Panama will not seek to suspend deficit cap after earthquake — The Rio Times

Panama will not ask the National Assembly to suspend the fiscal rule for 2026 following the earthquake on the Azuero Peninsula on October 9. The deficit target of 3.5% of GDP remains in force, the country’s Ministry of Economy and Finance said.

As The Rio Times reports, the government plans to primarily finance aid for those affected through insurance payments, donations, and grants. Borrowing will be considered only if absolutely necessary and on concessional terms.

Up to $100 million for urgent needs

On October 10, the government published Resolution No. 108 introducing a state of emergency. The document provides for up to $100 million for emergency procurement and recovery work, and also allows ministries to use a special procedure without public tenders until December 31, 2026.

The resolution authorized the Ministry of Economy and Finance to immediately ask parliament to suspend the restrictions established by the fiscal responsibility law. However, the ministry said it would not use this option. Funds will be allocated only for verified needs through a trust at the state-owned Banco Nacional de Panamá, and payments will require approval from the comptroller general.

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Damaged homes and bridges

As of October 11, more than 1,200 damaged homes had been inspected. Public Works Minister José Luis Andrade reported damage to at least 14 bridges in Veraguas province: about eight in the Soná district and at least six in Mariato. The road between Tonosí and Las Tablas was open to passenger vehicles in one lane.

By the morning of October 11, the Institute of Geosciences at the University of Panama had recorded 256 aftershocks, four of which exceeded magnitude 6. The U.S. Geological Survey estimated the main earthquake at magnitude 7.7, while the institute put it at 7.5.

Government Secretary for Goals José Ramón Icaza said that up to $100 million would be allocated from the 2026 budget and partly from the 2027 budget. Authorities have not yet released an estimate of total damage and the costs of repairing roads and bridges.