If you are a traveler on a budget in Panama, buses are definitely the best way to get around. Not only will you be able to travel cheaply throughout the country, it is also a great way to see and enjoy the countryside in between. With only one in four households owning an automobile in the mostly rural country, Panamanian buses are an important and integral form of transportation for the small nation. While busing it may not be the fastest or most comfortable way to get around, it definitely provides an experience in itself. As locals usually travel by bus in between cities, (and it is usually best to do as the locals do) with a little patience and some preparation for the confusion and/or unexpected, buses are a great way to get from Point A to Point B.
Albrook Bus Terminal
From Panama City, you can get to almost any destination both within Panama and a few in Costa Rica from the Albrook Bus Terminal. Although overwhelming and sometimes confusing to figure out which bus leaves when and goes where, this is a one-stop terminal for bus travel anywhere in the country. However, if you ask enough people or simply say the name of your destination to enough people, you will eventually be pointed in the right direction and put on a bus. Most buses collect fares just before you arrive at your destination, so you can keep your money belts and wallets safely tucked away as your navigate through the people and buses.
Local Buses aka Diablo Rojos
These outlandishly decorated refurbished American school buses are a Panamanian institution in their own right. Decorated with murals, bright colors and lights, these buses (nicknamed “Red Devils”) are not only cheap (US$.25-$1.50), but are also THE mode of transportation for intra-city and intra-town transportation throughout the isthmus.
Inter-City Buses aka Toyota Coasters
Some sort of mixture between an obese passenger van and a squashed bus, these buses connect nearly every town and city to the local transportation hub and Panama City. With the final destinations usually painted on the windshield, you can almost guarantee you won’t end up heading to the wrong place. I never ceased to be amazed at the amount of passengers that could be crammed onto these seemingly petite buses, with extra folding seats coming out of every imaginable spot. The doorman, whose job it is to stand by the door, cram people on the bus, collect fares and handle luggage, will usually strap your luggage to the roof or have it take up residence on an empty lap somewhere in the front of the bus. These buses leave at regular intervals from Panama City (at the Albrook bus station) and other larger cities and are an easy way to get in between cities for not a lot of money (about US$1-$1.50 per hour of travel). With no marked bus stops, passengers usually wave these buses down from the roadside and/or holler when they want to get off. In my many journeys through Panama on these buses, the only system that I managed to figure out was that there was no system. 
Luxury Buses
As a budget traveler in Panama (we stayed on about a US$20/day budget), we hesitated before getting on any form of transportation with the word “luxury” in front of it. However, if you are traveling the 440km from Panama City to David, these buses are definitely the best way to go. For just US$15, these coach-style buses are modern and air-conditioned with comfortable seats perfect for napping. Some even have televisions that will play either budget Panamanian music videos or dubbed American movies to temper the 6-hour journey. If you are looking for a cheap way to get across the isthmus, these buses are definitelly your best bet. While it will take about 5 hours more than a quick regional flight, you’ll also save US$50-$75.