Municipal debt tops €220 million

Municipalities are indebted to the tune of some €220 million – money which the central government has undertaken to repay.

According to the state treasury’s fiscal report for 2021, at the end of that year the balance of loans with government guarantees came to €226 million.

It dropped slightly from 2020, when the debt balance was €245 million – from an initial debt of €395.6 million.

In addition to the €226 million at the end of 2021, community councils had €3.2 million in government-guaranteed debt.

Of all community councils, only 13 had outstanding loans backed by government guarantees.

As for the municipalities, Nicosia municipality was the most indebted with a loan balance of €74 million at the end of 2021.

There followed Limassol municipality at €23.4 million, Larnaca at €22.5 million, Strovolos €17 million, Paphos €16.6 million, and Aglandjia €14.1 million.

The recent changes in local administration, with the clustering of municipalities and local communities, will impact some of the new administrative entities in terms of their outstanding debt balances.

For instance, Nicosia and Aglandjia municipalities are now part of the same cluster – so their prior debt balances will be combined.

By contrast, Strovolos municipality remains as it was administratively.

The state treasury’s fiscal report notes that as of January 1, 2018 the government undertook the repayment of all the guaranteed loans of local administration authorities.

The local government landscape changed radically last month when the House finally passed a legislative package creating 20 municipalities (down from 30) as well as 30 local council clusters. The transition period to full implementation would run through to May 2024.