The Republic of Panama has had a renewed fiscal architecture since October 28, 2024. Law 445, published in Gaceta Oficial N° 30149-C and signed by President José Raúl Mulino Quintero and Minister of Economy and Finance Felipe Eduardo Chapman Arias, reforms Law 34 of 2008 on Social Fiscal Responsibility and Law 38 of 2012 on the Panama Savings Fund. The text was approved on third reading in the Palacio Justo Arosemena under the presidency of the National Assembly exercised by Dana Castañeda Guardia and entered into force upon promulgation.

The core of the reform is a fiscal rule with a declining trajectory for the Non-Financial Public Sector deficit. The law establishes maximum limits expressed as a percentage of nominal Gross Domestic Product: 4.0% in 2025, 3.5% in 2026, 3.0% in 2027, 2.5% in 2028, 2.0% in 2029, and 1.5% from 2030 onward. The law also sets as a fiscal policy anchor the reduction of the net public debt of the Non-Financial Public Sector to a level equal to or less than 50% of nominal GDP within a period of ten years counted from fiscal year 2026, with the obligation to continue until reaching 40% in the following five years. Starting in 2028, the Non-Financial Public Sector must maintain a primary surplus, consistent with the debt reduction trajectory.

The law includes mechanisms for the temporary suspension of targets in two scenarios: a declaration of national emergency by the Cabinet Council, with an exception limit no greater than 1.5% of nominal GDP or the estimated cost of the emergency; and economic slowdown, defined as a real GDP growth rate of 2% or less for two consecutive quarters, or a drop in tax revenues equal to or greater than 10% compared to the previous year. In both cases, the Ministry of Economy and Finance must present the National Assembly with a correction plan within three months of the approval of the exception, with measures to restore the targets within a maximum of three years. Additionally, the law prohibits public entities from incurring, during the last six months of a government's term, obligations without sufficient budgetary allocation, or from committing more than 50% of the annual operating budget during that same period, excluding debt interest.

On the institutional front, Law 445 creates the Fiscal Council as an independent technical commission attached to the Ministry of Economy and Finance, composed of three professionals appointed by the Executive Branch and ratified by the National Assembly for non-renewable terms of seven years — the first members will serve staggered terms of three, five, and seven years. The Council will issue non-binding opinion reports on a semi-annual basis covering compliance with the fiscal rule, debt sustainability, fiscal risks, and the evolution of public finances, and will have a full-time Technical Secretariat. The law also creates, within the Ministry of Economy and Finance, the Public Expenditure Control Unit, responsible for monitoring and evaluating expenditure. Finally, Article 11 suspends the effects of paragraph 1 of Article 3 of Law 38 of 2012 on the Panama Savings Fund for fiscal years 2024, 2025, and 2026.