Newsroom
If government funding for municipalities rose from €70 million to €117 million, why are local authorities now saying they cannot breathe financially?
That was Interior Minister Konstantinos Ioannou’s central response Monday after municipalities across Cyprus stopped work for three hours in protest over government funding and their financial independence.
Ioannou was responding directly to Andreas Vyras, president of the Union of Cyprus Municipalities, who said local authorities had faced intense pressure and were effectively forced to accept the €117 million funding package.
The minister said the amount was negotiated with the previous government and written into law by Parliament in 2022.
Ioannou said he could not know what pressure may have been applied during those negotiations because they took place before the current administration. However, he argued that the numbers do not support claims that the government is starving municipalities of money.
Before local government reform, Cyprus’ 39 municipalities received €70 million from the state, representing about 22% of their total revenue. The €117 million grant increased the state’s contribution to approximately 37%, he said.
That, according to Ioannou, leaves local authorities with some explaining to do about what has changed and why the larger amount is no longer enough.
Vyras has also argued that municipalities were later handed responsibility for 63 communities, placing further pressure on their finances.
Ioannou disputed that account. He said the communities’ inclusion in the new municipal structure was already part of the same 2022 legislation that set the €117 million grant.
He added that municipalities inherited not only the communities’ responsibilities and expenses but also their revenue and assets. The government provided an additional €6 million in 2025 and another €6 million in 2026 for projects in those areas, he said.
The minister then listed further amounts that he said had been added to municipal funding.
Municipalities received €12 million to compensate for revenue lost when building and planning permits moved to the new district-level authorities. Ioannou said the government accepted the amount requested by municipalities without reducing it.
Another €15 million was provided for maintenance work on major roads, well above the €3.5 million previously available to the Public Works Department for that purpose.
Both amounts have been permanently added to the state grant rather than offered as one-off payments.
The government has also agreed to adjust municipal funding to reflect rising state spending, applying the new formula retroactively from 2024.
Under that calculation, the original €117 million rises to €125 million. Once the additional €12 million and €15 million are included, the amount used as the basis for future increases reaches €152 million.
Ioannou said municipal funding is expected to rise to €156 million in 2027.
He also pointed to approximately €240 million in state contributions for municipal infrastructure projects over five years and €28 million earmarked for Nicosia under a plan to revive areas along the Green Line between 2023 and 2027.
In some cases, he said, the government has also delayed municipal loan repayments and avoided deducting outstanding amounts from grants to help local authorities with cash-flow problems.
Ioannou rejected suggestions that the government is forcing residents to carry the cost of local government reform. But he also reminded municipalities that additional state funding ultimately comes from taxpayers.
Residents, he said, have a right to expect better services, a stronger collection of municipal revenue, and lower operating costs where councils and communities have merged.
His response moves the dispute beyond Monday’s three-hour work stoppage and into a much larger argument over whether local government reform was properly funded and whether Cypriots are getting the improved services they were promised.
