Habemus budget

PANAMA - In Brief 29 Oct 2025 by Marco Fernandez

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October 29, 2025 Approval: amounts and process The Legislative Assembly approved the General State Budget on Thursday, October 23 just before October 31, the date on which the ordinary period of legislative sessions ends. The previous year, the budget, despite a controversy between the Executive and the Legislative over fiscal figures, was also approved in October. Legislators thus avoided extraordinary sessions. The overall Budget was approved for US 34,900 million, but as we have pointed out before, this figure it includes transfers and between agencies and the operations of state-owned banks. For this reason, we prioritize for the analysis the data of the Central Government (US 17,523 million) for the aspects related to debt and financing and we concentrate most of the analysis on the non-financial public sector (US 30,072 million) in reference to the fiscal law. As expected, the budget confirms the compliance with the LRSF for 2026 that establishes a deficit cap of 3.5% of nominal GDP (2026 at US 92,400 million with real growth of 4% and a deflator of 1%). For the markets, the numbers “below the line” showed gross financing needs of US 8,649 million, 62.4% higher than in the 2025 budget. Local debt issuances will be only US 128 million (92% less than in 2025) and external debt, US 8,4891 million, 160.1% more than the previous year, which suggests a change of direction in debt policy. The change in net external debt of US 6,517 million is higher than the external interest that we estimated for 2026 in the order of US 3,000 million. Therefore, the Government will continue to be an important source of external financing for the economy. The effective interest rate on ...