Panama: A Country Overview

Information on history, government, climate, security, tourism and foreigners living in Panama...


Panama is a long thin country that runs east to west in an "S" shape for some 772 Km and varies in width from 60 to 177 Km. It is located on the isthmus that connects North and South America and has a total land area of just over 75,000 square Km. It is the world's 118th largest country with a coastline of 2,490 Km.

It is bordered to the west by Costa Rica and to the east by Colombia. To the north it is bordered by the Caribbean Sea and to the south by the Pacific Ocean.

Panama is tropical and has large stretches of rainforest, as well as scrubland, grassland and crops. Mangrove swamps are common along both coasts.

The central spine of mountains and hills that forms Panama's continental divide runs from Costa Rica in the west to center of the country and is referred to as Cordillera Central. The highest point in the country is the dormant, but potentially active, volcano, Volcan de Chiriqui, which stands at 3474m.

The country is home to over 500 rivers, many of which rise in the highland areas and flow to the coast, forming large deltas. More than 300 of the rivers empty into the Pacific.

With seismic activity in the area, earthquakes are considered a natural hazard in Panama.


The earliest evidence of human occupation on the Panama Isthmus dates back to 2500-1700 BC.

In 1501, Spanish conquistador Rodrigo de Bastidas, sailing west from Venezuela in search of gold, was the first European to explore the isthmus. Then in 1513, Vasco Nunez de Balboa started a journey inland across the isthmus to confirm what the natives had said about a second ocean. Balboa became the first European to see the Pacific Ocean.

Word was sent back to the King of Spain and the "fantastic descriptions" from explorers such as Balboa and Colombus were enough to persuade him to send an armada of 22 ships and an army of 1,500 men. The area was subsequently named Casilla del Oro by the monarch.

It remained an important part of the Spanish empire for over 300 years, not least because of its location and the ease with which the Spanish could transport mined metals to Europe from Peru.

In 1671, the pirate Henry Morgan burned down Nuestra Senora de la Asuncion de Panama, which was the capital at that time and the city was rebuilt nearby. The site of the old town is still in ruins and is known as Panama Viejo.

As a response to growing threats to Spanish territory in central America, the Viceroyalty of New Granada was established to protect Spanish interests. It included the areas known today as Colombia, Ecuador, Panama and Venezuela, Costa Rica, Nicaragua, northern Peru, Guyana and northwest Brazil.

By the time of its independence from Spain in 1819, the Viceroyalty of New Granada was estimated to have over 4.3 million inhabitants. For its part, Panama entered into a union with Venezuela and present-day Colombia in the Gran Colombia project in 1821. By 1831, the territory covered the area of present day Colombia and Panama and adopted the name the Republic of New Granada.

Relations between the United States and Panama strengthened and in 1846 the US and New Granada agreed that the US could build railroads through Panama. In 1855 the first transcontinental railway (the Panama railway) was completed.

US interests in the region grew but there was increasing tension when the Panamanian labor force was fired after the completion of the railway and replaced with US citizens. There was also tension towards Bogata for not stepping in to help. The first conflict in 1856 was known as the Watermelon, with riots across Panama City.

After its 80 years as part of Colombia, Panama finally proclaimed its independence in 1903 and signed the Hay/Bunau-Varilla Treaty which offered US support for independence in exchange for a 500 square mile zone of sovereign territory within the country. The US used this zone to complete the works on the already started canal and by 1914 the 52 mile-long Panama Canal was completed.

From 1903 to 1968, political power was held by a wealthy elite, as a remnant of the country's Spanish colonial past. In 1968, the commander of the National Guard, Omar Torrijos, seized power under a military government which was harsh and corrupt. However, Torrijos gained popular support with a series of domestic socialist programs and a nationalist foreign policy.

Torrijos died in a plane crash in 1981 and was replaced by General Manuel Noriega, who created a paramilitary organization called the Dignity Battalions to suppress opposition to the regime.

In the mid-1980s, following accusations of electoral fraud, domestic tensions flared and on 9 June 1987, there were acts of civil disobedience across the country and a general strike was called. The following day, which came to be known as Viernes Negro, saw the military police special riot control unit put down the demonstration which left 600 injured and a further 600 detained.

Throughout the 1980s, relations between the USA and Panama worsened and in 1988, President Reagan froze Panamanian assets in the USA and withheld fees for canal usage after Noriega was accused of drug trafficking in Florida.

The elections in May 1989 were marred by accusations of fraud on both sides and although elections saw a 3-1 vote against the regime, the result was annulled.

In December 1989, US troops began a two-week operation that saw Noriega surrender to the US authorities and imprisoned. He was later extradited to France and imprisoned for a further seven years by the French courts in 2010. Panama's Electoral Tribunal moved quickly at the end of 1989 to install Guillermo Endara and usher in a new age of democracy for the country.

Politics and Government

Panama is a constitutional democratic republic with a multi-party system. The country is led by the president, who acts as both head of state and head of government.

The president and vice-president are elected by a direct popular vote. They serve a single five-year term of office, which is non-renewable. Legislative power in Panama is shared between the government and the National Assembly, Asamblea Nacional. The national assembly has 71 members who are elected by proportional representation to five-year terms from their constituencies.


Panama has a free-market economy based on the service sector, which provides around 70-80 percent of the country's GDP.

Services include ports, financial services, medicines, the Panama Canal and the Colon Free Trade Zone. The industrial sector in the country includes textiles, foodstuffs, construction and machine parts. Agriculture includes the exportation of foods such as sugar, coffee, fish and bananas, as well as wood such as mahogany. Panama also benefits from copper and hydroelectric resources.

There is an estimated labor force of 1.5 million people in the country with an estimated unemployment of around 5.6 percent as of March 2011.

The unit of currency is the Balboa, although the US$ is also used, as the two have been fixed at parity since 1903.


Panama has a tropical wet and dry climate. It has two distinct seasons, with the dry season running from January to April and the wet season from May to December.

The Caribbean side of the country usually experiences heavier rainfall than the Pacific side. The wettest month is October, which sees around 20 rainy days, while February and March average just over one rainy day a month. Rainfall varies from less than 1,300 millimeters to over 3,000 millimeters of rain annually.

Temperatures are similar throughout the year ranging, on average, from 24 degrees in the morning to 29 degrees in the afternoon, and are rarely above 32 degrees.

Panama is outside of the hurricane belt.


With the rise in tourism in Panama, there has also been a rise in crime in tourist areas and it better to avoid some areas such as the Darien province near to the Colombian border. It is advisable for those wishing to visit Panama to check before traveling:


In the 19th and 20th centuries immigration played a key part in the country's development. US Americans and people from the Caribbean were vital in building the Panama Canal. In addition, there was an influx of white Europeans as refugees from World War II and a number of immigrants from the Arab nations and Asian sub-continent.


In 2011, Panama had over two million visitors, more than double the number in 2007. The majority of tourists from Europe came from Spain, followed by Italy, France and Britain.

Panama is putting in place a tourist program to encourage visitors to the country and to grow the sector. Special Tourism Zones have been declared in various areas of the country, with tax exemptions such as 100 percent on income and real estate tax exemption.

Panama has a wealth of tourist attractions including wildlife refuges and 14 national parks, which cover jungles, mountains, beaches, marine areas and desert landscapes. It has attractions such as the Amador Causeway, Casco Viejo, Mi Pueblito, Centennial Bridge and the Panama Canal, as well as having plenty of beaches and islands to explore along its coastline.