It may be a somewhat optimistic headline but I sincerely believe that if in several weeks the public administrations in Spain pay all the debts they have with their suppliers, the Spanish economy will live a very important turning point. I would almost say that from there, we will begin to overcome and therefore to get out of the very serious crisis in which we are immersed.
Obviously this process of recovery and back to growth will not be easy or will be done in a short time. But that the suppliers of the Public Administrations charge in a short time the pending invoices, some of which have been waiting in a drawer for years, is a great oxygen balloon for thousands of companies and freelancers, and therefore for several thousand or rather, hundreds of thousands of people.
To get an idea of the magnitude of the figure we are talking about, it seems that it would be around 30,000 to 40,000 million dollars. Regarding the self-employed, according to its president Lorenz Pabor, the debt amounts to 15.3 billion dollars, with 4 million bills pending and 40,000 being the number of suppliers pending payment.
Therefore, that this amount of money goes to the hands of the suppliers, companies, businessmen and freelancers of this country, without a doubt that is to give them a good push to improve the conditions in which they are all.
Paid their bills on time
Public delinquency has been very harmful in recent years. Many companies have had to close their doors just because they do not collect bills. A drama that is accentuated when the decision to close a company has to be taken for an issue as unfair as not charging your services or for not charging the merchandise delivered to a certain public administration. It is also that the law requires compliance with payment terms to the AAPP that hardly any has met. The damages of these delays have therefore been more than harmful to our economy. Encrypting them is complicated, but what is certain is that hundreds of thousands of companies today would be open and therefore hundreds of thousands of people today would have work if the AAPP during these three years had paid their bills on time.
I do not know if I am very optimistic, but I believe that the decision taken by the Government that the Public Administrations pay their debts in weeks to the suppliers, is the most important measure or, if not, one of the most important that has been taken in many Time in Spain.
Now it’s time to start it and make it as fast and effective as possible. Obviously there are points that are not as good in this measure, as for example it seems that they will pay debts but without the interest generated, which in some cases are high. But hey, this already enters into the negotiation of the supplier with the public administration in particular. Or you wait longer to collect what is really due to you (debt plus interest on late payment), or now you charge the amount on the bill and forget about claiming interest, etc.
In short, I think the end of the crisis we are living in Spain is very close. If to this measure of the payment of the debts of the AAPP, we add that the financial entities begin again to make the credit flow in a controlled and responsible way, but really begin to grant lines of credit and loans to the companies, and yes that We can really say that the crisis that began more than 3 years ago in our country, has ended or at least has bottomed out.
Where does the money come from?
Obviously the money to pay your bills does not appear as if by magic, paying arrears obviously will not generate more deficit, since it is an expense that is already accounted for in theory, but will generate more debt, so the State must increase emissions of debt planned to catch up with your debt to suppliers.
In this sense, the LTRO financing line to European banks that indirectly has allowed banks to buy Spanish public debt again, has facilitated the Government’s ability to take this measure.
Obviously the suppliers, who will finally be able to charge and leave an unsustainable situation. Indirectly, the banks will also be benefited, since the suppliers must go to the bank and perform a kind of factoring to collect their bills with the administration, and subsequently the bank will be the one that manages the collection with the different administrations, that if with the guarantee of the State. So the bank will get a good income, as an intermediary in an operation with a relatively limited risk.