The fiscal deficit of the Non-Financial Public Sector (SPNF) of Panama was reduced 10.6% as of July 2026, to $2,642.3 million, a decrease of $313.1 million compared to the same period in 2025. As a proportion of the gross domestic product (GDP), it went from 3.27% to 2.78%, below the limit of 3.5% established for this year by the Fiscal Social Responsibility Law (LRSF).
This is revealed by the Preliminary Fiscal Balance Report of the Ministry of Economy and Finance (MEF). According to the report, the improvement was linked to greater growth in income versus spending. Total revenues reached $8,376.1 million, $618.4 million more than a year before, equivalent to an increase of 8.0%. In contrast, total spending totaled $11,018.3 million, with an increase of $305.2 million, or 2.8%.
The primary deficit also improved. It went from $1,261.4 million to $910.2 million, a reduction of $351.2 million. In terms of GDP, it decreased from 1.39% to 0.96%.
The increase in income was mainly driven by current income from the Social Security Fund (CSS), which grew by $379.3 million, and from the Central Government, with an additional $75.2 million. Capital revenues brought in another $191.6 million.
In spending, the current component increased $342.9 million, while capital spending fell $37.7 million and stood at $2,014.1 million. The interest on the debt reached $1,732.0 million, B/.38.1 million more than in July 2025.
The Central Government also reduced its deficit, from $3,907.2 million to $3,371.0 million, a drop of $536.1 million, equivalent to 13.7%. Its current income grew 1.8%, to $4,823.4 million, favored by a 5.1% increase in tax collection. Expenses, on the other hand, decreased by $255.1 million, mainly due to the absence of extraordinary contributions to the CSS registered in 2025.
The weighted average cost of public debt also decreased, from 4.97% in December 2025 to 4.67% in July 2026, even though interest payments increased 2.2%. The evolution reflects the effect of the debt management strategies applied during the period, although debt service continues to represent an important part of public spending.
The current savings of the SPNF, although it remained negative, showed an improvement of $82.4 million compared to July 2025, going from -$912.5 million to -$830.1 million. The behavior of this indicator is conditioned by the seasonality of income, since a relevant part of contributions and dividends from public companies is concentrated towards the last quarter of the year.
This seasonality forces us to take the accumulated result as of July with caution. Between 2023 and 2025, the fourth quarter concentrated an average of 44.5% of annual income, while expenses had a more uniform distribution. The result of the coming months, therefore, will be decisive in establishing whether the improvement observed until July is maintained at the end of 2026.
Economist and financier Raúl Moreira described the fiscal figures as of July as “positive”, in general terms. He highlighted that the deficit of 2.78% of GDP is below both the legal limit of 3.5% for 2026 and the 3.27% registered in July 2025.
However, he warned that the composition of income deserves attention. “A significant increase in the increase in income, $191.6 million corresponds to capital income that, firstly, is not recurring and secondly, we would have to see what it corresponds to,” he noted.
Official data confirm that $191.6 million of the increase in income corresponds to capital income, although the main contribution came from the growth of current income from the CSS and the Central Government. Therefore, the improvement in July does not depend exclusively on non-recurring resources.
Moreira also drew attention to the $37.7 million reduction in capital spending. In his opinion, it will be necessary to observe behavior during the rest of the year to determine if the spending containment measures respond to a permanent efficiency strategy or an effort to meet the fiscal goal.
“It would be necessary to see at the end of the year whether the measure of not purchasing official cars in the rest of the period truly corresponds to an intention to efficiently manage public spending, or is just a concerted effort to reduce spending and thus balance the fiscal balance at the end of the year,” said Moreira, also former president of the College of Economists of Panama.
The cumulative result may still change in the coming months due to the seasonality of revenue. Between 2023 and 2025, the fourth quarter concentrated an average of 44.5% of annual income, while expenses had a more uniform distribution during the year. Therefore, the July balance sheet alone does not constitute the final fiscal result for 2026.
Moreira added that fiscal performance must translate into improvements for the population, especially in terms of employment. This consideration corresponds to its assessment of the impact of economic results and does not constitute, in itself, an indicator of the fiscal balance.
