The mayor of Panama, Mayer Mizrachi, criticized the handling of funds from the Real Estate Property Tax (IBI), stating that the central government, through the Ministry of Economy and Finance (MEF), would be retaining resources that, by law, belong to the municipalities. Mizrachi referred to Law 66 of 2015, which reforms decentralization regulations and establishes that municipalities must receive the resources from the collection of the IBI corresponding to the immediately preceding year, including fines and surcharges, which—according to his complaint—is not being fully complied with. "I am a person who makes do with what I have. But, faced with what is happening, I have to declare it and say it openly," he expressed. The mayor warned of a distortion in public finances that directly affects local governments. "The first contact of the citizen with the public sector is their local government," he recalled, noting that many times city halls end up assuming functions that correspond to the central government, such as the construction of sewers. He also warned that the situation could escalate to a larger institutional conflict. "They are being very clever in decentralization and no one is saying anything," he stated. This week they sent a note indicating that there will be an additional 12% reduction," he said, while questioning the feasibility of executing municipal projects under these conditions: "How do you expect us to carry out projects if they are keeping all the money?". In this context, the mayor also revealed that, due to the reduction in income, the Municipality of Panama will be forced to cut investments. "The more taxes the State collects, the less it is giving to local governments," he explained, which in his opinion shows that "the central government is financing itself with the money from local government". Mizrachi detailed that the problem is concentrated in the decentralization funds from the IBI, a tax that the State collects but which must be transferred in its entirety to the municipalities. "The State collects it and in its entirety it must be delivered to the municipalities of the entire country," he recalled, before questioning: "What if I tell you that today they are collecting more than ever and distributing less than ever?". In fact, during the budget hearings at the National Assembly in September 2025, the director of the National Decentralization Authority, Roxana Méndez, presented a statistical chart comparing what was received per year with what was collected in terms of the real estate property tax. Between 2021 and 2026, the Panamanian State collected 1,107 million dollars from the Real Estate Property Tax (IBI), but only transferred 618 million to the municipalities, according to official figures discussed in the Budget Committee of the National Assembly. 12% Cut According to Mizrachi, the outlook worsens with new cuts announced recently. "And nobody finds out, because nobody talks about this, but now it's my turn to say it," he stated. According to the mayor, the deliberate underestimation allows the law to be complied with in appearance, while a significant portion of the actual income is retained. He confirmed that he sent a letter to the Ministry of Economy and Finance and to the President of the Republic, José Raúl Mulino, and announced that the issue will be discussed at the Association of Municipalities of Panama. "This has already gone beyond the realm of diplomacy, because since last year I have been talking about this and nothing has been done; on the contrary, they have taken more money from us," he concluded. What Mizrachi raised has also been pointed out by the mayor of San Miguelito, Irma Hernández, and the mayor of Colón, Diógenes Galván. "This is not right," she sentenced. Mizrachi also emphasized the impact of this situation on local management and on the direct relationship with citizens. "In fact, we are going to have to cut projects, because the State is not distributing the money as it should. This is a reality that impacts the 81 municipalities of the country, since most of these resources are destined for the development of essential projects for the communities. Likewise, the director of the National Decentralization Authority, Roxana Méndez, has also mentioned it. In the last five years, municipalities have stopped receiving close to 500 million dollars, a shortfall that directly hits local investment capacity."
