The COVID-19 pandemic has severely hit the finances of local governments, making their operations unsustainable due to almost zero funds available, said the president of the Association of Mayors of Panama, Alex Lee.

The closure of businesses and the suspension of economic activities has reduced income in the 16 autonomous municipalities by between 90% and 95%, while the outlook for the 65 subsidized municipalities is much more serious, maintains the also mayor of Colón.

Lee estimates that to guarantee the operation of the municipalities, beyond May 15 (July - August), they require an economic injection by the central government of $ 35 to $ 40 million to meet, at a minimum, operating expenses (payrolls and payment of basic services).

However, for the president of the Association of Municipalities of Panama (AMUPA), Julio Vivies, the imminent closure of municipalities at the national level is a much bigger problem. Vivies estimates that this decision will leave more than 12,000 families without support.

In the case of the Municipality of Colón, although its operability was reduced to 30%, the payroll has been paid almost in its entirety in the last four fortnights, according to Mayor Alex Lee, using funds saved.

For the official, thinking about the dismissal would be inhumane and unsustainable, considering that in Colón, the people close 10 to 20 streets daily to claim social aid, while in the case of entering the 864 municipal officials it would be much more serious.

As regards the Municipality of Montijo, on which some 48 officials depend, a 50% reduction in wages and the closure of operations are already contemplated. Likewise, the municipality of Santiago reduced staff by 50%, a similar situation is replicated in the Municipality of Penonomé, says the president of AMUPA, Julio Vivies.

"Local government finances are in a coma from the COVID-19 pandemic and it is inhumane to try to collect tax from businesses that are closed," said Alex Lee, who called on the President of the Republic, Laurentino Cortizo.

For the mayor of Montijos this situation will also bring about a serious health problem and the total absence of community justice, considering that justices of the peace are on the municipal lists.

Lee maintains that the work of the municipalities has been essential during this pandemic, acting as an auxiliary arm of the government, attending to the disinfection of public places, distributing social aid, in addition to the fact that the municipalities are in charge of 85% of the collection of The trash.

Proposed solutions

Both the president of the Association of Mayors of Panama, Alex Lee, and the president of the Association of Municipalities, Julio Vivies, maintain that the short-term solution to the economic crisis facing local governments is in the hands of the central government.

The mayors propose that they be allowed to write checks in the National Bank without rebound and after the pandemic, until July, evaluate the balances of each municipality, as well as guarantee that the item of the Property Tax (IBI) goes directly to the municipalities to attend permanent expenses of payroll and service.

"Taking IBI's $ 180 million into operation gives municipalities and businesses a break," said Lee.

Mayors suggest a revision to the Decentralization Law . "We have neither the financial nor the technical independence to guarantee efficient solutions to the municipalities," said Lee.

However, the official explains that $77,000 for each mayor's office would only be enough to provide $25-$30 support for approximately 2,500 households. In the case of Colón, more than 166,000 households that require social assistance.