Panama closed 2025 with a combination of economic growth and fiscal consolidation, reinforcing its macroeconomic stability. The economy grew by around 4%, while the fiscal deficit of the non-financial public sector (NFPS) fell sharply from 6.23% of GDP in 2024 to 3.68% in 2025, outperforming the target of 4% established by the Fiscal Responsibility Law.
According to the report by the Ministry of Economics & Finance (MEF) earlier this month, Panama’s economy showed strong resilience amidst a challenging international environment and pension system reforms. The growth was driven by the logistics, financial services, commerce, and construction sectors and one of the highest in Latin America.
The primary balance of the Non-Financial Public Sector strengthened by $2.267 billion, narrowing the deficit from -3.32% of GDP to -0.67%. This improvement was driven by increased revenue collection rather than relying on debt and more disciplined expenditure control.
At the same time the central government’s current savings shifted from a negative position to a surplus of 0.04% of GDP by year-end.
Reduced Borrowing Costs
On the debt side, Panama recorded a 54% decline in its country risk premium, while the weighted average effective interest rate on public debt dropped below 5%, ending the year at 4.97%. The lower financing costs generated substantial interest savings and reduced pressure on public accounts.
Find out more in the press release from MEF.