Spain’s Public Administrations Owe Their Suppliers 83.35 Billion Euros; And Do Not Comply With The Late Payment Law

Pedro mascarilla españitaSpanish PM Pedro Sánchez at the Parliament debate

T.C. | Spain’s public administrations owed their suppliers over 83.35 billion euros at the end of 2020, according to data from the Bank of Spain. The debt – which is equivalent to the transfers Spain expects to receive from the Next Generation EU – increased by 2 billion last year and has only grown (+40%) since 2016.

More than half of the debt, 43.5 billion euros, corresponds to the central administration, the government. Meanwhile, local councils owe almost 20 billion euros, the Autonomous Communities 10 billion and the Social Security another 10 billion.

And nothing seems to indicate that these figures will improve in 2021. In breach of the law on late payment – which requires payment within 30 days – the central government was paying in January 2021, so in almost 40 days. For their part, the autonomous communities paid in 44 days at the beginning of 2020, improving throughout the year to leave the average payment period at 28 days. However, several communities (Balearic Islands, Navarre, Asturias, Catalonia and Aragon) exceeded the legal period of 30 days.

Currently, 12 Autonomous Communities pay below the 30 days set by the Late Payment Act. The Autonomous Community of Murcia – where the PSOE tried to unseat the PP from the regional government – has achieved an average payment period of only 12 days. This is very similar to that of the Social Security, which has an average payment period of 16 days.
But city councils – even though they are the financially healthiest administrations – pay in more than 73 days.

Cepyme, the Spanish Confederation of Small and Medium-sized Enterprises, has urged the payment of these debts to suppliers in a situation as critical as the current one, “when 300 companies are closing every day.” According to Cepyme, the worst thing is that “the debt continues to increase.”

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.