The Audit Service has issued a special report highlighting significant concerns over the Ministry of Finance’s financial management, compliance practices, and oversight of state-owned entities. The report, covering the 2023 financial year, points to delayed payments, questionable agreements, and risks to public funds.

According to Auditor General Andreas Papaconstantinou, the review examined revenue, expenditure, and payroll samples across the ministry’s two directorates, alongside a compliance audit and follow-up on past findings.

One of the most serious issues involves the ministry’s 2024 agreement with OPAP Cyprus for the exclusive provision of betting games. The Audit Service warned that the initial license fee may not have been set under normal market conditions, creating a risk of lost state revenue. Despite partial improvements that increased the fee by 30 percent, concerns remain, and an external consultant will now be engaged to assess the valuation model.

The ministry also came under fire for intervening in the independence of KEDIPES, the state-owned asset management company. The report found that officials instructed KEDIPES on how to handle non-performing loans for a group of borrowers—despite EU commitments prohibiting such interference. While KEDIPES did not implement the directives, the intervention itself was deemed a breach.

• Delayed funds: The Cyprus Investment Promotion Agency returned €8.75 million to the state only after more than two years, and the sum was not properly recorded in accounts.

• State-owned inactivity: The Cyprus Real Estate Development Company has been dormant for decades, despite holding assets worth €12.6 million. The Audit Service recommended its dissolution and the transfer of assets to the state.

• Outdated subsidies: “Ex gratia” grants, such as €250,000 annually plus free use of a building for the Rialto cultural organization, were flagged as unfair compared to other entities. Ad hoc political grants at inaugurations were also described as anachronistic.

• Public administration reform delays: Slow progress in implementing flexible employment reforms threatens Cyprus’ ability to access linked EU recovery funds.

• Public administration academy: The Cyprus Academy of Public Administration remains stuck in unsuitable premises since 2020, increasing training costs and preventing full use of equipment.

• Government bond management: The ministry’s agreement with the Cyprus Stock Exchange for retail bond services does not reflect real market terms, raising concerns ahead of the bourse’s planned privatization.

The Audit Service concluded that while some corrective steps have been taken, systemic weaknesses in financial oversight, asset utilization, and policy implementation persist. These not only risk fiscal inefficiencies but also jeopardize compliance with EU commitments and access to funding.

The Ministry of Finance has submitted responses, included in the report’s annex, but the Auditor General emphasized that further reforms and stricter adherence to rules are essential to safeguard public resources and ensure transparency.