What Happened
On March 19, 2026, UPI published an analysis examining infrastructure and the cost of capital, drawing lessons from Panama and Paraguay. The piece considers how financing costs influence the planning, delivery and long-term sustainability of major infrastructure projects in both countries.
Background
Cost of capital is a central factor in infrastructure development: higher financing costs raise the overall price of projects, affect which projects move forward, and shape the mix of public versus private funding. The UPI analysis uses Panama and Paraguay as case studies to explore these dynamics in different economic and institutional settings.
For Panama, infrastructure decisions intersect with the country’s role as a logistics and connectivity hub. Financing costs for transport, port and energy projects affect competitiveness, public budgets and the attractiveness of private investment. For Paraguay, the piece highlights contrasting conditions that offer comparative lessons on financing and project selection.
Key Themes
The analysis focuses on themes common to many Latin American infrastructure debates: the impact of global interest rates and investor sentiment on borrowing costs, the role of public-private partnerships and foreign financing, and the importance of selecting projects that deliver economic returns commensurate with their cost. It also underscores that institutional capacity and project preparation matter when tapping capital markets or negotiating private participation.
What This Means for Panama
While the article does not prescribe specific policies, it highlights the policy trade-offs Panama faces when financing large projects. Managing debt sustainability, improving project preparation, and structuring contracts to balance risk between public and private actors are among the considerations that can determine whether projects are affordable and deliver intended benefits.
Implications
The UPI analysis suggests that decisions about infrastructure financing have long-term consequences for growth and fiscal health. For Panama, ensuring that projects align with national priorities and withstand financing shocks will be central to maximizing returns from infrastructure spending. Policymakers, investors and civil society each play roles in shaping the frameworks that govern how projects are selected, financed and implemented.
Readers interested in deeper comparative detail can consult the original UPI piece for the full analysis.