Vessels sailing under the Panama Country Flag are required to have on board this flag as part of flag state requirements that derive from maritime regulations in the International Code of Signals and the International Safety Management (ISM) Code. These codes are published by the International Maritime Organization (IMO) as an ongoing effort to reinforce maritime safety procedures and communications to the international maritime community. Fleet management companies and ship owners are responsible to ensure that each vessel in their respective fleets have the appropriate flag signage onboard to be in compliance. This flag is used to identify the flag state a vessel is sailing under and to communicate with other vessels under the provisions of the International Code of Signals.

The Panama Country Flag may be recognized by it's red, white and blue design which is separated into four quadrants. The lower hoist, or left quadrant is colored solid blue, while the upper fly, or right quadrant is colored solid red. A blue, five pointed star resides in the center of the upper hoist quadrant which displays a white background. The lower fly quadrant also displays a white background and contains a red, five pointed star. The Panama Country Flag was officially adopted in 1925, however it was approved in 1903 and provisionally adopted the following year. The Flag is designated to hold a proportional ratio of 2:3, height to length, respectively. The colors directly correlate to the two primary political parties in Panama. The Liberal Party is represented by the red colors and the Conservative Party identifies with the blue colors. White coloration is intended to show the peace and cooperation between the two political parties. The equal distribution of colors throughout the Flag symbolizes that either Party has been in control at various times in history.

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