The Spanish government has decided to quickly pay off invoices that its public administrations have piled up in order to prevent companies from closing because administrations continue to default on their payments, which also boosts unemployment and undermines production in Spain.
To pay these bills, the Ministry of the Economy and Competition and the Ministry of Finance and Public Administration are working on a shock plan that will launch during the next Cabinet meeting on Friday. Details of the plan are being worked out with financial entities so that they can be the ones to deliver pending invoices to creditors so that they can make payments on approved invoices through a system of guarantees.
According to business sources consulted by elEconomista, a plan similar to "factoring" will be considered, such that they are the ones to approach creditors with unpaid pending bills from invoices from various public administrations through a system of guarantees.
The amortization period would be three years and the interest will be less than what was granted with ICO lines of credit that regional governments are paying to creditors, i.e., less than 6%. Interest will be paid to company or regional government creditors that present an unpaid invoice.
The company or self-employed worker will have to present unpaid invoices, the financial institution will have to be in contact with the involved administration in order to recognize the invoice and once this is done, the debt will be paid. In cases where the invoice is not approved by the administration, the Ministry of Finance and Public Administration will be notified so that an investigation can be opened.
