ECONOMY

Gov’t adds to liquidity problems

The government owed more than 11 billion euros to the private sector and public servants at the end of 2008, with a bit more than half of that incurred by the state health system, creating liquidity problems in the market. It is estimated that by the end of last month, hospitals’ total debts to their suppliers had exceeded the 6-billion-euro mark, while it remains unclear how the government plans to repay these amounts. Delays in paying debts are creating liquidity problems for a number of companies, prompting several leading hospital supply groups to send a joint letter to Economy and Finance Minister Yiannis Papathanassiou, calling for a solution to the problems crippling their businesses. «We have not earned a single euro and most of us are unable to meet hospital orders, as the viability of our business is under threat and, at the same time, we are unable to pay taxes and meet other financial commitments to the state,» the letter read. About 2.5 billion euros is owed to construction companies, while another 3 billion euros of debt represents value-added tax the government is obliged to return to taxpayers but has yet to do so. Teachers, public servants and hospital staff are also among those waiting in line to be paid. Delays by the Greek state in meeting its financial obligations come in contrast to what is seen in other European countries. The Greek government pays private companies after an average of 120 days. In some cases, this can even reach 330 days. However, in the majority of EU states, governments meets their responsibilities after an average of 60 days. Relevant data from the European Commission shows that Denmark owes the private sector 500 million euros, while in Finland there are no such outstanding amounts. On the other hand, Germany also owes some 11 billion euros but the two figures are not comparable to Greece’s debts, due to the great difference in the size between the two economies.