Panama's national economic council (Cena) has authorized the economy and finance ministry (MEF) to sign a US$400mn loan contract with Latin American development bank CAF.
The funds will be used to partially finance Panama City's metro system line 1, MEF said in a release.
Panama's metro authority signed a US$1.45bn contract in November last year with a consortium comprised of Spain's FCC and Brazil's Odebrecht to build and operate Line 1.
The 13.6km line will run from Los Andes district's San Miguelito neighborhood in the north of the city to the Albrook bus terminal in the south, with 11 stations in total.
Cena also approved US$25mn for MEF to create a financial stabilization fund earmarked for Panama City's Metrobus public transport system.
The fund will be administered by HSBC and will be used if concessionaire Tranporte Masivo de Panama hits a cashflow deficit. The fund was part of an agreement to lower fares from US$0.64 to US$0.45, the release said.