What Happened
Panama’s Procuraduría de la Administración has clarified that local governments may legally use funds from the Property Tax, known as the Impuesto de Bienes Inmuebles (IBI), for religious infrastructure projects. The ruling opens the door for public investment in the construction and maintenance of temples and worship centers, as long as the projects comply with the legal framework for decentralization.
The opinion was issued on March 30, 2026, after a consultation from the Asociación de Municipios de Panamá, which asked whether repairing or improving religious buildings fits within the spending powers allowed for local public investment.
According to the legal interpretation, Article 112-E of Law 37 of 2009, as amended by Law 66 of 2015, explicitly allows these resources to be used for “construction and maintenance of cultural, artistic and religious infrastructure.”
Community Approval Remains Mandatory
Even with that legal basis, the decision does not give mayors or corregimiento representatives free rein to approve church-related projects on their own. The same framework requires citizen participation through a public consultation process before projects can be selected for financing.
That means religious infrastructure cannot be funded simply because a local authority wants it. Residents must first support the project, and it must respond to a real community need rather than a unilateral political decision.
The projects must also align with land-use planning tools and the district strategic plan. Oversight of execution falls to the Autoridad de Descentralización, which coordinates, evaluates and monitors these works.
Why the Issue Matters
The ruling comes amid broader debate over how decentralization funds should be used and how to prevent discretion in public spending. The Autoridad Nacional de Descentralización has already issued guidance aimed at limiting the use of IBI and the Program for Public Works and Municipal Services, or PIOPSM, in religious infrastructure projects.
That guidance is tied to Contraloría General procedures requiring public investment to be carried out only on state-owned land. Under that standard, funds cannot be used on private property, closing off a practice that had drawn scrutiny.
The issue is especially relevant in communities where land for churches or chapels has been donated by residents but remains privately owned. In those cases, public financing faces legal constraints unless the property is formally transferred or otherwise meets the required conditions.
Church and State Boundaries
The AND’s guidance also notes that the Panamanian Episcopal Conference agreed, after meetings with the authority, that decentralization funds should prioritize community impact over purely ecclesiastical infrastructure. It also states that no work will be allowed on Church property without the express authorization of its legal representative.
José Alberto Álvarez Valdés, the acting procurator, said the opinion is advisory and meant to guide public officials, not to serve as a final binding ruling. Even so, the interpretation provides a clearer legal path for municipalities seeking to support religious facilities that also function as community spaces.