President José Raúl Mulino said that the achievements of his administration in a year of reorganizing the public finances, of attending to the needs of the population, and of facing the major structural problems that the country has, in particular, the critical situation of the Social Security Fund (CSS), are a reality.
This, according to Mulino, is a way of managing the economy responsibly, transparently, and in a stable manner, institutionally and fiscally in the long term.
Panama Maintains Investment-Grade Rating, Buys Time to Solve the CSS
Panama’s economy will continue to grow at more than double the regional average, the fiscal deficit will close at 4%, and international financial institutions and major credit rating agencies confirm that Panama maintains investment-grade rating. These were some of the messages President José Raúl Mulino sent yesterday in his first conference of the year to the media.
Mulino said that his administration has succeeded in reducing the fiscal deficit, rebuilding investor confidence, and creating the conditions for an economic expansion in which growth rates exceed expectations. This has been made possible by following an economic policy focused on fiscal order, maintaining strong public investment and consistency, which is why Panama maintains investment-grade rating.
“The fiscal deficit is being reduced, we are restoring confidence among investors and the Panama Canal Investment Fund, and we are creating conditions for an economic expansion where growth rates are going to exceed expectations. Panama maintains investment-grade rating because it is executing a disciplined, prudent, and consistent economic policy with fiscal order, while maintaining a strong public investment and consistency,” he explained.
Mulino noted that his government, “thanks to the joint work of my team, is laying solid foundations for an economy that is beginning to gain momentum. We are doing this with seriousness, without falling into cheap populism so that the Panamanian people do not once again pay the consequences of the irresponsible decisions of some governments.”
He added that fiscal prudence is the only responsible way to protect vulnerable sectors of the population and allow the country to remain competitive in the global economy.
Panama will Close the Year Meeting its Fiscal Deficit Target of 4%
Panama will end 2025 with a fiscal deficit of 4%, announced President José Raúl Mulino. This, he said, is an achievement since the deficit for the same period of the previous year closed at 7.5%. This represents a reduction of 3.5 percentage points of GDP, and indicates progress in the reorganization of public finances.
“It has been challenging for us to lower the deficit by three and a half points; it seems simple, but to manage the State to achieve it made this year the most difficult for me in all of my life,” he admitted.
To achieve this correction, Mulino said, “we have had to restrict expenditures, improve our tax collection system, modernize our State, and make decisions on essential investments. We have taken actions to make the State more efficient, to avoid duplication of efforts, and to strengthen internal control.”
Panama: Fiscal Responsibility Law Limits Fiscal Deficit to 4% in 2025
Panama’s Fiscal Responsibility Law limits the fiscal deficit for 2025 to 4.0%. The law, number 445 of 28 October 2024, amends law 34 of 2008 “On Fiscal Responsibility” and law 38 of 2012 “On the regulation and operation of the Panama Savings Fund”.
In addition to setting a deficit ceiling for 2025, Law 445 also establishes a downward path until 2030, when the deficit should not exceed 1.5% of nominal GDP. In this regard, the law establishes the following schedule: 4.0% for 2025, 3.5% for 2026, 3.0% for 2027, 2.5% for 2028, 2.0% for 2029, and 1.5% for 2030.
The legal limits imposed on fiscal policy are in addition to the political guidelines that the government has maintained. The minister of the presidency, Nardy Sosa, stated in October 2023: “From this government, we have said that we must reduce the deficit, and we have defined 4% as a reference figure for the years 2024-2025.”
Panama: Confidence of Investors Returns
Mulino also stated that with a more disciplined fiscal management, the confidence of investors, essential for attracting foreign capital and economic stability, has returned.
As an example of this, he said, Panama maintains investment-grade rating assigned by the three major credit rating agencies, which contradicts previous expectations that they could downgrade the country.
Moody’s Ratings agency confirmed Panama maintains investment-grade rating with a negative outlook on 13 November 2025. On 19 November, just a few days later, the agency Standard & Poor’s (S&P) also announced that it had decided to maintain Panama’s investment-grade BBB- rating with a stable outlook.
In its report, S&P stated that “Panama’s rating benefits from its policy consistency during 2024–2025 as well as its solid resilience amid past economic shocks. Over the coming years, we expect resilience to remain strong, despite an abrupt cooling in economic growth in the near term.”
Mulino said: “These are decisions that show us that we are moving in the right direction. According to the International Monetary Fund, Panama will grow at more than twice the average rate in the Americas. And beyond reaching macroeconomic parameters, the government’s priority is to improve the quality of life of our citizens.”
Panama Maintains Investment-Grade Rating amid Optimistic Economic Growth Outlook
The International Monetary Fund, World Bank, and ECLAC project real GDP growth of 4.0%, 3.9% and 4.2% for 2025, respectively. This is well above the expected growth for Latin America and the Caribbean of 2.4% in 2025 and 2.3% in 2026.
It should be noted that Panama maintains investment-grade rating amid a dynamic economic outlook driven by the logistics hub, financial services, aviation, the Panama Canal, and Trade. This is one of the reasons, as Panama maintains investment-grade rating, that it scores positively in global financial institutions’ evaluations.
Social Security Fund (CSS) and Health System Integration
President Mulino also urged the CSS and the Ministry of Health (MINSA) to accelerate the long-awaited process of the integration of their respective health systems, which, he said, must be completed by 2026.
He also announced that 2026 will be a major investment year in which thousands of new jobs will be created. He announced that the General State Budget has earmarked US$11.2 billion for public investment that will be directed to infrastructure development, water and sanitation systems, educational facilities, healthcare centers, and other priority projects.
“Those investments are already beginning to create new job opportunities for us. We are betting on the private sector, we are promoting foreign investment, and we are working hard to attract investment capital for the mega projects that the Panama Canal Authority has,” he said.
Opportunities for the Future
Mulino called on the public to be optimistic and not to listen to demagogic criticism without basis and at times, very hypocritical, of those who, he said, want the country to go backwards so that he, Mulino, can fail as president.
“I want to tell you the following. Forget the doomsayers, forget the unnecessary –and sometimes very hypocritical- criticism of those who want the country to fail so that I can fail. The country will not fail, I will not fail as president of all Panamanians,” he said.
Mulino emphasized that the jobs of the future will be technical jobs and those related to logistics. These are professions that are increasingly valued in Panama and are also well paid.