State arrears are growing to fund pre-election benefits

The government continues to run up fresh debts to third parties like suppliers and taxpayers, which came to a total of 2.2 billion euros in the first quarter of the year, up by 273 million euros compared with end-December. Hospital debts soared a shocking 80 percent within those three months.

Instead of reducing the state’s arrears the government appears to be creating new ones, depriving the market of valuable liquidity, while at the same time distributing handouts and making pre-election promises.

Some observers go as far as noting that the government is deliberately allowing the state’s arrears grow so that it can ensure that it has the to cash to distribute money to areas that it sees as having a higher priority.

It appears that bringing state arrears down to zero – as promised to the country’s creditors – will be postponed once more, with the new deadline of May 31 set to be missed again.

The most astonishing figure is the debts run up by hospitals to their suppliers, which jumped from 294 million euros at the end of last year to 531 million by end-March, according to the official data released on Friday by the Finance Ministry.