Multi-Dimensional Review of Panama by OECD

Author:OECD
Language: eng
Format: epub
Tags: Education/Finance and Investment/Governance/Taxation/Economics/Development
Publisher: OECD Publishing
Published: 2018-07-05T16:00:00+00:00

Figure 3.5. Investment at the provincial level (2016)

Source: OECD calculations based on data from Contraloría General de la República –DIPRENA.

StatLink http://dx.doi.org/10.1787/888933777205

On the revenue side, taxes are the main source of municipal income. While since 2014, and especially 2015, municipal revenue has been increasing as a percentage of GDP and total general government revenue (Figure 3.4), taxes have decreased as a share of municipal revenue since 2015 when municipalities started to receive grants linked to the decentralisation reform (Figure 3.5). The result is a significant increase in the weight of grants, and especially current grants, in municipal budgets. On the one hand, this can mean that the proportion of municipal budgets generated by taxes and other own-revenue sources is declining, thereby limiting fiscal autonomy. Central government transfers are often linked to specific uses, while own-source revenue can be used at municipal discretion and is associated with greater spending autonomy. On the other hand, it also means a more diversified and, in this case, balanced financing system for local authorities.

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