Panama, on Saturday (local time), revoked the credentials of 14 Venezuelan diplomats who were appointed by President Nicolas Maduro, according to Panama's Foreign Ministry.
This decision came after one of US-backed Juan Guaido's aides were arrested by the Maduro authorities in Venezuela recently.
"This measure is taken a day after illegal detention of Roberto Marrero, chief of the cabinet of (US-backed) President Guaido. This move is undermining the peace process in the country," Sputnik quoted the ministry as saying.
The consular services, however, will not be affected as Panama's President Juan Carlos Varela has accepted the credentials of Guaido-appointed envoy, Fabiola Zavarce.
"That is why the foreign ministry started to revoke credentials of former (Venezuelan) Ambassador Duran Centeno," the ministry added.
Venezuela's intelligence service had detained two of Guaido's associates, including Marrero on Thursday. While the other aide was let off, Marrero continues to be under detention.
Maduro-led authorities allege that he had rifles and a grenade in possession at the time of arrest. The Latin American nation's Minister of Interior Nestor Reverol on Thursday also claimed that Marrero was part of a terror cell which planned attacks.
In retaliation, the USA has since imposed sanctions on Venezuela's development bank, Bandes, while demanding Marrero's release.
"BANDES bank is to Venezuela's financial sector what PDVSA is to its oil sector. This action will severely affect any attempted currency movements by Maduro and his cronies moving forward. Do not test the resolve of this Administration," US National Security Advisor John Bolton tweeted.
Adding to this, US Vice President Mike Pence tweeted, "When the dictator Maduro uses imprisonment & intimidation against the legitimate government of Venezuela, America will respond. The United States will continue to stand strong with the people of Venezuela. FREE MARRERO NOW!"
Venezuela has been reeling under a political crisis after Guaido proclaimed himself as the President of the nation in January. The United States immediately recognised Guaido's claim and backed the opposition leader, along with asking other countries to recognise Guaido as the interim President.
Maduro, who is the elected President of the nation, decried the events and accused the United States of plotting a coup to overthrow him by supporting Guaido. He continues to hold on to his post despite calls by the international community for fresh elections. (ANI)