FINANCIAL markets have been unfazed by the political vacuum that has followed the inconclusive Italian general election in February. They are still reassured by the promise of the European Central Bank (ECB) to make unlimited bond purchases if countries come under siege. The calm has emboldened the government in Rome—yes, there still is one—to take a step that would have seemed impossible at the height of the crisis in 2011, when Mario Monti was parachuted in as prime minister. Despite the fact that it will raise Italy’s official debt levels, he is tackling the scandal of overdue payments from the public sector to its suppliers.

The decision will be most welcome to building firms, which along with suppliers to state health-care services, suffer badly from chronic payment delays. The average wait to get paid in the construction sector is nine months. Some unlucky firms that have done work for health authorities in the Campania region around Naples have been waiting for up to five years.

In order to pay off a big chunk of these arrears, the Italian government has decided to borrow an extra €40 billion ($52 billion). The borrowing will be in two tranches of €20 billion, one this year and the other next. It will raise public debt by 2.5% of GDP to around 130% of GDP.

The move brings hidden debt out into the open. Under European public-accounting rules money owed to suppliers is generally not counted in the official debt measure. Such trade credits from firms amount to €91 billion, according to the Bank of Italy. Of this €11 billion is already counted as official debt because firms have sold their invoices to bank factors, at which point the trade credit is included. About half of the remaining €80 billion is wildly overdue and will be tackled by the new measure.

The impact on the budget deficit will be limited. Current expenditure has already been counted (under accrual-based rules). However, about €8 billion out of the €40 billion that is going to be paid is capital spending, and this is counted only when cash payments are actually made. That will push up this year’s deficit from 2.4% of GDP to 2.9%.

Italy’s decision reflects the shifting nature of the euro crisis. The single currency may no longer face an existential threat from turbulent bond markets, but it seems unlikely to endure if membership crucifies economies. Italian GDP fell by 2.4% in 2012 as Mr Monti’s austerity measures took their toll. Hopes for a recovery this year are fading as firms find themselves caught in a ferocious credit squeeze. Lending to businesses dropped by 3% in the year to February. Where loans are extended they are costlier than those in northern Europe.

Providing liquidity for Italy’s corporate sector outweighs the impact on public finances. Even so, the impact is likely to be limited, says Fabio Fois, an economist at Barclays, a bank. He estimates that it will soften this year’s recession to a drop in GDP of 1.5% rather than 1.7%.

Along with the rest of southern Europe, Italy’s difficulty is that the improvement in financial conditions stemming from Mario Draghi’s “whatever it takes” pledge has not worked its way through to bank credit. In early April the ECB’s president insisted that the bank’s council was thinking “360 degrees” about how to solve this problem. The trouble is that he said the same a month earlier. An answer is needed.