When will the debts of the State to pensioners and entrepreneurs be paid

To Dimitris Katsaganis

The settlement of overdue public debts (funds, hospitals, municipalities) amounting to 728 million euros to individuals (retirees, companies, citizens, etc.) was doubled.

According to the Commission’s report on the 14th enhanced supervision, both the arrears of the funds to pensioners (EUR 200 million) and the (non-pension) arrears of other public bodies to individuals (EUR 528 million) .euros) should be repaid by August 2022.

Thus, the deadline for the repayment of the outstanding pensions was extended for 2 months and the deadline for the repayment of the other, non-pension debts of the state to individuals was extended for 6 months. This is because according to the previous Brussels report, the debts to the pensioners had to be repaid by June 2022, while the debts to other individuals had to be paid by February 2022.

Specifically, the report states that “non-retirement and retirement arrears are now expected to be cleared by August 2022”.

“Following the slowdown in the settlement of arrears in the first months of 2022, this represents a six-month delay for non-retirement arrears and a two-month delay for retirement arrears, compared to plan B,” he said.

On the other hand, it is stated that “the delay was largely caused by the ongoing pandemic, the increase in energy prices, the slower-than-planned delivery of planned technological improvements and the lower-than-expected performance of previous measures. The authorities have proposed “They have already partially implemented a number of additional actions to speed up the liquidation process. The actions include measures to improve, on a structural basis, the liquidity of hospitals and public transport, as well as targeted changes to the pension process.”

It’s also stressed that “the goal of effectively clearing non-pension arrears by February 2022 has not been achieved, mainly due to the ongoing pandemic and rising energy prices.”

The stock of public debt (excluding pension funds)

In more detail, the Commission states that:

– “The stock of non-pension arrears in March 2022 increased to 528 million euros compared to 238 million euros in December 2021, as reported in the 13th enhanced supervision report, deviating from the target by 225 million euros. is mainly observed in hospitals and coffers, where the deviation from the targets reaches 121 million euros and 60 million euros respectively.

The impact of the pandemic, reflected in the high number of cases and hospitalizations, continues to put pressure on hospitals resulting in increased workload and costs.

Although the legislative amendment that simplifies and speeds up the payment of grants, especially at the beginning of the year, was approved in time, the first installment of the annual hospital subsidy was paid in March instead of January, negatively affecting the liquidity of hospitals. of 2022 ”.

– “As for the funds (which are not part of the state budget), the increase in their overdue debts is mainly due to the increased energy costs of both fuel and electricity.

“On the other hand, the implementation of the mechanism to prevent the accumulation of overdue debts to local authorities has helped stabilize their overdue debts, which are now very close to the target.”

Brussels emphasizes that “supported by additional targeted actions, the remaining non-pension arrears should have been substantially settled by August 2022. The authorities have proposed, and have already partially implemented, additional actions to support have a high stock of overdue debts.

In the case of hospitals, a legal provision that addresses the legality of hospital costs and allows for the payment of supplies received through direct award of contracts instead of an open regular procedure was adopted in late March.

This provision, combined with the grants received in March, is expected to provide sufficient liquidity to repay overdue liabilities in the coming months.

In response to the high energy costs, the authorities plan to adopt a legal provision in May that will allow the state to transfer an additional grant to public transport companies to pay their arrears to electricity companies. In addition, the authorities issued in April, earlier than planned, a joint ministerial decision on the performance of public service obligations, which increases the amount by 41 million euros in order to improve the liquidity of these companies.

The authorities expect that the above-mentioned initiatives together with the actions taken in the previous period will result in the substantial settlement of non-pension arrears by August, and possibly earlier.

The settlement of arrears of pensions has been slowed down since December due to delays in implementing planned IT improvements and lower-than-expected returns on previous measures.

The stock of pensions

The Commission in the same report emphasizes that “the stock of overdue pensions in March 2022 reached 200 million euros compared to 267 million euros in December 2021, 105 million euros above the target set in October 2021.

The observed slowdown in the clearance rate is mainly due to delays in the delivery of software updates, as well as to the difficulties encountered in implementing certain measures.

The authorities proposed additional actions to optimize and simplify existing IT and pension procedures, which will allow the full payment of arrears by August 2022, two months later than originally planned. An amendment to the law was approved in April, which aims to significantly speed up the process of granting pensions through the improved verification of data available in the electronic system of the Single Pension Fund (s.s. e-EFKA).

According to the new provision, three months after the submission of the application, the award of the pension will be issued automatically using not only the data of the insurance history already registered in the information system, but also the declarations and the data submitted by the applicant. for additional period insurance.

Items that have not been audited prior to the award of the pension will be audited retrospectively within three years of the award being issued. In addition, the authorities have planned a number of additional actions to be carried out in May, which include:

– Changes in the retirement application process that will allow eligibility to be checked before the application is finalized,

– The introduction of significant modifications and updates of the IT to process the old stock of retirement applications faster, and

– The creation of an electronic portal to facilitate the exchange of data between the Single Pension Fund (s.s. e-EFKA) and the applicants.

These are significant improvements that are expected to lead to faster processing of retirement applications and the full elimination of arrears of pensions by August 2022.

The commitment to implement the reforms identified by the Court of Auditors to prevent the accumulation of arrears has been effectively completed. The vast majority of recommendations have either been completed or will be fulfilled and further expanded through the ongoing broader structural reforms included in the recovery plan and sustainability plan.

Since the last report, the authorities have completed a number of important actions, including improving the statistical recording of pension claims, digitizing the insurance history of the private sector employees, making corrections to the recording of pension claims as part of insurance periods acquired abroad and importing audits in the process of creating tax reports by the Ministry of Development.

In this way, the work of commitment is essentially completed. A small number of recommendations will be completed, mostly in 2022, according to the timetable announced by the authorities. The remaining recommendations, which mainly concern technological improvements, are expected to be completed by the end of 2023.

Authorities have also completed a broader reform to simplify the tax process and speed up the payment chain, the report said.

The authorities have adopted all the amendments to the law identified by the working group for the simplification of the legal framework governing the tax management of the central administration and legal entities under public law.

These include:

– The simplification of the payment of the first installment of the annual regular grants to legal entities that ensure sufficient liquidity, especially at the beginning of the year,

– Changes in the regulatory framework for the prevention of conflicts of interest of accountants,

– Payment of certain types of expenses through simplified procedures,

Amendments to the legal framework on multiannual obligations.

These initiatives will ultimately help streamline budget execution as well as payment procedures and are expected to further help prevent new arrears. concludes the Brussels report.