Panama debt refinancing and fiscal consolidation

In late July 2026 Panama’s Ministry of Economy and Finance carried out an early refinancing of two euro‑denominated sovereign loans worth €2.4 billion, extending maturities to 2031 and fixing coupons at 4.83 % and 4.67 %. The operation, arranged with Santander and Merrill Lynch‑Bank of America, also added €500 million of fresh financing under the same terms to fund the 2026 fiscal budget, reducing exposure to variable‑rate risk and easing liquidity through semi‑annual amortisation.

A few days later the government prepared to submit the 2027 General State Budget, targeting a public‑sector deficit of 3.5 % of GDP after a decline to 3.7 % in 2025. The budget aims to avoid borrowing for day‑to‑day spending while maintaining investment that underpins growth. Credit‑rating agencies noted that the recent deficit reduction relied heavily on cuts to capital projects, with Moody’s and Fitch warning that the slowdown in public investment could be temporary. Nonetheless, higher revenue and tighter spending controls were also cited as contributors to the fiscal improvement. Together, the refinancing and the budget outline Panama’s effort to strengthen its debt profile and pursue fiscal consolidation without sacrificing essential investment.