Debts of the Public Administration: Now a Decree Is Needed – by A.Quadro Curzio

i-debiti-della-pubblica-amministrazioneThe debt that the government owes to private companies is a serious matter not just for the survival of businesses, especially medium-size and small ones, but also for the prospect of economic recovery entrenched in the dynamics of debt-credit-debt connected to the banking system. Finally, it’s a matter of economic civility, since a government that demands citizens and companies to respect payment obligations must symmetrically comply with its own obligations.

Italy’s pathological problem can be summed up in the 70 billion euros of debt that the government owes to private business, with delays that on average amount to 180 days but that in certain areas and sectors stretch to years. These are hidden behind the constant requests for certifications from suppliers. In Europe, delays amount to 60 days on average, while in Germany they are only 36 days. A European directive that went into effect on March 16 and that was adopted by the Italian government in January requires the government to pay its bills within 30 days. If it doesn’t, it is subject to interest rates above 8 percent.

Since Giorgio Squinzi became the head of Italy’s employers’ association in May 2012, he has constantly focused, with the concrete approach typical of an entrepreneur, on asking the government to pay at least 48 billion euros. His action was recently affected by two very important turning points. First, an official statement by President Giorgio Napolitano, who, after meeting with Squinzi on March 13, urged Italian institutions to pay their debt, thus meeting Europe’s demands. 

One more time, and despite the current difficult political context, Napolitano worked toward preserving Italy’s economy and employment. For this reason, too, we must be grateful to him.

The second turning point is the official statement by the vice presidents of the European Commission, Rehn and Tajani, who explained in detail that the Italian government can and must pay its debt. Given that Italy does not plan to subject existing debt to the 30-day requirement (starting from March 16), officials stressed that our government should not adopt “opportunistic behavior” on pre-existing debt and that it must set up a payment plan in order to bring debt back to reasonable levels. Rehn and Tajani have made clear that this will increase Italy’s public debt, and that it will in turn have an impact on Italy’s deficit (which is among the lowest in the euro zone), but that the specific nature of the payment, while not a justification in itself, can be considered an extenuating circumstance in regard to the stability pact imposed by Europe on Italy. The declaration by the two vice presidents ends with the very important statement that “the Commission is ready to cooperate with Italian authorities to help with the technical details of a payment plan for existing commercial debt and would welcome the acquisition of more detailed and updated information on the current debt owed by the government at all levels.” Tajani also clarified this that this availability refers to a two-year payment plan and that a task force connected with the European Commission would negotiate with the government.

After thanking Napolitano and Commissioners Rehn and Tajani, Squinzi stressed that the operational involvement of the European Commission, which is usually more vague in respect to its openings. That’s why he demanded that the government immediately cooperate with the commission without waiting for a new government, since the payment plan would improve companies’ balance sheets, in addition to the ratings of banks exposed to companies, thus lowering stress and decreasing rates, to the advantage of investment and growth. Commenting on Tajani and Rehn, Prime Minister Mario Monti stated that “we will work with the European Commission to identify technical solutions in order to start the liquidation of debt as soon as possible.”

We hope that this plan, although late, will translate into conferring European Affairs Minister Enzo Moavero Milanesi a full appointment, since he has an extraordinary knowledge of how Brussels works, and that will also be necessary to design a decree in Italy. This is an urgent matter.

Il Sole 24 Ore


2 thoughts on “Debts of the Public Administration: Now a Decree Is Needed – by A.Quadro Curzio

  1. Pingback: The many no’s of Italy. A luxury we cannot afford – by G.Pedullà | theitalianist

  2. Pingback: The many no’s of Italy. A luxury we cannot afford – by G.Pedullà | theitalianist

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