Updated June 6, 2024

Panama: Country Overview and U.S. Relations

Panama’s central location in the Americas (linking North a Panamanian Supreme Court ruling that the country’s new
and South America), large financial sector, use of the U.S. contract with a Canadian mining firm was unconstitutional.
dollar as currency, and transportation infrastructure—
especially the Panama Canal—make the country a global
trade hub. Panama is in the midst of a political transition
Panama at a Glance
following general elections on May 5, 2024, as conservative Population: 4.45 million (2022, IMF est.)
President-elect José Raúl Mulino is due to replace outgoing Area: 29,120 square miles, slightly smaller than South
center-left President Laurentino “Nito” Cortizo on July 1. Carolina (CIA World Factbook)
Given Panama’s strategic importance to U.S. commerce Gross Domestic Product (GDP): $87.24 billion (2024,
and security, some Members of Congress have sought to current prices, projected, IMF)
strengthen U.S.-Panama relations.
Per Capita GDP: $19,350 (2024, current prices, projected,
Figure 1. Map of Panama IMF)
Key Trading Partners: United States (20.1%), China
(15.0%), Japan (4.3%), Mexico (3.7%), and Costa Rica (2.5%)
(2022, total merchandise trade, TDM)
Sources: Central Intelligence Agency (CIA) World Factbook,
International Monetary Fund (IMF), Panama National Institute
of Statistics, as presented by Trade Data Monitor (TDM).

2024 Elections
President-elect José Raúl Mulino, who ran as head of a
coalition of two conservative parties, Realizing Goals (RM)
and Alliance, captured 34.3% of the vote in general
elections on May 5, 2024. His inauguration to a five-year
Source: CRS.
term is scheduled for July 1, 2024.
Mulino had been the 2024 vice-presidential running mate of
Political and Economic Environment former President Ricardo Martinelli (2009-2014). The
Panama reestablished representative democracy in 1989, Supreme Court barred Martinelli from running for the
following a U.S. military intervention that ousted the presidency after upholding a lower court’s conviction that
military regime of General Manuel Antonio Noriega. Since sentenced him to more than 10 years in prison on money
then, Panama has held regular free and fair elections, and laundering charges. Nicaraguan President Daniel Ortega
governments generally have respected civil liberties and subsequently granted Martinelli political asylum; Martinelli
political rights, though corruption has remained a challenge. has been residing in the Nicaraguan embassy in Panama
Outgoing President Cortizo, of the Democratic City since February 2024. Mulino himself faced a
Revolutionary Party (PRD), took office in July 2019 after constitutional challenge, which Panama’s Supreme Court
narrowly winning the May 2019 presidential elections with rejected days before the election took place.
33% of the vote. Cortizo’s PRD entered into a coalition Panamanians also elected members of the 71-seat National
with a smaller party to secure a small legislative majority. Assembly in the May general elections. No party won a
Cortizo faced a series of political and economic setbacks simple majority. Mulino’s RM and Alliance parties together
over the course of his term, contributing to an 88% won 15 seats; independent representatives won 21 seats in
disapproval rating in February 2024, according to one poll. the Assembly. The RM and Alliance parties are working to
The pandemic took a toll on Panama’s services-oriented develop a majority coalition in the legislature with
economy, which contracted by 17.9% in 2020 due to the representatives from other parties. Once in office, Mulino
slowdown in international commerce and shipping, has pledged to focus on stimulating the economy,
according to the International Monetary Fund (IMF). improving the social security system, and closing the
Growth returned in 2021, with gross domestic product Darién Gap to irregular migration through Panama.
(GDP) expanding by 15.8%, and continued in 2022 with an
expansion of 10.8%. GDP growth slowed to an estimated U.S.-Panama Relations
6.0% in 2023, and the IMF projects slower GDP growth of Close U.S.-Panamanian relations stem in part from the
approximately 2.5% in 2024. The decrease is due in part to extensive linkages developed when the Panama Canal was
Cortizo’s December 2023 decision to close the profitable under U.S. control (1914-1999) and Panama hosted major
Cobre Panamá copper mine following popular protests and U.S. military installations. In February 2024, the United

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 Panama: Country Overview and U.S. Relations

States and Panama reinforced their mutual commitment to 520,000 migrants entered through the Darién in 2023, more
bilateral security cooperation under the pillars of border than 60% of whom were Venezuelan nationals. Panama
security, citizen security, cyber security, and maritime recorded more than 139,000 migrants crossing into Panama
security. Some Members of the 118th Congress have sought from January to April 2024, almost 10% more than the
to strengthen the partnership by advocating increased same period in 2023.
cooperation on commercial, migration, and security Panama also cooperates closely with the United States on
matters. S.Res. 357, for example, calls on the President to migration matters, including to detect and detain potential
engage with Panama and other members of the Alliance for
security threats. H.Rept. 118-146 directs the Secretary of
Development in Democracy (ADD; Costa Rica, Dominican State to submit a report on opportunities to support Panama
Republic, and Ecuador) to advance shared priorities and in its management of migrant flows.
U.S. economic and security interests.
In November 2017, Panama became the first country in Drug Trafficking and Money Laundering
Latin America to join the People’s Republic of China’s According to the State Department’s 2024 International
(PRC’s) Belt and Road Initiative, which aims to develop Narcotics Control Strategy Report (INCSR), Panama’s
China-centered global infrastructure, transportation, trade, location makes it a major transit country for cocaine
and production networks. Some U.S. military leaders have smuggling by drug trafficking organizations; up to 40% of
expressed concerns that the presence of PRC-linked cocaine produced in Colombia reportedly passes through
companies along the Panama Canal may present a security Panama. According to the INCSR, Panama is among the
vulnerability for the United States. The House report U.S. government’s most capable partners in the region in
(H.Rept. 118-146 to H.R. 4665) accompanying the House- countering illicit narcotics.
passed Department of State, Foreign Operations, and The United States and Panama also collaborate on efforts to
Related Programs (SFOPS) Appropriations Act, 2024 (P.L. combat financial crimes, including through a bilateral Anti-
118-47) echoes those concerns. The Senate report (S.Rept. Money Laundering and Anti-Corruption Task Force,
118-71 to S. 2438) accompanying the SFOPS bill for operating since May 2021. In October 2023, Panama was
FY2024 directs the Secretary of State to report to the removed from the Financial Action Task Force’s “gray list”
Appropriations Committees on PRC influence in Panama. of countries deemed to have insufficient efforts to combat
Trade and Investment money laundering.
A bilateral free trade agreement (FTA) that entered into Panama Canal Concerns
force in 2012 (P.L. 112-43) has significantly liberalized The Panama Canal is responsible for more than 6% of
trade between the United States and Panama. As Panama
Panama’s GDP, with more than 14,000 vessel transits in
has a primarily services-based economy, it runs a large 2023. Since fall 2023, the El Niño climate phenomenon has
merchandise trade deficit with the United States. In 2023, resulted in severe drought conditions in Panama. Record-
the United States exported $11.2 billion in goods to Panama
low water levels led to the first-ever restrictions on the
and imported $527 million in goods, according to the U.S. number of daily transits through the canal, which had a
Census Bureau. U.S. services exports to Panama in 2022 typical range between 36 and 38 crossings prior to the
totaled $2.6 billion, and imports totaled $2.4 billion.
drought. As of June 2024, daily vessel transits are expected
Over the past two years, the United States and Panama have to increase to 32 crossings per day, up from the 22 daily
collaborated on efforts to strengthen supply chains. This has crossings in December 2023. Some 72% of transits through
included multilateral cooperation under the Americas the canal are either toward or away from U.S. ports,
Partnership for Economic Prosperity, a regional integration according to the U.S. State Department.
initiative, and the U.S.-ADD Consultative Dialogue on
Supply Chains and Economic Growth. In July 2023, the U.S. Assistance
Biden Administration announced a bilateral partnership The United States provides foreign assistance to Panama
with Panama to explore opportunities to strengthen the across a number of sectors, including border security, drug
global semiconductor supply chain under the CHIPS Act of trafficking, and health services.
2022 (H.R. 4346). H.Rept. 118-146 encourages the U.S.
International Development Finance Corporation to In FY2023, the Biden Administration requested $1.2
prioritize infrastructure and port projects to develop secure million in bilateral funding, including $500,000 for
supply chains in Panama and other ADD members. Nonproliferation, Anti-terrorism, Demining, and Related
(NADR) programs and $725,000 for International Military
Migration Education Training (IMET); the Administration requested
Large-scale northward migration through the Darién Gap, a level funding for such programs in Panama for FY2025. In
stretch of dense rainforest along the border of Colombia addition to NADR and IMET funds, it is typical for Panama
and Panama, has become a humanitarian and security to receive funding through regional and global accounts.
concern for Panama and the broader region (see Figure 1). For example, in FY2023, the United States allocated $12.5
Migrants in the Darién face high risks of crime, disease, and million of Global Health Programs assistance for
injuries. Panama cooperates with Colombia and Costa Rica HIV/AIDS activities.
to regulate the flow of migrants and prosecute smugglers.
The scale of migration has challenged Panama’s border
patrol, which devotes resources to registration and Leticia Chacon, Analyst in Foreign Affairs
biometric screening of migrants and rescuing those in IF10430
distress. Panamanian officials estimate that more than

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 Panama: Country Overview and U.S. Relations

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