The government on Tuesday deflected criticism that President Nicos Anastasiades’ promise of paying off municipalities’ state-guaranteed debts with tax payers’ money amounts to an electioneering gimmick.
In a statement, Interior Minister Constantinos Petrides argued that the gradual repayment by the government of municipality loans guaranteed by the state, as announced by Anastasiades last Friday during a visit to Larnaca, was a sound move as it would rid municipalities of the “baggage of the past” so that they could focus on providing quality services to citizens.
Paying off these debts would also reduce the risk exposure of the economy, as the loans in question are guaranteed by the government and therefore count toward the public debt.
The minister was responding to the Diko party, which had asked why the government did not see to the consolidation of the municipalities’ finances first, before injecting the cash.
He added that the bills regarding reform of local administration have been pending before parliament for two years, while the relevant regulations accompanying the bills were tabled in April of this year.
While in Larnaca last week, the president said the government would pay off some €185 million of municipality debts that are guaranteed by the state.
The reveal has caused some confusion among municipalities, as no details were given as to how this amount would be allocated.
And no timeframe has yet been cited for paying off the loans.
Moreover, daily Phileleftheros reports, the numbers referenced by the president do not seem to add up.
Currently, municipalities overall are in the red to the tune to €307 million in terms of loans guaranteed by the state.
But back in 1998, the then-government had announced it would pay off €129 million of these debts. This left a balance of €178 million, which does not correspond to Anastasiades’ figure of €185 million.
When the paper contacted the secretary of the cabinet Theodosis Tsiolas about the discrepancy of around €7 million, he explained away this extra amount as a “cushion” for contingencies.
Currently, municipalities’ total loans come to €445 million, of which €307 million are guaranteed by the state.
The finance ministry could not be reached for comment.
But sources familiar with the subject, speaking on condition of anonymity, told the Cyprus Mail one should not get hung up on the numbers.
Rather, they said, the key question should be why the president promised this cash injection without demanding something in return from the municipalities.
“He [Anastasiades] could have made repayment of these loans contingent on the mooted clustering of municipalities and the shoring up of their finances, instead of giving out a blank cheque.”
Another matter, the same sources said, relates to fair treatment of the municipalities.
For example, Aradippou municipality, only slightly smaller than Larnaca in terms of population, has no government-guaranteed loans.
“Municipalities without government-backed loans will ask why they don’t get to benefit whereas other municipalities, which do have debts, do.”
The Diko party also lambasted the president for making promises he cannot deliver on.
Christos Orfanides, a Larnaca MP, pointed out that, contrary to Anastasiades’ proclamation, construction on the third phase of the Dhekelia-Larnaca road, a project worth some €20 million, could not begin in 2019.
This, Orfanides said, was because the studies regarding the necessary land expropriations could not be completed anytime before the end of that year.
The Diko MP went on to accuse the president of making hollow promises.
Anastasiades has not officially announced his candidacy for the 2018 presidential elections, but is widely expected to do so.
