Explored and settled by the Spanish in the 16th century, Panama broke with Spain in 1821 and joined a union of Colombia, Ecuador, and Venezuela - named the Republic of Gran Colombia. When the latter dissolved in 1830, Panama remained part of Colombia. With US backing, Panama seceded from Colombia in 1903 and promptly signed a treaty with the US allowing for the construction of a canal and US sovereignty over a strip of land on either side of the structure (the Panama Canal Zone). The Panama Canal was built by the US Army Corps of Engineers between 1904 and 1914. In 1977, an agreement was signed for the complete transfer of the Canal from the US to Panama by the end of the century. Certain portions of the Zone and increasing responsibility over the Canal were turned over in the subsequent decades. With US help, dictator Manuel NORIEGA was deposed in 1989. The entire Panama Canal, the area supporting the Canal, and remaining US military bases were transferred to Panama by the end of 1999. In October 2006, Panamanians approved an ambitious plan (estimated to cost $5.3 billion) to expand the Canal. The project, which began in 2007 and could double the Canal's capacity, is expected to be completed in 2014-15.

Central America, bordering both the Caribbean Sea and the North Pacific Ocean, between Colombia and Costa Rica

slightly smaller than South Carolina

tropical maritime; hot, humid, cloudy; prolonged rainy season (May to January), short dry season (January to May)

interior mostly steep, rugged mountains and dissected, upland plains; coastal areas largely plains and rolling hills

copper, mahogany forests, shrimp, hydropower

occasional severe storms and forest fires in the Darien area

water pollution from agricultural runoff threatens fishery resources; deforestation of tropical rain forest; land degradation and soil erosion threatens siltation of Panama Canal; air pollution in urban areas; mining threatens natural resources

strategic location on eastern end of isthmus forming land bridge connecting North and South America; controls Panama Canal that links North Atlantic Ocean via Caribbean Sea with North Pacific Ocean

mestizo (mixed Amerindian and white) 70%, Amerindian and mixed (West Indian) 14%, white 10%, Amerindian 6%

Spanish (official), English 14%

Roman Catholic 85%, Protestant 15%

Panama is a country of demographic and economic contrasts. It is in the midst of a demographic transition, characterized by steadily declining rates of fertility, mortality, and population growth, but disparities persist based on wealth, geography, and ethnicity. Panama has one of the fastest growing economies in Latin America and dedicates substantial funding to social programs, yet poverty and inequality remain prevalent. The indigenous population accounts for a growing share of Panama's poor and extreme poor, while the non-indigenous rural poor have been more successful at rising out of poverty through rural-to-urban labor migration. The government's large expenditures on untargeted, indirect subsidies for water, electricity, and fuel have been ineffective, but its conditional cash transfer program has shown some promise in helping to decrease extreme poverty among the indigenous population.

Panama has expanded access to education and clean water, but the availability of sanitation and, to a lesser extent, electricity remains poor. The increase in secondary schooling - led by female enrollment - is spreading to rural and indigenous areas, which probably will help to alleviate poverty if educational quality and the availability of skilled jobs improve. Inadequate access to sanitation contributes to a high incidence of diarrhea in Panama's children, which is one of the main causes of Panama's elevated chronic malnutrition rate, especially among indigenous communities.

3,510,045 (July 2012 est.)

19.17 births/1,000 population (2012 est.)

4.69 deaths/1,000 population (July 2012 est.)

-0.38 migrant(s)/1,000 population (2012 est.)

PANAMA CITY (capital) 1.346 million (2009)

92 deaths/100,000 live births (2010)

2.43 children born/woman (2012 est.)

1.5 physicians/1,000 population (2000)

2.2 beds/1,000 population (2009)

urban: 75% of population

rural: 51% of population

total: 69% of population

urban: 25% of population

rural: 49% of population

total: 31% of population

constitutional democracy

9 provinces (provincias, singular - provincia) and 3 indigenous territories* (comarcas); Bocas del Toro, Chiriqui, Cocle, Colon, Darien, Embera-Wounaan*, Herrera, Kuna Yala*, Los Santos, Ngobe-Bugle*, Panama, Veraguas

3 November 1903 (from Colombia; became independent from Spain on 28 November 1821)

Independence Day, 3 November (1903)

11 October 1972; revised several times

civil law system; judicial review of legislative acts in the Supreme Court of Justice

accepts compulsory ICJ jurisdiction with reservations; accepts ICCt jurisdiction

18 years of age; universal and compulsory

unicameral National Assembly or Asamblea Nacional (71 seats; members elected by popular vote to serve five-year terms)

Supreme Court of Justice or Corte Suprema de Justicia (nine judges appointed for staggered 10-year terms); five superior courts; three courts of appeal

Democratic Change or CD [Ricardo MARTINELLI]; Democratic Revolutionary Party or PRD [Francisco SANCHEZ Cardenas]; Nationalist Republican Liberal Movement or MOLIRENA [Sergio GONZALEZ-Ruiz]; Panamenista Party [Juan Carlos VARELA Rodriguez] (formerly the Arnulfista Party); Patriotic Union Party or UP (combination of the Liberal National Party or PLN and the Solidarity Party or PS)[Anibal GALINDO]; Popular Party or PP [Milton HENRIQUEZ] (formerly Christian Democratic Party or PDC)

Chamber of Commerce; Concertacion Nacional (mechanism for government of Panama to formally dialogue with representatives of civil society); National Council of Organized Workers or CONATO; National Council of Private Enterprise or CONEP; National Union of Construction and Similar Workers (SUNTRACS); Panamanian Association of Business Executives or APEDE; Panamanian Industrialists Society or SIP; Workers Confederation of the Republic of Panama or CTRP

BCIE, CAN (observer), CD, CELAC, CSN (observer), FAO, G-77, IADB, IAEA, IBRD, ICAO, ICC (national committees), ICRM, IDA, IFAD, IFC, IFRCS, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, ISO, ITSO, ITU, ITUC (NGOs), LAES, LAIA, MIGA, NAM, OAS, OPANAL, OPCW, PCA, SICA, UN, UNASUR (observer), UNCTAD, UNESCO, UNIDO, Union Latina, UNWTO, UPU, WCO, WFTU (NGOs), WHO, WIPO, WMO, WTO

divided into four, equal rectangles; the top quadrants are white (hoist side) with a blue five-pointed star in the center and plain red; the bottom quadrants are plain blue (hoist side) and white with a red five-pointed star in the center; the blue and red colors are those of the main political parties (Conservatives and Liberals respectively) and the white denotes peace between them; the blue star stands for the civic virtues of purity and honesty, the red star signifies authority and law

Panama's dollar-based economy rests primarily on a well-developed services sector that accounts for more than three-quarters of GDP. Services include operating the Panama Canal, logistics, banking, the Colon Free Zone, insurance, container ports, flagship registry, and tourism. Economic growth will be bolstered by the Panama Canal expansion project that began in 2007 and is scheduled to be completed by 2014 at a cost of $5.3 billion - about 10% of current GDP. The expansion project will more than double the Canal's capacity, enabling it to accommodate ships that are too large to traverse the existing canal. The United States and China are the top users of the Canal. Panama also plans to construct a metro system in Panama City, valued at $1.2 billion and scheduled to be completed by 2014. Panama's booming transportation and logistics services sectors, along with aggressive infrastructure development projects, have lead the economy to continued high growth in 2012. Strong economic performance has not translated into broadly shared prosperity, as Panama has the second worst income distribution in Latin America. About 30% of the population lives in poverty; however, from 2006 to 2012 poverty was reduced by 10 percentage points, while unemployment dropped from 12% to 4.4% of the labor force in 2012. A US-Panama Trade Promotion Agreement was approved by Congress and signed into law in October 2011. Seeking removal from the Organization of Economic Development's gray-list of tax havens, Panama has also recently signed various double taxation treaties with other nations.

$55.8 billion (2012 est.)

$51.43 billion (2011 est.)

$46.51 billion (2010 est.)

$34.82 billion (2012 est.)

30.1% of GDP (2012 est.)

26.5% of GDP (2012 est.)

-2.9% of GDP (2012 est.)

37% of GDP (2012 est.)

40% of GDP (2011 est.)

6.6% (31 December 2012 est.)

6.91% (31 December 2011 est.)

$7.488 billion (31 December 2012 est.)

$6.107 billion (31 December 2011 est.)

$29.72 billion (31 December 2012 est.)

$25.73 billion (31 December 2011 est.)

$31.47 billion (31 December 2012 est.)

$28.1 billion (31 December 2011 est.)

$10.68 billion (31 December 2011)

$10.92 billion (31 December 2010)

$8.048 billion (31 December 2009)

bananas, rice, corn, coffee, sugarcane, vegetables; livestock; shrimp

-$4.191 billion (2012 est.)

-$3.892 billion (2011 est.)

$17.97 billion (2012 est.)

$16.93 billion (2011 est.)

gold, bananas, shrimp, sugar, iron and steel waste, pineapples, watermelons

US 13.1%, South Korea 12.5%, Honduras 10.2%, Japan 9.3%, India 7%, Canada 4.4%, Mexico 4.2% (2011)

$24.04 billion (2012 est.)

$22.95 billion (2011 est.)

fuel products, medicines, vehicles, iron and steel rods, cellular phones

Japan 23.5%, China 23%, Singapore 18.1%, US 13%, South Korea 6% (2011)

$3.314 billion (31 December 2012 est.)

$2.315 billion (31 December 2011 est.)

$13.13 billion (31 December 2012 est.)

$12.21 billion (31 December 2011 est.)

balboas (PAB) per US dollar -

6.546 billion kWh (2010 est.)

5.805 billion kWh (2010 est.)

39 million kWh (2010 est.)

71 million kWh (2010 est.)

1.815 million kW (2009 est.)

51.6% of total installed capacity (2009 est.)

0% of total installed capacity (2009 est.)

48.4% of total installed capacity (2009 est.)

0% of total installed capacity (2009 est.)

0 bbl/day (2011 est.)

0 bbl/day (2009 est.)

0 bbl (1 January 2010 est.)

0 bbl/day (2008 est.)

98,890 bbl/day (2011 est.)

0 bbl/day (2008 est.)

46,370 bbl/day (2008 est.)

0 cu m (1 January 2012 est.)

15.46 million Mt (2010 est.)

6.735 million (2011)

multiple privately-owned TV networks and a government-owned educational TV station; multi-channel cable and satellite TV subscription services are available; more than 100 commercial radio stations (2007)

800 km (includes the 82-km Panama Canal that is being widened) (2011)

Balboa, Colon, Cristobal

no regular military forces; Panamanian public forces include: Panamanian National Police (PNP), National Air-Naval Service (SENAN), National Border Service (SENAFRONT) (2010)

on 10 February 1990, the government of then President ENDARA abolished Panama's military and reformed the security apparatus by creating the Panamanian Public Forces; in October 1994, Panama's Legislative Assembly approved a constitutional amendment prohibiting the creation of a standing military force but allowing the temporary establishment of special police units to counter acts of "external aggression"

organized illegal narcotics operations in Colombia operate within the remote border region with Panama

major cocaine transshipment point and primary money-laundering center for narcotics revenue; money-laundering activity is especially heavy in the Colon Free Zone; offshore financial center; negligible signs of coca cultivation; monitoring of financial transactions is improving; official corruption remains a major problem