Panamanian Balboa (PAB)

What Is the Panamanian Balboa (PAB)?

The Panamanian balboa (PAB) is the national currency of the Republic of Panama, which circulates alongside the U.S. dollar (USD), to which the PAB is pegged at par (1:1). Balboas are issued only in coin form and are subdivided into 100 centésimos.

The money's name honors Vasco Núñez de Balboa, the Spanish explorer, conquistador, and founder of the first European settlement in Panama in 1510.

Key Takeaways

  • The Panamanian balboa (PAB) is the official currency of the Republic of Panama.
  • The PAB is pegged at 1:1 to the U.S. dollar, and U.S. money circulates widely in the country.
  • Balboas are only minted as coins, with rare "seven-day" banknotes issued in 1941 collector's items fetching up to thousands of dollars each.
  • The currency is named after Vasco Núñez de Balboa, the Spanish explorer, conquistador, and founder of the first European settlement in Panama.

Understanding the Panamanian Balboa

The Panamanian balboa was first introduced in 1904, replacing the Colombian peso, following Panama’s independence from Colombia. With freedom came the introduction of new silver coins in denominations of 2 1/2, five, 10, 25, and 50 céntimos. Later, coins included coins in one-tenth, one-fourth, one-half, 1 1/4, and one céntimo, with metallic composition and size resembling coins issued by the U.S.

Panama commemorative coins in denominations of five, 10, 20, 50, 75, 100, 150, 200, and 500 balboas have been minted from time to time to celebrate significant milestones in Panama’s history.

Since its inception, the Panamanian balboa has been pegged to the US dollar at par. A significant American military and political presence, starting with the construction of the Panama Canal in 1904, influences the country's currency.

Seven Days "Arias" Balboa Banknotes

In 1941, President Dr. Arnulfo Arias enacted Article 156 of the Panamanian Constitution. This Article authorized both private and public banks to issue private currency Balboa banknotes and resulted in the creation of El Banco Central de Emisión de la República de Panamá, or Central Bank of Issue of the Republic of Panama.

Seven days later, a military coup replaced Arias with Ricardo Adolfo de la Guardia Arango. The new government immediately shut down the banknote issue, closed the bank, and ordered all 2.7 million notes issued to that date incinerated. Very few of these banknotes have survived and to this day the so-called “Seven Days’ Notes” (also called "Arias issues") are valuable collector’s items.

The Economy of Panama

Located on the thin slip of land connecting North and South America, Panama derives a significant portion of its income from the toll charged for the use of the Panama Canal. The country declared its independence from Spain in 1821 and a month later unified with their neighbor Columbia forming the Republic of Columbia.

In 1903, the region declared its independence from Columbia and became a constitutional democracy. The United States received criticism for encouraging the separation, due to their interest in reviving the failed French attempt at creating a man-made waterway between the Atlantic and Pacific oceans between 1881-1894. The U.S. led the Panama canal effort in 1904, eventually taking control of the waterway and finishing it in 1914. The Panama canal was and still remains a vital economic link for global trade and commerce.

The Panamanian government was a business monopolized oligarchy until the military challenged it in the 1950s and '60s. Elections in 1968, marred by violence and fraud, led the Panamanian National Guard to oust the elected president and appointed a provisional government.

The country passed a new constitution in 1972 but continued to be crippled by a succession of corrupt governments and fraudulent elections. Beginning in 1987, the U.S. would intervene in Panama again, imposing sanctions and eventually invading the country in 1989 to replace the government. Stability returned to the country in the 1990s, and this situation continues through the 2000s.

In recent years, the Republic of Panama has seen growth in its economy but there continues to be an unequal distribution of wealth. The updating and expansion of the Panama Canal opened in 2016, and the Canal continues to provide a significant portion of the country's income. According to the 2019 World Bank data, Panama experienced a 3% annual growth in its gross domestic product (GDP) with only a negligible amount of inflation. 

Article Sources
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  1. Superintendencia de Bancos de Panama. "Uso de Dólar Norteamericano En El Terrirorio de la República de Panamá." Accessed Dec. 31, 2020.

  2. Office of the Historian. "FOREIGN RELATIONS OF THE UNITED STATES DIPLOMATIC PAPERS, 1935, THE AMERICAN REPUBLICS, VOLUME IV. The Panamanian Legation to the Department of State." Accessed Dec. 31, 2020.

  3. SKINNER. "The First Paper Currency of Panama." Accessed Dec. 31, 2020.

  4. Office of the Historian. "A Guide to the United States’ History of Recognition, Diplomatic, and Consular Relations, by Country, since 1776: Panama." Accessed Dec. 31, 2020.

  5. The World Bank. "Data Bank: World Development Indicators, Panama." Accessed Dec. 31, 2020.

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