Cyprus’ newly formed municipalities are facing financial turmoil, with €34.3 million in unpaid water bills threatening to slash their state grants, revealed on Tuesday.

Under local government reforms, former municipalities and communities merged into new municipal districts on July 1, 2024. However, they still owe the water development department (WDD) millions for drinking water purchases. According to government guidelines, any municipality with outstanding debts risks having the amount deducted from its state funding.

The municipality of Ayia Napa is the most heavily indebted, with €10.2 million in unpaid water bills. Despite agreeing to a repayment plan, it has failed to meet the terms, putting its funding at serious risk. The financial strain is compounded by additional debts from former communities that are now part of the municipality.

The municipality of Aradippou owes €1.7 million, while Lefkara Municipality has accumulated debts of over €1.1 million. Both are working on repayment plans to avoid losing crucial state grants. In the Paralimni-Deryneia municipality, the former Frenaros community council has a €2.2 million debt, adding pressure on local authorities to settle outstanding payments.

The municipality of Kourion, which now includes Ypsonas, has also emerged as a major debtor, with over €2.4 million owed. Similarly, Yeroskipou municipality is struggling with a €2 million water bill, raising concerns about financial stability.

The interior ministry has asked district administrations and government agencies for an update on outstanding debts before issuing the first installment of the 2025 state grant. If these debts remain unpaid, funding will be reduced accordingly.

However, municipalities that have repayment plans in place and are following them will not face cuts. Yet, Ayia Napa’s failure to meet its agreement raises concerns that other municipalities may also struggle with repayment.

With state funding at stake, municipal leaders now face urgent decisions to settle their debts or risk financial shortfalls that could impact essential services.