The Audit Office has advised the blocking of grants due to political parties this year, escalating a dispute over €2.1 million in public moneys allocated to the parties in 2018 but never returned to the state.

Auditor-general Andreas Papaconstantinou urged the attorney-general’s office to issue a legal opinion regarding the payment of some €7 million in state grants to the parties for 2026.

The letter was copied to the deputy director of parliament – in charge of internal audits – and to House Speaker Annita Demetriou.

In it, Papaconstantinou opines that the €7 million in funds earmarked for this year should be frozen until the parties reimburse the state for the €2.1 million they still owe the government.

He also opines that if the €7 million is given, it should be offset against the owed €2.1 million. In effect, the €2.1 million would be deducted from the €7 million.

The auditor-general warned that continued inaction risks the permanent loss of public funds.

Yiota Michael, a spokesperson for the Audit Office, told the Cyprus Mail that Papaconstantinou’s intervention was intended as “a means of pressure”.

She added: “Obviously the decision rests with parliament on whether to release the funds, or how, as parliament is an independent authority”.

There is another ‘gray area’ – even if the attorney-general were to recommend the temporary freezing of the €7 million, it’s unclear if parliament would have to comply.

The issue has remained unresolved for several years, despite the Audit Office repeatedly making noise about it.

During presidential election years, the parties get additional funds.

In 2018, the state allocated the parties an extra €2.6 million for the presidential elections. However, the parties covered most of their election campaign expenses through private donations to the candidates.

Because of this, the parties ended up tapping just €500,000 of the €2.6 million. But they kept the rest, and to this day have refused to return the cash – despite a prior legal opinion from the deputy attorney-general stating that they must.

To date, the attorney-general has initiated no legal proceedings against the wayward parties over the €2.1 million they need to return to the state.

Now, the disbursement of the €7 million to the parties for fiscal year 2026 is scheduled for sometime over the next few days – hence the timing of the auditor-general’s intervention.

The €7 million are the regular annual state grant given to the parties. They are paid to the parliament’s treasury, which then distributes the cash to each political party with seats in the House of Representatives.

Of this sum, the €7 million is earmarked for parliamentary parties and their youth organisations, while €5.6 million is allocated to cover the salaries and benefits of over 100 parliamentary associates employed by parties and members of parliament.

The release of funds comes as parties prepare for parliamentary elections scheduled for May, a campaign expected to be highly competitive amid the emergence of new political formations that threaten to erode the dominance of the traditional established parties.

Under the funding formula, 85 per cent of the €7 million allocated to parties is shared proportionally based on the results of the last parliamentary elections.

On this basis, the approximate allocations for 2026 are €1.98 million for Disy, €1.62 million for Akel, €890,000 for Diko, €591,000 for Elam, €587,000 for Edek, €546,000 for Dipa and €434,000 for the Greens.

Youth organisations of parliamentary parties will receive a total of €314,640, comprising a flat €9,000 per organisation and a proportional distribution of the remaining €251,640 based on their parties’ electoral strength.

An additional €100,000 is allocated for activities abroad intended to promote the republic’s official positions on the Cyprus problem. For this particular spending item, the parties are not required to document how the funds are spent.

By law, parties must submit audited accounts of their state funding within ten months of the end of each financial year.