Ricardo Martinelli, 63, is accused of using public funds to illegally spy on more than 150 prominent people.
The fugitive ex-president faces up to 21 years in prison on charges of running an illegal spy ring.
Among those he allegedly spied on are trade union activists, politicians, lawyers, doctors and business people.
Ricardo Martinelli denied the allegations, saying they were part of a vendetta by current President Juan Carlos Varela.
The Supreme Court ordered the arrest because Ricardo Martinelli failed to appear at a hearing earlier this month.
The former president left Panama in January days before the Supreme Court voted in favor of having him investigated over separate corruption allegations.
Ricardo Martinelli is believed to be living in Miami, Florida.
The court did not give any details about how Ricardo Martinelli’s detention would be sought.
On December 21, Ricardo Martinelli tweeted: “First round of the political trial: without having been properly documented, without charges, without proper notification and without sentence, my provisional arrest has been ordered.”
The Supreme Court launched an investigation into the alleged spying ordered by Ricardo Martinelli in June.
It came after dozens of people alleged they had their phones tapped and that the administration of Ricardo Martinelli prepared dossiers against them containing intimate information.
Among the alleged victims are high-ranking members of the opposition Revolutionary Democratic Party, as well as lawmaker Jose Luis Varela, who is the brother of current President Juan Carlos Varela.
Investigators said the wiretaps were carried out by members of Panama’s National Security Council.
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