Marbella council called to reduce payment time to contractors by 75%
Marbella City Council is four months delinquent in paying private suppliers and contractors and is currently liquidating bills from November 2009, according to sources in the city government. Last week, however, the Congress of Deputies enacted reforms that require municipal governments to cut permitted payment delays to no later than 30 days, or by 75 percent in the case of Marbella.
The new regulation, known as an ‘express charge’, eliminates the possibility of negotiation between debtor and creditor for payment times. Local governments in the most populated municipalities of Málaga, as well as employers, have expressed scepticism toward the measure, saying they do not trust its effectiveness given the financial situation of some corporations. Municipalities in the province currently owe a total of more than 350 million euros to private contractors, according to the Confederation of Employers of Málaga (CEM).
The 18 most populated areas account for 67% of this amount, or more than 235 million euros. Benalmádena is the most delinquent, with a debt of 60 million euros, by Fuengirola (58 million), Estepona (36 million), Mijas (32.6 million) and Velez (22 million).
Some municipalities, however, say they are current in their payments to private contractors, including AlhaurÃn de la Torre, Cártama, Coin, and Alhaurin el Grande, with an average of 45 days credit. These municipalities have kept out of debt despite being one in one of the most heavily indebted regions in Spain, according to the Bank of Spain.
As for Marbella, the City Council owes bout seven or eight million euros to suppliers, or less than two percent of the total debt of 500 million euros owed by Malaga municipalities, according to Carlos Rubio, the city’s general coordinator of finance.
For the new policy of ‘express charges’ to come into effect, however, it must pass the Senate. Many in municipal governments throughout Malaga province are calling the new rule ‘incomprehensible’. Central and autonomous administrations, which owe most of the debt, as Rubio says, ‘will be the first to breach this measure, and it will be impossible for municipalities to apply it’.
Javier González de Lara, president of EMC, which has called for this type of reform, is also sceptical. ‘There are already payment limits that have never been fulfilled’, he says. ‘There have been many opportunities for management to enforce the law, and they have not done so, so I have no reason but to think that this measure is merely a smokescreen, a toast to the sun’.
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