The report Fiscal Panorama of Latin America and the Caribbean 2026 noted that the primary balance of the Panamanian central government decreased from a deficit of 4.7 percent of GDP in 2024 to 2.2 percent last year.

The study attributes these results, in regional terms, to fiscal consolidation measures adopted by the governments to contain debt growth.

However, it warns that these processes can have negative effects when they rely on cuts in public investment, subsidies, or transfers, due to their potential impact on social welfare and medium- and long-term economic growth.

In the case of Panama, the regional organization highlights the significant increase in income tax revenue withheld from payroll, partly due to measures aimed at strengthening employer oversight.

It also mentions extraordinary growth in capital gains for the sale of assets, associated with substantial acquisitions of shares in companies in the financial, industrial, and automotive sectors, within a context of intense merger and acquisition activity.

ECLAC’s analysis places Panama on a path toward fiscal correction by 2025, but points to the challenges of reducing the deficit without sacrificing strategic investment and strengthening tax collection.

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