Country Listing

Panama Table of Contents



In the 1950s and most of the 1960s, the expansion of revenue sources and the growing economy permitted an increase in government expenditures. Spending remained concentrated on the canal, and only a small share went to agriculture, industry, or commerce. Government investments were not large, but revenues financed only a part of them, thereby requiring a substantial increase in the public debt to fund the remainder. Expanding private investment was achieved through a high rate of private savings in spite of a considerable increase in per capita private consumption in the terminal cities.

In the 1970s, government current expenditures expanded dramatically. Most of that increase was a result of the rise in interest payments on the public debt from 2 percent to 6 percent of GDP. In 1979 expenditures totalled US$554 million, most of which covered administrative costs (52.4 percent) and interest payments (23.6 percent). By 1985 expenditures had risen substantially to US$1.4 billion, but the actual structure of government expenditures changed very little; administrative costs accounted for 56 percent of the budget, followed by interest payments at 32.3 percent.

Between 1972 and 1983, the share of total expenditures fell in the categories of education (from 20.7 percent to 11.0 percent), health (15.1 percent to 13.1 percent), and economic services (24.2 percent to 13.5 percent). The share of expenditures allocated for housing, amenities, social security, and welfare rose during the same period from 10.8 percent to 12.2 percent. The biggest increase, however, was in the "other" category, which rose from 29.1 percent to 50.2 percent, mostly because of a larger debt service share (including interest payments and amortization).

Data as of December 1987