 2015-2030. Available at: https://www.undrr.org/publication/sendai-framework-disaster-risk-reduction-2015-2030 52 National Assembly- Law No.393 of 14 September 2015, which adopts the Sustainable Development Goals, published in the Official Gazette (Gaceta Oficial Digital) No. 27870-B of 17 September 2015. https://www.gacetaoficial.gob.pa/pdfTemp/27870_B/52756.pdf 53 National Assembly Law No.40 of 12 September 2016, by which the Paris Agreement, adopted in Paris on December 12, 2015, is approved. Published in the Official Gazette (Gaceta Oficial Digital) No. 28115-B of 12 September 2016. https://www.gacetaoficial.gob.pa/pdfTemp/28115_B/57860.pdf Page 41 of 41