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Panama Budget Process
Panama developed an efficient and centralized budgetary system
in the mid-1960s. By law, the budget had to balance, so increasing
recourse was made to handle some expenditures outside the budget.
One such device was the creation of autonomous government agencies.
These agencies increased in numbers and importance in the 1960s and
1970s. Their areas of operation included banking, the national
electrical system, welfare, tourism, and gambling. Their budgets
were excluded from that of the central government, although various
transfers were made.
The collection of direct taxes (on income, businesses, and
corporations) was relatively efficient in Panama. Direct taxes
totalled 7 percent of GDP in 1983. Although this figure is high
compared with those of other countries in the region, direct taxes
have brought stability to Panama's budget system and avoided the
fluctuations that occurred in neighboring countries, which were
more dependent on import and sales taxes. In the late 1980s, only
a fraction of Panama's revenue was derived from taxes levied on
foreign trade.
Data as of December 1987
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