Summary.
The draft bill amends Law 4 of May 17, 1994 to make interest discounts on local loans conditional on compliance with the Sustainable Finance Taxonomy of Panama. It would cover agricultural producers, processors and producers of domestic sea salt, and exporters of nontraditional agroindustrial products. It sets a ceiling of one million balboas per production cycle and product category, and three loans per cycle, category and beneficiary; each loan must relate to a technically justified project. Loans made to the Agricultural Development Bank (Banco de Desarrollo Agropecuario) would also qualify for the discount, while loans the bank grants using Special Interest Compensation Fund (Fondo Especial de Compensación de Intereses, FECI) resources would qualify for compensation only if they meet the sustainability criteria.
The bill provides for a 1% annual withholding on specified local personal and commercial loans exceeding five thousand balboas and on outstanding amounts under factoring agreements. Exclusions include loans by agricultural cooperatives recognized under Law 17 of 1997, interbank transactions, certain financing subject to the Securities Market Superintendency (Superintendencia del Mercado de Valores) or connected with Law 42 of 2001, loans linked to life insurance, and some factoring agreements entered into by micro, small and medium enterprises. It provides an exception for certain financing of state contractors, involving the Ministry of Economy and Finance (Ministerio de Economía y Finanzas) under Law 34 of 2008. The Agricultural Cabinet (Gabinete Agropecuario) would allocate the resources assigned to the sector, reserving at least 25% for the Agricultural Development Bank. FECI would compensate lenders for interest discounts and pay its administrative and oversight costs.
The FECI Commission (Comisión FECI) would set application criteria and coordinate the Banking Superintendency (Superintendencia de Bancos), the Ministry of Agricultural Development (Ministerio de Desarrollo Agropecuario), the Ministry of Environment (Ministerio de Ambiente) and the Ministry of Economy and Finance. The Banking Superintendency would verify transactions, set discounts and reference rates, manage fund personnel and decide sanction proceedings. Reconsideration and appeal would be available within five business days; an appeal would require binding opinions from the relevant ministers, requested for a fifteen-business-day period. The Ministry of Agricultural Development would prepare a sustainable practices manual with the Ministry of Environment, the Ministry of Economy and Finance, and the Agricultural Innovation Institute of Panama (Instituto de Innovación Agropecuaria de Panamá). These bodies would also undertake environmental certification, financial oversight, research and technical assistance.
Banks and financial entities would obtain a sworn declaration on the use of funds, verify practices and certifications throughout each loan, conduct site visits and submit quarterly reports. Eligible activities span crop farming, livestock, poultry, aquaculture, forestry, beekeeping, sea-salt production, agroindustry and rabbit farming. Permitted uses include inputs, labor, facilities, animals, land and certain prior investments. Complementary activities and assets would likewise depend on environmental criteria. Violations could result in a written warning or a fine of five thousand to fifty thousand balboas, payable into FECI. Omitted withholdings and improperly applied subsidies would be repaid with interest.
The text defines the transactions subject to withholding, including those in the Colón Free Zone, and provides exceptions for beneficiaries of Law 6 of June 16, 1987 and registered microenterprises. It defines terms used in the scheme and assigns its regulation to the Executive Branch (Órgano Ejecutivo). The FECI Commission would submit an annual report to the Agricultural Cabinet for publication by participating bodies. The bill amends Articles 1 to 8, 14 and 15 of Law 4 of May 17, 1994 and would take effect upon promulgation. It concerns the public bodies identified above, producers, agroindustries, cooperatives, banks, other financial entities and rural communities.
What it proposes.
- Interest discounts for agricultural and agroindustrial credit subject to sustainability criteria.
- FECI withholdings, allocation and administration.
- Verification, certification, penalties and reporting under the scheme.
Who it would affect.
- Eligible agricultural producers and agroindustries.
- Producers and processors of domestic sea salt.
- Banks, agricultural credit cooperatives and other financial entities.
- Borrowers whose transactions are subject to withholding or an exception.
Key points.
- The preferential discount requires environmental eligibility and limits loan amounts and numbers by beneficiary, production cycle and product category.Art. 1
- Compensation for agricultural loans granted with FECI resources is subject to sustainability criteria.Art. 2
- A 1% annual withholding applies to specified credit transactions, with exclusions and administrative procedures involving the FECI Commission and Banking Superintendency.Art. 3
- The Agricultural Cabinet allocates sector resources, and FECI compensates discounts granted by lenders.Arts. 4-5
- The bill assigns public bodies administrative, assistance, certification and oversight functions, and imposes verification and reporting duties on lenders.Arts. 6-7
- The catalogue of eligible activities and uses is subject to sustainability criteria; violations may be penalized and improperly applied sums must be repaid.Arts. 8-10
- The bill specifies loans subject to withholding, exceptions and definitions for the scheme.Arts. 11-13
- It assigns rulemaking to the Executive Branch, requires a public annual report, and identifies the amended articles and proposed commencement.Arts. 14-17