Spain has promised to help town halls pay their unpaid bills, part of a public finance clean-up in the regions amid budget cuts that are disrupting services and threatening small businesses. Schools and hospitals in some regions are under-resourced and the companies that supply them unpaid and at risk of bankruptcy, in a funding crisis that has prompted numerous street protests. Government spokeswoman Soraya Saenz de Santamaria said on Friday that the government is “working on mechanisms to enable the payment of debts to suppliers by the public administrations”. She did not give specific financial details. “The measure being drawn up takes into account the very delicate situation of the small and medium businesses and the self-employed who are in a very hard situation because of non-payment by the public authorities,” she said. The conservative government that took power in December after a landslide election victory has launched a tough programme of reforms and spending cuts and is pressuring the big-spending regions to do their bit. “They will be obliged to submit to the treasury before March 15 the list of the debts pending to their suppliers,” Saenz told a news conference. “Before March 31, these town halls will have to submit a cost-cutting plan that will enable them to settle their debts in future.” “Alongside this, a temporary change to the regulations is planned to enable the state to make guarantees to meet the payments to these suppliers.” The local authorities in Spain owe a total of around 30bn euros ($40bn) to suppliers, according to media reports. The authorities’ inability to pay threatens small businesses that rely on public contracts, worsening the hardship in an economy that is expected to officially enter recession in the current quarter. Spain in 2010 crawled out of one recession brought on by the collapse of a building boom in 2008. Unemployment reached nearly 23% in late 2011, the highest rate in the industrialised world.
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