They will be discounted to the delinquent administrations by the payment of the debts

In this note we are going to mention an event that is taking place and that is that the Government will discount revenues to the delinquent administrations to pay their debts with suppliers.

The Ministry of Finance and Public Administration is working on the creation of an instrument through which the providers of any delinquent administration may directly address the Ministry so that it may arbitrate the form of payment of the debt. This was advanced by the Minister of Finance and Public Administration named Cristóbal Montoro, in Seville after receiving the I Impulse Autonomous Award, where it was explained that the Treasury will deduct the debt to municipalities and communities from their participation in the State’s income.

The minister assured that it is not difficult to start up an instrument of this type after the experience that supposes the plan of payment to suppliers and because part of the income of the communities and the city councils depends on the central Government. Montoro indicated that this instrument will be ready in the first months of 2013 and will prevent administrations from financing themselves at the expense of not paying suppliers.

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In this regard, it is guaranteed that the Delinquency Law will be strictly complied with in all administrations. The Spanish administrations can not live situations of default because they cause the business crisis, that of the self-employed that are the suppliers of the administrations, by interrupting the economic circulation in Spain after considering incalculable the damage that makes to the image of Spain any voice that says that a city or autonomous community owes you money. According to the minister, this will be one of the reforms that the Government will undertake in the coming months and will be added to other instruments that are already underway, such as the Autonomous Liquidity Fund, which is a continuity of payment to suppliers and aims to also provide liquidity to the regions.

In this sense, Montoro recalled the success of the supplier plan, which handled 5.5 million overdue invoices, prior to 2012. The management of this macroplan showed that Spain has a very efficient public administration. In addition, he stressed the importance of guiding economic policy to SMEs and self-employed so that the recovery is viable and to get out of the crisis as soon as possible. In fact, it was recalled that Spain is a founding member of the euro and that thanks to this stability, more than 800,000 self-employed workers and SMEs will generate millions of jobs. In 2013, he took charge of reforms to improve confidence, on the other hand, he referred to the reduction of the deficit committed to the European Union (EU), which is touching with his hands and which is so important to regain confidence in Spain.

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He also referred to labor reform and banking reform as points to increase the activity of SMEs and the self-employed. According to Montoro, in Spain there are some positive symptoms that are allowing to recover some confidence, such as the reduction of the external debt and the establishment of the bases of growth. It is the first time that we changed the balance of payments sign without resorting to a devaluation, it is a historical phenomenon, after ensuring that 2013 will be full of reforms to advance along that same path.




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