To the southwest of Calidonia and El Chorillo, Panama City encompasses the former Canal Zone town of Balboa, administered by the US as de facto sovereign territory from 1903 to 1979. Balboa retains many of the characteristics of a US provincial town: clean and well ordered, it stands in stark contrast to the chaotic vitality of the rest of the city, though it conceals a troubled past.

Along the border of the former Canal Zone runs Avenida de Los Mártires. An extension of Avenida 4 de Julio and often called by the same name, the road is named in honour of the young Panamanians, mostly students, killed by the US military during the flag riots of 1964. A sculpture by González Palomino, depicting three people climbing a flagpole, was erected here in 2004 as a tribute to the fallen; above it rises Cerro Ancón, crowned by a huge Panamanian flag that is visible throughout the city. An early-morning or late-afternoon walk to the top will reward you with great views of both the canal and the city and likely sightings of toucans in the treetops.

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