Panamanian President José Raúl Mulino has denied that the idea that U.S. ships will not have to pay to transit the Canal is an "absolute falsehood."

"I have to reject this statement from the State Department because it is based on a lie," said Panamanian President José Raúl Mulino at a press conference. "This is intolerable, simply and plainly intolerable. And today Panama expresses to the world my absolute rejection of continuing to explore bilateral relations based on lies and falsehoods," he stressed.

Amid heightened tension over Donald Trump's threat to retake control of the canal, the State Department said Wednesday that its ships would not have to pay to transit the waterway.

However, the Panama Canal Authority (ACP), an independent body created to manage this strategic waterway, quickly denied the US announcement on Wednesday night.

The Panamanian president said he had instructed the Panamanian embassies to "deny" the State Department's announcement.

The controversy comes days after a visit to Panama on Sunday by Secretary of State Marco Rubio, who said the Central American country had offered several concessions.

Rubio told the Panamanian government that it was not fair for the United States to be in a position of "defending" the vital interoceanic route and, in addition, having to pay for its use.

Since winning the presidential election in November, Trump has not ruled out using force to regain control of the canal, which carries 40 percent of U.S. container traffic and which the United States considers to be under Chinese influence.

Trump and Mulino are scheduled to hold a telephone conversation on Friday to discuss the U.S.-built interoceanic canal, which opened in 1914 and was handed over to Panamanians in 1999 under bilateral treaties.