"The Central American nation of Panama has had five successive elected civilian governments since its return to democratic rule in 1989, and a sixth is scheduled to assume power on July 1, 2014 with the inauguration of current Vice President Juan Carlos Varela as President. Hailing from the center-right Panameñista Party, Varela won the May 4, 2014 presidential election with 39% of the vote in a three-candidate race. Significantly, Varela defeated the candidate of the ruling Democratic Change party of current President Ricardo Martinelli, who was constitutionally prohibited from running for reelection. Elected in 2009, Martinelli remained generally popular during his presidency despite criticism at various junctures for his combative style of governing. Nevertheless, his popularity ultimately was not enough to convince voters to support his party's candidate. One controversy that emerged in the campaign was that Martinelli's wife became his party's vice presidential candidate. This led to some critics complaining of an attempt by Martinelli to extend his influence in the next government. Panama's largely services-based economy has been booming in recent years, spurred on by several large infrastructure projects, including, most significantly, the Panama Canal expansion project that began in 2007 and is expected to be completed in early 2016. A challenge for the Varela government will be how to contend with slower economic growth rates as the Canal expansion project winds down. Another challenge for the government is making more headway in combating poverty and inequality in Panama, which still remain relatively high."
CRS Report for Congress, R43620