The third service provider payment plan will not even cover half of last year's unpaid invoices by the end of 2013. Of the 19.35 billion euros of unpaid bills, the first stage of payments will cover only 8.2 billion euros, and the Finance Ministry won't free up these funds until the end of the year. Priority will be given to town councils, which will receive 3 billion euros, followed by the regional governments.
Most of the private sector service providers will have to wait until next year to receive their payments. Companies in the construction, contracting and lending businesses that work with service providers are understandably angered at the newest delays, even if they are not voicing their frustration loudly. The government's inability to pay these service providers on time is the main reason that their balance sheets are in disarray, and they are tired of financing the public sector's spending in this way.
The healthcare industry has been hit hardest by delayed service provider payments, racking up a total of 7 billion in back payments. The pharmaceutical industry in particular has 3.53 billion euros in unpaid hospital medicines. The pharmaceutical companies are trying to channel investments outside of Spain and have even started to increase their foreign sales in order to compensate for domestic sales struggles.
Service providers have had to make a series of cutbacks to their staff and salaries, but these will have little effect because now they will have to wait even longer to receive their payments. Cristóbal Montoro, who promised to reduce the term that Public Administrations have to pay their service providers to just 30 days by the end of this year, was not able to keep his word. And 2012 invoices will still be unpaid as we enter 2014 as companies keep financing the government.
