PANAMA CITY (Reuters) -The Panama Canal said on Thursday that lawmakers in the Central American nation had approved the proposed budget for the key global freight channel for the 2025/26 fiscal year, which is expected to bring an increase in state contributions.
For the October to September period, lawmakers backed a $5.21 billion budget for the canal, which is expected to bring $3.19 billion to state coffers, up 14.5% from the level set out in the prior year’s budget, the canal authority said.
Last week, the canal forecast a $3.5 billion profit for the fiscal year ending in September. The canal has said it expects less transits next year due to global economic instability.
The now-approved budget includes provisions for some of the canal’s planned investments, it added, including its plan to build a $1.6 billion reservoir to expand the canal, a project that has been challenged in court by local communities.
The Rio Indio reservoir project would displace some 2,500 people. A group representing farmers filed a lawsuit to Panama’s Supreme Court, saying most residents do not want to leave and that the project violates the constitution.
Building the reservoir would boost key supplies of water needed to transport cargo ships through a series of elevated locks, after a drought in 2023 caused the canal to reduce transits. Millions of gallons of water are needed per transit.
Panama has faced pressure from Washington over the running of the canal, with the Trump administration pledging to “take back” the waterway from perceived influence from China.
China and the United States compete for economic influence in the region, and the latter has been pushing countries in the Central American to limit the presence of Chinese companies.
(Reporting by Sarah Morland and Elida Moreno; Editing by Natalia Siniawski)
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