The Legislative Commissions are finally elected: uncertainty ahead. Steps in the right direction in fiscal results through June. Crossroads in ACP investment

PANAMA - Report 19 Aug 2025 by Marco Fernandez

The Budget Commission of the Legislative Assembly was installed on Monday, August 11. It will be chaired by Deputy Eduardo Vásquez of Cambio Democrático (CD). Minister Chapman stated that the MEF will present the budget proposal to the Commission on Wednesday, August 20; Vásquez will open the discussion around August 25. The definite structure of the budget is still weeks away from approval in the plenary.

The latest polling (July 2025) confirms the following: Mulino's popularity is low (76% unfavorability); 84% are against giving the Panama Canal back to the U.S.; there is a the right-leaning trend among voters (39% right, 23% center, 10% left); and there is also a persistently negative perception of resuming copper mining operations (pro: 17%, anti: 34%, no opinion: 46%).

The reduction of the NFPS deficit in H1 brings the MEF closer to meeting the fiscal rule (4% of GDP). The favorable outcome was mainly driven by a sharp cut in capital expenditures and higher Social Security Fund revenues following the pension reform. The projection for nominal GDP growth remains unchanged at 5%. The government projects that the 2026 NFPS budget targets can be achieved without further one-off measures, assuming 5% nominal GDP growth and public investment at 5.7% of GDP.

The construction sector (14% of GDP) is being hit by the downward adjustment of subsidized interest rates. As we noted in previous reports, in Q1—excluding transportation—the economy grew only 2.5%. This was the result of the severe impact of the copper mine closure, persistently high interest rates, lower public investment spending, and the elimination of housing subsidies, on which the residential real estate sector (and the construction sector) are heavily dependent.

Panama Canal Authority CEO Ricaurte Vásquez’s tenure will end on September 1, 2026. He may be reappointed for another seven-year term, but the decision is in the hands of the ACP's eleven members of the Board of Directors, who must decide whether to renew his mandate or appoint another CEO amid the start of six projects that will be the engines for the future of the economy.

Now read on...

Register to sample a report

Register
Sign-in
Forgot your password?
Copyright 2025 GlobalSource Partners. All rights reserved. This report is prepared for GlobalSource Partners’ clients and may not be redistributed, reproduced, stored in a retrieval system, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of GlobalSource Partners. This report is distributed simultaneously to our website and other portals used by GlobalSource Partners. The information herein was obtained from various sources and is believed to be reliable but GlobalSource Partners does not warrant its completeness or accuracy. Neither GlobalSource Partners nor any Country Analyst, officer or employee accepts any liability whatsoever for any direct, indirect or consequential damages or losses rising from any use of this report or its contents.