Italy delays settlement of debt arrears

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 yesterday, pushing back previous commitments.

The Italian state owes some €75bn to private suppliers, according to the most recent data from the Bank of Italy. The unpaid bills have starved companies of cash and triggered lay-offs, factory closures and bankruptcies.

“We will ensure that the arrears are paid off by the end of the year,” Mr 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.

Italy’s 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.

Mr Padoan also confirmed reports Italy might delay the privatisation of 40% of post office operator Poste Italiane, 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.

— Reuters