The Balboa is Panama’s national currency, named after Spanish explorer Vasco Nez de Balboa, who encountered the Pacific Ocean. One Balboa represents one U.S. Dollar, and the U.S. Dollar has been lawfully exchanged in Panama since then. As a result, Panama is regarded a highly inflationary country; however, Panama can profit from the U.S. dollar’s resilience as the foundation of the world banking markets. For example, this implies that Panama will not face hyperinflation as a consequence of shifting exchange rates. Consequently, Panama has become a more attractive investment and tourist destination. Nevertheless, a dollarized system has outstanding inflation performances and may even lessen the influence of global trust shocks but not real external upsets (Bakari & Mabrouki, 2017). Furthermore, it is unclear whether Panama’s loose monetary policy resulted from the dollarization system or the competing, increasingly globalized banking sector.
Panama’s geographic position as a key maritime route adds to the significance of the Agreement. Approximately two-thirds of the Panama Canal’s yearly transits are destined to or from U.S. locations (Park et al., 2020). Almost all U.S. automotive and commercial goods shipments to Panama will be duty-free initially, with residual levies phased away over a ten-year period (Park et al., 2020). Information systems gear, farming, large machinery, aircraft and components, healthcare and measure environmental, ecological products, medicines, fertilizer, and agrochemicals are among the U.S. items that will benefit from immediate duty-free accessibility. The U.S. and Panama exchange crops like corn and bananas if we talk about exports and imports.