The European Commission is considering allowing Italy to pay its suppliers around 70 billion euros ($91.52 billion) in arrears, giving the euro zone's third-largest economy much-needed-liquidity while allowing the government some leeway in how to account for the funds.
European Commission vice presidents Olli Rehn and Antonio Tajani said Monday they would consider liquidation of Italy's overdue commercial debt a "mitigating factor" in budget assessments, signaling that Rome wouldn't be forced to make offsetting adjustments to its budget or public debt levels.
Prime Minister Mario Monti said the decision was the result of last week's European Council, where national leaders sought to find growth-boosting measures without abandoning fiscal rigor.
Mr. Monti noted that his government had been working for more than a year to achieve such a breakthrough.
Italy has around EUR80 billion in unpaid bills and small companies around the country are collapsing because they lack funds to operate even though they have delivered goods and services to the public administration.
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Mr. Monti's government had floated a scheme to settle pending invoices, but apparently only EUR3 million has actually been paid.
Technically making use of the new leeway may take time, however. Mr. Rehn and Mr. Tajani said the European Commission "would welcome the provision of more detailed and timely information on the current stock of debt by level of government."
Read more: EU Offers Italy Budget Leeway to Pay off Commercial Debt Arrears
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