PANAMA CITY — Panamanian President Jose Raul Mulino on Thursday rejected the US State Department's claim that the US government vessels can now transit the Panama Canal free of charge.

At a news conference, Mulino said the US statement, made by "the entity that governs the foreign policy of the United States" is "based on a falsehood and that is intolerable".

The president expressed his "absolute refusal" to "manage bilateral relations based on lies and falsehoods", adding that he had asked Panama's ambassador in Washington to dispute the statement.

On Wednesday, the US State Department said on social platform X that Panama had agreed to waive fees for US government vessels transiting the Panama Canal, which would save the US government "millions of dollars a year".

Mulino also gave details of his conversation with US Secretary of Defense Pete Hegseth on Wednesday, in which he explained that he has no authority to set the canal transit fees or exempt anyone from them.

US President Donald Trump has accused the Central American country of charging excessive rates to use its trade passage, one of the busiest in the world.

US military vessels have priority of passage through the waterway, according to a 1977 neutrality treaty signed when the US agreed to return the canal to Panama. But all ships, regardless of origin, destination or flag, must pay tolls that vary depending on size and type.

Xinhua - Agencies