What Happened
Panama is feeling the economic effects of higher global oil prices driven by the conflict in the Middle East. The increase in international petroleum prices is raising local fuel costs, putting upward pressure on inflation and prompting the government to expand subsidies to shield consumers — a move that increases public spending at a time when national debt has surpassed $60 billion.
Government figures and debt
Finance Minister Felipe Chapman addressed the issue at a forum organized by the Asociación Panameña de Ejecutivos de Empresa (Apede). He warned that the conflict and its effect on oil prices could alter the country’s growth projections, which some investment banks have placed as high as 5%.
According to a report from the Ministry of Economy and Finance (MEF), public debt reached $60,059 million at the close of February. Chapman said the increase in debt “estaba anunciada” (“was announced”) and that it had reached the level “exactamente previsto en el plan estratégico del Gobierno” (“exactly as foreseen in the government’s strategic plan”). The MEF also notes that part of the increase reflects an active management of the liabilities portfolio, not only new borrowing.
Unemployment and skills gap
Chapman used the same forum to highlight labor market challenges. He said he regularly meets people seeking public-sector jobs after failing to find work in the private sector for lacking the necessary skills. The article reports roughly 227,302 people were unemployed, and that some 72,000 young people sought jobs without success between 2024 and 2025. Chapman attributed much of the rise in unemployment to a larger economically active population entering the labor market.
What this means for Panamanians
If oil prices remain high, consumers can expect higher costs for gasoline and transport and, indirectly, for many imported goods because of higher freight and input costs. While the government can freeze certain tariffs such as public-transport fares, private drivers and businesses bear higher fuel bills directly — costs that often pass through to consumers.
To limit immediate price increases, the state is increasing subsidies. That provides relief but raises public expenditure and constrains fiscal space for other priorities, at a time when the MEF reports a public debt above $60 billion. Chapman’s remarks suggest the government sees these developments as largely anticipated, but they still pose risks to growth forecasts, inflation and budgetary flexibility.