Republic of Panama

Fiscal Performance

Third Quarter 2017

Dulcidio De La GuardiaMinister of Economy and Finance

Iván ZarakVice Minister of Economy

Eyda Varela de ChinchillaVice Minister of Finance

November 2017

This presentation does not constitute or form part of, and should not be construed as, an offer or invitation to sell securities of the Republic of

Panama (“Republic”), or the solicitation of an offer to subscribe for or purchase securities of the Republic, and nothing contained herein shall form

the basis of or be relied on in connection with any contract or commitment whatsoever. Any decision to purchase any securities of the Republic

should be made solely on the basis of conditions of the securities and the information to be contained in the prospectus, prospectus supplement or

equivalent disclosure document produced in connection with the offering of such securities. Prospective investors are required to make their own

independent investigations and appraisals of the business and financial condition of the Republic and the nature of any securities of the Republic

before taking any investment decision with respect to securities of the Republic. The contents of this presentation should not be the basis for

making investment decisions, nor should the presentation be construed as a recommendation to engage in investment transactions. This

presentation is not related to the provision of advisory services regarding investment, tax, legal, financial, accounting, consulting or any other

related services, nor is a recommendation being provided to buy, sell or purchase any good or product.

This presentation contains forward-looking statements, which include all statements other than statements of historical facts, including, without

limitation, any statements preceded by, followed by or including the words “targets,” “believes,” “projects,” “estimates,” “expects,” “aims,” “intends,”

“may,” “anticipates,” “would,” “could” or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown

risks, uncertainties and other important factors beyond the Republic's control that could cause the Republic’s actual results, performance or

achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

These forward-looking statements speak only as at the date of this presentation. The financial information in this presentation should be used for

reference purposes only with the understanding that market conditions may change and past performance is not an indicator of future performance.

The Republic expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements

contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any of

such statements are based. However, the Republic reserves the right to update, amend or delete information contained in this presentation without

prior notice.

The Republic, the Ministry of Economy and Finance (MEF) and the Public Financing Directorate of MEF do not assume legal responsibility nor will

they be liable for the way that this information may be interpreted, including any inaccuracies, assumptions, or projections related to this

information. The Republic, MEF and the Public Credit Directorate of MEF will not be liable for any loss or damage that directly or indirectly arises

with respect to the use of this information.

LEGAL DISCLAIMER

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Contents:

Macroeconomic Overview

3

Fiscal Performance

Debt Profile

Recent Events

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Contents:

Macroeconomic Overview

4

Fiscal Performance

Debt Profile

Final Remarks

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3.5

5.9

5.7

4.0

2.6

0.2

0.7 0.8

2010 2011 2012 2013 2014 2015 2016 sep-17

Price controls scheme of President Varela comes into effect, helping to slow the rate of CPI

growth

Increase driven by biennial adjustment of the minimum wage

leading to increase in unit laborcosts in 2016

Panama´s growth continues to be supported by a well diversified economy and is seen when compared to regional peers.

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GDP growth, as of August 2017 (%)

Source: INEC

Macroeconomic Overview1

FDI Growth ( 2014-2016)

IQIQIQ

4,4584,494 5,225

2014 2015 2016

1,1…

1,315

2016 I Trim 2017 I TrimI Q 2016 I Q 2017

5.2%

5.8%

I SEM 2016 I SEM 2017August 2016 August 2017

2,589

2,689

2,845

2015 2016 2017

FDI Growth 2Q (2015-2016)

+5.8 %

Inflation(%)

Real GDP Growth Expected as of October 2017

Source: IMF

5.3% 3.9% 2.7% 2.1%

Source: INEC Source: INEC

US$million US$million

According to the World Economic Forum (WEF), Panama is ranked 11 out of 137 countries in macroeconomic environment.

3 Competitive AdvantegesMacroeconomic Overview1

Open Unemployment (%)

4.6 9.3 9.6 8.7 12.6

Panamá Argentina Costa Rica Colombia Brasil

26.2 25.8

23.022.1

2013 2014 2015 2016

Extreme Poverty (%)

Total Poverty (%)

11.1 11.0

10.39.9

2013 2014 2015 2016

21,809

9,467

Panama BBB Median

Total Poverty

(USD MM)

Source: World Economic Forum 2017-2018

Source: DAES

The fiscal year 2017 was a record year for the Panama Canal. It received a record 403.8 million tons of cargo, the largest amount of annual tonnage ever transited in its 103-year history.

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Macroeconomic Overview1

Source: ACP

Panama Canal Economic IndicatorsAugust YoY

-7.0%-4.4%

-10.6%

6.0%

19.3%23.7%

Transit Panama Canal Revenues Cargo Volume

August 2016 August 2017

403.8 million Cargo tonnage record

13,548 vessels Transited through the Panama Canal

Fiscal Year 2017

The 2018 Goverment Budget is part of an environment of economic growth of the country and meets the déficit limit of 0.5%.

Macroeconomic Overview1

USD 23.8 Billion2018 Goverment Budget

USD 9.5 Billion2018 Investment Budget

4th Bridge Over thePanama Canal

Financial Services

Development of Social Services

Other

Development and Promotion of Production

General Services

Infrastructure Development

Government Budget by Sector

46.8%

13.3%

14.2%

11.0%

2.4%

12.3%

Law 72 of November 13, 2017:

Selected economic indicators as of August 2017

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Macroeconomic Overview1

National Banking System

Consumption Industrial

Energy

Delivered Generation 1.0%

Power Supply 1.5%

Power Demand 1.5%

Chicken Production

Milk Production

Soft Drinks

2.1%

2.5%

-9.0%

Internal Deposits 2.9%

Loan Portfolio 1.3%

Net Profit 17.4%

Tourist Expenditures 0.6%

Number of Visitors 0.4%

Car Sales -13.1%

Average Liquidity Index 60.7%

Source: INEC

Contents:

Macroeconomic Overview

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Fiscal Performance

Debt Profile

Final Remarks

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4

104 mm

27 mm

19 mm

The NFPS results showed an income of US$ 8,323 million, expenses of US$9,752 million and a deficit of US$1,430 million, or 2.4% of GDP.

Personal Services by CategorySept 2016 – Sept 2017

Fiscal Performance2

Source: MEF

Deficit

93

4658

20

Education Security Health Judicial

(USD mm)

Main Investment Projects of the NFPSas of Sept17

38 mm

87 mm

128 mm

55% of SNPF Expenditures increase was due to personal services special laws for teachers, doctors and security personnel.

Contents:

Macroeconomic Overview

12

Fiscal Performance

Debt Profile

Final Remarks

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Debt Profile3

13Source: MEF

29 Sep 2017

Changes outlook on Panama to positive from stable; Baa2 rating affirmed

Prudent debt management has helped achieve favorable debt cost trends…

Debt Profile3

14Source: MEF

5.6%

5.3%

5.1%

4.8% 4.8% 4.8%

2012 2013 2014 2015 2016 sep-17

82.8%

17.2%Fixed

Floating

Source: Bloomberg

Source: MEF

Central Government Debt Interest as of Sep17 (US$millions)

Weighted average cost of debt (%)

… while protected from a tightening global interest rate environment by a solid debt structure and composition, as reflected by low EMBIG spreads

Debt composition by rate as of Sep17 (% of total) Quarterly Comparison of Global EMBIG with Panama and Latin American peersJuly 2017 – September 2017

100

150

200

250

300

350

30/6/17 15/7/17 30/7/17 14/8/17 29/8/17 13/9/17 28/9/17

EMBIG EMBIG PANAMA EMBIG COLOMBIA EMBIG PERU EMBIG MEXICO

408

116

404

1Q 2Q 3Q

Interest

Net Debt in $US million and as a percentage of GDP

18,231

20,222

21,602 21,602

34.5%

36.4%

37.8%

35.1%

33.0%

34.0%

35.0%

36.0%

37.0%

38.0%

39.0%

40.0%

16,000

17,000

18,000

19,000

20,000

21,000

22,000

2014 2015 2016(Projected)

2016 (Real)

Total Debt Net Debt/GDP

(Forcasted)

Panama has developed a successful market makers programs, which has a positive assessment by multilateral agencies and credit rating agencies, enhancing our status as a country with investment grade…

Debt Profile3

15Source: MEF

Local Market Issuances Secondary Market

(USD MM) (USD MM)

Since the launching of the Market Maker Program the Republic has issued

approximately US$4,781 billion in the local market, excluding the T. Bills.

Panama Yield Curves vs UST

387 323471 425 427

715

346 268

466

994

100

665290

318

60

1364

699

352

853

1317

1835

525

10921005

1363

680

2010 2011 2012 2013 2014 2015 2016 Sep. 2017

T. Bills T.Notes T.Bonds Total

26.2

312.2

620.9

762.9 767.6

533.3

1,266.9

572.39

2010 2011 2012 2013 2014 2015 2016 sep-17

(US$

mill

ion

TACC:74%

2020

2024

2025

2026

2027

2028

20292036

20472053

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

0 3 6 9 12 15 18 21 24 27 30 33 36 39

Yie

ld (

%)

Tenor (years)

External Curve Local Curve UST

2023

Macroeconomic Overview

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Fiscal Performance

Debt Profile

Final Remarks

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Prudent debt management has helped achieved a constant weighted average cost of debtof 4.8% from 2015 to September 2017.

Panama has fifteen years of sustained macroeconomic momentum supported by a strongtrack-record of economic growth, fiscal performance and debt management.

Panama´s diversified economy and low inflation continue to support strong economicgrowth with 5.8% growth as of August 2017.

Final Remarks4

The implementation of various initiatives under the development of the domestic capitalmarket, has allowed to close the spread among both curves of government debtsecurities.

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Great fiscal performance as of September 2017, the Central Government revenuesincreased 1.6%, collecting 83 million dollars more compared to previous years.