Italian minister delays goal of repaying commercial debts

Sun Jul 6, 2014 8:07am EDT
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By Gavin Jones

ROME (Reuters) - Italy will settle the debt arrears it owes to private sector suppliers by the end of this year, Economy Minister Pier Carlo Padoan said in a newspaper interview on Sunday, pushing back previous commitments.

The Italian state owes some 75 billion euros ($102 billion)to private suppliers, according to the most recent data from the Bank of Italy. The unpaid bills have starved companies of cash and triggered layoffs, factory closures and bankruptcies.

"We will ensure that the arrears are paid off by the end of the year," Padoan told Corriere della Sera daily.

Prime Minister Matteo Renzi promised in March to pay back all the debt arrears by July. Within a week he put back the target date to September.

The government is finding it hard to tackle the problem because of public finance constraints, inefficiency, uncertainty over exactly how much is owed and a reluctance on the part of some public bodies to acknowledge their debts.

In June, the European Commission opened a formal infringement procedure against Italy because of its failure to comply with the Late Payments Directive, which orders governments to reduce payment delays to no more than 60 days.

Padoan also confirmed reports that Italy might delay the privatization of 40 percent of post office operator Poste Italiane, which was planned by the end of this year.

But he said the government was considering accelerating the sale of stakes in energy companies Eni and Enel in order to keep the revenues from its privatization plans on track. Italy is aiming to raise 8-10 billion euros from privatizations over the next two years to help cut its public debt.   Continued...

Italy's Economy Minister Pier Carlo Padoan attends a news conference after talks with German Finance Minister Wolfgang Schaeuble (not pictured), at the finance ministry in Berlin June 5, 2014.    REUTERS/Thomas Peter