Capital: Panama City

Size: 78,000 km²

Population: 2.8m

Currency: US Dollar (known as Balboa)

Language: Spanish

Visas: Not required by British nationals

Food: Ropa vieja ('old clothes') is beef sautéed with onions, garlic, tomatoes and green or red peppers served with yellow rice.

Panama is the crossroads of the Americas. Panama can be heady stuff indeed – but years of occupation and the 'Big Ditch' are not its only claim to fame. There are unexplored coral reefs, minute frogs in red, orange and yellow, the intriguing archipelago of San Blás, vast stretches of cool highlands and thundering rivers.

Panama City is a curious blend of old Spain and modern America. The rubble and ruins of Panamá Viejo (the old centre) lies to the east - the tale of its sacking in 1671 by Henry Morgan is the stuff of pirate legend. Spreading inland from the Gulf of Panama, the modern centre lies at the Pacific end of the Panama Canal, surrounded by palm-fringed beaches and rolling hills. The canal is both an engineering marvel and the world's greatest short cut, raising ocean-going liners 26m to Lake Gatún on the 80km voyage between the Caribbean Sea and the Pacific Ocean.

On the Caribbean coast, Portobello was the site of flamboyant 16th and 17th century markets, where fortified warehouses filled with Peruvian gold and silver were guarded against pirate raids - though today you'll only find quiet, beautiful beaches.

The archipelago of San Blás, to the east, is a string of islands stretching towards the Colombian border, inhabited by indigenous Kuna Indians.

Further still, the Darién Gap was, until recently, almost completely impenetrable but parts of the rainforest wilderness are now opening up to the most adventurous travellers.

On the Pacific, the Azuero Peninsula is dotted with old colonial towns, perfect surfing beaches and nature reserves hosting wetland birds and nesting turtles. Then head inland to the Chiriquí Highlands, a land of eternal spring where you can hike up Barú volcano, explore coffee fincas (plantations) or laze away days fishing or riding.

The virgin rainforests and coral reefs of the Bocas del Toro have been called the new Galapagos - a fragile paradise set to become Latin America's favourite new destination.

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