Panama municipalities to receive full property tax funds in 2027

Municipalities across Panama are set to receive the entirety of their estimated property tax (IBI) collections for 2027, a significant financial boost approved by the Ministry of Economy and Finance. The state budget will incorporate $196 million, a move celebrated by the National Directorate of Decentralization (AND) as a crucial step towards empowering local governments.

This development means local governments will have greater capacity to plan and execute projects, addressing community needs more effectively. It's the first time since 2021 that municipalities will receive the full estimated IBI collection. Previously, they often faced partial allocations through extraordinary transfers, creating financial instability and hindering long-term planning.

The decision fulfills a persistent demand from the Association of Municipalities of Panama (Amupa). Amupa had repeatedly urged the government to adhere to the law and transfer IBI funds to mayoral offices, as stipulated by Law 37 on public administration decentralization. Nadine Méndez, director of the AND, emphasized that this achievement resulted from sustained efforts to ensure municipalities receive their legal entitlements.

Amupa president Nadine González previously highlighted the severe limitations faced by at least 81 municipalities due to incomplete fund transfers. These shortfalls have hampered their ability to cover operational expenses and develop community projects. Calculations showed a projected $193 million in collections for 2026, with only $86 million included in the approved budget, leaving a deficit of $113 million. Over the past six years, a deficit exceeding $502 million has accumulated for local governments.

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this achievement is the result of sustained efforts over the past few months with the MEF to ensure that municipalities have the resources that by law correspond to them and can respond more effectively to the needs of the population.