The sale of state lands to the Panama Canal Authority (ACP) for about $100 million became an extraordinary income that have been contributing to the public financial consolidation process during 2026, according to Fitch Ratings’s latest assessment of Panama.
The operation allowed the state to gain liquidity for the sale of public land to the ACP, resources that entered public coffins.
The issue has been important after Fitch’s update of 16 July, in which it noted that fiscal data for the first five months of the year show that fiscal consolidation is directed supported by an extraordinary sale of land to the Canal amounting to 0.2% of gross domestic product (GDP) and by new cuts to capital spending.
The qualifier indicated that capital spending had been reduced by 7.5 per cent from last year’s level and had been the lowest for the last 20 years.
Under this stage Fitch expects the Government to meet its target of bringing the non-financial public sector deficit to 3.5% of GDP by 2026.
Nevertheless, the firm also put forward a precautionary note about the sustainability of this strategy.
He noted that how sustainable capital spending remains, as some projects have deferred payments but have been neither cancelled nor delayed.
The amount of the sale of the lands had been disclosed by the Minister of Economy and Finance, Felipe Chapman in March 2026 during an appearance before the National Assembly’s Budget Commission.
At that time, Chapman explained that the operation corresponds to lands that had to be transferred from the Ministry of Economics and Finance to the ACP and that previously required a process of sanitation as a result of the presence of ammunition leave from the time these areas were part of the old Canal Zone.
According to the Minister, as the current administration reached the MEF, they found that they put the value of the lands at about $26 million, a figure that the economic team found low.
From there, she said, a negotiation process with the ACP was initiated, with the Ministry of Economics and Finance, through the Unit of Reportable Property (UABR), assuming responsibility to clear the ground before giving them to the Canal.
Chapman argued that the process allowed to substantially raise the value of the operation up to about $100 million.
Once the investment necessary to clear the polygons was broken down, she estimated that the transaction would generate a gain of about $90 million for the National Treasury.
“Retracting the investment we have to make in the cleanup of the polygons, we have achieved an increased collection or a useful or gain or gain for the Panamanian state, for the National Treasury, of 90 million dollars,” Chapman explained during that appearance outlined on social networks of the MEF.
The operation had been under management since 2025.
In December of that year, the manager of the Panama Canal, Ricaurte Vásque, had reported that the ACP negotiated with the MEF the acquisition of additional lands necessary to complete the assets intended for the future port development of Corozal, in the Pacific, and Isla Telfers, in Colón.
Vásquez then explained that the Canal needed to complete the transfer and register the lands as an ACP property before advanced with the prequalification and subsequent bidding processes of port projects.
Some of the lands belonged to state-owned areas of TelFers Island and also required land at Corozal.
In the case of the port project of Corozal, it was known that at this time the ACP did not require to acquire more land, as the intended area forms part of its heritage from the first attempt to develop that terminal in 2015.
Indeed, Corozal’s original design was more extensive than currently put forward and was situated on Canal’s property.
To this end, the lands that the ACP managed with the State would be mainly linked to other infrastructures, including areas at Telfers Island and possibly required spaces for the tanking, pumping station and Pacific pier intended to receive LPG ships for the operation of the pipeline and not to the Corozal terminal.
That kind of transaction has a background.
In 2023, the ACP negotiated with the MEF the purchase of land for $500 million.
On that occasion, the operation allowed Laurentino Cortizo’s government to manage an additional credit for just over $456 million, raising its budget for that year, about $27.720 million, to about $28.100 million.
Beyond the extraordinary income generated by the sale of lands, Fitch noted that several structural reforms put forward to strengthen public finances have yet to advance.
They mentioned potential changes to the terms of reference for education and to automatic public sector wage increases.
According to the qualifier, these reforms have yet to be put forward.
Fitch believes that an amendment could mainly improve budgetary transparency rather than contribute directly to fiscal consolidation as a result of underperformance in this sector.
The qualifier also recalled that the Government has ruled out general tax increases to increase tax revenues, which in 2025 represented about 7% of GDP, a level Fitch considers structurally low.
Fitch noted that the fiscal consolidation process advanced and some of the 2026 result was supported by extraordinary factors, including the sale of land to the Canal, and with a reduction of public investment with its sustainability to be observed in the coming months.
