BUSINESS

Greek state is taking longer to pay up

DIMITRA MANIFAVA

TAGS: Economy

The average time it takes for the Greek state to make payments to the private sector has more than doubled from 49 days in 2015 to 115 days this year, according to the European Payment Report 2016 by Intrum Justitia, one of Europe’s biggest firms in debt collection and bad-loan management.

Troubles with transactions between enterprises are also continuing to increase, with the report confirming the explosive problem of cash shortfalls in the market, hampering the operation of the business sector and any hopes of recovery.

The report, compiled in February and March this year, covered 9,440 enterprises in 29 countries across the continent. Greece is second only to Italy in payment delays by the state, but the neighboring country improved its record from 144 days in 2015 to 131 days this year.

Greece scores worst among the 29 countries in terms of the ratio of “bad debts” to total revenues, amounting to 5.8 percent. This concerns debts that are either never collected or are paid after a great delay.

The average time of payment in transactions between enterprises has almost doubled within a year, from 32 days in 2015 to 63 days in 2016, as has the time it takes consumers to pay enterprises, from 21 days to 41. Notably, 62 percent of companies in Greece stated they have been forced to accept an extension to the repayment time from their customers, even though this has a negative impact on the companies’ operations.

Payment delays also have major consequences on employment, with 51 percent of the survey’s Greek respondents saying that if payments were made in time they would have hired more staff.

On Monday Economy Minister Giorgos Stathakis stated that the government’s target is to bring the state’s debts to the private sector down to zero within 12 months. This is an estimate not shared by the majority of entrepreneurs: The Intrum Justitia survey found that 50 percent of businesspeople believe that the credit risk from debtors will grow in the next 12 months, while 28 percent estimate it will continue to grow after that.

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