Billions in Bank Loans Buy Panama Time as Doubts Mount

Despite Panamanian debt posting double-digit gains in 2025, bond investors and market analysts are raising red flags over President José Raúl Mulino's reliance on billions of dollars in bank loans. The administration opted to fund sovereign fiscal obligations through bank financing while holding back on issuing new sovereign bonds. While the tactic bought the government temporary breathing room, analysts warn it could ultimately increase debt vulnerabilities and precipitate a downgrade into junk status. The nation faces sustained fiscal pressure stemming from budget shortfalls and the broader economic fallout following the closure of the Cobre Panamá mine.