On July 25, 2026, the Cypriot Ministry of Interior issued a statement responding to the Union of Municipalities' recent decision to reject the government's proposal for an annual state grant adjustment mechanism. The ministry categorically dismissed allegations that the costs of the local government reform are being shifted onto citizens, labeling such claims as inconsistent with the facts.

The ministry highlighted that state support for local government has more than doubled following the 2022 reforms. Specifically, total state funding has increased from 70.8 million euros to 144 million euros. Officials noted that the 117 million euro grant figure established in the 2022 Municipalities Law was adopted with the consensus of the Union of Municipalities. Furthermore, the government emphasized that it recognizes the need for an objective, predictable mechanism to adjust funding based on inflation and fiscal changes, rather than maintaining a fixed, static grant.

The dispute arose after the Union of Municipalities expressed strong opposition to the government's proposed adjustment framework, leading to the announcement of protest measures. The ministry maintains that its proposed mechanism ensures a gradual increase in funding over the coming years, reflecting changing economic conditions, and continues to defend the current financial support structure as robust.