Panama: Selected Issues

This Selected Issues paper aims to develop a better understanding of the state-owned enterprises (SOE) sector, its financial performance, its governance, and its relation to the budget in Panama. It also makes a comparison between the governance framework of the Panama Canal Authority (ACP) and that of the other SOEs, with a view to drawing lessons. The ACP is a well-run organization that performs well. It delivers steady and large contributions to the budget, successfully managed a major expansion and other investment projects, is well respected by its customers, and has contributed greatly to the Panamanian economy. Its institutional autonomy and good corporate governance have been key to its success. It may offer lessons to improve the performance of the other SOEs. Panama’s other SOEs would benefit from enhanced governance and oversight mechanisms. Drawing lessons from the success of the ACP, greater independence in governance, finances and operations, coupled with increased transparency and more effective oversight, would likely help improve the SOEs’ financial performance as well as the quality of the services they provide.