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Nicosia’s mayor, Charalambos Prountzos, has raised the alarm over the capital’s financial situation, warning that without immediate state support, the municipality will struggle to meet its obligations. Nine months after taking office, Prountzos painted a bleak picture of municipal finances, revealing a deficit of €9 million and calling on the government to step in.
“We inherited a budget where expenses exceeded revenues by €9 million. There were cases where trade creditors were left unpaid for over six months. It’s impossible to run a city like this without the necessary financial support,” he said during a press conference.
State Funding Not Keeping Up
According to an article by Kathimerini's Marios Christophi, one of the main concerns raised by Prountzos is that state funding for Nicosia has significantly dropped over the years. In 2011, the four municipalities that now make up the new, unified Nicosia Municipality received €24 million in state subsidies. By 2023, that amount had shrunk to €15 million.
“How can we avoid running deficits when our funding keeps decreasing while costs continue to rise?” the mayor asked, stressing that the municipality needs at least €10 million more in government support.
The problem isn’t unique to Nicosia. Speaking at a parliamentary discussion on municipal finances, Larnaca Mayor and President of the Union of Municipalities, Andreas Vyras, confirmed that cities across Cyprus are facing similar struggles. “Every end of the month, municipal councils are fighting to pay their obligations,” he said.
Vyras pointed out that when the €117 million annual state grant for municipalities was agreed upon in 2020, economic conditions were very different. Inflation, rising labor costs, and higher expenses for services like road maintenance have since eaten away at municipal budgets. Meanwhile, an additional 62 municipalities have been added under the local government reform, increasing financial burdens without additional funding to match.
Municipal Payroll and Cost-Cutting Measures
Prountzos revealed that last November, the municipality proposed a plan to cut payroll costs by 10%, saving €2 million annually. However, the government has yet to respond on whether municipalities will be allowed to downsize their workforce.
“The municipality cannot afford voluntary redundancies, but this isn’t about charity—it’s an investment. If the government helps fund the program, it will bring long-term financial benefits,” he argued.
Despite these financial challenges, the Nicosia Municipality has managed to reduce its debts. In July 2024, the city owed €8 million to commercial creditors. By March 2025, that amount had been cut in half to €4 million. Liquidity has also improved, but Prountzos warned that without additional funding, these gains could be short-lived.
Government Evaluating Next Steps
The government has acknowledged the financial struggles of local authorities but has not yet committed to increasing funding. The Director General of the Ministry of Interior, Dr. Elikkos Ilias, said that both his ministry and the Ministry of Finance are reviewing municipal finances and may consider raising state subsidies in the future.
“The reform of local government took effect last July, and we are still in the process of evaluating its impact,” Ilias said. He did not rule out the possibility of additional support but stressed that any decision would need to be made in collaboration with the finance ministry.
Meanwhile, parliamentary discussions over the issue remain heated. AKEL MP Aristos Damianou criticized the government for not addressing financial concerns sooner, arguing that while much has been discussed, little has actually been done.
“We were promised solutions, yet municipalities are still struggling to function properly. If these financial issues aren’t resolved soon, the entire local government reform could be at risk,” he warned.
What’s Next?
With mounting financial pressure, municipalities are left waiting for the government’s next move. Prountzos made it clear that Nicosia cannot continue operating under these conditions without additional support. “Unfortunately, there’s no magic money tree,” he said. “We need the state to step up before it’s too late.”
For now, the capital and other municipalities across Cyprus are hoping that their calls for help won’t go unanswered.
