Panama will maintain its 2026 fiscal-deficit ceiling despite the costs arising from last week’s powerful earthquake, the Ministry of Economy and Finance has announced.
The ministry said on October 11 that it would not ask the National Assembly for a temporary waiver of the limits established under Panama’s fiscal-responsibility law. The deficit for the non-financial public sector will remain capped at 3.5% of gross domestic product.
The clarification follows Cabinet Resolution No. 108, adopted on October 10 as part of the nationwide state of emergency. That resolution authorized the ministry to request a temporary suspension of the fiscal limits, leading to expectations that the government would seek additional spending room.
The ministry said the authorization does not oblige it to make such a request and that the expected emergency costs can be accommodated within the existing limit.
Panama will first seek to finance the response through insurance coverage, private and international donations, and non-reimbursable assistance. Concessional borrowing would be considered only if necessary.
The government has authorized up to $100 million for emergency works, supplies and reconstruction. The ministry emphasized that this figure is a ceiling rather than an automatic expenditure. Actual disbursements will depend on verified needs.
The funds will be administered through a trust at Banco Nacional de Panamá. Payments require review by the Comptroller General, while unused money must be returned to the Treasury.
Final reconstruction costs remain unknown. More than 200 aftershocks had been recorded by Sunday evening, although the University of Panama’s Institute of Geosciences said their strength and frequency were decreasing.
Emergency authorities have reported damage to nearly 900 homes. At least 14 bridges were affected in Veraguas and Los Santos, while inspections of schools, hospitals and other public buildings remain underway.
The United States has pledged $5 million and is sending a 20-member team to assist with infrastructure evaluations and emergency operations.
Sources: TVN, Reuters
