President Barack Obama and Cuban leader Raul Castro are set to hold a historic meeting on the sideline of the Summit of the Americas in Panama, as they seek to repair diplomatic relations severed for over half a century.

A day after exchanging handshakes, Obama and Castro alongside dozens of leaders from the American hemisphere, gathered in the capital Panama City on Saturday for a roundtable discussion, where the two leaders also addressed US-Cuba relations.

"This shift in US policy represents a turning point for our entire region," Obama said. "The fact that President Castro and I are both sitting here today marks a historic occasion."

Obama said that while differences between US and Cuba will remain, "If we continue to move forward and seize this momentum, in pursuit of mutual interests, then better relations between the United States and Cuba will create new opportunities for cooperation across the region."

In response, Castro said that "it was good" that the Obama administration "is not trapped in the ideology of the past."

But he also said that he will not allow Cuba "to be colonised again" and that his country will not be "bought off."

As he praised Obama as "an honest man", Castro said "every US president before him is to blame" for making Cuba suffer.

Al Jazeera's diplomatic editor James Bays, who is reporting from Panama City, said that the meeting between Obama and Castro is expected after the group session, when leaders take a break for lunch.

The meeting is not "formally on the schedule" of events in the summit, but all indications point to a "historic moment" are and there is not timing given for the meeting," said Bays.

High expectations

There are expectations that Obama will use the meeting to announce his decision to remove Cuba from the US list of state sponsors of terrorism.

On Thursday, Obama suggested an announcement was imminent when he said that the State Department's lengthy review of the designation was finally complete.

Cuba has eagerly sought that move, and Cubans are hoping that their economy will benefit from the decision, our correspondent said.

The US has long ago stopped accusing Cuba of conducting terrorism, and Obama has indicated that he is ready to take Cuba off the list.

Mending ties with Cuba could form a cornerstone in the foreign policy legacy for Obama, with Latin America a rare bright spot for the president.

Obama and Raul Castro had shook hands once before, at the funeral of South African President Nelson Mandela, but expectations are higher this time following Obama's decision in December to begin talks on restoring relations with Cuba that were severed in 1961.

Al Jazeera