Italy’s caretaker government is expected to approve a decree law to pay the huge sums it owes to private companies.
If passed the state will pay some 40 billion euros which should provide vital liquidity to Italy’s cash-strapped companies.
On Wednesday Mario Monti’s outgoing administration announced it was delaying the approval but it has come around after pressure from the European Commission.
Olli Rehn, the European Commissioner for Economic and Monetary Affairs and the Euro said:
“The Commission looks forward to a decree law by the Italian government in order to address the urgent issue of unbearable commercial debt that is owed by the state to Italian enterprises.”
The massive backlog of unpaid bills by Italy’s public administration is a growing source of concern for firms that are struggling to raise credit from banks and has seen many of them go bust.
The government must now find a way of funding the repayments without going above accepted deficit and debt limits.