PM pledges 1 billion euros of arrears will be settled by end of 2012

One billion euros in state arrears will be disbursed by the end of the year after Greece received 34.3 billion euros in bailout funding this week, Prime Minister Antonis Samaras said on Thursday.

The premier conducted a visit to the General Accounting Office, where he met with Finance Minister Yannis Stournaras and other ministry officials, to discuss how the money would be allocated. The government is hoping that the gradual payment of some 9 billion euros of arrears in months to come, along with the completion of the bank recapitalization process, will improve liquidity and soften the impact of the ongoing recession.

“With the money that has been paid from the loan, the gradual payment of debts will begin tomorrow,” said Samaras.

Kathimerini understands that 40 million euros will be used to pay the one-off retirement packages of more than 1,200 civil servants, 255 million will go to the Interior Ministry so it can allocate the money to the country’s 42 municipalities, which also have arrears to pay, another 700 million euros will go toward paying tax returns, while the government also has to decide how to settle the bill that has been run up by the National Organization for Healthcare Provision (EOPYY). EOPYY owes about 100 million euros to hospitals and private clinics and another 80 million to pharmacists for drugs issued to insured patients in September.

Of the money received this week, 16 billion euros has been earmarked for bank recapitalization, 7 billion for budgetary financing and 11.3 billion to cover Greece’s bond buyback program.

There was contact on Thursday between the three parties in the governing coalition over the reshuffling of dozens of high-ranking staff at tax offices. PASOK and Democratic Left suggest that they had been caught unaware by the Finance Ministry’s announcement and expressed concern in private that the changes might be motivated by party political criteria.

The three coalition leaders met earlier this week to discuss ways to improve coordination within the government.