Obligation Paname 9.375% ( US698299AS33 ) en USD

Paname

100 % ▼

Panama

US698299AS33 ( en USD )

9.375% par an ( paiement semestriel )

15/01/2023 - Obligation échue

Prospectus brochure de l'obligation Panama US698299AS33 en USD 9.375%, échue

100 000 USD

756 000 000 USD

698299AS3

L'Obligation émise par Paname ( Panama ) , en USD, avec le code ISIN US698299AS33, paye un coupon de 9.375% par an.
Le paiement des coupons est semestriel et la maturité de l'Obligation est le 15/01/2023

Prospectus Supplement
424B3 1 d424b3.htm PROSPECTUS SUPPLEMENT
Table of Contents
Filed Pursuant to Rule 424B3
Registration Number 333-14262

Prospectus Supplement
(To prospectus dated January 11, 2002)

US$430,000,000

Republic of Panama

9.375% Global Bonds Due 2023

Interest Payable January 16 and July 16

The global bonds will bear interest at the rate of 9.375% per year, accruing from December 3, 2002. The global
bonds will mature on January 16, 2023. The global bonds are not redeemable prior to maturity.

The global bonds are direct, unconditional and unsecured obligations of Panama.

Application has been made to list the global bonds on the Luxembourg Stock Exchange.

Neither the Securities and Exchange Commission nor any state securities commission has approved or
disapproved of these securities or determined the adequacy or accuracy of this prospectus
supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.

Per Global Bond
Total
Public Offering Price

98.857% $425,085,100
Commissions

0.650% $ 2,795,000
Proceeds to Panama (before net expenses)

98.207% $422,290,100

Panama will issue the global bonds through the book-entry system of the Depository Trust Company on or
about December 3, 2002.

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Prospectus Supplement
You should read this prospectus supplement and the accompanying prospectus carefully before you invest.

Joint Lead Managers and Bookrunners
JPMorgan
Morgan Stanley

The date of this prospectus supplement is November 22, 2002.
Table of Contents

You should rely only on the information contained in or incorporated by reference in this prospectus supplement and the
accompanying prospectus. The Republic of Panama has not authorized anyone to provide you with different information.
The Republic of Panama is not making an offer of these securities in any state where the offer is not permitted. You should
not assume that the information provided by this prospectus supplement or the accompanying prospectus is accurate as of
any date other than the date on the front of this prospectus supplement.

TABLE OF CONTENTS

Prospectus Supplement

About This Prospectus Supplement

S-2
Forward-Looking Statements

S-3
Summary

S-4
Use of Proceeds

S-6
Recent Developments

S-6
Description of the Global Bonds

S-9
Global Clearance and Settlement

S-12
Taxation

S-15
Underwriting

S-18
Validity of the Global Bonds

S-19
Official Statements and Documents

S-20
General Information

S-20
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Prospectus Supplement
Prospectus

Where You Can Find More Information

2
Use of Proceeds

2
Debt Securities

3
Warrants

12
Governing Law

13
Jurisdiction and Enforcement

13
Plan of Distribution

14
Validity of the Securities

15
Official Statements

15
Authorized Representative

16
Glossary

16

S-1
Table of Contents

ABOUT THIS PROSPECTUS SUPPLEMENT

The Republic of Panama, having made all reasonable inquiries, confirms that this prospectus supplement and the
accompanying prospectus contain all information with respect to Panama and the global bonds which is material in the
context of the issue and offering of the global bonds, and that such information is true and accurate in all material respects
and is not misleading, that the opinions and intentions expressed herein are honestly held and that, to the best of Panama's
knowledge and belief, there are no other facts the omission of which would make any such information or the expression
of any such opinions and intentions materially misleading. Panama accepts responsibility accordingly.

You should rely on information provided or incorporated by reference in this prospectus supplement and the
accompanying prospectus. Panama has not authorized anyone else to provide you with any other information. You should
not rely on any other information in making your investment decision.

Panama is not offering to sell or soliciting offers to buy any securities other than the global bonds offered under this
prospectus supplement, nor is Panama offering to sell or soliciting offers to buy the global bonds in places where such
offers are not permitted by applicable law. You should not assume that the information in this prospectus supplement or
the accompanying prospectus, or the information Panama has previously filed with the Securities and Exchange
Commission (the "Commission") and incorporated by reference in this prospectus supplement and the accompanying
prospectus, is accurate as of any date other than their respective dates. Panama's economic, fiscal or political
circumstances may have changed since such dates.

The global bonds described in this prospectus supplement are debt securities of Panama being offered under Registration
Statement No. 333-14262 filed with the Commission under the U.S. Securities Act of 1933; the accompanying prospectus
is part of the registration statement. The accompanying prospectus provides you with a general description of the securities
that Panama may offer, and this prospectus supplement contains specific information about the terms of this offering and
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Prospectus Supplement
the global bonds. This prospectus supplement also adds, updates or changes information provided or incorporated by
reference in the accompanying prospectus. Consequently, before you invest, you should read this prospectus supplement
together with the accompanying prospectus as well as the documents incorporated by reference in this prospectus
supplement and the accompanying prospectus. Those documents contain information regarding Panama, the global bonds
and other matters. The registration statement, any post-effective amendments thereto, the various exhibits thereto, and the
documents incorporated therein by reference, contain additional information about Panama and the global bonds. All such
documents may be inspected at the office of the Commission. Certain terms used but not defined in this prospectus
supplement are defined in the prospectus.

References to "US$", "U.S.$" or "$" in this prospectus supplement are to U.S. dollars.

References to the "Republic" or "Panama" are to the Republic of Panama.

The distribution of this prospectus supplement and the accompanying prospectus and the offering of the global bonds in
certain jurisdictions may be restricted by law. Persons who receive copies of this prospectus supplement and the
accompanying prospectus should inform themselves about and observe any such restrictions. See "Plan of Distribution" in
this prospectus supplement.

Panama is a foreign sovereign state. Consequently, it may be difficult for investors to obtain or realize upon judgments of
courts in the United States against Panama. See "Jurisdiction and Enforcement" in the accompanying prospectus.
S-2
Table of Contents

FORWARD-LOOKING STATEMENTS

Panama has made forward-looking statements in this prospectus supplement. Statements that are not historical facts are
forward-looking statements. These statements are based on Panama's current plans, estimates, assumptions and
projections. Therefore, you should not place undue reliance on them. Forward-looking statements speak only as of the date
they are made, and Panama undertakes no obligation to update any of them in light of new information or future events.

Forward-looking statements involve inherent risks. Panama cautions you that many factors could affect the future
performance of the Panamanian economy. These factors include, but are not limited to:

·
external factors, such as:

·
the interest rates in financial markets outside Panama;

· the impact of hostilities or political unrest in other countries that may affect international trade,

commodity prices and the global economy; and

· the decisions of international financial institutions, such as the International Monetary Fund, regarding

the terms of their financial assistance to Panama; and
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·
internal factors, such as:

·
general economic and business conditions in Panama; and

·
the ability of the Panamanian government to secure the adoption of key economic reforms.

S-3
Table of Contents

SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed
information appearing elsewhere in this prospectus supplement and the accompanying prospectus.

Issuer

Republic of Panama.
Title of Security

9.375% Global Bonds Due 2023.
Aggregate Principal Amount

$430,000,000.
Maturity Date

January 16, 2023.
Interest Rate

9.375% per annum.
Issue Price
98.857%, plus accrued interest from December 3, 2002, if

any.
Interest Payment Dates

January 16 and July 16 of each year, starting July 16, 2003.
Form
The global bonds will be represented by one or more
book-entry securities in fully registered form, without
coupons, which will be registered in the name of, and
deposited with a custodian for, The Depository Trust
Company ("DTC"). Beneficial interests in the global bonds
will be shown on, and transfer thereof will be effected only
through, records maintained by DTC and its participants,
unless certain contingencies occur, in which case the global
bonds will be issued in definitive form. (See "Description
of the Global Bonds--Definitive Global Bonds" in this

prospectus supplement.)
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Book-Entry System
Upon the issuance of the global bonds as book-entry
securities, DTC or its nominee will credit on its book-entry
registration and transfer system the respective principal
amounts of the global bonds represented by the book-entry
securities to the accounts of institutions ("DTC
participants") that have accounts with DTC or its nominee
that the underwriters designates. Ownership of beneficial
interests in the book entry securities will be limited to DTC
participants or persons that may hold interests through
DTC participants. Ownership of beneficial interests in the
book-entry securities will be shown on, and the transfer of
that ownership will be effected only through, records
maintained by DTC or its nominee (with respect to
interests of DTC participants) and on the records of DTC
participants (with respect to interests of persons other than
DTC participants). Investors may elect to hold interests in
the global bonds through any of DTC, Clearstream
Banking, société anonyme ("Clearstream, Luxembourg") or
the Euroclear System ("Euroclear") if they are participants
of such systems, or indirectly through organizations which

are participants in such systems.
Payment of Principal and Interest
Principal and interest on the global bonds will be payable
in U.S. dollars or other legal tender of the United States of
America. As long as the global bonds are in the form of
book-entry securities, payment of principal and interest to

investors shall be made through the facilities of DTC.
S-4
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Ranking
The global bonds will constitute direct, unconditional and
general obligations of Panama and will rank equally,
without any preference among themselves, with any other
existing and future unsecured and unsubordinated
indebtedness of Panama. (See "Description of the Global
Bonds--General Terms of the Global Bonds" in this
prospectus supplement and "Debt Securities-- Status of the

Debt Securities" in the prospectus.)
Negative Pledge
The global bonds will contain certain covenants, including
restrictions on the incurrence of certain liens. (See "Debt

Securities--Negative Pledge" in the prospectus.)
Events of Default
The global bonds will contain events of default, the
occurrence of which may result in the acceleration of
Panama's obligations under the global bonds prior to
maturity. (See "Debt Securities--Default, Acceleration of

Maturity" in the prospectus.)
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Listing
Application has been made to list the global bonds on the

Luxembourg Stock Exchange.
Fiscal Agent
The global bonds will be issued pursuant to a fiscal agency
agreement, dated as of September 26, 1997, between
Panama and JPMorgan Chase Bank, as fiscal agent, paying

agent, transfer agent and registrar.
Taxation
For a discussion of the Panamanian and United States tax
consequences associated with the global bonds, see
"Taxation--Panamanian Taxation" and "--United States
Taxation" in this prospectus supplement and "Debt
Securities--Tax Withholding" in the prospectus. Investors
should consult their own tax advisors in determining the
foreign, U.S. federal, state, local and any other tax
consequences to them of the purchase, ownership and

disposition of the global bonds.
Governing Law
The laws of the State of New York will be the governing
law except with respect to the authorization and execution
of the global bonds, which will be governed by the laws of

the Republic of Panama.
Further Issues
Panama may, without the consent of the holders of the
global bonds, create and issue additional securities with the
same terms and conditions as those of the global bonds (or
with the same terms and conditions except for the amount

of the first interest payment and issue price).
Clearing Reference Numbers

The clearing reference numbers for the global bonds are:

ISIN: US698299AS33

Common Code: 015897309

CUSIP: 698299AS3
S-5
Table of Contents

USE OF PROCEEDS

The net proceeds from the sale of the global bonds will be approximately $422,165,100 after deduction of the underwriting
commission and the net expenses payable by Panama, estimated to be $125,000. Panama will use a portion of the net
proceeds to purchase from the underwriters $276 million aggregate face amount of Republic of Panama
dollar-denominated Interest Reduction Bonds due 2014. Panama will also use a portion of the net proceeds to repurchase
$59.754 million aggregate face amount of the Republic's dollar-denominated Collateralized Fixed Rate Bonds due 2019,
USD Par Series A and Series B. Panama will use the balance of the proceeds to pre-fund public debt amortization for 2003
and for the repurchase or exchange of external bonds.
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RECENT DEVELOPMENTS

The information included in this section supplements the information about Panama contained in Panama's annual report
for the year ended December 31, 2001 on Form 18-K filed with the Commission on September 30, 2002, as amended. To
the extent the information in this section is inconsistent with the information contained in such amended annual report, the
information in this section replaces such information. Initially capitalized terms used in this section have the respective
meaning assigned to those terms in such amended annual report.

The Economy

The Republic projects GDP growth for 2002 to be in the range of 1.0% to 1.5%, with the first quarter of 2002 registering
growth of 0.8% compared with the first quarter of 2001, and the second quarter of 2002 registering growth of 1.1%
compared with the second quarter of 2001. Inflation for the first half of 2002 is estimated to be 0.8%, and the Republic
anticipates that inflation for 2002 will be between 0.5% and 1.0%. The consolidated non-financial public sector balance is
expected to show a deficit of $301 million (2.7% of GDP) in 2002.

Panama has been affected by the general global economic downturn, and economic indicators continue to be mixed.
Services, including government services, rose 5.6% and commerce rose 4.4% in the second quarter of 2002 year on year,
but industrial production through June 30 fell 8% year on year, and the Colón Free Trade Zone and banking also showed
declines during the same period of 9.6% and 3.6%, respectively, primarily due to financial difficulties in South American
countries.

Exports of goods and services for the first half of 2002 decreased by 4.0% compared with the same period in 2001.
Imports for the first half of 2002 decreased by 3.9% compared with the same period in 2001.

In the first half of 2002, the National Dialogue (the discussions among government, the business sector, representatives of
workers and opposition parties) resulted in an agreement on the use of the fund in which proceeds generated from certain
privatizations are deposited (the "Development Trust Fund"). The agreement is reflected in the Fiscal Responsibility Law,
which was signed on May 7, 2002. The law sets targets for the ratio of total debt to GDP at 50% and the ratio of external
debt to GDP at 35% and provides a mechanism to meet those targets over the medium term. To facilitate debt
management, the law allows the Republic to invest up to 100% of the principal of the Development Trust Fund in
Panamanian bonds. The law also provides for several large infrastructure projects, which are expected to stimulate
employment starting in 2003. These projects include the widening of the Inter-American highway, irrigation projects, and
projects aimed at increasing the supply of potable water.

On January 14, 2002, the Ministry of Economy and Finance announced the budget for 2002, invoking the mechanisms of
Article 270 of the Constitution of Panama, which allowed the 2001 budget to be automatically extended as the 2002
budget with certain required adjustments. Under this procedure, all items included in the Republic's 2002 budget proposal
relating to contractual obligations, debt service and investment as previously authorized were automatically approved. The
2002 budget contemplates total expenditures of $6,135 million, an amount that includes both the spending required by
Article 270 and approximately $232 million of spending cuts from the 2001 budget as originally approved.

In February 2002, the Government implemented a spending cut of $355 million. In the first half of 2002, the non-financial
public sector registered a deficit of 2.7%, mainly attributable to an increase in medical services and
S-6
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Table of Contents
personnel in the social security system. In June 2002, the Government implemented an additional spending cut of $150
million, and on June 26, 2002 the Government implemented a hiring freeze for the public sector, with the aim of achieving
a fiscal deficit target of between 1.0% and 1.5% of GDP for 2002. In order to ensure compliance with the Fiscal
Responsibility Law, on September 18, 2002 the cabinet announced spending cuts totaling $190.7 million to be spread
broadly among central government operations and other public sector entities (decentralized institutions).

The budget for 2003 was submitted to the National Assembly on September 25, 2002, and was approved by the National
Assembly on October 15, 2002. The 2003 budget contemplates total expenditures of $5,493 million. The 2003 budget was
planned in accordance with the Fiscal Responsibility Law. Consequently, the 2003 budget is structured on a cash
execution basis unlike budgets in previous years, which were formulated on a commitment execution basis. The
Government believes that cash execution basis is an improved tool for managing the Government's public finances. The
2003 budget includes investment projects which will be executed within the 2003 fiscal period. Under the 2003 budget, the
total financial needs for the year are approximately $600 million, which include approximately $400 million in public debt
amortizations, plus the anticipated deficit for 2003.

The Government remains committed to carrying out tax reform. On November 8, 2002, the National Dialogue began
discussions regarding a proposed tax reform. The tax reform proposal is structured around two goals. The first is to
improve administrative and operating procedures to increase efficiency in tax collection. The second is to broaden the tax
base by extending the value-added tax to services and enacting an additional real estate tax. The tax proposal would also
increase the exemption for salaries from the current level of $300 per month to $800 per month.

Panama has announced $145 million in investments in various water projects over the next two years to strengthen
IDAAN, the national water company. Panama has also announced a $160 million project to build a second bridge over the
Panama Canal.

Panama has decided not to privatize the Tocumen International Airport located outside Panama City. The Government
instead plans to restructure the operations of the airport, as a state-owned company, in order to improve efficiency.

As of September 30, 2002, Panama's external debt was equal to $6,199.36 million, down from $6,261.81 million as of
December 31, 2001. The ratio of external debt to GDP as of September 30, 2002 was 55.0%.

In an effort to promote the development of Panama's capital market, in 2002 the Government initiated a program of
Treasury Note issuances. In five monthly auctions ending on November 1, 2002, Panama has issued approximately $160
million of 7.25% Treasury Notes due 2005.

On January 16, 2002, Panama issued $180 million principal amount of its 9.375% Global Bonds due 2012 in exchange for
warrants that Panama had issued previously in connection with its July 13, 2001 tender offer. On July 19, 2002, Panama
issued $150 million principal amount of its 9.375% Global Bonds due 2012 in a reopening of that issue. On September 19,
2002, Panama issued $170 million principal amount of its 9.375% Global Bonds due 2012 in an additional reopening of
that issue. A portion of the September reopening was used to repurchase external debt.

In July 2000, Panama entered into a $30.0 million loan agreement with the International Commercial Bank of China, the
proceeds of which are intended to be used to decrease poverty levels. The final three disbursements were made in one
payment of $22.5 million in June 2002.

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Political Developments

On September 1, 2002, the Government regained a working majority in the National Assembly on key economic issues.
The Government remains committed to carrying out tax reform and social security reform, and anticipates pushing for tax
reform and social security reform in the National Dialogue and using its working majority in the National Assembly to
obtain passage of the resulting draft legislation. The Government has asked the National Dialogue to focus first on tax
reform.
S-7
Table of Contents

International Trade

In April 2002, Panama entered into the Panama-El Salvador Free Trade Pact, which covers about 85% of both countries'
output. This agreement is subject to ratification by both countries. In addition, Panama is currently negotiating bilateral
trade agreements with each of Guatemala, Honduras and Costa Rica. Panama is also negotiating bilateral trade agreements
with each of Nicaragua and the Dominican Republic. Panama expects to enter into a bilateral trade agreement with Mexico
in 2003. Panama also negotiated an agreement in principle with Costa Rica, El Salvador, Guatemala, Honduras and
Nicaragua to work towards a Central American free trade zone by 2005. Panama has submitted this agreement to the
National Assembly for ratification. Panama expects that the countries will sign this agreement in 2003.

In June 2002, Panama announced the creation of the Baru Free Trade Zone, located in the District of Baru, in the western
province of Chiriqui. The objective of the creation of the Baru Free Trade Zone is to facilitate commercial access to and
from markets in the Pacific, Central America, Mexico and the West Coast of the United States.

In April 2002, the Organization for Economic Cooperation and Development (OECD) removed Panama from the list of
countries that it considers uncooperative tax havens. As part of an agreement with the OECD, Panama has pledged to
improve the transparency of its tax system, and to provide certain tax information to the OECD member countries.

The Unit of Financial Analysis (UAF) of Panama has signed letters of understanding with regulatory bodies in eleven
other countries in Latin America and the Caribbean to prevent money laundering. The letters of understanding pave the
way for greater cooperation between countries in order to facilitate the exchange of information.

IMF Relationship

The IMF concluded its Article IV review of Panama in July 2002. IMF and Government representatives met in April 2002
following the expiration of Panama's most recent stand-by agreement in March 2002. The Government is involved in
ongoing conceptual discussions with the IMF about a possible new standby facility.

The Panama Canal

The Panama Canal Authority announced that preliminary estimates for toll revenues for fiscal 2002 reached a record
$588.8 million, an increase of 1.6% over fiscal 2001. Toll revenues for fiscal 2001 were $573.6 million, a decline of 1.4%
over fiscal 2000. In June 2002, the Panama Canal Authority announced proposed changes to the existing toll structure,
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Document Outline

Local Disk
- #1">Prospectus Supplement