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Panama's dollar economy: the balboa at par, US dollar legal tender since 1904 and no exchange controls

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Last verified: 2026-10-29 · Status: Stable

Panama's monetary unit is the balboa, but since Ley 84 de 1904 the US dollar has been legal tender at par, one dollar for one balboa. The Constitution bars paper money of forced circulation, and Panama mints only coins whose denominations are set in the Código Fiscal. There is no exchange rate to manage, no FX market to access and no central bank approval for payments abroad: the regulator states that the dollar circulates without restrictions in commercial and financial transactions.

Panama's currency, the balboa (B/.), is at par with the US dollar, which circulates freely; the Superintendencia de Bancos states that the balboa's value is on a par with the US dollar and that the dollar circulates without restrictions in commercial and financial transactions (checked 29 October 2026). USD figures therefore equal the balboa figures.

Key facts

Exchange rate regime	Dollarized: US dollar legal tender at par with the balboa textLey 84 de 1904 art. 1, as of 2026-10-29 · in force
Exchange or capital controls on payments abroad	None; the US dollar circulates without restrictions textSuperintendencia de Bancos statement; Ley 54 de 1998 art. 2, as of 2026-10-29 · in force
Paper money of forced circulation allowed	No textConstitución art. 262, as of 2026-10-29 · in force
Balboa coin denominations above one balboa	1, 2 and 5 PABCódigo Fiscal art. 1179, as of 2026-10-29 · in force
Exchange rate used for USD conversions	1 PAB per USDBalboa at par with the US dollar (Superintendencia de Bancos); Ley 84 de 1904 art. 1, as of 2026-10-29 · in force

The rule

1. The monetary unit of the Republic is the balboa, divisible into one hundred centésimos. The gold dollar of the United States and its multiples are legal tender in the Republic at their nominal value, each equivalent to one balboa.
Example: A contract priced at B/.250,000 is paid with US$250,000 by wire or in cash; no conversion takes place. / US$250,000.Ley 84 de 28 de junio de 1904, sobre moneda, art. 1 and parágrafo, 1904-06-28 official text · verified 2026-10-29

2. The power to issue money belongs to the State, which may transfer it to official issuing banks as the law provides (art. 261). There shall be no paper money of forced circulation in the Republic (art. 262). Panama therefore does not issue a paper currency of its own that people can be compelled to accept.Constitución Política de 1972, texto único published by Decreto Ejecutivo 672 de 2004, arts. 261 and 262, 2004-11-15 official text · verified 2026-10-29

3. Panamanian coins in circulation have denominations of one, two and five balboas and fractional coins of 50, 25, 10, 5 and 1 centésimos, with the metal content, weight and design set in the Código Fiscal; the Ministry of Economy and Finance was authorized to mint 40 million one balboa and 40 million two balboa coins in fiscal periods 2010 and 2011.Código Fiscal art. 1179 as worded by Ley 8 de 2010 art. 91, art. 1179, 2010-03-15 official text · verified 2026-10-29

4. The Superintendencia de Bancos, the banking regulator, states that the official currency is the balboa, whose value is on a par with the US dollar, and that under Panamanian law the US dollar circulates freely and without restrictions in commercial and financial transactions.Superintendencia de Bancos de Panamá, historical review, Official statement on the monetary system, 2026-10-29 official text · verified 2026-10-29

5. Foreign investors and the companies they hold have the same rights and duties as nationals, and are guaranteed free disposal of the resources their investment generates and free repatriation of capital, dividends, interest and profits from the investment.Ley 54 de 22 de julio de 1998, legal stability of investments, art. 2, 1998-07-22 official text · verified 2026-10-29

Question	Answer in Panama	Rule
Which currency do contracts, payroll and taxes use?	Balboas, paid in US dollars at one to one	Ley 84 de 1904 art. 1
Is there an official FX market or exchange rate?	No; the balboa is fixed at par by law	Ley 84 de 1904 art. 1
Can paper money be forced on creditors?	No paper money of forced circulation	Constitución art. 262
Which local money exists?	Coins of 1, 2 and 5 balboas and fractional centésimos	Código Fiscal art. 1179
Is approval needed to send profits or capital abroad?	No; free repatriation is guaranteed	Ley 54 de 1998 art. 2
What still applies?	Taxes on the payment and AML reports on cash	Código Fiscal art. 733; Ley 23 de 2015 art. 53

What dollarization means in practice for a foreign investor in Panama, by rule.

Worked example

A foreign group invests US$2,000,000 in a Panamanian sociedad anónima: the funds are wired in dollars to a Panamanian bank account and booked as B/.2,000,000 with no conversion, no FX registration and no exchange spread.
Five years later the company sells assets and returns B/.500,000 of capital and pays a dividend; both leave in dollars without FX approval, subject only to the dividend tax rules and the bank's own know your customer checks.
Because the investor's reporting currency is often also the dollar, there is no translation loss on the Panamanian balance sheet.

Step by step

Open a dollar account at a Panamanian licensed bank for the operating company; expect full beneficial owner and source of funds checks under Ley 23 de 2015.
Price contracts, payroll and invoices in balboas or dollars; they are the same unit at par.
Plan taxes, not FX: dividends, interest and service payments abroad carry Panamanian withholding.
Keep large cash movements to a minimum; cash of B/.10,000 or more is reported by banks and declared at the border.

Common traps

No currency risk in Panama does not mean no currency risk for the group: payments to or from countries with their own FX controls, such as Argentina, follow those countries' rules.
Free movement of money is not freedom from AML scrutiny; banks report cash and quasi cash transactions of B/.10,000 or more.
The ten year stability guarantees of Ley 54 de 1998 require registration and a B/.2,000,000 investment; the general repatriation guarantee of art. 2 does not need registration.

Sources

Related: Panama country profile · live dashboard · central bank and release calendar · our posts on X · where Argentina is involved, see The Argentine Thread guide

← Annual compliance for Panamanian companies and foundations: tasa única dates, accounting records to the resident agent by 30 April, suspension, B/.1,000 reactivation and the 2026 dissolution of suspended entitiesRepatriating profits and capital from Panama: no FX approval, the free transfer guarantee of Ley 54 de 1998 and the 10 percent dividend tax →

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