Economy

First, and almost certainly most important, the country is stable both politically and economically. More specifically, Panama has had three sets of presidential and legislative elections since the downfall of strongman Manuel Noriega in 1989, and both have been fairly conducted without even a suggestion of corruption. Moreover, the country has adopted an amendment to its constitution prohibiting the formation of another military force by any administration.

This move is generally considered to have been a strong endorsement of democratic government in the country, both for the present and over the long term. Moreover, at noon on December 31, 1999, Panama became the sole steward of the Panama Canal, and the Government is determined to demonstrate conclusively to the world its ability to operate this famous waterway with the same efficiency as did the United States for more than 85 years. It is aware that it can accomplish that goal only if it fosters a mature and stable political system. Panama's wholly capitalistic economy has grown steadily since 1989 and the country continues to prosper.

Part and parcel of the economic stability of the country is the monetary agreement it has with the United States which allows Panama's unit of currency, the Balboa, to circulate at par with the U.S. dollar. Indeed, Panama does not even print its own paper money, using instead the American greenback as legal tender. Furthermore, there is no *exchange control.

Also for consideration is the fact that Panama does not impose any tax on income derived outside its borders. The country has strict banking and privacy laws designed to protect those doing business here. At the same time, Panama does not have any tax treaties with the United States or, for that matter, with any other country. In addition to the positive tax situation here, Panama also has the Free Trade Zone, which is considered one of the largest in the world.

All of these factors provide a sound basis for the conduct of offshore banking from this jurisdiction. And the banking business is booming in Panama: There are more than 85 banks from all over the world operating out of Panama City, a cosmopolitan metropolis, which boasts a well-trained and bilingual (English-Spanish) work force uniquely qualified to provide offshore banking services to clients from the United States and elsewhere. There also exists a solid and reliable communication infrastructure, which allows close and continuous personal contact between clients on every continent on the planet and their banking facility here.