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Government and Economy

Panama - Government and Economy


Panama is now a democracy following the removal from power of Noriega in the late 1980s. The country was ruled by the military for many years but there is now a range of political parties operating in the country. These include the Communist Party, the Panamenista Party, the National Republican Liberal Movement and the Democratic Revolutionary Party, although there are many more. It is not often that one political party can achieve an outright win in an election, so Panamanian governments in recent years have been mainly coalitions.

From the early part of the 20th century until the late 60s, the country was a democracy, but the military ousted the then president and established their own government. Noriega was in power by the mid 80s, but with a corrupt regime that was implicated in drug trafficking and election fixing, he was ousted with the help of the US military and by the end of 1989 a democratic government was back in place.

Ernesto Perez Balladeres became President in 1994 and ran a coalition government which put into place a number of economic reforms. His government was also instrumental in working closely with the US government regarding the Canal treaties. 1999 saw Mireva Moscoso elected to the presidency. She was the widow of Arias Madrid who was ousted in the 60s. She implemented a number of social reforms, particularly in the field of child welfare and it was her administration that oversaw the handover of the Panama Canal from the US to Panama. Further economic growth took place under the next president, Martin Torrijos, elected in 2004 and in 2009, Ricardo Martinelli became president. He promised to undertake further reforms, particularly related to the health service and free trade and to carry out a number of expansion plans for the Panama Canal.

The structure of the Panamanian government consists of the President and until 2009 there were 2 vice presidents, although only one has been appointed with the latest government. There are ministers who control various departments such as the Economy and Finance department, Housing, Education, Justice and Public Works. The Executive branch is just one section of the government and it is supported by other branches such as the legislature, the judiciary and regional governments. Elections are held every 5 years and voting is confidential. All Panama citizens who are over the age of 18 are able to vote but foreign citizens are not eligible.

The legislature is comprised of 72 elected members. Each region has its own governor and the indigenous territories of the countries deal with their own administration. The government has an electoral tribunal, which was established to ensure that all elections are fair, following attempts by former military rulers to influence voting procedures. The tribunal oversees the registration of voters and keeps a careful eye on the activities of each party.

Panama’s economy focuses mainly on the services industry, with banking and tourism among the main sources of income. Since control of the Panama Canal was given back to the country from the US in 2000 there have been a number of new construction projects. The United Nations published a report which showed that levels of poverty in the country have dropped considerably over the period from 2001 to 2007 and this trend is set to continue over the coming years.

The economy of Panama is one of the few in Central and South America which grew during 2009 but this growth came after falls in 2007 and 2008. Inflation in 2008/9 was high at 8.8% when compared with other years but settled back down to 2.4% in 2009/10. As the economy is strongly linked to the US dollar, there can be a knock-on effect if the US is having economic problems. There is no central bank in Panama which monitors the state of the economy (as there is in the UK and the US) and the currency is based on the US dollar.

Predictions for the future show little change in the current state of the economy. There is expected to be some improvement in the levels of unemployment and poverty with the expansion of the Canal and other projects such as the Panama Metro.


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