Panama's Minister Promises to Investigate $6M Transfer to Municipalities

The Minister of Economy and Finance of Panama, Felipe Chapman, stated that the use of 6 million dollars transferred to municipalities nationwide without apparent justification will be investigated. He also announced a review of the regulations on fund transfers to local governments to prevent irregularities. Chapman reiterated his agreement with reviewing the legal framework to guarantee citizens that these funds are being used properly; for this reason, he shared his concerns with the Comptroller General of the Republic, Anel Flores, who will handle the necessary audits. "One of the issues we have started to see is what criteria are used for the allocation of resources, for example, socioeconomic indicators that have never been used in the history of Panama, so it is a good time to raise the issue and allow us to conduct a very sharp analysis," he asserted. "We are in the process of completing the due diligence, and when we have all the information, we will share the necessary explanations with the country so that there is no doubt about the use being given to these resources," he said. The minister reiterated that he has always been a critic on this issue and will continue to be so; therefore, he considers that the questioning by some deputies is timely to strengthen the oversight of these funds. After it became known that the Ministry of Economy and Finance (MEF) has transferred around 6 million dollars to certain municipalities nationwide without apparent justification, the head of this entity, Felipe Chapman, pointed out that the use of these funds will be investigated and the regulations on transfers to local governments will be reviewed to avoid irregularities. Chapman also announced that the law that grants municipalities resources from the collection of the Real Estate Tax (IBI) will be evaluated, a request made by several mayors last November, to study its performance and find the best budgetary practice. He explained that he had a conversation with Prado in which they shared their concerns and commitment to investigate the situation to take the necessary corrective measures, including defining the criteria for the allocation of these resources because, like the rest of Panamanians, he also questions the parameters used to determine their distribution. The current legislation establishes that municipalities that fail to raise all their funds will be subsidized by general taxpayers through the IBI and the Transfer of Movable Goods and Services Tax (ITBMS). This allocation, in the minister's opinion, should be made not only based on socioeconomic indicators, but also on distribution, income, poverty levels, and employment in each of the country's regions. However, he warned that if poor management or "unethical" situations disguised as "legal" are found, the corresponding actions will be taken.