Govt starts paying 40 billion euros in debt to firms

Funds to be paid out over 12 months

Govt starts paying 40 billion euros in debt to firms

Rome, April 8 - A decree authorising the release of 40 billion euros over 12 months for the repayment of public administration debt to the private sector came into force on Monday in what has been hailed as an ''indispensable and welcome'' move. The decree was approved by the government on Saturday and will have to be ratified in parliament, although the law is already effective. The government hopes it will give a much-needed boost to the country's recession-hit businesses. In an interview with Rome's Il Messaggero newspaper, economist Alberto Quadrio Curzio said the measure would have ''important effects'', helping to mitigate the drop in gross domestic product (GDP) in 2013 and having a more evident positive effect in 2014. However, the real impact of the move could only be assessed in relation to the total ''debt stock accumulated over the years'', he added. Some business associations have complained that not enough detail has been provided about how to obtain the repayments, amid fears that the arrival of the much-needed cash may get held up by bureaucratic procedures. Speaking to journalists after the cabinet meeting to approve the decree on Saturday outgoing technocrat Premier Mario Monti said unpaid public sector debts to the private sector amounted to 80 billion euros at the end of 2011. ''It is incredible that the exact figure is still not known,'' said Quadrio Curzio. ''If, as some people claim, the debt stock reaches 120 billion then (40 billion euros) is the minimum essential amount''. Last week Monti called European Economic and Monetary Affairs Commissioner Olli Rehn to reassure him that the plan would not not affect Italy's commitment to bringing its deficit for this year under the threshold of 3% of gross domestic product.

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