The Delegate Commission for Economic Affairs gave the green light to the last phase of the plan to settle the commercial debt.Mike "Mish" Shedlock
€6.5 billion has been allocated to settle unpaid debts to suppliers for outstanding bills prior to December 31, 2011.
The last phase corresponds to unpaid accrued invoices between January 1, 2012 and May 31, 2013. Early estimates suggest that the total could exceed €14.0 billion.
The problem is that the government only has additional €1.7 billion in the current year to meet those debts. The remaining money will be paid starting January 1, 2014 and shall come primarily from Treasury reserves and surpluses that have accumulated in the various issues of bonds and notes recent months.
The government has chosen to prioritize payments to those companies that have major problems or liquidity needs. The Ministry of Finance and Public Administration has reached an agreement with the five big banks (Santander, BBVA, CaixaBank, Popular and Sabadell) to companies that want to get their invoices paid at a discount in December.