Greece’s credit-crunched private sector got a welcome relief in the form of 1.109 billion euros paid out by the state to contractors and suppliers in July 2016, according to figures released this week by the Bank of Greece (BoG).
Arrears by the state totaled 5.91 billion euros in June 2016, rising to 7.22 billion euros if tax returns are included.
The payment is a memorandum-mandated obligation by the current leftist Greek government – which signed and ratified a third bailout with creditors last summer – by which a portion of bailout loans must be allocated towards paying off state debts to the private sector.
Based on a timetable through the third quarter of 2017, the Greek government must hand over 6.7 billion euros towards eliminating arrears towards the private sector.
Prior to the third memorandum, payments to third parties were usually left for last in whatever finance ministry calculations, with businesses and suppliers often forced to pay taxes up front and to turn over VAT remittances based on the value of public sector contracts that, however, were still unpaid.
