## 1. Revenue and Profit for State-Owned Enterprises (2014-2023)

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### A. Introduction
- Panama’s SOE sector comprises 16 non-financial enterprises and 8 financial institutions.
- The Panama Canal Authority (ACP) is not among the 16 non-financial enterprises but is considered in this paper and is the largest SOE.
- All fully-owned SOEs are consolidated in the general government budget, but only a subset is part of the non-financial public sector (NFPS) for budget purposes.
- Panama holds equity stakes, including majority holdings, in other enterprises (examples cited: AES Panama and Panama Petroterminal).
- Relative to other Latin American countries, Panama’s SOE liabilities-to-GDP are about in line with the average.
- SOE size ranges from entities with a budget below $1 million to very large corporations.
- Public satisfaction: metro system and Tocumen Airport perceived as functioning well; significant concerns persist about water supply, sewage, and waste collection.

### B. Panama Canal Authority (ACP)
- Institutional facts:
  - Handover date: December 31, 1999.
  - Oversight: 11-member Board of Directors with staggered 9-year terms.
  - Budget: prepares its own budget that is approved by the National Assembly (NA) in a strict yes/no vote.
  - Labor regime: Constitution grants a special, merit-based labor regime.
  - Restrictions: ACP is prohibited from buying Panamanian government debt (Art. 44 of the Organic Law).
  - Constraints on government use: National Government may not use the ACP’s revenues or patrimony as collateral for loans or other financial transactions (Art. 45 of the Organic Law).
  - Governance limits: Directors may be candidates to elected office only if they resign at least six months prior to the election date (ACP’s Organic Law, Art. 16).
  - Staff political activity: Code of Ethics (Art. 46) prohibits employees from engaging in propaganda and party affiliation activities during hours of service and on premises; Code explicitly allows staff to vote or run for elected office (Art. 48).
- Performance and role:
  - ACP recognized as a well-run organization that exceeded expectations since handover (Gedan, 2016).
  - ACP enjoys a credit rating better than the sovereign.
  - ACP transfers to the government have been over 3 percent of GDP in recent years.
  - Identified future risks: election of a populist President hostile to ACP autonomy; a fiscal crisis prompting use of ACP resources; public dissatisfaction with ACP autonomy.
  - ACP oversaw major investments including construction of the Neopanamax locks and contributed to economic integration and growth in logistics and trade.

### C. Governance of Other State-Owned Enterprises
- Legal and organizational framework:
  - Other SOEs lack the constitutional protections enjoyed by the ACP.
  - Most SOEs established through specific legislation and governed by arrangements outlined in the Manual de Organización del Sector Publico de la República de Panamá (most recent edition 2017).
  - Legal forms: most are public limited companies; some (e.g., IDAAN) are autonomous state entities.
  - Ownership model: centralized—Ministry of Economy and Finance (MEF) exercises the state’s shareholder rights; other ministries may be involved for sector-specific SOEs.
  - Appointments: senior officials are largely political appointees; CEOs often appointed by the President or the MEF and tend to be replaced after elections.
- Assessments and findings:
  - 2021 OECD assessment (Panama responses by MEF) found some good practices but considerable weaknesses in how state ownership rights are exercised and in SOE governance.
  - IGCP evaluation (2016, updated 2019) of five SOEs found average compliance of 28 percent (minimum 23 percent, maximum 36 percent) against OECD Guidelines (2015).
  - Main weaknesses: politicized boards with little authority and no independence; lack of knowledge of good corporate governance practices; lack of transparency on corporate governance; absence of audit committees.

### D. Relationship with the Government Budget
- Budgetary integration and treatment:
  - Government budget sets revenue and expenditure targets for SOEs; these targets are approved by the National Assembly and frequently adjusted during the fiscal year.
  - The 2023 Fiscal Transparency Assessment found budgetary classification of SOEs is inconsistent and not in line with international standards.
  - Four large SOEs excluded from the NFPS: ACP, Tocumen International Airport, ENA and ETESA; these companies and state-owned financial intermediaries are included in the General Budget.
  - Companies with less than 100 percent government equity are not covered by the budget (examples: AES Panama, Petroterminal de Panama).
  - Eight other commercial companies with government equity stakes; clarity on effective control over these companies is lacking per the Fiscal Transparency Assessment.

### E. Reporting and Accountability
- Reporting regimes:
  - SOEs report monthly to MEF, the Office of the Comptroller General (OCG) and the Budget Committee of the National Assembly on budget execution.
  - OCG publishes basic financial information (budget execution, revenues, expenditures, and profit/loss) for SOEs on a quarterly and annual basis and audits SOEs.
- Public disclosure and transparency:
  - Public reporting practices vary considerably; some SOEs publish only legally required minimums.
  - Public corporations must produce IFRS financial statements audited by a recognized auditor.
  - SOEs that raise funds from financial markets (e.g., ENA and Tocumen Airport) generally provide more informative financial disclosures.
  - Transparency law (Law 6 on Transparency) requires SOEs to publish a range of information; ANTAI monitors disclosure practices and publishes disclosed information on its website.
  - Quality of disclosed information varies; published financial information is often very basic.

### F. Financial Performance (2014–2023)
- Data coverage:
  - Revenue and profit/loss charts use OCG-published data for 2014-2023; earlier data not available on OCG website.
- Aggregate contribution dynamics:
  - Non-ACP SOEs contributed significantly to the budget in the second half of the 2000s, with contribution exceeding 1 percent of GDP in 2008.
  - Between 2017 and 2022 these non-ACP SOEs were a drag rather than a contributor to the government’s finances.
  - ACP has been a major and steadfast contributor, with transfers of over 3 percent of GDP in recent years.
- Heterogeneity across SOEs and revenue composition examples:
  - Tocumen Airport: Revenues of $266 million in 2023, loss of $13 million for the year.
  - Metro de Panama: ticket sales and other commercial revenues account only for about 25-30 percent of its revenues; revenues largely consist of regular capital increases financing expansion.
  - Bingos Nacionales: 2023 revenues of $325,000; depends on subsidies for about two thirds of its revenues; loss for the year over $600,000.
  - EGESA: 2021 revenues of $116,000, expenditures $1.6 million; small electricity generator operating a single solar plant has seen revenues collapse as its original business disappeared.
  - ETESA: 2023 revenues of $155 million, profit of $28 million.
  - ENA: Consolidated revenues of $154 million in 2023 and net profit of $26 million.
  - Zona Libre de Colón: Revenues of $25 million in 2024 and profit of $1.8 million.
  - Banco Nacional de Panamá (BNP): In 2024, booked $484 million in net interest income and a net profit of $323 million.
  - Caja de Ahorros: In 2024, booked a net profit of $35 million on net interest income of $132 million.
  - Banco de Desarrollo Agropecuario: January-October 2024, $7 million in operational revenues and $25 million in operational expenditures.

### G. Analysis: ACP versus Other SOEs
- Market position and revenue potential:
  - ACP benefits from a monopoly position with limited competition from alternative sea routes in a global, capital-intensive sector, providing pricing power and constant demand.
  - ACP has segmented the market and differentiated pricing by vessel type, and has increased revenue/profit potential via investments (e.g., Neopanamax locks).
- Public-policy constraints for other SOEs:
  - Other SOEs serve mostly domestic markets with limited spending power, constraining revenue mobilization.
  - Many SOEs provide public services where pricing must consider social and public policy objectives—limiting profit-maximization.
- Governance differences:
  - ACP benefits from constitutionally enshrined independence, an independent supervisory board, and good governance practices.
  - Other SOEs are managed by politically appointed boards and management with limited financial independence and governance practices that differ from international standards.
  - Transparency of governance arrangements and financial performance in other SOEs can be significantly improved.

### H. Privatization
- Historical context:
  - Waves of privatizations and rationalization occurred in the 1980s and 1990s; about 45 SOEs and decentralized agencies in 1983.
  - Privatizations under President Pérez Balladares (1994-1999) included ports, INTEL (telecommunications), and the hydroelectric power system.
  - Reforms including SOE management strengthening and regulatory reform to allow privatization were part of the 1995-96 IMF Standby Arrangement.
  - There have been no privatizations in recent times.
- Scope for future privatizations:
  - Limited scope: SOEs operating on a commercial basis without public policy roles could qualify.
  - SOEs providing key public services with constrained revenue/profit potential are unlikely to attract buyers; private ownership may conflict with public policy roles and valuation is difficult when revenues/expenses are policy-dependent.
  - By law, proceeds from SOE sales go to the Sovereign Wealth Fund.

### I. Conclusions and Policy Implications
- Conclusions:
  - The ACP is a well-run organization that delivers steady and large contributions to the budget, successfully managed a major expansion and other investment projects, is well respected by customers, and has contributed greatly to the Panamanian economy. Its institutional autonomy and good corporate governance have been key to its success.
  - Panama’s other SOEs display mixed financial performance; some are profitable and financially sound while others depend on budget resources.
- Policy implications and recommendations:
  - Draw lessons from the ACP’s experience: greater independence in governance, finances and operations for other SOEs could improve financial performance and service quality.
  - Enhance transparency and oversight mechanisms for SOEs to align governance practices more closely with international standards.
  - Consider limited privatization for commercially-oriented SOEs that do not fulfill public policy roles, while recognizing valuation and policy-consistency constraints for public-service SOEs.

*Source: IMF — "1. Revenue and Profit for State-Owned Enterprises (2014-2023)" (excerpt).*

### 1. Revenue and Profit for State-Owned Enterprises (2014-2023) ____________________ 8

### 1. Revenue and Profit for State-Owned Enterprises (2014-2023)

### A. Introduction
- Panama’s SOE sector comprises 16 non-financial enterprises and 8 financial institutions.
- The Panama Canal Authority (ACP) is not among the 16 non-financial enterprises but is considered in this paper and is the largest SOE.
- All fully-owned SOEs are consolidated in the general government budget, but only a subset is part of the non-financial public sector (NFPS) for budget purposes.
- Panama holds equity stakes, including majority holdings, in other enterprises (examples cited: AES Panama and Panama Petroterminal).
- Relative to other Latin American countries, Panama’s SOE liabilities-to-GDP are about in line with the average.
- SOE size and activities range from entities with a budget below $1 million to very large corporations.
- Public satisfaction varies: metro system and Tocumen Airport perceived as functioning well; significant concerns persist about water supply, sewage, and waste collection.

### B. Panama Canal Authority (ACP)
- Key facts and institutional features:
  - Handover date: December 31, 1999.
  - Oversight: 11-member Board of Directors with staggered 9-year terms.
  - Budget: prepares its own budget that is approved by the National Assembly (NA) in a strict yes/no vote.
  - Labor regime: Constitution grants a special, merit-based labor regime.
  - Restrictions: ACP is prohibited from buying Panamanian government debt (Art. 44 of the Organic Law).
  - Constraints on government use: National Government may not use the ACP’s revenues or patrimony as collateral for loans or other financial transactions (Art. 45 of the Organic Law).
  - Governance limits: Directors may be candidates to elected office only if they resign at least six months prior to the election date (ACP’s Organic Law, Art. 16).
  - Staff political activity: Code of Ethics (Art. 46) prohibits employees from engaging in propaganda and party affiliation activities during hours of service and on premises; Code explicitly allows staff to vote or run for elected office (Art. 48).
- Performance and role:
  - ACP recognized as a well-run organization that exceeded expectations since handover (Gedan, 2016).
  - ACP enjoys a credit rating better than the sovereign.
  - ACP transfers to the government have been over 3 percent of GDP in recent years.
  - ACP’s autonomy and governance are credited with its success; identified future risks include: election of a populist President hostile to ACP autonomy; a fiscal crisis prompting use of ACP resources; and public dissatisfaction with ACP autonomy.
  - ACP has overseen major investments including construction of the Neopanamax locks and contributed to economic integration and growth in logistics and trade.

### C. Governance of Other State-Owned Enterprises
- Legal and organizational framework:
  - Other SOEs lack the constitutional protections enjoyed by the ACP.
  - Most SOEs established through specific legislation and governed by arrangements outlined in the Manual de Organización del Sector Publico de la República de Panamá (most recent edition 2017).
  - Legal forms: most are public limited companies; some (e.g., IDAAN) are autonomous state entities.
  - Ownership model: centralized—Ministry of Economy and Finance (MEF) exercises the state’s shareholder rights; other ministries may be involved for sector-specific SOEs.
  - Appointments: senior officials are largely political appointees; CEOs often appointed by the President or the MEF rather than by Boards and tend to be replaced after elections.
- Assessments and findings:
  - 2021 OECD assessment (Panama responses by MEF) found some good practices but considerable weaknesses in how state ownership rights are exercised and in SOE governance (see Annex II in source).
  - Instituto de Govemo Corporativo – Panama (IGCP) evaluation (2016, updated 2019) of five SOEs (ENA, ETESA, IDAAN, Tocumen, Metro de Panamá) against OECD Guidelines (2015) found average compliance of 28 percent (minimum 23 percent, maximum 36 percent).
  - Main weaknesses identified: politicized boards with little authority and no independence; lack of knowledge of good corporate governance practices; lack of transparency on corporate governance; absence of audit committees.

### D. Relationship with the Government Budget
- Budgetary integration and treatment:
  - Government budget sets revenue and expenditure targets for SOEs; these targets are approved by the National Assembly and frequently adjusted during the fiscal year.
  - The 2023 Fiscal Transparency Assessment found budgetary classification of SOEs is inconsistent and not in line with international standards.
  - Four large SOEs excluded from the NFPS: ACP, Tocumen International Airport, ENA and ETESA; these companies and state-owned financial intermediaries are included in the General Budget.
  - Companies with less than 100 percent government equity are not covered by the budget (examples: AES Panama, Petroterminal de Panama).
  - There are eight other commercial companies with government equity stakes; clarity on effective control over these companies is lacking per the Fiscal Transparency Assessment.

### E. Reporting and Accountability
- Reporting regimes:
  - SOEs report monthly to MEF, the Office of the Comptroller General (OCG) and the Budget Committee of the National Assembly on budget execution.
  - OCG publishes basic financial information (budget execution, revenues, expenditures, and profit/loss) for SOEs on a quarterly and annual basis and audits SOEs.
- Public disclosure and transparency:
  - Public reporting practices vary considerably; some SOEs publish only legally required minimums.
  - Public corporations must produce IFRS financial statements audited by a recognized auditor.
  - SOEs that raise funds from financial markets (e.g., ENA and Tocumen Airport) generally provide more informative financial disclosures.
  - Transparency law (Law 6 on Transparency) requires SOEs to publish a range of information; ANTAI monitors disclosure practices and publishes disclosed information on its website.
  - Quality of disclosed information varies; published financial information is often very basic.

### F. Financial Performance (2014–2023)
- Data coverage:
  - Revenue and profit/loss charts use OCG-published data for 2014-2023; earlier data not available on OCG website.
- Aggregate contribution dynamics:
  - Non-ACP SOEs contributed significantly to the budget in the second half of the 2000s, with contribution exceeding 1 percent of GDP in 2008.
  - Between 2017 and 2022 these non-ACP SOEs were a drag rather than a contributor to the government’s finances.
  - ACP has been a major and steadfast contributor, with transfers of over 3 percent of GDP in recent years.
- Heterogeneity across SOEs and revenue composition examples:
  - Tocumen Airport: solid revenues and generally profitable.
  - Metro de Panama: ticket sales and other commercial revenues account only for about 25-30 percent of its revenues; revenues largely consist of regular capital increases financing expansion.
  - Bingos Nacionales: depends on subsidies for about two thirds of its revenues.
  - EGESA: a small electricity generator operating a single solar plant has seen revenues collapse as its original business (operation of a number of gas turbines) disappeared.

### G. Analysis: ACP versus Other SOEs
- Market position and revenue potential:
  - ACP benefits from a monopoly position with limited competition from alternative sea routes in a global, capital-intensive sector, providing pricing power and constant demand.
  - ACP has segmented the market and differentiated pricing by vessel type, and has increased revenue/profit potential via investments (e.g., Neopanamax locks).
- Public-policy constraints for other SOEs:
  - Other SOEs serve mostly domestic markets with limited spending power, constraining revenue mobilization.
  - Many SOEs provide public services (utilities, public transport, food production promotion) where pricing must consider social and public policy objectives—limiting profit-maximization.
- Governance differences:
  - ACP benefits from constitutionally enshrined independence, an independent supervisory board, and good governance practices.
  - Other SOEs are managed by politically appointed boards and management with limited financial independence and governance practices that differ from international standards.
  - Transparency of governance arrangements and financial performance in other SOEs can be significantly improved.

### H. Privatization
- Historical context:
  - Waves of privatizations and rationalization occurred in the 1980s and 1990s; about 45 SOEs and decentralized agencies in 1983.
  - Privatizations under President Pérez Balladares (1994-1999) included ports, INTEL (telecommunications), and the hydroelectric power system.
  - Reforms including SOE management strengthening and regulatory reform to allow privatization were part of the 1995-96 IMF Standby Arrangement.
  - There have been no privatizations in recent times.
- Scope for future privatizations:
  - Limited scope: SOEs operating on a commercial basis without public policy roles could qualify.
  - SOEs providing key public services with constrained revenue/profit potential are unlikely to attract buyers; private ownership may conflict with public policy roles and valuation is difficult when revenues/expenses are policy-dependent.
  - By law, proceeds from SOE sales go to the Sovereign Wealth Fund.

### I. Conclusions and Policy Implications
- Conclusions:
  - The ACP is a well-run organization that delivers steady and large contributions to the budget, successfully managed a major expansion and other investment projects, is well respected by customers, and has contributed greatly to the Panamanian economy. Its institutional autonomy and good corporate governance have been key to its success.
  - Panama’s other SOEs display mixed financial performance; some are profitable and financially sound while others depend on budget resources.
- Policy implications and recommendations (drawn from analysis):
  - Draw lessons from the ACP’s experience: greater independence in governance, finances and operations for other SOEs could improve financial performance and service quality.
  - Enhance transparency and oversight mechanisms for SOEs to align governance practices more closely with international standards.
  - Consider limited privatization for commercially-oriented SOEs that do not fulfill public policy roles, while recognizing valuation and policy-consistency constraints for public-service SOEs.

*Source: IMF — "1. Revenue and Profit for State-Owned Enterprises (2014-2023)" (excerpt).*

### References

### References

### Key cited works
- Gedan, Benjamin N., 2016, “Understanding the political economy of successful state-owned enterprise management: a case study of the Panama Canal Authority”
- Instituto de Goberno Corporativo – Panama (IGCP), 2019, “Evaluación de las Prácticas de Gobierno Corporativo de 5 Empresas de Propiedad Estatal Panameñas.” https://igc-panama.org/wp-content/uploads/2023/09/Evaluacion-de-las-Practicas-de-Gobierno-Corporativo-de-5-Empresas-de-Propiedad-Estatal-Panamenas.-Actualizacion-a-octubre-2019._compressed.pdf
- OECD, 2015, “Guidelines on the Corporate Governance of State-Owned Enterprises”, https://www.oecd.org/en/publications/2015/11/oecd-guidelines-on-corporate-governance-of-state-owned-enterprises-2015-edition_g1g5a749.html
- OECD, 2019, “Guidelines on Anti-corruption and Integrity in State-Owned Enterprises”, www.oecd.org/corporate/Anti-Corruption-Integrity-Guidelines-for-SOEs.htm
- OECD, 2021, “Anti-corruption and integrity in state-owned enterprises in Latin America: A survey of ownership entities in Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Panama and Peru”, http://www.oecd.org/corporate/Survey-Integrity-Anti-Corruption-SOEs-Latin-America.htm
- World Bank, 1983, “Report and Recommendation of the President of the International Bank for Reconstruction and Development to the Executive Directors on a Proposed Structural Adjustment Loan in an Amount Equivalent to US$60.2 Million to the Republic of Panama.”

### Annex I. List of State-Owned Enterprises — Selected factual data and financials
- Aeropuerto Internacional de Tocúmen, S.A.: Revenues of $266 million in 2023, loss of $13 million for the year. https://www.tocumenpanama.aero/
- Agencia Panamá-Pacifico: Revenues of $4.47 million and expenditures of $5.3 million in 2022. https://www.panamapacifico.com/
- Autoridad de Aseo Urbano y Domiciliario (AAUD): Revenues in 2023 of $54.5 million and expenditures of $63.8 million. https://www.aaud.gob.pa/index.asp
- Autoridad de Aeronáutica Civil (AAC): Civil aviation authority. https://aeronautica.gob.pa/
- Autoridad Marítima de Panamá (AMP): Mentioned contribution of $112 million annually to the government budget. https://www.amp.gob.pa/
- Bingos Nacionales: 2023 revenues of $325,000. Loss for the year over $600,000. https://www.facebook.com/p/Bingos-Nacionales-100064149638645
- Empresa de Generación Eléctrica, S.A. (EGESA): 2021 revenues of $116,000, expenditures $1.6 million. https://www.egesa.net/
- Empresa de Transmisión Eléctrica, S.A. (ETESA): 2023 revenues of $155 million, profit of $28 million. https://www.etesa.com.pa/
- Empresa Mercados Nacionales de la Cadena de Frío, S.A.: No financial information found. https://www.cadenadefrio.com.pa/
- Empresa Nacional de Autopistas, S.A. (ENA): Consolidated revenues of $154 million in 2023 and net profit of $26 million. https://ena.com.pa/
- Instituto de Acueductos y Alcantarillados Nacionales (IDAAN): No financial statements found. http://www.idaan.gob.pa/ (Website inaccessible on January 29, March 18, May 11 and July 7, 2025.)
- Instituto de Mercado Agropecuario (IMA): Budget of $124.7 million for 2024, up from $68.7 million in the original budget. https://ima.gob.pa/
- Lotería Nacional de Beneficencia: 2024 budget of $216 million. http://www.lnb.gob.pa/
- Metro de Pánama, S.A.: Revenues of $48 million and expenses of $52 million during January-October 2024. Loss for the period of $104 million due to amortization/depreciation charges of $88 million. Most recent financial statements on the website are for 2021. https://www.elmetrodepanama.com/
- Transporte Masivo, S.A.: 2021 loss of $60 million on revenues of $101 million (of which $71 million were subsidies). https://www.mibus.com.pa/nosotros/
- Zona Libre de Colón: Revenues of $25 million in 2024 and profit of $1.8 million. https://www.zolicol.gob.pa/

### Annex I. Financial Intermediaries — Selected factual data and financials
- Banco de Desarrollo Agropecuario: January-October 2024, $7 million in operational revenues and $25 million in operational expenditures. https://www.bda.gob.pa/
- Banco Hipotecario Nacional: January-October 2024, $6.5 million in current revenues and $8 million in current expenditures. 2023 current revenues of $5.8 million. https://www.bhn.gob.pa/
- Banco Nacional de Panamá (BNP): In 2024, booked $484 million in net interest income and a net profit of $323 million. https://www.banconal.com.pa/
- Caja de Ahorros: In 2024, booked a net profit of $35 million on net interest income of $132 million. https://www.cajadeahorros.com.pa/
- Instituto de Seguro Agropecuario (ISA): 2022 revenues $15 million, paid out $2.8 million in damages (for the 12 months to October 2022) and covered $76 million in risks. ISA receives subsidies from the state ($1.1 million) and funding from the Special Fund for the Compensation of Interest ($11.2 million). It had $8.4 million in expenditures during the first 10 months of 2022. http://isa.gob.pa/

### Annex I. Table 1 — Revenues and Subsidies of SOEs (selected cells preserved)
- Tocumen Airport: Revenues (in $ millions) 266
- APP (Panamá-Pacifico): Revenues (in $ millions) 4.5
- AAC: Revenues (in $ millions) (blank)
- AAUD: Revenues (in $ millions) 54.5
- AMP: Revenues (in $ millions) (blank)
- Bingo Nacionales: Revenues (in $ millions) 0.3
- EGESA: Revenues (in $ millions) 0.1
- ETESA: Revenues (in $ millions) 155
- Cadena de Frio: Revenues (in $ millions) (blank)
- ENA: Revenues (in $ millions) 154
- IDAAN: Revenues (in $ millions) (blank)
- IMA: Subsidies (in $ millions) 70.5
- Loteria Nacional: Revenues (in $ millions) 216
- Metro de Panama: Revenues (in $ millions) 48; Subsidies (in $ millions) 29.3
- Transporte Masivo: Revenues (in $ millions) 30; Subsidies (in $ millions) 67.4
- Zona Libre de Colón: Revenues (in $ millions) 25

Financial Institutions (selected)
- Banco de Desarrollo Agropecuario: Revenues (in $ millions) 7; Subsidies (in $ millions) 46.5
- Banco Hipotecario Nacional: Revenues (in $ millions) 6; Subsidies (in $ millions) 1.6
- BNP: Revenues (in $ millions) 484
- Caja de Ahorros: Revenues (in $ millions) 132
- ISA: Revenues (in $ millions) 3; Subsidies (in $ millions) 12

- Note: “1/ Based on publicly available information. Most recent data available. Cells are left blank when no data could be found in the public domain.”
- Note: “2/ For BNP and Caja de Ahorros, the revenues number reflects the sum of the interest margin and other revenues.”

### Annex II. Findings of 2021 OECD Assessment — Strengths and weaknesses
- Areas in which Panama scores well:
  - It is general practice to separate the roles of chair of the board and CEO.
  - It is a widespread practice for SOE boards to include independent members.
  - Panama reported that its SOEs disclose the costs related to the implementation of public policy initiatives.

- With respect to individuals that exercise ownership rights on behalf of the state, Panama is the only country in the study that:
  - is not a signatory to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (“Anti-Bribery Convention”).
  - does not have restrictions on individuals exercising ownership rights on behalf of the state on becoming involved in the corporate governance of private sector enterprises.
  - does not have confidential channels for public officials to report suspected instances of corruption or rule-breaking involving SOEs to responsible authorities that have the mandate and capacity to conduct investigations free from undue influence (“whistle-blower channel”). It is also among the countries that do not have protections for whistle-blowers.
  - does not require ownership officials to declare their assets.
  - does not have measures to mitigate the risks of insider trading.

- Other weaknesses:
  - Panama lacks requirements for SOEs to develop internal codes of ethics, conduct or similar policies.
  - Panama is the only country in the study in which laws criminalizing bribery of public officials do not apply to SOEs’ directors, top management and employees.
  - Panama does not have systems to assess SOEs’ compliance with applicable corporate governance standards and SOEs’ alignment with rules and guidance with respect to integrity and anti-corruption.
  - Panama does not have a mechanism for officials to find timely advice and freely discuss public integrity concerns (e.g., a special committee or designated Ethics officer).
  - Panama is the only country in the study that does not have a legal requirement for board members to act in the best interest of the SOE.
  - Panama is among the jurisdictions in the study in which the state can intervene in, or veto, SOEs’ management decisions.
  - Panama does not empower the board of directors of SOEs with the sole authority to appoint and dismiss senior executives, including the CEO.
  - Panama does not have a selection process for board members “on the basis of personal integrity and professional qualifications, using a clear, consistent and predetermined set of criteria for the board as a whole, for individual board positions and for the chair”, as recommended by the ACI Guidelines.
  - Panama does not prohibit politicians from sitting on the boards of SOEs.
  - Panama does not have a requirement for boards to include independent members.
  - Panama has no term limits for SOE board members.
  - Panama has no requirement for boards to carry out regular evaluations of their performance.
  - There is no requirement for board members and executive management to report potential conflicts of interest.
  - There is no requirement to establish a board audit committee, but it is common practice. It is not common practice for SOE boards to have a risk management committee and a committee to review the appointment of top management.

- Footnote: “This annex summarizes the findings of OECD (2021).”

### Annex III. IGCP’s Top Features of Panamanian State-Owned Enterprises — Summary of IGCP findings and recommendations
- 10 Best Features (with IGCP recommendations):
  1. Most SOEs are incorporated as corporations.
     - Recommendation: Organize as a corporation whenever practical and ensure that differences in legal treatment between private companies and SOEs are minimized.
  2. Financial statements use IFRS and are audited in accordance with the International Standards on Auditing.
     - Recommendation: Full compliance with IFRS appears to be a challenge for some SOEs; systems should be in place at the board level to monitor external auditor independence.
  3. All SOEs have websites and use them for transparency and disclosure purposes.
     - Recommendation: Provide more material and analytical information, not just unanalyzed data.
  4. Board sizes are in line with best practice (range from 5 to 7 members).
     - Recommendation: Consider flexibility; boards of 5 may be too small—consider increasing to 5 to 10 people.
  5. The positions of Board Chair and CEO are separate.
     - Recommendation: No changes recommended; maintain balance of power.
  6. Legal framework provides clear guidance on many good corporate governance practices.
     - Recommendation: Law can encourage change while allowing SOE-specific flexibility.
  7. The Transparency Law establishes disclosure requirements; ANTAI assesses compliance.
     - Recommendation: Law 6 on Transparency should require disclosure of essential information on corporate governance.
  8. Public procurement rules are clear.
     - Recommendation: SOEs should review control systems and the board’s role in overseeing them.
  9. SOEs have internal audit functions that report directly to the Boards.
     - Recommendation: Boards need to actively use internal audit; internal audit functions must ensure compliance with best practice standards.
  10. Obligation to report wrongdoing is enshrined in the law.
     - Recommendation: All SOEs should develop whistleblowing policies outlining procedures and guarantees of anonymity.

- 10 Worst Features (with IGCP recommendations):
  1. Weak implementation of the public procurement law.
     - Recommendation: Strengthen control systems and board independence in overseeing procurement.
  2. Board composition biased toward political appointments and interest groups.
     - Recommendation: Presidency should reduce political appointments, introduce independence, and base appointments on merit; allow non-Panamanians to serve as directors.
  3. Boards have little authority or autonomy and no independence.
     - Recommendation: Update roles/responsibilities; require a minimum number of independent members; define and disclose independence criteria.
  4. Board appointment processes are politically oriented, opaque, and not explicitly merit-based.
     - Recommendation: Create a central selection policy, require merit-based selection, publicly announce some positions, consider independent search consultants.
  5. Weak monitoring by boards of corporate governance systems, control, and reporting.
     - Recommendation: Evaluate and update legal roles; train board members in corporate governance.
  6. Absence of audit committees established according to best practice.
     - Recommendation: Ensure audit committees comply with best practice and include independent members with financial expertise; disclose audit committee information.
  7. Near-total lack of transparency regarding corporate governance.
     - Recommendation: Improve disclosure of corporate governance; revise Law 6 on Transparency; use UNCTAD’s Guide as a model.
  8. Limited systems for monitoring and disclosing conflicts of interest.
     - Recommendation: Implement more detailed policies, rules, documentation, and better disclosure.
  9. Culture of public administration leading to bureaucratic practices.
     - Recommendation: SOEs should adopt private sector practices in HR, incentive compensation, and management by objectives (MBO).
  10. Lack of knowledge of good corporate governance practices.
     - Recommendation: Train SOE executives, board members, and public officials; conduct annual corporate governance assessments and disclose corrective plans.

- Footnotes and checks:
  - Source: Instituto de Goberno Corporativo—Panama (2019).
  - A check on May 11, 2025 showed that the composition of the board was published on the websites of ETESA and Metro de Panama. It could not be found on the websites of ENA and Tocumen Airport. IDAAN’s website was not accessible.
  - A check on May 11, 2025 showed that ENA, ETESA and Tocumen Airport publish organigrams on their websites that show an internal audit function that reports to the board. Metro de Panama does not have a recent organigram on its website and does not list oversight of internal audit among the functions of the board, although it has a Director of Internal Audit on its Executive Board. IDAAN’s website was not accessible.

*Source: sipea2025124 - References (PDF).*

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_Source: https://www.imf.org/-/media/files/publications/selected-issues-papers/2025/english/sipea2025124.pdf_