Republic of Panama

República de Panamá
Republic of Panama

Motto
Pro Mundi Beneficio

Anthem
Himno Nacional de Panamá

Canal Zone (1903-79)

Capital

Panama City

Government

Republic

President

- From 2009

Ricardo Martinelli

Legislature

National Assembly

History

- November 3, 1903

Independence from Colombia

Area

75,517 km²

Population

- May 2010

3,405,813

Density

45/km²

GDP

May 2010 (PPP)

- Total

US$ 40.1 billion

- Per capita

US$ 11,788

Currency

Balboa, U.S. dollar

Colombia

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The Republic of Panama is a republic in Central America.

Background

Explored and settled by the Spanish in the 16th century, Panama broke with Spain in 1821 and joined a union of Colombia, Ecuador, and Venezuela - named the Republic of Gran Colombia. When the latter dissolved in 1830, Panama remained part of Colombia. With US backing, Panama seceded from Colombia in 1903 and promptly signed a treaty with the US allowing for the construction of a canal and US sovereignty over a strip of land on either side of the structure (the Panama Canal Zone). The Panama Canal was built by the US Army Corps of Engineers between 1904 and 1914. In 1977, an agreement was signed for the complete transfer of the Canal from the US to Panama by the end of the century. Certain portions of the Zone and increasing responsibility over the Canal were turned over in the subsequent decades. With US help, dictator Manuel NORIEGA was deposed in 1989. The entire Panama Canal, the area supporting the Canal, and remaining US military bases were transferred to Panama by the end of 1999. In October 2006, Panamanians approved an ambitious plan (estimated to cost $5.3 billion) to expand the Canal. The project, which began in 2007 and could double the Canal's capacity, is expected to be completed in 2014-15.^[1]

Economy

Panama's dollar-based economy rests primarily on a well-developed services sector that accounts for three-quarters of GDP. Services include operating the Panama Canal, logistics, banking, the Colon Free Zone, insurance, container ports, flagship registry, and tourism. Economic growth will be bolstered by the Panama Canal expansion project that began in 2007 and is scheduled to be completed by 2014 at a cost of $5.3 billion - about 25% of current GDP. The expansion project will more than double the Canal's capacity, enabling it to accommodate ships that are now too large to traverse the transoceanic crossway. The United States and China are the top users of the Canal. Panama also plans to construct a metro system in Panama City, valued at $1.2 billion and scheduled to be completed by 2014. Panama's booming transportation and logistics services sectors, along with aggressive infrastructure development projects, will likely lead the economy to continued growth in 2011. Strong economic performance has not translated into broadly shared prosperity, as Panama has the second worst income distribution in Latin America. About 30% of the population lives in poverty; however, from 2006 to 2010 poverty was reduced by 10 percentage points, while unemployment dropped from 12% to 6% of the labor force. Panama and the United States signed a Trade Promotion Agreement in June 2007, which, when implemented, will help promote the country's economic growth. Seeking removal from the Organization of Economic Development's gray-list of tax havens, Panama has also recently signed various double taxation treaties with other nations.^[2]