Panama has a stable multi-party democracy that favors economic openness. Multi-party democracy has been consolidated since the end of the 1968-89 military dictatorship. There is a successful history of political parties alternating in power, though political power has primarily been in the hands of the country’s traditional political and economic elites. Panama’s Constitution dates from 1972 when the military (and progressive) government of General Omar Torrijos was in power. Torrijos is considered the leader of the Panamanian Revolution after the signing of the Torrijos-Carter treaty in 1977 that put an end to the US colonial presence in the Panama Canal. He is also considered the ideological leader of the currently ruling Revolutionary Democratic Party (PRD).

The country has maintained orthodox macroeconomic management that has resulted in high levels of foreign direct investment (FDI) in various sectors. Since the presidency of Mireya Moscoso (1999-2004), the government has maintained a pro-business stance, achieving some of the highest economic growth rates in Latin America since the turn of the century. The lack of transparency and accountability pose the main risk for foreign businesses operating in the country. Government procurement processes are often marred with inconsistencies while corruption is prevalent in all branches of government.

The Panama Papers revelations in April 2016 exacerbated a trend in which the country had come under increased scrutiny with regards to the probity of the financial and professional services industry. This has continued with the country’s re-inclusion in June 2019 on the Financial Action Task Force (FATF)’s grey list of countries with strategic anti-money laundering (AML) combating the financing of terrorism (CFT) deficiencies. As a result, further efforts to tighten the regulatory environment will remain prominent. However, given the importance of the industry to the economy, the government will seek to avoid measures that will severely damage its ability to win and maintain business.  

Cortizo’s main priorities will be maintaining the COVID-19 pandemic under control, reducing its social and economic impacts, and removing Panama from the FATF’s grey list and the European Union list of non-cooperative jurisdictions. In this context, the passage of constitutional reforms to tackle corruption (which was one of Cortizo’s main campaign promises) will likely become less of a priority, particularly after the political and legislative pushback Cortizo experienced in the second semester of 2019 during the passage of number of constitutional reforms aimed to increase government entities’ accountability and transparency. Nonetheless, Cortizo has made strides to improve the efficiency of the judicial branch by appointing through a transparent and rigorous selection process new magistrates in the Supreme Court of Justice (CSJ) and a new prosecutor with a strong anti-corruption profile. While Cortizo’s moves represent a significant shift towards strengthening anti-corruption efforts, the pace of transformation will likely be long and complex.

Panama is considered a Flawed Democracy in the 2020 Democracy Index, developed by The Economist Intelligence Unit (EIU), where the country ranks 46 out of 167 countries scored. 

The country ranks 67 at the 2019 Human Development Index developed by the United Nations Development Programme.

Panama is regarded as one of the most competitive Latin American economies due to its well-developed infrastructure, particularly for the logistics and financial industries, and for its favourable economic environment. New businesses can be created through a streamlined online system, and multinational legislation facilitates the establishment of headquarters or regional affiliates. Panama receives high levels of foreign investment in infrastructure to improve transport and communications systems, which are already of a high standard. However, corruption is common and some labor regulations are inflexible. Multisector unions are well organized and have the capability to delay projects for several days and, in rare cases, weeks.

Labour unions can pose obstacles for businesses operating in Panama, particularly in sectors where they have strong influence, such as construction. Moreover, there is a lack of availability of skilled workers, resulting in companies in high value-added sectors struggling to commence operations. Labour laws vary, with rigidity for hiring and firing practices, although companies operating in so-called free zones are covered by their own labour regimes. 

In addition, the COVID-19 pandemic is likely to continue posing operational obstacles for businesses. Cortizo’s economic reactivation plan amid the pandemic (which is comprised of six phases) will likely be implemented at a slow pace, with the government keen to avoid worsening the outbreak by lifting restrictions too soon. Panama, taking into account the performance of the pandemic indicators, is attempting a "new normality" after reopening almost all non-essential trade and tourism with the total resumption of operations on October 12th at Tocumen International Airport, a regional hub, after seven months of closure and restrictions due to the ongoing pandemic. Given Cortizo’s hard-line approach to the pandemic, the government will likely re-introduce restrictions if it identifies a significant increase in new COVID-19 cases.

Regarding transportation, cases of taxi drivers robbing kidnapping and/or robbing their clients have been reported, and offending drivers may be armed. To minimize this risk, it is highly recommended toonly use official taxis (yellow in color), ensuring that the car's license plate and drivers' credentials are visible. Larger highways are generally well maintained but secondary roads are often less so. Traffic accidents are common along the Pan-American Highway, which should be avoided when possible after nightfall. According to one study, Panama is one of the worst countries in the world for drivers, due to poorly maintained roads and heavy traffic.

Overall, Panama ranks 86 out of 190 countries scored at the 2020 Doing Business Index by the World Bank and 111 out of 198 at the 2020 Corruption Perception Index by the Transparency International Organization.

Panama is regarded as one of the most competitive Latin American economies due to its well-developed infrastructure, particularly for the logistics and financial industries, and for its favourable economic environment. New businesses can be created through a streamlined online system, and multinational legislation facilitates the establishment of headquarters or regional affiliates. Panama receives high levels of foreign investment in infrastructure to improve transport and communications systems, which are already of a high standard. However, corruption is common and some labor regulations are inflexible. Multisector unions are well organized and have the capability to delay projects for several days and, in rare cases, weeks.

Labour unions can pose obstacles for businesses operating in Panama, particularly in sectors where they have strong influence, such as construction. Moreover, there is a lack of availability of skilled workers, resulting in companies in high value-added sectors struggling to commence operations. Labour laws vary, with rigidity for hiring and firing practices, although companies operating in so-called free zones are covered by their own labour regimes. 

In addition, the COVID-19 pandemic is likely to continue posing operational obstacles for businesses. Cortizo’s economic reactivation plan amid the pandemic (which is comprised of six phases) will likely be implemented at a slow pace, with the government keen to avoid worsening the outbreak by lifting restrictions too soon. Panama, taking into account the performance of the pandemic indicators, is attempting a "new normality" after reopening almost all non-essential trade and tourism with the total resumption of operations on October 12th at Tocumen International Airport, a regional hub, after seven months of closure and restrictions due to the ongoing pandemic. Given Cortizo’s hard-line approach to the pandemic, the government will likely re-introduce restrictions if it identifies a significant increase in new COVID-19 cases.

Regarding transportation, cases of taxi drivers robbing kidnapping and/or robbing their clients have been reported, and offending drivers may be armed. To minimize this risk, it is highly recommended toonly use official taxis (yellow in color), ensuring that the car's license plate and drivers' credentials are visible. Larger highways are generally well maintained but secondary roads are often less so. Traffic accidents are common along the Pan-American Highway, which should be avoided when possible after nightfall. According to one study, Panama is one of the worst countries in the world for drivers, due to poorly maintained roads and heavy traffic.

Overall, Panama ranks 86 out of 190 countries scored at the 2020 Doing Business Index by the World Bank and 111 out of 198 at the 2020 Corruption Perception Index by the Transparency International Organization.

Vaccines required to enter the country:

Yellow fever: A yellow fever vaccination certificate is required for travelers arriving from countries with risk of yellow fever transmission. A single dose of YF vaccine is sufficient to confer sustained life-long immunity against the disease; it should be taken ten days in advance to be fully effective.

Panama ranks 68 out of 195 within the 2019 Global Health Security Index, a project of the Nuclear Threat Initiative (NTI) and the Johns Hopkins Center for Health Security (JHU), developed with The Economist Intelligence Unit (EIU).

The Atlantic hurricane season lasts from June 1 until November 30. While hurricanes and tropical storms rarely hit Panama directly. Storm systems can bring torrential rains, leading to flooding and landslides. Hurricane Otto lingered off the northern coast for several days in November 2016, resulting in at least ten deaths and an estimated USD 10 million in damages, prompting the government to decree a six-month state of emergency.

Mountainous areas of the country can prove dangerous, particularly during the long rainy season - which extends from March until December - due to flooding, mudslides, and subsequent road closures. Flooding also occurs within Panama City and can result in transportation chaos.

Panama is located in a seismically active zone and earthquakes occasionally occur. A 7.7-magnitude earthquake struck neighboring Costa Rica in 1991, leaving dozens dead and resulting in major infrastructural damage in the Panamanian province of Bocas del Toro.

If you plan to visit Panama, stay informed by the Panama National Civil Protection System.