EU Commission warns Italy over late debt repayments

BRUSSELS, June 18 Wed Jun 18, 2014 3:52pm EDT

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BRUSSELS, June 18 (Reuters) - The European Commission warned Italy on Wednesday that it needed to speed up payments by public-sector bodies to suppliers, with companies still waiting months before invoices were settled.

The Italian state owes some 75 billion euros ($101.8 billion) to private-sector suppliers, according to the most recent data from the Bank of Italy. The unpaid bills have starved companies of cash and triggered layoffs, factory closures and bankruptcies.

The Commission said it had sent formal notice under EU infringement procedures, requesting clarification on Italy's failure to comply with the Late Payments Directive, which orders governments to reduce payment delays to no more than 60 days.

It said it had received complaints that the country's public authorities take on average 170 days to pay for services or goods provided, and 210 days for public works.

"Italy is the worst payer in Europe," Antonio Tajani, the Commission's outgoing vice president for industry, said at a briefing in Brussels.

The Commission also sent a request for information to Slovakia about late payments. Both countries have two months to respond, and risk breaching European law if their responses are considered inadequate.

Italian Economy Minister Pier Carlo Padoan said at a news conference in Rome that he was surprised by the warning.

Shortly after coming to office in February, Prime Minister Matteo Renzi pledged to set aside funds to pay off all arrears owed. But progress has been slow since and companies still complain payments take on average several months to arrive.

Small-business association Confartigianato said successive governments had failed to respect commitments to bring payment delays down to the promised limits of 30 to 60 days.

"It is unfortunately undeniable that the public administration does not pay in 30 days or in 60 days and no smooth talking can make us say anything different. You just have to ask any supplier to the public administration," Confartigianato President Giorgio Merletti said in a statement.

There was angry reaction from Renzi's centre-left Democratic Party to the action begun by Tajani, who was appointed by former Prime Minister Silvio Berlusconi and who is shortly to step down to take a seat in the European parliament for Berlusconi's Forza Italia party.

Matteo Colaninno, a PD deputy, said the timing of the procedure was "amazing".

"The move is almost like clockwork but it isn't worth opening sterile argument about it. The government has everything in order to identify a solution," he said in a statement.

($1 = 0.7368 Euros) (Reporting by Francesco Guarascio and Giuseppe Fonte, writing by Isla Binnie and James Mackenzie; Editing by Larry King)

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