Panama is now an upper/middle-income country since economic growth has been one of the fastest in Latin America over the past decade, buoyed by the Panama Canal expansion and large public infrastructure projects. This strong economic growth has had a positive impact on social indicators. The poverty rate has been falling during the last few years and, yet, social inequalities remain relatively high and challenges persist in the public provision of social services.
For the above reasons, Panama has been "graduated" regarding the EU cooperation under the financial exercise 2014-2020, therefore it will be no longer eligible for receiving EU bi-lateral assistance. However, Panama will continue benefitting from the EU thematic lines, the regional programmes for Latin America and from the sub-regional programme for Central America.
For the period 2007–2013, €38 million were earmarked under the EU financing Instrument for Development Cooperation and two focal sectors of intervention were established, namely improving social cohesion to help modernise institutions and support for regional integration with other Central American countries with a view to align to the rest of the region.
In 2012, an action in the field of Public Security (€28 million) was financed and implemented with the Inter-American Development Bank (IADB) and the United Nations Office on Drugs and Crime (UNODC). The project SECOPA (Security Cooperation in Panama) was approved and signed in December 2013 by Presidents Martinelli and Barroso during the official visit of the latter to Panama.
Panama is signatory of the EU-Central America Association Agreement, a comprehensive free trade agreement with a strong focus on development cooperation. As in the past, Panamá will continue benefiting during 2014-2020 from the EU sub-regional programme for Central America (€120 million). It must be noted that the focal sectors of cooperation for the sub-regional have evolved for this period. In the past, cooperation was mainly focused on social cohesion and economic growth, while the new programming exercise responds to the emerging needs of the region, namely security and impunity, climate change and private sector development as a vehicle for generating employment opportunities.