Italy gets ready to settle €70bn debt

Italy will pay its outstanding debt to private companies soon, says its economy minister.

Italian Economy and Finance Minister Vittorio Grilli. Picture: AFP

MILAN - Italy will pay huge public sector debt owed to private companies very soon, Economy Minister Vittorio Grilli told daily Il Sole 24Ore on Wednesday.

"After the green light arrived from the European Commission, I do not see any reason why we shouldn't use an urgent procedure to unblock public administration payments," Grilli said, adding the treasury could do it through a decree.

Italian public authorities have one of Europe's worst track records for paying creditors, and in all they owe companies an estimated 70 billion euros - money the government can ill-afford to part with as it struggles to cut the budget deficit while the economy contracts.

For some of the debt to be paid the treasury will likely have to issue more government bonds to draw the necessary liquidity on the market, Grilli said.