"The break is relatively small but we have had to stop operations at the water plant to control the water pressure," said Rodrigo Barragan, an official with the Institute of National Aqueducts and Sewers.
He said 800,000 to 900,000 people living in Panama City and adjacent areas were affected by the shutdown late on wednesday.
Schools and universities suspended classes because of the lack of water.
Authorities said the flow of water would return to normal on Thursday.
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