The increase comes just during Holy Week, when the mobilization of more than 100,000 vehicles is expected from the capital city to the interior of the country.
The rise in international oil prices is intensifying pressures on Panama’s public finances, at a time when the country already faces a rigid budget, rising subsidies and a debt that exceeds $60 billion.
95 octane gasoline will increase 11 cents per liter and 91 octane gasoline will increase 10 cents per liter. Regarding diesel, it was reported that it will increase 15 cents per liter starting this Friday, April 3.
Per gallon, 95 octane gasoline will cost $4.77, 91 octane $4.43, and diesel $5.15. The latter, key for heavy and work transportation, exceeded the $5.00 threshold. The increase comes just during Holy Week, when the mobilization of more than 100,000 vehicles is expected from the capital city to the interior of the country.
Given the increase in costs, the Government has chosen to expand subsidies to avoid an immediate impact on consumers, especially in sensitive areas such as public and school transportation.
The measure authorizes the Ministry of Economy and Finance (MEF) to manage the necessary resources to stabilize the price of liquid fuels, with a budget ceiling of up to $100 million for 10 months.
“The subsidy works as a containment mechanism, but it does not eliminate the problem. What it does is transfer the cost to the State,” explains economist Eric Molino.
This can reduce the fiscal space available for investment, limit the ability to respond to crises and increase pressure on public debt.
The Minister of Economy, Philip Chapmanassures that this will not affect the budget allocated to public investment. “The savings will have to come from the current or operational spending of the State, since the investment works or capital expenditure will not be stopped,” said the official.
In the 2026 budgetwhich amounts to $34,900 million, the subsidies were projected at $2,486.6 million, well above the $1,747.4 million in 2025, a figure that was not contemplated in the current scenario.
Yesterday afternoon, the Presidency of the Republic issued a statement in which it gave more details of the subsidy.
Among the operators of public passenger transport, the modalities are included: collective, selective, school and tourism. Likewise, cargo transportation, agricultural machinery and artisanal fishing may benefit from the measure announced by the National Government for the temporary stabilization of the price of fuel.
At the meeting, government representatives addressed the concerns of the transporters and explained the information that they must provide to complete the development of a platform of the National Authority for Government Innovation (AIG), designed to guarantee the controls of said subsidy.
It is unknown if the rate freeze will apply to them from this Friday, since it is understood that it could take a few days for the benefit to be implemented.
Oil above $100 and high volatility
In this context, the behavior of the oil market continues to be key. On Wednesday, benchmark crude oil in the United States (WTI) closed at $100.12 per barrel, with a drop of 1.24%. Despite the decline, the price remains at high levels, after having exceeded $100 for the first time since July 2022 at the beginning of the week.
The volatility responds to geopolitical uncertainty in the Middle East. US President Donald Trump assured that Iran would have requested a ceasefire, conditional on the reopening of the Strait of Hormuz, a strategic route through which nearly 20% of the world’s oil transits.
However, Iran denied these statements, which maintains tension in the markets and uncertainty about the global supply of crude oil.
Panama thus faces a complex scenario: protecting the purchasing power of the population without compromising fiscal sustainability. If oil prices remain high, the country will have to decide between expanding subsidies—with the consequent impact on debt—or allowing more rapid adjustments in domestic prices.
In previous years, the bill for fuel subsidies was very high
As background, Panama had already resorted to a prolonged subsidy to contain the impact of the rise in fuel prices. Between July 2022 and January 2024, the State allocated nearly $500 million to keep the price frozen at $3.25 per gallon of 91 octane gasoline and diesel.
The measure, which was extended through several extensions of the Cabinet Council, benefited more than 880,000 vehicles, with a greater load in the private sector, although it also represented key relief for commercial transportation.
This scheme, which came to an end at the beginning of 2024, today serves as a reference for the fiscal cost involved in intervening in the market in the face of sustained rise scenarios.
