Rescue package for cash-strapped municipalities

By Aline Davidian

THE GOVERNMENT has agreed emergency measures to help stave off the financial crisis besetting the island’s municipalities.

A rescue package was hammered out at a meeting yesterday between Finance Minister Christodoulos Christodoulou and Pancyprian Municipalities Union president Lellos Demetriades.

On Monday, local authorities had warned they were facing bankruptcy in the face of mounting debts, delays in government funding and increased public demands for municipal services.

It was agreed yesterday that the government would finance a study to determine the economic situation facing local government, identifying weaknesses and proposing appropriate measures.

The first phase of the study will target Nicosia municipality and will be funded directly by the Finance Ministry.

The study is expected to take four months to complete.

Christodoulou said the project would help “the municipalities… but also the government correctly to direct its broader activities, highlighting the immediate practical steps which must be taken.”

In addition, reimbursement of municipality loans is to be postponed for a year, and the Finance Minister has promised to submit to the Council of Ministers a Municipalities Union application for a grant of £500,000 to alleviate the immediate crisis.

Both sides yesterday expressed satisfaction with the outcome of their meeting, Demetriades showing particular appreciation for the weight given to the problem by the government.

By the end of 1996, 24 municipalities had accumulated total debts of over £73 million, owing money both to the government and to local co-operative credit institutions.

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