By Constantinos Psillides
MUNICIPALITIES and community councils owe the banks over €600 million in loans, according to Interior Minister Socratis Hasikos, who met on Monday with a delegation from the Union of Cyprus Municipalities (UCM) .
UCM head Alexis Galanos told the press that the money was spent on development projects to improve municipalities and local communities.
The largest chunk of the debt – €370 million – is owed to the Cooperative Bank and according to an interview Hasikos gave CyBC radio in October, dozens “of these loans are non-performing, with only interest being paid and debts to commercial banks are similar”.
Hasikos hopes his much debated local government reform will resolve the problem, but the plan has been bitterly criticised by the UCM. Hasikos proposes the creation of second-tier local government that would move authority – along with funding and debts – from current local administrations to overarching authorities
The proposal was a result of a number of reports on local government in Cyprus that argued that at 39, the number of municipalities is absurdly high and suggests that it be cut down to between five and 12.
Following his meeting with Galanos and the UCM delegation, Hasikos told the press that it was natural for banks to be worried and added that the reform proposal offered a solution.
Galanos said that the debt will be dealt with, “when the time comes.” Asked to comment on the numerous investigations launched by the auditor general’s office into the mishandling of local government funds, Galanos called on anyone who had “evidence of misconduct that took place at the local authority level to notify the auditor general’s office so the Augean stable can be cleaned.”
The interior minister said that his ministry had taken suggestions from the UCM on board and would incorporate them into the final draft to be tabled to the House of Representatives.
Hasikos pledged to bring the legislation to the House by the end of the year.
Speaking on the legislation in general, Galanos said that UCM didn’t meet with the minister to express their disagreement but to submit suggestions on how to improve the proposal.
“We need to find common ground with the minister. We want reform, we want better administration that saves the taxpayer money and we want to better serve the public. This is why we are working along with the minister on this legislation,” said Galanos.
Municipalities may soon find themselves faced with the actual ramifications of not paying their debts, since the Electricity Authority of Cyprus (EAC) is now threatening to cut the power on community council buildings and even street lights.