The Late Payments Directive does not necessarily apply to the stock of commercial debt of public administrations
Commission's Vice Presidents Olli Rehn and Antonio Tajani have made a joint statement in which remains the Late Payments Directive, that must have been transposed and applied as of 16 March 2013, does not necessarily apply to the outstanding stock of commercial debt. In particular, in the case of Italy, the authorities have decided that the new rules will apply only to contracts signed since 1 January 2013.
According to a joint statement from Commission's Vice Presidents Olli Rehn and Antonio Tajani, the excessively tight financing conditions, especially in southern European countries like Spain, Portugal and Italy, are hindering the flow of credit to households and businesses. This is holding back export growth and economic activity.
The Commissioners stressed that in this context, in order to help European industry, the EU needs to keep on cutting red tape, to ensure simple rules for businesses. The EU also needs to do what all we can to ensure businesses will be paid for the goods and services they have delivered, also in order to address existing liquidity constrains. In this sense, the Late Payments Directive, that establishes clear rules on payments for goods and services purchased by the public sector. Member states must have transposed and applied the Directive as of 16 March 2013.
However, the Directive does not necessarily apply to the outstanding stock of commercial debt. In the case of Italy, the authorities have decided that the new rules will apply only to contracts signed since 1 January 2013. A realistic solution to the commercial debt overhang – which is estimated to be sizeable – is likely to involve a liquidation plan with the objective of bringing such debt to levels not related to payment delays within a relatively short timeframe. The plan should include adequate safeguards against moral hazard by the administrations responsible for the debt overhang. The Commission highlighted that is ready to cooperate with the Italian authorities to help with the technical implementation of the liquidation plan.