Regional and local governments get some breathing room

The Finance Ministry is going to lower interest rates and make the terms more flexible in the Service Provider Payment Plan. The changes will give regional and local governments some room to breathe this year as they try to pay service providers over 17 billion euros in unpaid invoices.

The measure will pump much-needed cash into companies, many of which are struggling financially. The government was wise to reduce interest rates, because financing conditions are better today than in recent history, which Montoro pointed out. Still, it does not make sense that the governments will get an even longer period of time before they have to start paying back service providers. This change could make the regions think that they don't have to make more stiff cutbacks now. Perhaps the changes are another pre-election ploy to free up cash in the regional and local economies.