Nicosia, Cyprus. Interior Minister Constantinos Ioannou rejected claims that the government was driving municipalities towards “financial suffocation”, saying state funding would rise to €156 million by 2027.
His comments followed a three-hour work stoppage held on Monday by the Union of Cyprus Municipalities.
Funding framework
Ioannou said the previous government and the Union of Cyprus Municipalities had agreed that state funding for the country’s 39 municipalities would total €117 million, an amount later included in legislation passed in 2022.
He said the 2022 local government reform raised state funding to about 37 per cent of municipalities’ revenues, representing a 15 per cent increase compared with previous levels.
The amount was supplemented by €12 million to offset revenue losses following the transfer of licensing responsibilities to local district governments, as well as €15 million for road maintenance projects described as being of “primary importance”.
Proposed increases
In consultation with the finance ministry, the government proposed a formula to adjust state funding retroactively from 2024, increasing the total from €117 million to €125 million, Ioannou said.
With the proposed three-year adjustment formula, state funding would reach €156 million by 2027.
Ioannou said Nicosia municipality would also receive an additional €28 million between 2023 and 2027 through the Green Line revitalisation project. Municipalities across Cyprus would receive €240 million for infrastructure over five years, he added.
Government response
Ioannou rejected the municipalities’ argument that the government was seeking to transfer the cost of the reform to citizens.
“The municipalities must finally realise that the money they claim from the state is the citizens’ money,” he said.
He said the government had addressed a series of problems and distortions arising from the reform, strengthened municipalities through additional temporary resources and proposed a mechanism for automatically adjusting state subsidies.
