Thousands of former Panamanian public servants who retired, resigned, or were dismissed are still waiting for the State to pay their seniority bonuses — and as budget hearings in the National Assembly reveal, the government itself does not know how much it owes. Entities requested $182.2 million for 2027 to cover these obligations, but the Ministry of Economy and Finance (MEF) recommended just $82.3 million.
What Happened
During presentations before the Budget Committee of the National Assembly, a growing debt has come into focus: millions of dollars in seniority bonuses owed to former state employees, scattered across the budget documents of individual institutions. MEF Budget Director Justo Botacio said the 2027 budget proposal includes $48 million for seniority bonuses within the Central Government alone.
When decentralized institutions, public companies, and financial intermediaries are included, the amount recommended by the MEF rises to $82.3 million — comprising $25 million for decentralized institutions, $5.6 million for public companies, and $3.7 million for financial intermediaries. That figure, however, falls far short of the $182.2 million the entities themselves requested, meaning the MEF applied a cut of $99.9 million.
Botacio acknowledged that the government does not yet have a complete inventory of what it owes former officials, and the MEF has requested updated reports from each entity detailing amounts owed and the number of people awaiting payment. He suggested one way to boost resources: transferring payroll savings to bonus payments. The MEF itself plans to transfer roughly $3 million in such savings. He questioned why some institutions instead use those savings to create new positions.
The shortfall is stark in individual cases. The Ministry of Security requested $76 million but received an allocation of only $10 million, leaving the difference outstanding.
Background
The seniority bonus is not a new obligation created by recent court rulings. It was first established by Laws 39 and 127 of 2013, granting public servants a benefit equivalent to one week’s salary for each year worked. In 2014, Ricardo Martinelli’s government regulated payment through Executive Decree 52, which was repealed shortly after by Juan Carlos Varela’s administration. Law 23 of 2017 modified the system but preserved the bonus.
In 2021, Law 241 maintained the payment but excluded certain officials, including ministers, deputy ministers, and directors of autonomous and semi-autonomous entities. On July 21, 2026, the Supreme Court of Justice declared nine of the ten sections establishing those exclusions unconstitutional, finding they violated the principle of equality and affected a work-related right. The ruling expanded the benefit’s scope, but the underlying debt had accumulated for years beforehand — some entities are only now paying obligations dating back to 2011.
What This Means for Panama
Lawmakers from both sides of the aisle are pressing the issue within the Budget Committee. Deputy Luis Duke of the Vamos party argued the State must honor the economic rights of those who end their working lives in public service, and questioned why no consolidated inventory of these obligations has ever existed. He said lawmakers’ questioning prompted the MEF to request detailed information from each institution.
Deputy José Pérez Barboni of the Otro Camino Movement criticized the government for owing money for services already rendered while spending on travel allowances, rent, and per diems. He noted that many former officials die before seeing these commitments fulfilled, and pointed to the Public Prosecutor’s Office as an example of an institution that does keep proper track of who it owes.
The immediate next step is the ‘debt census’ the MEF has ordered: until each entity reports how much it owes and to whom, the true scale of the obligation — and the gap between the $82.3 million recommended and actual liabilities — will remain unknown, leaving former officials in limbo and future budgets likely to face renewed shortfalls.
This story was originally reported by Newsroom Panama.