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Greek State Owes €6 Bln to Businesses and Individuals

189490-ofeiles-708_8The Greek state budget until end of October does not include payment of debts to individuals and private businesses that amount to 6 billion euros and estimated to reach 7 billion by the end of 2015.
Based on the bailout agreement signed in July, Greece, since August, has received 13 billion euros for fiscal needs and another 10 billion euros for bank recapitalization. The initial planning was that 2.6 billion euros would be earmarked for state debts to private individuals and businesses and due to be paid until end of December.
The Greek state was to repay 1.6 billion euros in September and October, and 1 billion in November and December. However, payments to the private sector remain in arrears.
The 2-billion-euro subtranche that was unlocked on Monday will only cover Greece’s loan needs, amounting to 450 million euros in November and 1.3 billion in December.
The last subtranche for 2015 is 1 billion euros, but its disbursement is connected to the completion of the second batch of prior actions which is due December 15, at the earliest. Therefore, repayments to the private sector are postponed indefinitely.
State debt to private individuals
The payments to private individuals that are in arrears for at least three months are:
Export companies expecting return of taxes, especially value added tax, amounting to 810 million euros.
Suppliers to hospitals and the National Health System, with outstanding state debts amounting to 1.9 billion euros.
The Greek state owes 800 million euros to private hospitals and clinics.
Security funds owe 750 million euros in pensions and retirement bonuses.
Construction companies participating in public works expect 1 billion euros from the Greek state.
The Greek state also owes 600 million euros for operating costs such as heating fuel and utilities for public buildings such as ministries and municipalities.
State debts to private companies create an additional problem to the general economy such as low cash flow, especially at a time when banks do not lend money to businesses and individuals.
The settlement of state debt is one of the main requirements of the bailout program. The issue will be thoroughly discussed in the first official bailout program evaluation in December. The Greek government is trying to reassure that the problem would be resolved by the end of the year.

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