HOUSING GUARANTY PANAMA - $9 MILLION TO THE INSTITUTO DE FOMENTO HIPOTECAS ASEGURADAS (IFHA)

This final evaluation covers the period 5/74-11/80 and is based on a review of project documents. The project failed to strengthen the institutional capability of S&L"s or of BHN. Only $5.5 million of an expected $9 million mortgage portfolio was generated, and only 782 of an expected 1,200 housing units were built and sold as of 12/15/80. Although they attracted sizeable savings deposits, S&L"s could not mobilize their resources for housing investments. Indeed, S&L-sponsored housing construction has not increased in the last 10 years, in contrast to the Caja de Ahorros which, while not participating in the program as planned, expanded its housing sector role out of its own initiative and resources. A key project issue is BHN"s presentation to A.I.D. of approximately $3 million in ineligible mortgages. To address this issue, BHN deposited $1.5 million into an escrow account to finance the second phase of the Nuevo Chorillo cooperative; the mortgages generated thereby will account for nearly 33% of the outstanding balance of mortgages. The remaining mortgages will be generated through cooperative projects using BHN"s own resources. It is recommended that an agreement with BHN be secured to fund these projects and that the submission of eligible mortgages be monitored. Depending on the results of this activity, the possibility of repayment by BHN will be re-considered in 12/81. While the project was hindered by negative external factors such as Panama"s economic recession and various legal problems, the major problem was poor financial and adminstrative management. Poor project design and monitoring also were contributing factors. The project"s major lessons--which are guiding present housing efforts in Panama--are the need to conduct a complete sector evaluation prior to program design and not to overemphasize projects at the expense of institution-building.