Italy frees up to $38BN to pay overdue bills

[May 22, 2012]  MILAN (AP) -- The Italian government is to free up to euro30 billion ($38.25 billion) to make overdue payments to businesses that have supplied goods or services to state institutions.

Prime Minister Mario Monti said the measures will "give fuel" to businesses and go some way to relaunch Italy's stagnant economy.

Delayed government payments are a major contributing factor to liquidity shortages faced by many small and medium-sized Italian companies. Analysts say payments are routinely delayed for two to three years, even longer in the health sector, with no interest due the creditor. Reduced turnover in the recession means many businesses have trouble paying even small debts.

The decrees approved Tuesday in Rome would require payment within 60 days, Monti said, acknowledging the habitual delays have been a "big problem for Italian businesses."

[Associated Press]

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