State arrears keep piling up
Despite the high primary surplus recorded in 2016 and the overperformance of revenues in the first quarter of this year, the Greek state will not pay its dues to its suppliers.
In a particularly tough period for the Greek economy, with company shutdowns increasing every year and private consumption shrinking even in terms of basic commodities, the government has chosen not to pay up, further exacerbating enterprises’ already big problems.
According to data released yesterday by the State General Accounting Office, by end-February the government had only paid 28.1 million euros this year to businesses out of the 3.79 billion euros it owed them. It also paid out tax rebates amounting to 20.5 million euros – a drop in the ocean compared to the 1.25 billion euros which had been due to taxpayers. And that doesn’t include the 1 billion euros in rebates owed to businesses whose applications the state hasn’t processed yet.
All this despite the fact that 3 billion euros is sitting in the state coffers. It is not clear why the government has chosen to halt payments when the economy needs them most, not just for investments or new orders but also for companies to pay their own dues to the state.
European Commission data show that Greece is among the bad debtors of Europe: The average time it takes the Greek state to pay its arrears to third parties averages 115 days today, against just 49 in 2015. There are also cases where payment has taken 500 days – almost a year-and-a-half.
The payee’s rights are also violated, as for the money to be deposited a businessman is often forced to accept certain terms in advance, such as waiving the right to interest for the late payment. Small and medium-sized enterprises that do not have the same financial clout as major companies are more vulnerable to the consequences of late payments, particularly at times of economic recession.
A European Union directive dictates that public authorities ought to pay for goods and services they receive within 30 days, or in exceptional circumstances within 60 days, otherwise interest is due.
