21.1 Panama is situated on the isthmus connecting the continents of North and South America, the Panama Canal linking the Caribbean Sea with the Pacific Ocean. The country has a population of 3.7 million, more than 1.6 million of whom live in the capital, Panama City. Panama gained its independence from Colombia in 1903 and is now a republic. A number of US military bases near the Panama Canal, and the canal itself, was transferred to Panama in December 1999. Between 2007 and 2016 the canal was widened to double the transit capacity, creating a new ‘post-Panamax’ category of vessel. The government of the Republic of Panama consists of a legislative assembly, an executive branch with executive power vested in the President, assisted by a Vice-President and an appointed cabinet, and a judicial branch. The legal tender is the Balboa, but following a treaty of 1904 US currency is used. Balboa paper currency is not printed, only coins.