Parliament is facing legal and political turbulence after it emerged that the budgets for Cyprus’ five new district local government organisations were filed late, sparking warnings of possible unlawful spending.

During an emergency session on Wednesday, the House interior committee examined the delayed budgets for the district authorities of Nicosia, Limassol, Larnaca, Paphos and Famagusta. MPs heard that these authorities had already been making expenditures without approved budgets. The spending was carried out following instructions from the interior minister, based on what the government calls the “law of necessity”.

Committee chairman Aristos Damianou said this state of affairs resulted from a deliberate decision to delay full local government reform by two-and-a-half years. He stressed that despite the extra time, the reform was not properly prepared. Damianou warned that the new bodies had been left to operate without sufficient support or structure, and argued that the current situation suggests a violation of laws passed by Parliament itself.

He questioned under which legal framework the five authorities were operating and spending public funds.

Responding, Antonis Economides, head of the local government directorate at the interior ministry, confirmed that the Interior Minister had sent a letter to the district authorities instructing them to continue spending, with the finance minister’s agreement, until budgets were formally approved. But MPs noted that this practice appears to contradict the provisions of the law, raising serious constitutional and legal questions. Damianou told the committee he had never witnessed such a scale of potential illegality in his 14 years in Parliament. He called for the interior minister’s letter to be formally submitted to the committee for scrutiny, saying it was essential to protect both the committee and the institution of Parliament.

Economides said the ministry would soon provide a timetable for submitting the outstanding budgets. He explained that once the final budget drafts were received by the ministry, they were immediately forwarded to the cabinet for further action. Finance ministry representative Protopapas stated that preparing the budgets had been challenging because this was the first time the new authorities were required to draft them. To help the process, the ministry prepared standard templates for the district bodies.

Meanwhile, the district authorities raised further concerns, including issues about their operational autonomy. Wrapping up the meeting, Damianou said there was a need for a parallel dialogue to address several problems, acknowledging that significant distortions existed in the new system. He pointed out that the district authorities had marked one year of operation on Tuesday, describing the period as difficult and riddled with challenges, particularly concerning licensing procedures.

Speaking after the session, Disy MP Nikos Sykas said the committee had reviewed the budgets for each district authority and that the documents would now proceed to Parliament’s plenary session for approval. He insisted that any delays were not the fault of Parliament but stemmed from other parts of government. He noted the combined budgets total around €500 million, adding that both the legislative and executive branches share responsibility for ensuring the authorities function efficiently.

Sykas highlighted that despite laws granting autonomy to the district bodies, there have been repeated interventions from central government and ministries, causing delays in decision-making. He argued that the new authorities should be able to operate more freely, productively and effectively. Sykas also pointed to serious backlogs in the issuing of building and urban planning permits, describing it as a significant problem that affects citizens directly.

He said the matter would be brought back for discussion in the committee next week. He expressed hope that recent staff hirings by the authorities would help solve some of the problems, which he said harm both citizens and the country’s development. Sykas confirmed that transactions within the authorities were being conducted based on the interior minister’s letter invoking the law of necessity, but criticised the delay in bringing the 2025 budgets for approval only in early July.

Asked whether invoking necessity via a letter is lawful, Sykas replied that this question should be directed to the interior minister. He declined to speculate on whether Parliament would be breaking the law by approving the late budgets, stating only that the House would examine the documents presented.