The Spanish government is a bad client. Thousands of its clients could testify to this fact, because it takes an average of 58 days for them to receive payments for services rendered. This timeframe is excessively long considering that a Spanish payment default law only allows 30 days for public administrations to pay for ongoing expenses for the goods and services it buys.
The figure that the General State Administration is providing for Q1 2013 gives cause for concern. By way of comparison, last year's average payment timeframe was 47.5 days -- 10.5 fewer days than this year. It is hard to understand how the law created earlier this year to help the government make its payments has actually exacerbated the government's defaults. This is yet one more failure from Finance Minister Cristóbal Montoro. At the end of last year, he met internally with Peoples' Party members and promised that service providers would receive payments within 30 days thanks to the new law on payment defaults.
As a result of this latest disappointment, the government will keep financing itself at its service providers' expense. Even worse, these service providers are struggling to get the financing they need to keep their businesses running and provide services to the state.
Delayed invoice payments are threatening some service providers with bankruptcy and hurting Spain's image abroad. Investors worry whether the country is a safe or risky bet.
Putting the new Transparency Law into effect (it is currently going through the law-making process in Parliament) should help to pave over this rough spot, because it will root out the government officials who don't pay service providers on time.
