The Presidential Office and the Ministry of Foreign Affairs defended the planned donation of an executive jet to Panama yesterday, denying dollar diplomacy was still alive.

The Chinese-language China Times daily quoted the Panamanian media yesterday as reporting that Taiwan was donating a US$40 million aid package, including a US$22 million plane, to the country in order to please its new president, Ricardo Martinelli, who took office last July.

Past Taiwanese administrations often came under fire for spending large amounts of money overseas in efforts to prevent the country's rare diplomatic allies from switching recognition to China.

Taiwan government defends plane donation to Panama