Debt Briefing: Panama

Explanation of terms used

Term	Meaning
Sovereign debt  (also called government debt, national debt, or public debt)	The amount of money that a nation's government has borrowed from creditors, who may be domestic or foreign.
Internal debt	All debt contracted with domestic creditors, often issued in local currency or under local law.
External debt	All debt contracted with foreign creditors (= non-residents, both public and private, including commercial banks, governments or international financial institutions), often issued in foreign currency or under foreign law.
Debt swaps	An agreement in which a country restructures its debt by exchanging it for something else in order to reduce its debt burden or improve the terms of payment.
Audits of public debt	A detailed review of a government's loans to assess how much it owes, to whom, for what purpose, and whether the debt was acquired legally, transparently, and in the public interest.

History of the debt

Panama's debt history is linked to its canal and US intervention. Modern borrowing began in the 1970s under General Torrijos to finance social programs and infrastructure.¹ The debt crisis of the 1980s, exacerbated by the Manuel Noriega regime and US sanctions², led to the imposition of IMF adjustment programs that disproportionately affected the most vulnerable populations.³

Current situation of sovereign debt

Panama's debt became unsustainable in 2020 due to pandemic-related expenses, increasing by $18 billion (71%) between 2018 and 2022.⁴ Since then, debt levels have remained high due to slower economic growth and the impact of climate change on canal activity.⁴

Panama's debt in figures

Panama's outstanding debt stood at approximately US$56 billion in June 2025, a 16% increase from the previous quarter. Eighty percent of this debt is owed to non-multilateral foreign creditors, mostly private entities: banks, asset managers (such as BlackRock), and pension funds. Bilateral creditors (other countries) account for a small percentage, around 1% or 2%. The remaining 18% is held by multilateral creditors, primarily the Inter-American Development Bank, followed by the World Bank.⁵

Source: Quarterly Public Debt Report, June 2025 https://fpublico.mef.gob.pa/es

Source: Quarterly Public Debt Report, June 2025 https://fpublico.mef.gob.pa/es

Based on the Quarterly Public Debt Report, June 2025 https://fpublico.mef.gob.pa/es

Debt swaps

Debt-for-nature swaps have been used in Panama since 2003.⁶ Although the initiatives have been praised for conservation and restoration efforts, they have had no effect on Panama's debt level because they focused on a very small portion of the outstanding payment and covered only the interest on the debt, not the principal.⁷ Debt-for-nature swaps, as organized by philanthropic corporations such as The Nature Conservancy, operate primarily as a dispossession of sovereignty that moves away from the local protections of nature they claim to safeguard, converting natural habitats and carbon sinks into financial assets from which foreign investors can profit.

Debt audit

Finally, Panama's debt was never audited by the government or by Panamanian civil society. A citizen audit of the debt could establish what portion of the debt is legitimate and contributed to the well-being of the Panamanian people, and what portion is illegitimate and was appropriated by private interests against the country's interests.⁸

Debt and social conflict

Social conflicts in Panama related to debt are centered on two main cases that expose the tension between national sovereignty, environmental protection, and global financial interests.

Closure of the Cobre Panamá Mine: The main point of conflict was the Cobre Panamá mine, whose concession to the Canadian company First Quantum Minerals provoked a massive mobilization of indigenous communities such as the Ngäbe-Buglé, environmentalists, and labor unions. The protests denounced deforestation, water pollution, and the illegality of the contract.⁹ Although the collective struggle achieved a historic victory with the closure of the mine, credit rating agencies downgraded the country's rating in response, increasing the cost of borrowing.¹⁰ This action was perceived as a disciplinary measure by the financial markets against the country for prioritizing environmental protection and its sovereignty over mineral extraction.

The Role of BlackRock and Canal Sovereignty: BlackRock, the world's largest asset manager, is probably the largest private creditor of Panama's debt.¹¹ Its influence extends beyond debt, as it attempted to acquire a majority stake in the company that manages key ports of the Panama Canal. This move was interpreted by many as an action on behalf of US interests to regain influence over the canal. The situation was complicated when a Chinese market regulator challenged the deal, highlighting a geopolitical dispute between China and the US over control of this strategic asset, with the Panamanian government excluded from the negotiations.¹²

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