SMEs in Greece Face Liquidity Crisis Amid Rising Public Sector Debts

Thousands of small and medium-sized enterprises (SMEs) in Greece are grappling with severe liquidity risks as delays in public sector payments have reached record levels, according to the latest official data released on June 18, 2025. During the first quarter of 2025, the total amount of overdue debts owed by the public sector to individuals approached €4 billion, creating stifling market conditions and severely impacting SMEs that are already struggling with cash flow shortages. Enterprises collaborating with public entities are particularly affected, waiting months for payments for goods and services. In the healthcare sector alone, accumulated hospital liabilities to suppliers exceeded €1.65 billion in April, following a years-long upward trend. This explosive increase deprives businesses of vital working capital, limits investment opportunities, and intensifies uncertainty in an already strained sector. Serious issues also persist with tax refunds, where outstanding amounts have reached €760 million, remaining largely unpaid during a period when businesses urgently need liquidity. Delays exceeding 90 days surpass €290 million, often due to procedural deficiencies or data verification problems, further exacerbating uncertainty for taxpayers. According to sources from the trade sector quoted on newsit.gr, the lack of liquidity is becoming a major issue for the sustainability of Greek SMEs, disrupting daily operations and investment activities. Nearly half of the companies report having cash reserves that last less than a month, while in vulnerable sectors like hospitality, 30% have no available funds at all. Over 50% of B2B transactions experience delayed payments, often because of client capital shortages, creating ripple effects across entire business chains. Despite gradual improvements in interest rate policies, accessing bank loans remains difficult for many businesses, limiting their ability to invest and grow. Particularly in sectors like retail, tourism, and construction, which require seasonal liquidity boosts, the situation is especially pressing. The issue of public sector debts has now taken on European dimensions, as the Commission has noted that chronic payment delays by the Greek government undermine economic competitiveness, especially in the health sector. Greece is already under scrutiny by the European Court of Justice regarding this matter. Despite occasional announcements about clearing public debts, overall liabilities—including those of social security organizations, local governments, and other public entities—continue to rise steadily. The situation is expected to worsen further as delays in tax refunds and worsening fiscal flows persist.