Panama President José Raúl Mulino has rejected the U.S. State Department’s claim that his country had reached a deal allowing U.S. warships to transit the Panama Canal for free.

Panama has denied the U.S. State Department's claim that the country will eliminate fees for U.S. government vessels transiting the Panama Canal.

Panama President Jose Raul Mulino on Thursday accused the United States government of lying a day earlier when the U.S. State Department claimed that U.S. government vessels would be able to cross the country's namesake canal without paying fees.

Washington had suggested Panama had agreed to no longer charge fees for US government vessels using the waterway.

The Panama Canal Authority said in a statement late on Wednesday that it had not made any changes to charges or rights to cross the canal, after the U.S. State Department said that U.S. government vessels could transit the crossing without being subject to such fees.