The flag of Panama was officially adopted on November 3, 1903. The flag was modeled after the USA flag, however, the colored stars are said to represent the country's conservative (red) and liberal (blue) parties. White symbolizes peace.
The upper right quarter shows a crossed sword and gun, symbols of the liberation from Spain and Colombia. The agricultural tools in the upper left quarter symbolise the tools used for making the Panama canal.
The canal itself is shown in the middle of the arms. The lower half shows in the right quarter a horn of plenty (cornucopia), symbol of the richness of the country. The left quarter shows a winged wheel, symbol of traffic. The eagle above the arms is the American eagle, as the USA was the first to recognise Panama as an independent country. The stars above the eagle represent the nine provinces present since 1946.