The payment plan set up between regional governments and their service providers is working well. After Spanish town councils balance their debts by making a first wave of payments, regional governments will make their payments at the end of June. The plan will pay out a critical 27 billion euros to providers, giving both them and regional governments a much needed boost. Until now, governments have already paid 611 big companies, 67,768 PYMES and 36,904 independent contractors.
Total payments equal 9.263 billion euros, and soon businesses that have invoices pending with the 14 regional governments that have agreed to the payment plan will receive their funds. Neither Basque nor Navarra is participating in the plan because of their régimen foral, which is a set of guidelines relating to ancient regional laws still existing in some parts of Spain. Galicia is also not participating, because presumably it is the only government that, in addition to not having much debt with service providers, is paying off what debt they do have n a very short time.
The availability of liquidity will ensure that many businesses can stay afloat. Previously, their future was in jeopardy because of serious problems with Spanish government accounts. The plan will prevent more layoffs and fuel subcontracting growth.
Governments that have embraced the plan will have an easier time paying pending invoices, because the plan gives them more time and special conditions to face cutbacks that they are required to make in order to meet deficit goals. From now on, regional and town governments should make changes to their revenue and spending policies so that this situation does not reoccur and the practice of storing away invoices until later is nixed.
