The Government of Panama is headed by the Executive branch, which is composed of a President and two Vicepresidents, democratically elected for a five-year term by direct vote.

The Ernesto Perez-Balladares administration, elected in 1994, was able to accomplish many market-based reforms including normalization of external debt, Tax Harmonization Law, labor code reform, accession to the WTO, and a successful privatization program of telecommunications and ports.

Mireya Moscoso, elected in 1999, Moscoso was the country's first woman president and the leader of a country at a moment of great historical importance as the Panama Canal started a new era under Panamanian administration.

Martin Torrijos, assumed power on Sept. 1, 2004 , after winning the presidential elections held on May 2, and his presidential administration will face the challenge of expanding the Panama Canal as well as implementing an aggressive economic development plan to foster trade, investments and development in Panama .

For the most part, Panamanian parties are driven relatively less by ideological concerns and tend to be centrist to conservative in terms of economic outlook. The Panamanian military was abolished by constitutional amendment in 1994, and the government still has a unique security arrangement with the U.S. due to the Neutrality Treaty Canal.