S&P Global Ratings has maintained Panama’s sovereign credit rating at BBB-, preserving the country’s investment-grade status with the agency while leaving it at the lowest level within that category.
The rating agency affirmed Panama’s BBB- long-term and A-3 short-term ratings in local and foreign currency on September 22. It also retained a stable outlook, indicating that it does not currently expect to raise or lower the long-term rating if its economic and fiscal projections hold.
The decision is not an upgrade. S&P lowered Panama from BBB to BBB- in November 2024 because of rising debt-servicing costs. A further reduction to BB+ would place the country below investment grade under S&P’s scale.
S&P said Panama’s fiscal deficit should decline during 2026 and 2027, helping stabilize government debt and interest payments. It cited continuity in economic policy, improved revenue collection, spending restraint and changes to Panama’s fiscal-responsibility framework.
The agency also described the pension reform approved in March 2025 as an important political and fiscal achievement.
S&P expects Panama’s economy to grow approximately 4.5% in 2026, followed by growth of close to 4% annually from 2027 through 2029. It identified Panama Canal activity, private construction, aviation and tourism as important sources of expansion.
However, the assessment does not suggest that Panama’s fiscal risks have disappeared. Government debt and the country’s external debt remain at historically high levels, and elevated interest costs continue to constrain the rating.
The affirmation matters because sovereign ratings influence the interest demanded by investors when Panama issues international bonds. They can also affect financing conditions for state entities, banks and infrastructure projects.
Panama’s investment-grade position varies among rating agencies. Fitch currently assigns the country a BB+ rating, one level below investment grade. S&P’s decision therefore preserves an important source of market confidence but does not represent a universal restoration of investment-grade status.
Sources: S&P Global Ratings
