9.5 billion euro owed to private companies by the public sector

Finance Minister Giorgos Papacostantinou is now moving between "the hammer and the anvil”, seeking “here and now” solutions to increase state revenue, while the “spendthrift nation” begins to rear its head once more.

George Papacostantinou placed SDOE leader Mr. Giannis Kapeleris in the position of Secretary General through “fast track” processes, who will now be heading both posts in order not to lose any ground in the fight against tax evasion. On the expenditure front, the finance minister is witnessing some of his government colleagues lose track, as new ministry debts are slowly coming to light. As the announced figures show, debts in arrears of ministries in just two months rose by 30% or 210 million, from 620 to 830 million euros.

Unwilling administration

Despite the memorandum, the horizontal wage cuts and the Papacostantinou letters, the administrations of public enterprises and public institutions, which he calls upon to comply and apply the austerity measures, seem to show an increase in the public sector expenditures, instead of them being reduced. Thus, the Troika mandate that the state should pay its debts within 90 days seems to “stretch” itself out of the plan once more.

In only one month, expenditure rose by 900 million euro, despite the efforts of the Finance Ministry to rationalize (and embellish) the image illustrating the financial information required by the Troika collection and monitoring process.
Besides these shortcomings, a revelation has been made that outstanding obligations by government entities towards private companies have risen to 4.5 billion in 2010. If former hospital debts amounting to 5 billion are included then the debts to third-party companies reach 9.5 billion (compared to 8.6 billion last November).

Similarly, local authorities and insurance funds also have increased outstanding debts to a total of 900 million within a month. The arrears of local authorities reached 552 million in 2010. Social security organizations also show high debts. From 1.549 million at the end of November, the outstanding debts towards third parties reached 1.583 million in December. Other government entities were 160 million short by late 2010. The biggest debts still belong to hospitals. Even with the deletion of old debt accounts held by the Finance Ministry, debts increased by 700 million euros in one month.

Under these circumstances, debts in both the narrow and the broader public sector came to 23 billion, or 10% of the - revised - GDP.