EUROPEAN COMMISSION Brussels, 17.6.2021 SWD(2021) 155 final COMMISSION STAFF WORKING DOCUMENT Analysis of the recovery and resilience plan of Greece Accompanying the document Proposal for a COUNCIL IMPLEMENTING DECISION on the approval of the assessment of the recovery and resilience plan for Greece {COM(2021) 328 final}



Table of contents 1. Executive summary 2. Recovery and resilience challenges: scene-setter 2.1. Macroeconomic outlook and developments since the 2020 country report 2.2. Challenges related to sustainable growth, cohesion, resilience and policies for the next generation 2.3. Challenges related to the green and digital transition Green dimension Digital dimension 3. Objectives, structure and governance of the plan 3.1. Overall strategy of the plan 3.2. Implementation aspects of the plan 4. Summary of the assessment of the plan 4.1. Comprehensive and adequately balanced response to the economic and social situation 4.2. Link with country-specific recommendations and the European Semester 4.3. Growth potential, job creation, economic, institutional and social resilience, European Pillar of Social Rights, mitigating the impact of the crisis, and social territorial cohesion and convergence 4.4. The principle of ‘do no significant harm’ 4.5. Green transition 4.6. Digital transition

4.7. Lasting impact of the plan 4.8. Milestones, targets, monitoring and implementation 4.9. Costing 4.10. Controls and audit 4.11. Coherence 5. Annex



1.Executive summary Greece has been severely affected by the coronavirus pandemic, as the structure of its economy with a large share of tourism and transport services sector, and the high share of micro enterprises have made it particularly vulnerable to the shocks triggered by travel restrictions and social distancing measures. At the end of 2019, Greece’s recovery from the decade-long financial crisis was taking hold, with business and consumer confidence at pre-2010 levels, and disposable income, investment and consumption steadily increasing. The positive trends that had started to materialise as a result of the reforms implemented under the macroeconomic adjustment programmes and its aftermath were largely interrupted by the outbreak of the pandemic, which put the challenges related to Greece’s high public debt, incomplete external rebalancing and high ratio of non-performing loans to the spotlight again. It also highlighted the importance of addressing the large investment gap, social and economic inequality and high unemployment, especially of women and young people. Greece submitted its Recovery and Resilience Plan, named “Greece 2.0”, on 27 April 2021. The cost of all projects in the plan amounts to EUR 31.164 billion, of which EUR 17.770 billion is foreseen to be financed from non-repayable financial support and EUR 12.728 billion from loans up to 2026. Structured around four pillars and encompassing a well-balanced mix of reforms and investments, the plan aims at addressing the key structural challenges Greece faces and pursues the objective of the Recovery and Resilience Facility (RRF) Regulation to promote the Union’s economic, social and territorial cohesion. The plan also contributes to effectively addressing all or a significant subset of the country-specific recommendations that were addressed to Greece by the Council in 2019 and 2020, and provides a good balance across the six policy pillars referred to in Article 3 of the RRF Regulation. The plan is also consistent with the challenges and priorities identified in the most recent euro area recommendation. The four pillars of the plan are (i) green transition (EUR 6.2 billion); (ii) digital transition (EUR 2.2 billion); (iii) employment, skills and social cohesion (EUR 5.2 billion); and (iv) private investment and economic and institutional transformation (EUR 4.9 billion), comprising in total 175 measures, of which 67 reforms and 108 investments. These include key investments in energy networks and energy efficiency of buildings, environmental protection and sustainable transport, investments in very high capacity networks and connectivity, the digitalisation of the public and the private sectors, education, reskilling and upskilling, active and passive labour market policies, social services, and health care. The plan also promotes private-sector investments through the RRF Loan Facility (EUR 12.7 billion). Investments are flanked by ambitious reforms of the business environment, labour market, education and training, and public administration, including tax administration, public procurement, and justice. The wide set of investments and reforms is expected to contribute to economic growth and thereby support the correction of the identified macroeconomic imbalances, while promoting a more inclusive and sustainable growth model. The plan is consistent with the Development Plan for the Greek Economy prepared under the steer of the Nobel laureate Professor Pissarides in 2020. The measures presented in the recovery and resilience plan are especially targeted at addressing the large investment gap that has held back growth in Greece in the past decade, while also facilitating the green and digital transitions and the modernisation of the economy, with a view of promoting export-led growth. The plan projects a rebound of economic growth (+3.6%) in 2021, following the severe downturn in 2020 (-8.2%). Driven by both domestic and foreign demand as well as the supportive stimulus from the Recovery and Resilience Facility, GDP growth is expected to peak at 6.2% in 2022 before decreasing to 4.1% in 2023 and 4.4% in 2024. Unemployment should remain unchanged at 16.3% in 2021, then decline progressively to reach 11.9% in 2024. The budget deficit (9.7% of GDP in 2020) is expected to remain broadly unchanged in 2021, mainly due to the prolongation of the measures meant to address the consequences of the pandemic, and to start improving from 2022. The plan ensures that the policies monitored under enhanced surveillance continue to be pursued and are substantially reinforced through the support of necessary investments under the recovery and resilience plan. This applies in particular to key areas, such as fiscal structural including the tax administration and public procurement; labour market, social benefits and health care; the financial sector and business environment; and modernisation of the public administration, justice and fight against corruption. Reforms in these areas were essential to the emerging economic recovery in Greece prior to the outbreak of the pandemic and to improvements in underlying fiscal conditions, both of which were helping to improve the confidence of investors and financial markets. Specific commitments given in the Eurogroup in June 2018 will continue to be monitored under enhanced surveillance and provide a basis for the release of additional debt support measures up to mid-2022. The first, green pillar of the plan contributes significantly to the decarbonisation of the Greek energy sector and of the economy overall, and is consistent with the National Energy and Climate plan. Underpinned by the commitment to completely phase out lignite-based electricity production by 2028, with all existing power plants to be closed by 2023, the plan supports investment in energy networks and includes measures to promote energy efficiency and the energy renovation of buildings, reforms of the electricity market, of the licensing process and of the financing of renewable energy. It also includes the revision of urban policy and of spatial and maritime planning, and supports infrastructure for electric vehicles as well as the rehabilitation of land currently used for lignite mining. Finally, the plan covers environmental protection issues, such as waste and wastewater management, which have long been an issue for Greece, and includes an ambitious plan for reforestation, also supporting biodiversity. Together, the measures supporting the climate change objectives account for 37.5% of the Greek plan’s total allocation (non-repayable financial support and loans). The digital transition is supported through measures included in the second pillar, aiming at enhancing connectivity, improving the digitalisation of public administration and businesses, and contributing to the digital transformation of public services and of economic sectors and industrial activities. The plan promotes investment in fibre optic infrastructure in buildings, submarine cables and 5G networks, and promotes the adoption of digital technologies by the SMEs. It also includes important investments in the digitalisation of archives and digitalisation of public services, including the upgrading of the digital infrastructure of the Greek public administration, alongside reforms to simplify and improve public administration processes. Together, the measures supporting the digital transition objectives account for 23.3% of the Greek plan’s total allocation (non-repayable financial support and loans). A comprehensive set of measures presented under the third pillar aims at addressing labour market deficiencies, delivering a structural increase in employment, upgrading the education and training system, improving social cohesion and increasing the resilience and efficiency of the healthcare sector. According to the estimations included in the plan, the implementation of all the measures could lead to 180 000 – 200 000 new permanent jobs, i.e. an increase of around 5% compared to pre-COVID employment levels. Measures aim at modernising the labour market, fostering employment, including for women, and reducing long-term unemployment through hiring incentives, reskilling, and upskilling. Investment in upgrading vocational education and training as well as university education further contribute to human capital building. Social cohesion will be enhanced by improving access to healthcare and social services, and fostering active inclusion, also addressing the challenges identified by the Social Scoreboard, such as expanding access to early childhood education and care for children less than 3 years old. The plan contains a number of measures to promote deinstitutionalization of care for vulnerable children and adolescents, integration of refugees, persons with disabilities and other vulnerable groups, including the Roma, in the labour market. Access to social policies is planned to be improved through the digital transformation of the social security system and increased support for persons with disabilities. The plan envisages significant reforms and investments in the healthcare sector, upgrading the infrastructure of the hospital system and improving several of its operational aspects, while promoting access, efficiency and resilience of the healthcare sector more broadly. The fourth pillar of the plan combines measures to strengthen public administration, including tax administration and justice, improve the financial system, promote research and innovation, and enhance competitiveness in key sectors, also facilitating private investment. For public administration, measures are geared towards the improvement of administrative capacity, the enhancement of coordination, a better public procurement framework, and the continued modernisation of the public financial management framework. The measures to codify tax legislation and to improve the functioning of the tax administration, also through its digitalisation, will support fiscal sustainability through more effective tax collection. The quality and the efficiency of the justice system will be increased by accelerating and digitalising judicial processes, while upgrading relevant infrastructures. Important measures are also included to strengthen transparency and fight against corruption and illicit trade. A set of financial sector reforms will address private indebtedness and strengthen capital markets. On business environment, measures include tax incentives for private investment targeting the green economy, energy and digitalization of businesses, the promotion of economies of scale and extroversion of enterprises, and the simplification of key administrative processes and improvements in the quality of regulation, particularly in areas such as manufacturing and logistics. The pillar also includes important investments in the sustainable development of key sectors, such as tourism, culture, transport and agriculture. Finally, the RRF Loan Facility aims at addressing the lack of affordable financing for companies, with loans passed on to the private sector through international financial institutions and commercial banks. This could help overcome the significant constraints in providing credit through the Greek banking sector, which suffers from the still high volume of non-performing loans and low profitability.

All measures included in the plan have passed the ex-ante assessment of the “do no significant harm” principle. Greece has conducted an assessment for each measure indicating that the principle is followed. Based on the information provided by the Greek authorities, no measure included in the plan is expected to do significant harm to environmental objectives within the meaning of Article 17 of Regulation (EU) 2020/852. The implementation of the plan is expected to bring about a lasting significant impact to Greece. It is set to provide a significant contribution to the green transition of the Greek economy and strongly supports the decarbonisation of the energy sector. The quality and the efficiency of the public administration at large, including the justice system and tax administration, will benefit from investments and reforms that introduce structural changes. Enhancing and upgrading the digital tools and services is another essential element, coupled with strengthening the administrative capacity and improving the skills of employees. In addition, the strategic investments in very high capacity networks, emerging technologies and the multi-country projects could help achieving scale, networking, interoperability and cooperation with similar activities in other Member States. Measures to strengthen the functioning of healthcare, education and employment services are expected to improve labour market performance and reduce inequalities, poverty and the risk of social exclusion. Finally, strengthening the national frameworks for the fight against corruption, money laundering and terrorism will also be relevant steps positively affecting all sectors of the economy and the society at large. The plan defines milestones and targets for each investment and reform. Greece has designated 10 “top investments” and 8 “key reforms” based on value, impact and maturity criteria, while the remaining measures were categorised in 28 groups based on their area of focus and the allocation of responsibilities across ministries. The milestones and targets are sufficiently clear, ambitious and realistic. Their indicators are relevant, as they provide a suitable measure of the actual implementation; acceptable, as they are sufficiently ambitious and their scope reflects the overall objective of the measures; and robust, as they are specific and trackable, facilitating effective verification. The authorities have designed a clear governance structure responsible for the coordination and the monitoring of the plan’s implementation. The structure consists of a central RRF Coordination Agency, designated ministries responsible for the oversight of specific measures, implementation bodies and the Financial Audit Committee whose mission is to safeguard the observance of the principles of sound financial management for programmes co-financed with the EU. The structure is expected to be fully set up in time for the first payment request. The Technical Support Instrument (TSI) provides expertise in building capacities to implement the plan in a number of areas. These areas are clean energy, digital transformation, state aid, health system reform, non-formal education, customs, financial literacy, as well as for the overall implementation of the plan. The Greek authorities have presented detailed cost assessments for all investment projects and reforms where costs occur. The cost descriptions and methodologies vary across the plan, also depending on the nature of the projects. A cost analysis was produced for each project, including a brief description of the main characteristics, an overview of the timeline, and a breakdown of the project budget. Greece provided an appropriate level of information, based on which it is possible for the European Commission to assess positively reasonability, plausibility, additionality with EU funding, and how commensurate with expected national economic and social impact the costs are for a large majority of the measures. Cost assessments were also validated by the independent National Productivity Board. The control and audit system developed by the Greek authorities is coherently designed to meet the RRF requirements. The proposed system is a tailored-made Management and Control System rooted within the RRF Coordination Agency, which has the overall responsibility for the implementation of the plan and constitutes the single point of contact between the Greek authorities and the European Commission. Overall, the solutions identified are adequate to effectively manage the complexity of the plan. The plan achieves a high degree of coherence and complementarity among its components. This is facilitated by the structure of the plan around four main pillars, which include mutually reinforcing measures. Notably, the inclusion of climate-related and sustainability criteria from the green transition pillar will also enable the deployment of digital technologies and reinforce the impact of the digital pillar. On the other hand, measures such as demand response, which enables consumers to adjust electricity demand during peak periods, are only possible because of investment in digital technologies. The third pillar on employment, skills and social cohesion includes measures ensuring that the costs and benefits of digital and green transitions will be fairly distributed across different parts of the Greek society. To this effect, the third pillar includes measures prioritising sustainable job creation, improvement of the education system and skills, and the provision of high quality and effective health and social care services. Finally, the fourth pillar presents measures for boosting competitiveness and innovation by mobilising private and public investment and setting up institutional frameworks that will be instrumental in supporting the digital and green transition in Greece. Table 1 Summary of the assessment of the plan under the RRF criteria (1)

Balanced Response (2)

CSRs (3)

Growth, jobs… (4)

DNSH (5)

Green target (6)

Digital target (7)

Lasting impact (8)

Milestones & Targets (9)

Costing (10)

Control Systems (11)

Coherence A A A A A A A A B A A

2.Recovery and resilience challenges: scene-setter 2.1.Macroeconomic outlook and developments since the 2020 country report The macroeconomic scenario underlying the Greek recovery and resilience plan projects a recovery of economic activity to the pre-pandemic levels of 2019 in 2022. According to the plan, GDP is expected to grow by 3.6% in 2021 and 6.2% in 2022, before decreasing to 4.1% in 2023 and 4.4% in 2024. Growth is expected to be driven by domestic demand and the supportive stimulus from the Recovery and Resilience Facility. Net trade is forecast to recover ahead of the rebound in the tourism sector, especially in 2022, also improving the current account deficit. Inflation is expected to increase but to stay close to 0% in 2021 before increasing to 0.7% in 2022. The macroeconomic scenario under the plan foresees unemployment to remain unchanged at 16.3% in 2021, and to follow a downward trajectory towards 11.9% in 2024. Employment is forecast to grow marginally in 2021, due to a gradual return of hiring in the tourism industry, while the services sector is still constrained by the containment measures. Long-term unemployment remains the highest in the EU, however, risks of a further increase are expected to remain contained as employment support measures prevented an increase in unemployment during the pandemic. Poverty is expected to slowly ease from the peak recorded during the pandemic. The share of people at risk of poverty or social exclusion is among the highest in the EU (30% in 2019), albeit below its peak of 36% in 2014. Vulnerable groups are more likely to be at risk of poverty or social exclusion, including people with migrant background and low-skilled workers. The pandemic is expected to have further accentuated those gaps. The position of those struggling to find employment before the pandemic, low-skilled, young and women, is expected to deteriorate when the employment support measures are discontinued. Further, it remains uncertain whether the steady improvement seen before the pandemic will resume in the following years. Greece remains a ‘moderately equal’ society with respect to the fairness of income distribution and income inequality is higher compared to the euro area average. Greece is experiencing excessive macroeconomic imbalances. Vulnerabilities relate to high government debt, incomplete external rebalancing and high non-performing loans, in a context of high unemployment and low potential growth. The Greek economy’s potential growth has been in negative territory for over a decade, primarily due to the economy’s low total factor productivity and diminished capital stock. Since 2012, Greece has significantly narrowed its current account deficit, however the coronavirus pandemic has widened the country’s external imbalances again. The pandemic has also put additional pressure on the non-performing loan ratios for nonfinancial corporations and households. Support measures, including loan payment moratoria, provided a temporary cushion and while the initial signs following the expiry of the moratoria suggest that the adverse impact on asset quality may be contained, downside risks remain as the state support programmes are gradually phased out. In the context of the 2021 European Semester spring package, the European Commission adopted earlier in June an in-depth review for Greece, in accordance with the respective regulation on the prevention and correction of macroeconomic imbalances in Greece. The Commission 2021 spring forecast expects real GDP in Greece to grow at 4.1% and 6.0% in 2021 and 2022, respectively. Similar to the scenario underlying the plan, the Commission considers domestic demand as the main growth driver behind the recovery. The Commission expects a stronger rebound of gross fixed capital formation in 2021 than the scenario presented in the plan, with investments in equipment and construction receiving a strong boost from the foreseen projects. Private consumption is also likely to benefit from the measures foreseen in the plan, albeit less than investments. Both the Commission and the Greek authorities forecast a negative contribution from the implementation of the plan to net exports, due to the strong import component of the envisaged investments. The Commission foresees inflation to remain mildly negative in 2021, before gradually recovering in 2022. Table 2 Comparison of the macroeconomic forecast under the plan and Commission’s 2021 spring forecast 2019 2020 2021 2022 2023 2024 2025 2026 COM COM RRP COM RRP COM RRP RRP RRP RRP RRP Real GDP (% change) 1.9 -8.2 -8.2 4.1 3.6 6.0 6.2 4.1 4.4 n.a. n.a. HICP inflation (% change) 0.5 -1.3 -1.3 -0.2 0.0 0.6 0.7 1.3 1.3 n.a. n.a. Employment (15-74 yrs, % change) 1.2 -1.3 -1.3 0.4 0.7 0.7 2.3 1.3 1.3 n.a. n.a. Unemployment rate (%) 17.3 16.3 16.3 16.3 16.3 16.1 14.4 13.2 11.9 n.a. n.a. General government balance (% of GDP) 1.1 -9.7 n.a. -10.0 n.a. -3.2 n.a. n.a. n.a. n.a. n.a. General government gross debt (% of GDP) 180.5 205.6 n.a. 208.8 n.a. 201.5 n.a. n.a. n.a. n.a. n.a. Sources: Greek recovery and resilience plan, Commission 2021 spring forecast The general government budget reached a deficit of 9.7% of GDP in 2020, which is expected to remain broadly unchanged in 2021 before improving in 2022. Discretionary policy measures taken in response to the pandemic amounted to some 6.3% of GDP in 2020. For 2021, the Commission 2021 spring forecast expects a deficit of 10% of GDP. The lack of improvement compared to 2020 is mainly attributed to the prolongation of the fiscal measures that were adopted to address the pandemic.

Despite the increase in the debt-to-GDP ratio in 2020, financing conditions remain favourable. The debt-to-GDP ratio increased by more than 25 percentage points in 2020 due to the combined effect of shrinking GDP and the fiscal stimulus in 2020. The liquidity position of the general government is adequate, as financing conditions remain favourable and the government continues holding a large cash buffer. Gross financing needs will remain above 15% of GDP in 2021-2022. The debt sustainability analysis in the tenth enhanced surveillance report projects that, in the baseline scenario, the debt-to-GDP ratio remains on a downward path from 2021 onwards and reaches 169% by the end of the decade. According to the report, the protracted pandemic increased fiscal sustainability risks, which are partly offset by the expected economic recovery. The composition and maturity profile of government debt mitigates debt vulnerabilities, while additional risks could emerge from contingent liabilities. The macroeconomic scenario underpinning the recovery and resilience plan projections, identical to the projections in the Stability Programme for 2021, is cautious in 2021, while the projections for 2022 are plausible, closely in line with the Commission 2021 spring forecast. According to the Commission 2021 Spring forecast, real GDP growth is estimated at around 0.5 percentage points higher in 2021 than according to the scenario presented in the plan. This is due to different assumptions on the development of the pandemic, the uptake of funds under the Recovery and Resilience Facility and the outlook of key economic sectors, primarily tourism. The macroeconomic and fiscal outlook continue to be affected by high uncertainty related to the COVID-19 pandemic and its economic consequences. 2.2.Challenges related to sustainable growth, cohesion, resilience and policies for the next generation Smart, sustainable and inclusive growth Despite continued improvements in the past years, Greece entered the pandemic with sizeable legacy vulnerabilities that had been further deepened by the crisis. On 2 June 2021, the Commission published an in-depth review under Article 5 of Regulation (EU) No 1176/2011 of the European Parliament and of the Council for Greece. Greece is experiencing excessive imbalances. Vulnerabilities relate in particular to high government debt, incomplete external rebalancing and high non-performing loans, in a context of high unemployment and low potential growth. Potential growth has been very low in the last decade. Small and low productivity firms continue to play an outsized role in the economy. Economic activity, though shifting gradually to tradable sectors, is still concentrated in traditional and low-innovation sectors, contributing to low productivity growth. Despite some recent progress, the high tax burden, red tape, high regulatory burden, and a slow and inefficient justice system weigh on private investments, both domestic and foreign, create obstacles to companies’ growth and delay external adjustment. Low investment in research and development, skills mismatches weighing on productivity growth and low labour market relevance of education also point to weak growth prospects in the future. Finally, the lack of an effective planning and monitoring system for implementing large infrastructure projects weighs on rollout of public investments, including public-private partnerships. The Greek banking sector has become more resilient since the end of the European Stability Mechanism programme for Greece, but legacy risks and challenges related to the current crisis remain high. Safeguarding the overall soundness of the banking system and managing financial stability risks are essential for recovering from the current crisis and supporting the economy. The pandemic is posing strains on banks, through an increase in credit risk and pressure on profitability and capitalisation. Vulnerabilities and challenges stem from the high stock of non-performing loans (NPLs), which limit the scope of bank credit to support the real economy. The banking sector in Greece has the highest ratio of NPLs on total loans in the euro area. Considerable challenges lie ahead, as support measures such as payment moratoria and associated regulatory forbearance and relaxation of loan origination requirements expire. The timely and effective implementation by 1 June 2021 of the recent insolvency reform, will be key to enhance the use of restructuring solutions for viable firms and the quick resolution of non-viable businesses. This would accelerate the clearance of the existing stock of non-performing loans, while avoiding the creation of new backlogs of bad loans and insolvencies. Sustainable economic recovery could be fostered through alternative ways of non-bank financing. This includes venture capital and deepening of the Greek capital markets, which are still underdeveloped. Sustainable finance combined with its transition to a Green model of economic growth could further favour economic recovery. State support may also be warranted to leverage private investors and foster lending to viable firms exposed to a shortfall of funding at a reasonable cost, through the design of financial instruments, which avoid crowding-out or moral hazard adverse effects. Social and territorial cohesion Unemployment remains very high and the slowly declining trend was interrupted by the COVID-19 crisis. Greece has persistently the highest unemployment rate (16.3% in 2020) and the lowest employment rate (61.1% in 2020) in the EU. Youth unemployment (35.0% in 2020), the gender employment gap (19 percentage points) and share of long-term unemployed (around 70%) are also among the highest in the EU. The labour market is distorted by the large informal economy, estimated to account for some 20% of the GDP. Labour productivity (output per person employed) remains weak and the modest increases starting from 2017 have been reversed by the COVID-19 crisis. Emigration of highly skilled people raises concerns about a brain-drain and adds to the pressure of population ageing. While several short-time work schemes implemented during the crisis have prevented an increase in unemployment, activation support to help jobseekers reintegrate in the labour market is not effective enough. The limited capacity of the Public Employment Services to provide individualized support, as well as the lack of monitoring and evaluation and quality assurance in upskilling programmes are the main bottlenecks. Greece spends less than most other EU Member States on active labour market policies and their coverage is low. Prior to the pandemic, poverty had been gradually decreasing, but remained among the highest in the EU, with children and working-age people being particularly affected. The introduction of the guaranteed minimum income (GMI) reform in 2017 had a visible impact in terms of poverty reduction, but its second and third pillar (access to complementary social services and activation support) are still not sufficiently developed to face the challenges ahead. In-work poverty is above the EU average. The housing costs overburden rate, at 36.2% in 2019, is by far the highest in the EU and contrasts with the absence of a social housing policy. The pandemic is likely to exacerbate the social situation again, as reflected in the rising number of GMI beneficiaries. The large influx of asylum seekers puts additional stress on the employment and social services. The integration of third-country nationals in the labour market and society presents particular challenges. There are large regional disparities, notably between the capital region and the rest of the country. Rural areas in Greece suffer from a very high poverty rate and one of the highest rural unemployment rates (especially in young people) in the EU. Health, and economic, social and institutional resilience The Greek health system still has several structural problems. The COVID-19 emergency confirmed the need to address remaining structural challenges to ensure unhindered access. The primary healthcare network is not strong enough, mainly due to the insufficient stock of family doctors and the lack of a comprehensive workforce strategy. Centralised procurement is still not mature despite recent progress. There has been limited progress in investment in the health sector, which is significantly below the EU average (0.1% of GDP as opposed to 0.2% for the EU-27 in 2018). Investment seems to be insufficient especially in priority areas such as primary care, which could significantly increase the efficiency of the health system. Despite some improvement in the recent years, unmet needs for medical care linked to cost/distance/waiting times remained among the highest in the EU in 2019, with a wide gap between the lowest and the highest income group as well as between employed and not employed people. Co-payments have not been sufficiently means-tested to protect vulnerable groups. This is aggravated by persistent supply-induced demand in pharmaceuticals and diagnostics, which is also reflected in high and increasing clawbacks. While the share of people aged 65+ who face serious difficulties in personal care and/or household activities is considerably higher than the EU-27 average (22.6 against 18.1 in 2014, the latest available year), public spending on long-term care is very low (less than 2% of total healthcare spending). Greece has the lowest number of long-term care workers per 100 individuals aged 65 and over among the OECD countries. Concerning institutional quality, Greece still faces major challenges regarding its business environment, as evidenced by the low performance in several areas. As for business environment, Greece is one of the countries with the lowest business dynamism in the EU. High regulatory barriers and inefficiencies in the public administration especially in areas such as contract enforcement and registering property, licensing process, environmental permits, coupled with the time needed by the justice system to deliver its final decisions, as well as lack of clarity on existing tax rules hinder productivity growth. Key reforms to improve Greece’s digital performance are progressing, although it remains among the lowest in the EU. Greece does not perform well compared to the EU average in terms of many public administration indicators. The public administration reforms over the past decade focused on a leaner and more efficient state and on the improvement of services. However, Greece remains one of the least decentralised administrative systems of the EU. While digital services available to citizens have been recently expanded (see Gov.gr) and the law-making processes have been reviewed (see Executive State Law), the challenge remains to properly implement and fully roll out these initiatives. Furthermore, the overall administrative capacity of the regional and local government levels is very uneven with unclear and/or overlapping competencies. Areas where there is scope for improvement, include (i) capacity to properly design and implement public policies; (ii) coordination, in particular evident for cross-cutting subjects; (iii) human resources under-utilised and inefficiently allocated; (iv) overly complicated regulatory framework; (v) low penetration of e-Government services; (vi) low continuity in administration due to lack of standardisation of operational procedures; and (vii) absence of modern methods, techniques, and management tools. Regulatory quality suffers from excessive regulation, low use of evidence-based instruments, and non-meritocratic or heavily politicised regulation. Despite recent reforms, the justice system faces multiple challenges that weigh on its efficiency and quality. The civil court system continues to face efficiency challenges, as the time needed to resolve litigious civil and commercial disputes in first instance has continued to increase. In addition, the productivity of first instance courts has not improved as regards the clearance rate for litigious civil and commercial cases, which means that Greece is facing a clear risk of building up additional backlogs, further exacerbated by the consequences of partial interruptions of work due to the COVID-19 pandemic . Outdated infrastructure and manpower insufficiencies, along with an inefficient distribution of resources under the current judicial map explain part of the issues. Further improvements are needed in the system for the collection of judicial statistics. Shortcomings in the digitalisation of justice include the lack of availability of online information about the judicial system to the general public, the absence of digitalisation of judicial processes and of the digitalisation of archives and judicial decisions. Policies for the next generation, children and youth, including education and skills As per policies for the next generation, improving basic educational outcomes and performance in basic skills is a priority. Strengthening the teaching profession, reforming school curricula and providing adequate support to disadvantaged pupils are overarching challenges. Increasing participation in vocational education and training is also key, alongside promoting reskilling and upskilling to reduce skills mismatches and to address the green and digital transition. An institutional framework to update skills’ supply on a regular basis along with a modern training design and delivery mechanism is missing, hence hampering the link between the education system and labour market needs. Availability and quality of childhood education and care (ECEC) is relatively low, in particular for children below the age of obligatory pre-school education. The integration of recently arrived migrants into the education system remains a significant challenge. 2.3.Challenges related to the green and digital transition Green dimension

The recovery and resilience plan should contribute to the green transition and at least 37% of the financial allocation needs to contribute to climate objectives. The measures in the plan shall contribute to achieving the 2050 climate neutrality objective, and the 2030 energy and climate targets, taking into account Member States’ national energy and climate plans. They should also contribute to meeting environmental targets for waste, water, pollution control, sustainable mobility, biodiversity protection and restoration, marine and water resources, and support the transition to sustainable food systems as well as to a circular economy as appropriate, while ensuring that nobody is left behind. For Greece, this refers in particular to energy and resource efficiency in buildings, transport, and industry; renewable energy; and the development of relevant technical competencies and skills. The measures should also contribute to meeting environmental targets for waste, water, pollution control, sustainable mobility, biodiversity protection and restoration, marine and water resources, and support the transition to sustainable food systems as well as to a circular economy as appropriate, while ensuring that nobody is left behind. For Greece, investment in marine biodiversity and ecosystems are particularly important, as marine protected areas (MPAs) provide limited real protection and overfishing persists. Greece has been historically reliant on solid fossil fuels (lignite) for electricity generation. However, a combination of increased effectiveness of climate policies and higher carbon prices, inability to modernise plants so as to bring them in line with stricter environmental policies, and market reforms, which are expected to lead to increase in competition of alternative energy sources, have significantly brought down the share of electricity produced with lignite, which in 2020 was less than 20%. The Greek government committed to phase out existing lignite-based power plants by 2023 already at the UN Special Climate Action Summit in 2019, and confirmed such commitment in the final National Energy and Climate Plan (NECP). The only exception is the Ptolemaida V plant, still under construction, which will be converted by 2028. The phase-out will have significant economic and social consequences for the regions where lignite production is concentrated, notably Western Macedonia and – to a lesser extent in absolute terms – Peloponnese (Megalopolis). Security of supply and a smooth transition to clean energy sources need to be ensured. Renewable energy production and consumption have significantly increased. The share of consumption of energy from renewable sources has almost doubled between 2010 (10.08%) and 2019 (19.68%). Greece has therefore gone beyond its 2020 target of 18% and has set a 35% objective for 2030, which was assessed by the Commission as sufficiently ambitious in its final assessment of the NECP. Looking ahead, the decommissioning of existing lignite power plants by 2023 and the increased level of ambition for climate objectives at 2030 and 2050 will require further significant investment in this sector. Offshore wind in particular is still at early stages in Greece but a good potential has been identified, also for other forms of renewables. Greece has announced reforms of the framework for offshore wind parks, including regulatory, installation and support aspects, while maritime spatial plans will need to be prepared. Greece has also a high potential for other forms of renewable energy from waste and by-products of the agriculture and forestry sectors (while taking into account the effects on air pollution and the waste hierarchy). Considering that Greece is particularly prone to forest fires, damage to forests needs to be prevented by supporting forest resilience and restoration in addition to afforestation. Energy efficiency remains a key issue, with a modest level of ambition for 2030 set for final energy consumption targets and a low level of ambition for primary consumption. This is especially problematic for private and public buildings, which should undergo deep renovations to realise the significant potential savings. In its NECP, Greece has set out a target to annually renovate 3% of the total floor area of public buildings and a target of 40 000 homes per year to be upgraded by 2030 (equal to 12-15% of total housing stock by 2030), while according to Greece’s long-term renovation strategy the final energy demand in buildings will be reduced by 8% compared to 2015 levels through targeted policy measures. While such target is relevant, it is not ambitious enough. Ideally, this effort should be reinforced and accompanied by measures to alleviate energy poverty, a pressing social challenge for Greece. Greece implemented deep reforms in its energy markets in the context of the economic adjustment programmes. They focused on opening up markets and increasing competition, and delivered a reduction in the market share of the electricity incumbent, which declined in the electricity retail market from 95% in 2015 to 66% in 2020. It will be important for competitors in this market to gain further traction and for competition to cover all market segments, including the different segments of the wholesale electricity market. Further reforms are pending under the post-programme enhanced surveillance framework and need to be implemented to make Greek electricity markets more competitive, by enhancing flexible market participation (demand response) and complete the market coupling with neighbouring Member States. Further, to enable the new electricity markets to function properly, a monitoring mechanism is being finalised by the national regulatory authority, while it is essential that all market actors fulfil their role and responsibilities in a transparent and non-discretionary manner. For gas, past reforms brought about the full liberalization of the market, with the breaking up of the gas distribution monopolies and the separation of the distribution and supply activities. The building of the interconnector with Bulgaria enhanced possibilities for competition and improved security of supply. Full ownership unbundling of the electricity and gas transmission network operators is having a significant impact on the level of investment in networks. Apart from the effect on economic growth, this should also have a positive effect on electricity consumer prices as the interconnection with the mainland is expected to bring down the cost of electricity in the islands. Enhancing interconnection capacity with neighbouring countries is also key. It will facilitate Greece’s further integration in the European markets and also increase competition. Interconnection with Cyprus is particularly relevant in this regard. Public and private transport also require strong investment to improve energy efficiency and develop electro-mobility and sustainable transport. Greece is well behind in the adoption of electric vehicles (with a rate of 0.3% in new sales compared to an EU average of about 2%) and in the availability of sustainable public transport, especially in the two major cities of Athens and Thessaloniki. The Greek fleet is among the oldest in Europe, in particular the medium- and heavy-duty vehicles (18.7 years in Greece versus an EU-average of 11.7), which contributes to the transport system’s heavy dependence on oil and the low use of renewables, which accounted for only 1.7% in 2016, against an objective of 10% by 2020. This also contributes to a relatively poor road safety record. Major reforms should be also undertaken in the rail sector as a fundamental pillar of promoting sustainable transportation, especially in the connection between Athens and Thessaloniki. Major investments are also required for the upgrade and greening of the fleet of vessels interconnecting the islands with the mainland. Waste management and circular economy remain an issue. Greece brings to landfill 80% of its municipal waste (versus an EU average of 24%), and plans for improving reuse and recycle, in line with circular economy principles, are lagging behind. The country is going to miss its recycling targets for 2020, and important investments and reforms are thus required to reach the post-2020 targets and to fully implement the EU environmental acquis. Greece has adopted its National Circular Economy Strategy in December 2018, however the circular material use rate is currently at 2.4%, far below the EU27 average (11.2%). Following the update of the National Waste Management Plan in 2020, the 13 Regional Waste Management Plans, also have to be updated. Investments are still needed to improve water treatment and water infrastructure in general. About 10% of generated wastewater is not connected to collecting systems, representing close to half of the Greek municipalities. This load is treated exclusively through individual or ad-hoc systems (for instance septic tanks, storage units or individual treatment plants) and needs upgrading. The performance of the water supply services is poor, particularly with regards to distribution leakages. Greece submitted its second River Basin Management Plans with a long delay. The third River Basin Management Plans are due end-2021 and should be submitted to the Commission by March 2022. The proper functioning of the sector requires reforms and the adoption of legislative and administrative measures to ensure the sustainability and operational viability of investments and quality services to the citizens. Greece faces challenges with water abstraction and prolonged periods of drought, which are projected to intensify due to the climate change. The restoration of the water bodies to good status as provided by the Water Framework Directive remains an issue. Reversing soil erosion, reducing air pollution and improving water use efficiency are important priorities. Prioritising challenges related to biodiversity, soil, air and water (e.g. catch and cover crops, retention of crop residues on fields, switching to less water intensive crops and improved crop varieties, improving irrigation efficiency via water-saving systems and precision farming) combined with an enhanced conditionality, will be crucial to the successful green transition of Greek agriculture. The law on biodiversity and the national biodiversity strategy are sound and comprehensive, but neither has been properly implemented. According to Greece’s latest report (2019) on the conservation status of habitats and species covered by the Habitats Directive, only 48% of the assessments for Mediterranean habitat types and 35% for species show a good conservation status. The country is lagging behind in the implementation of the Regulation on invasive alien species, failing to establish surveillance systems and official controls to prevent the introduction and further expansion of invasive alien species of Union concern. The table below gives an overview of Greece’s objectives, targets and contributions under Regulation (EU) 2018/1999 of the European Parliament and of the Council of 11 December 2018 on the Governance of the Energy Union and Climate Action. Table 3 Greece’s objectives, targets and contributions under regulation (EU) 2018/1999 National targets and contributions Latest available data 2020 2030 Assessment of 2030 ambition level Binding target for greenhouse gas emissions compared to 2005 under the Effort Sharing Regulation (ESR) (%) -28

(2017) -4 -16 As in ESR, total GHG target implies higher reductions National target/contribution for renewable energy: Share of energy from renewable sources in gross final consumption of energy (%) 19.7 (2019) 18 (target) 35 Sufficiently ambitious (31% is the result of the formula) National contribution for energy efficiency: Primary energy consumption (Mtoe) 22.3 (2019) 24.7 20.55 Modest Final energy consumption (Mtoe) 16.2 (2019) 18.4 16.51 Low Level of electricity interconnectivity (%) 10% 13 21 N.A. Source: Assessment of the final national energy and climate plan of Greece, SWD (2020) 907 final. Eurostat where data is indicated for specific years. Digital dimension The recovery and resilience plan should contribute to the digital transition and at least 20% of the financial allocation needs to contribute to digital objectives. The measures in the plan should, inter alia, contribute to the digital transformation of the economic and social sector (including public administration, public services, and the justice and health systems). The objective of the measures in the plan should be to improve not only the competitiveness, but also the resilience, agility and security of companies and public actors, all while ensuring inclusiveness.

Greece ranks 27th out of the 28 countries assessed in the Digital Economy and Society Index (DESI) for 2020. This indicates large gaps regarding all aspects of the digital transformation. Based on the data collected prior to the pandemic, Greece made limited progress across most of the sub-dimensions of the Digital Economy and Society index (DESI) and did not close its gap compared to other EU countries. The combination of shortfalls in connectivity, lack of digital skills and ICT specialists, limited digital uptake by companies, low digital public sector services provision, low digital related investment in R&D, and absence of smart public transport solutions hinders digital transformation of the Greek economy and society. However, the pandemic acted in Greece as an accelerator in setting out an ambitious reform agenda for digital transformation and launching a range of new digital services (see gov.gr). Connectivity remains an issue in Greece, and is a key obstacle to the digital transition. While the country has started engaging in the deployment of very high capacity networks and its fixed very high capacity network coverage reached 10% in 2020, up from 7% a year before, it is still far below the EU average of 59%. The take up of the fixed broadband is improving slowly, reaching 77% in 2020, up from 76% in 2019 (in line with the EU average). While Greece has recently made progress to tackle long standing obstacles to investment in networks, more efforts are needed, in particular in view of the forthcoming deployment of Fiber To The Premises (FTTP) and 5G. Reforms to address obstacles to investment in networks i.e. one-stop shops, digitalisation of the permit granting procedure, are needed and would maximise the impact of investments. Low broadband coverage in rural areas is increasing the rural urban divide in particular in remote and less populated rural areas, hindering their integration in the knowledge based economy and results in an unattractive environment making it difficult for businesses to thrive. The 5G license auction was successfully concluded in December 2020. With reforms and targeted investments, Greece needs to create the right conditions for the achievement of the 2025 Gigabit targets, and bridge the digital divide with investments such as the fibre interconnection of main islands, the cross-border 5G corridors and interconnection of islands with submarine fibre cables, complemented by space-based solutions. Lack of digital skills, both at basic and advanced level, remains an obstacle to the digital transition. Despite a 5 percentage point increase since the previous year, the share of citizens with at least basic digital skills remained low at 51% in 2019, when 90% of jobs require at least basic digital skills. The share of ICT specialists in total employment, is at 2.0% in 2020, well below the EU average of 4.3%. The situation is critical as the share of ICT graduates in total graduates remains low as well. Skills mismatch is a major challenge in Greece with companies reporting difficulties in finding people with the right skills. A comprehensive digital education action plan including the revision of curricula and teachers’ training has been launched in 2020. Other initiatives such as the ‘Greek National Coalition for Digital Skills and Jobs’ can contribute to upskilling and reskilling the adults and the workforce. Nevertheless, significant efforts in increasing both basic and digital skills remain necessary to close the gap to the EU average and facilitate the country’s digital transformation. Integrating digital technologies, in particular in small and medium-sized enterprises (SMEs), remains an issue in Greece. Overall, Greece ranks 24th regarding the integration of digital technologies in the Digital Economy and Society Index in 2020. The share of SMEs selling online was at 9% in 2019, i.e. half the EU average, and the share of turnover coming from e-commerce amounted only to 4% of total turnover for SMEs, almost one third of the EU average. Limited uptake of innovative digital solutions by SMEs in Greece also hinders innovation performance. Despite the provision and the uptake of the digital public services in Greece remaining below the EU average, the pandemic acted as an accelerator of the use of digital public services. Digital public services for business have improved as well in recent years but also remain below the EU average. Limited provision of digital public services undermines access to key social services such as healthcare and education/learning, particularly endangering vulnerable groups of society, especially during crisis times. The research and innovation activity in Greece remains low in general as well in the ICT sector. In 2019, R&D intensity amounted to 1.27% of GDP in Greece, compared to 2.19% at EU level. At 2.5% of GDP in 2017, the ICT sector is small in relative size compared to other EU Member States and only accounts for 1.1% of total Greek R&D expenditure. Increasing Greece’s business R&D expenditure would be instrumental in improving its research and innovation capacity. The deployment of digital advanced technologies across all economic sectors in Greece remains slow, partly due to the large share of SMEs and the large services sector focused on low technology intensive services such as tourism. With 98% of enterprises having less than 20 employees (2017) the Greek business landscape is characterised by a large share of micro and small enterprises, which in general are slower in adapting cutting-edge technologies. The share of enterprises using new technologies such as artificial intelligence or 3D printing technologies therefore remains low at 1% and 2% respectively in 2018. More established advanced technologies such as cloud computing services and big data analytics are being used by a larger share of enterprises (7% and 13% respectively in 2019). Greece has expressed interest in investing on advanced technologies and signed the declaration on Quantum Communication Infrastructure (in December 2019). It is currently developing a national strategy on AI, while a strategy towards Industry 4.0 is still missing. Greece is significantly lagging behind the rest of the EU regarding the digitalisation of urban public transport and other smart and sustainable city initiatives. The digital transformation of Urban Transport Organisation of Athens and Thessaloniki (OASA and OASTH respectively), would be necessary in order to make public transport more attractive and other, smaller municipalities are also lacking as regards integrated public transport systems. Making less polluting public transport alternatives more attractive would also contribute to the country’s green transition. Other elements of smart and sustainable city initiatives such as big data analytics technologies, Artificial Intelligence, smart water utilities, traffic management, waste management solutions, smart lighting and smart energy solutions, urban planning, improved social participation in decision making, improved service delivery to vulnerable groups, local urban centre improvements, and the improved availability of digital resources, training and skill upgrading are relatively limited. More activities based on the principles of the EU Living-in.eu declaration would further improve the life of citizens, with investments in smart data platforms and advanced digital services. Regarding rural communities and the agricultural sector, connectivity and skills for farming communities will be key to achieve the digital transformation. Knowledge and innovation have a key role to play in helping farmers and rural communities meet future challenges. Innovation support services as well as full broadband coverage in rural areas are needed to enable the development of digital skills through appropriate training. Advisory services and operational groups will be essential to respond to the growing information needs of farms regarding economic, environmental as well as social aspects. Further actions have to be undertaken to increase knowledge flows and strengthen links between research and practice, including the creation of innovation support services, e-infrastructures, workshops and platforms for disseminating information. Figure 1 DESI 2020 - relative performance by dimension Note: EU aggregate corresponds to EU28, based on 2020 DESI report. Source: Greece’s ranking in the Digital Economy and Society Index 2020. https://ec.europa.eu/digital-single-market/en/scoreboard/greece Greece has set out an ambitious reform agenda in its draft national digital strategy. The new digital strategy (“Digital Bible”), which is under revision following its release for public consultation, presents over 450 projects focused on connectivity, digital upskilling, e-Commerce and enhancing the interoperability and robustness of public IT systems. The new Ministry for Digital Governance is overseeing the work on the new digital strategy and is pursuing the objective to implement the ‘digital by default’ principle in Greece by 2023. Box 1 Progress towards the Sustainable Development Goals The objectives of the Sustainable Development Goals (SDGs) are integrated in the European Semester since the 2020 cycle. This provides a strong commitment towards sustainability in coordination of economic and employment policies in the EU. In that respect, this section outlines Greece’s performance with respect to SDGs with particular relevance for the four dimensions underpinning the 2021 Annual Sustainable Growth Strategy and of relevance to the recovery and resilience plans (green transition, fairness, digital transition and productivity, and macroeconomic stability), indicating possible areas where investments and reforms in line with the objectives of the Recovery and Resilience Facility could further accelerate the progress on the SDGs. Sustainable Development Goals and the four dimensions underpinning the Annual Sustainable Growth Strategy In an EU context, Greece has made substantial progress towards meeting the Sustainable Development Goals (SDGs) over the past years starting from a relatively low position. By comparison with the EU average performance, Greece has taken important steps based on several headline indicators included in the EU SDG indicator set used by Eurostat for monitoring progress towards the SDGs in an EU . However, in several cases, this has been due to the relatively low starting position of Greece compared to the EU as a whole . Greece has made progress with meeting certain environmental objectives that are relevant for the green transition. In the area of affordable and clean energy (SDG 7), Greece has fared particularly well in reducing the greenhouse gas emissions intensity (by 23% between 2014 and 2019). However, their level remain above the EU average. Access to affordable energy, an area where Greece lagged for long significantly behind other EU Member States (with almost 1/3 of population being unable to keep their home adequately warm in 2014) has also improved markedly in more recent years, although at almost 17.9% in 2019, the share of affected households remains well above the EU average (6.9%). Performance with regard to SDG 12 (responsible consumption and production) has been mixed. While resource productivity in Greece increased by 37% between 2014 and 2019, it remains below the EU average, while average CO2 emissions per km from new passenger cars in Greece saw a 7% increase during the same period, when in the EU they went down marginally. On the positive side, the circular material use rate (percentage of material input for domestic use) increased by three times (from 1.4% to 4.2%), but remains below the EU average (11.9% in 2019), while generation of waste excluding major mineral wastes dropped by around 23% when it increased marginally in the EU. Some steps were also taken towards meeting climate action goals (SDGs 13) as reflected in the dramatic increase of the share of renewable energy in gross final energy consumption that by 2019 had reached the EU average (19.7%), albeit starting from a lower level. In the area of labour market and social policy, progress has been mixed. The unfavourable trend in poverty rates and long-term unemployment, which reached a peak in 2013, had been reversed by the economic recovery that ensued after the decade-long financial crisis. The recovery has also supported job creation (SDGs 1, 2, 8). Nevertheless, given Greece’s relatively weaker starting position, its labour and social situation remains less favourable than in the EU as a whole based on almost all indicators. In the same vein, fairness aspects, such as gender equality (SDGs 5, 10), have shown some signs of improvement, but remain less positive than in the EU as a whole, given Greece’s still large gender gap in terms of employment and pay and the more prominent underrepresentation of women in economic and political life. Meanwhile, a number of good health and wellbeing indicators (SDG 3) have remained relatively stable or even deteriorated in Greece during the reference period (such as smoking prevalence or people killed in accidents at work) as opposed to the positive trend that was observed in the EU as a whole. Despite improving during 2014-2019, access to health care also remains an issue, with 8.1% of the population aged 16 or above reporting unmet medical needs in 2019 due to cost, distance or waiting times as opposed to only 1.7% in the EU as a whole. Objectives to promote the digital transition, productivity and macroeconomic stability are gradually being pursued. Positive performance in several aspects of the education and R&D system such as early school leaving, tertiary education attainment, adult learning, and basic digital skills (SDG 4), as well as higher R&D production (SDG 9) has supported the digital transformation of the economy and society and reverted the negative trend in productivity. Macroeconomic stability (SDG 8) improved during the five years prior to the pandemic for which data are available, mainly thanks to the general labour market and economic recovery and the strengthening of institutions as reflected in improved perceptions of citizens about personal security and the justice system (SDG 16). Financing under the Greek recovery and resilience plan can further support progress towards the SDGs and the four dimensions underpinning the Annual Sustainable Growth Survey. The proposed wide-range and thorough reforms and investments in the green and digital transition, social inclusion and macroeconomic stability are expected to further contribute to meeting the respective SDGs. Substantial EU funds already support actions in line with the Sustainable Development Goals in Greece. The European Structural and Investment Funds support 13 out the 17 SDGs and up to 92% of the funds’ expenditure is contributing to meeting the respective objectives. 3.Objectives, structure and governance of the plan 3.1.Overall strategy of the plan Greece’s recovery and resilience plan introduces reforms and investments that aim at a considerable improvement in economic activity, technologies and institutions. These measures aspire to direct the country towards a more extroverted, competitive, green, and digital economic model. The plan also aims at facilitating cohesion and justice, while establishing a more efficient public administration and a resilient and inclusive social safety net. Greece anticipates that the proposed measures will result in the creation of new and permanent jobs, and in a lasting increase of real GDP, while contributing to addressing challenges identified in the relevant Country Specific Recommendations. In this context, the plan is structured around four pillars, encompassing a total of eighteen components: (i) Green Transition (four components); (ii) Digital Transformation (three components); (iii) Employment, skills and social cohesion (four components); (iv) Private investment and transformation of the economy (seven components). The timeline for the implementation of the plan ranges from the fourth quarter of 2020 to the third quarter of 2026, while the disbursements are proportionally distributed throughout the lifetime of the facility.

The green transition pillar focuses on energy efficiency and buildings renovation, renewables, electro-mobility, climate resilience, and environmental protection. The objective of component 1.1 (Power Up) is to increase the resilience of the electricity network, its capacity and its energy storage capabilities, thus allowing for greater penetration of renewable energy sources in the energy mix. Measures aim to reduce energy costs, phase-out oil-fired power generation, and increase the potential of the islands to support electricity generation from renewables. Component 1.2 (Renovate) introduces reforms and investments in urban and spatial planning, as well as in the renovation of residential, commercial, industrial and public buildings to improve energy performance and reduce the carbon footprint. Component 1.3 (Recharge and refuel) contains actions that enable the installation and operation of electric vehicle charging equipment, and promotes investments to establish the required infrastructure. To enhance environmental protection and resilience in natural risks, component 1.4 (Sustainable use of resources, climate resilience and environmental protection) describes measures related to reforestation and biodiversity protection, improvements in the national irrigation network, wastewater and water management, and prevention and coordination of actions against natural disasters and climate change phenomena. The digital transformation pillar aims at improving network infrastructures and facilitating the digital transition in the public and private sectors. In an effort to accelerate connectivity, a key prerequisite for digital transition, the main objectives of component 2.1 (Connect) are the facilitation of fibre optic infrastructure in buildings, the switch to fast broadband connections and 5G technology, and the utilisation of space technologies and applications. Taking into consideration current challenges, component 2.2 (Modernise) includes the incorporation of new technologies, tools and infrastructure in the public sector, and the provision of improved services to citizens and businesses. It aims at increasing interoperability between systems and data, cybersecurity and data governance strategies and policies, and extended use of advanced technologies, such as cloud computing, artificial intelligence and big data. Component 2.3 (Digitalisation of businesses) focuses on increasing the digital maturity of businesses by creating a digital infrastructure through funding and digital awareness schemes, creating the appropriate digital business ecosystem (industrial platform and data spaces), encouraging investments in modern digital technologies (e.g. using tax incentives), and upgrading the cash registers and Point of Sale (POS) ecosystem. The third pillar focuses on labour market, education and training, healthcare sustainability, and access to social policies. Component 3.1 (Increasing job creation and participation in the labour market) introduces labour market policy reforms to enhance job creation, improve job quality, strengthen economic and social resilience, promote labour market inclusion, and reduce inequalities, poverty and exclusion. The aim of component 3.2 (Education, vocational education, training, and skills) is to increase long term employment and productivity through reforms and investments in skills, lifelong learning, vocational education and training, research performance of universities, and digitalisation of all levels of education. Component 3.3’s (Improve resilience, accessibility and sustainability of healthcare) main building blocks include redesigning the health system through organisational reforms, optimising financial resources, reforming the primary health system, and reorienting health services. Finally, measures in component 3.4 (Increase access to effective and inclusive social policies) pertain to active inclusion of vulnerable population groups, reinforcing early childhood education and care, and combating discrimination. The fourth pillar combines measures to strengthen public administration, justice, and the financial system, promote research and innovation, enhance competitiveness in key sectors, and facilitate private investment. Components 4.1 (Making taxes more growth friendly, and improving tax administration and tax collection) and 4.2 (Modernise the public administration) describe tax policy and tax administration measures (including digitalisation) to contribute to the fight against tax evasion, as well as actions in selected areas of public administration, fight against corruption, public finance management, and public procurement. Component 4.3 (Improve the efficiency of the justice system) aims at accelerating and digitalising judicial processes, while upgrading relevant infrastructures. Component 4.4 (Strengthen the financial sector and capital markets) includes a set of financial system reforms, mainly to address private indebtedness, tackle information asymmetries between lenders and borrowers, as well as public sector entities and banks, and strengthen capital markets. Component 4.5 (Promote research and innovation) seeks to increase R&I public and private investment, strengthen the links between science and business, and develop R&D infrastructure through a series of investments and reforms. A group of measures aiming to improve the competitiveness of key sectors of the Greek economy, namely tourism, culture, agriculture, aquaculture, manufacturing, and transport, are provided in component 4.6 (Modernise and improve resilience of key economic sectors) as recently promoted by the Commission Communication “Updating the 2020 New Industrial Strategy: Building a stronger Single Market for Europe’s recovery”. Component 4.7 (Improve competitiveness and promote private investment and trade) regards reforms that target at the improvement of the business environment and the simplification of the regulatory framework, complemented by the provision of financial incentives to the private economy, using RRF loans (see below). RRF loans are intended to incentivise private investment in transformative sectors of the economy. The reforms included in component 4.7 are complemented by Greece’s proposal to use RRF loans to increase private investment in five strategic areas, namely a) green transition, b) digital transformation, c) research and development, d) economies of scale through mergers, acquisitions and partnerships, and e) trade promotion, using three different channels. First, funding will be provided through corporate bond purchases or syndicated loans alongside financial institutions and commercial banks, with a small participation by the beneficiaries. Second, the proposal includes the establishment of an equity platform targeting start-ups, scale-ups and dynamic SMEs in important sectors of the Greek economy. Third, the proposal includes the utilisation of a part of Greece’s InvestEU national compartment. Table 4 Components and associated costs Component Costs (EUR million) 1.1 Power Up 1 200 1.2 Renovate 2 711 1.3 Recharge and refuel 520 1.4 Sustainable use of resources, climate resilience and environmental protection 1 763 Total Costs Pillar 1: Green Transition 6 194 2.1 Connect 522 2.2 Modernise 1 281 2.3 Digitalisation of businesses 375 Total Costs Pillar 2: Digital Transformation 2 178 3.1 Increasing job creation and participation in the labour market 776 3.2 Education, vocational education, training, and skills 2 311 3.3 Improve resilience, accessibility and sustainability of healthcare 1 486 3.4 Increase access to effective and inclusive social policies 611 Total Costs Pillar 3: Employment, skills and social cohesion 5 184 4.1 Making taxes more growth friendly, and improving tax administration and tax collection 187 4.2 Modernise the public administration, including through speeding up the implementation of public investments, improving the public procurement framework, capacity building measures and fighting corruption 189 4.3 Improve the efficiency of the justice system 251 4.4 Strengthen the financial sector and capital markets 21 4.5 Promote research and innovation 444 4.6 Modernise and improve resilience of key economic sectors 3 743 4.7 Improve competitiveness and promote private investment and trade 5 Technical Assistance 40 Total Costs Pillar 4: Private investment and transformation of the economy 4 880 Total Costs all Pillars 18 436 RRF Loan Facility 12 728 (loans) 3.2.Implementation aspects of the plan Consistency with other programmes The recovery and resilience plan provides detailed justification for its alignment to the goals, priorities and policy and reform recommendations of other national broad plans. The recovery and resilience plan is part of the National Plan of Government Policies (NPGP) 2021. It is also interlinked and consistent with reforms from the National Reform Plan (NRP). In some instances, the reforms from the plan are broader than the corresponding ones presented in other national documents, covering more fields. The plan states that reforms that are listed only in the plan and are new to the NRP, range between 5-10% of the NRP (less than 15 reforms), but will be added to the NRP on its regular revision. The recovery and resilience plan is consistent with the National Energy and Climate Plan, which includes reforms and investments that will facilitate reaching climate and energy targets for 2030 and paving the path towards climate neutrality by 2050. Notably, the “Green Transition” pillar of the plan supports the transition towards a low-carbon energy system, with increased participation of renewable energy sources in energy consumption, improved energy efficiency of the domestic building stock (household, public and commercial buildings), and a “greener” and more sustainable transport system (with emphasis on the use of electromobility and electric vehicles). The Greek recovery and resilience plan is consistent with the National Transport Strategic Plan, as it acknowledges the importance of developing modern, sustainable, accessible and climate change resilient transport infrastructures. It acknowledges the enhancement of resilience against threats and risks of any kind as a crucial element of economic and societal development and progress. As a result, it incorporates the strategic guidelines, objectives and detailed targets of the National Plan for Crisis Management and Hazard Mitigation. The plan also takes into account the objectives and priorities presented in the draft National and Territorial Just Transition Plans and facilitates the just and viable socio-economic transition of the coal-dependent areas through dedicated reforms and investments. The “Green Transition” pillar, and specifically Component 1.1, includes investments for the restoration, rehabilitation and upgrading of lignite zones in Western Macedonia and Megalopolis, to accommodate new uses according to the five growth pillars detailed in the draft Just Transition Plan: (i) clean energy, (ii) smart agricultural production, (iii) sustainable tourism, (iv) industry, handicrafts and trade, and (v) technology and education. These works are expected to create new jobs for the local workforce, as well as a range of novel growth opportunities. The recovery and resilience plan is also designed to operate in consistency, complementarity, and cooperation with the new Greek Partnership Agreement for the Development Framework for the 2021-2027 Programming Period of the Cohesion Policy funds, and its sectoral and regional programmes. On the one hand, the plan incorporates the strategic directions, objectives and priorities of the new draft Partnership Agreement, while on the other hand it draws from and builds on the outcomes and the experience from implementing the Partnership Agreement for the previous MFF period (2014 – 2020). Along with the Common Agricultural Policy, the three instruments contribute the bulk of investment funds to be deployed in the Greek economy in the following nine years. The new Partnership Agreement for the 2021 – 2027 Programming Period, currently in draft form, is structured around five key Policy Objectives (PO) and a Special Objective linked to the Just Transition Fund, presented in a manner consistent with the strategic priorities, the goals and the respective components of the recovery and resilience plan. Throughout the implementation, it will be important to ensure appropriate coordination between the Recovery and Resilience Plan and the operational programmes co-financed by the Cohesion Policy funds, exploit synergies and avoid overlaps in order to maximise impact of the investments and safeguard efficiency. The pillars of “Green Transition,” “Digital Transformation”, “Private investments and transformation of the economy” and “Employment, skills and social cohesion” comprise investments and reforms which contribute directly and indirectly to job creation, to enhancing youth employment and interact with the Youth Guarantee Implementation Plan. Reforms and investments included in the “Employment, skills and social cohesion” pillar aim at increasing long-term employment, employability and labour productivity through labour market reforms, modernization of active and passive labour market policies (including measures targeted to the young unemployed individuals), upgrading the mechanisms for diagnosis of labour market needs, and reforming and digitalizing the Public Employment Service (OAED). These reforms and investments are related to the goals and priorities of the National Youth Guarantee Implementation Plan, and complement its activities, while they are expected to operate as complements in mitigating the employment and social impact of the COVID-19 pandemic. Consistency with the challenges and priorities identified in the most recent euro area recommendation The Recovery and Resilience Plan is also consistent with the challenges and priorities identified in the most recent euro area recommendations and the European Flagships identified in the Annual Sustainable Growth Strategy. In particular, the Recovery and Resilience Plan includes reforms linked to improving the business environment, the efficiency of the public administration, and the quality and efficiency of the justice system through component 4.7 (Improve competitiveness and promote private investment and trade), component 2.2 (Modernise), component 4.2 (Modernise the Public Administration) and component 4.3 (Improve the efficiency of the Justice System). Reforms regarding the anti-money laundering framework, fight against corruption and securing tax collection capacity are addressed through component 4.1 (Making taxes more growth friendly, and improving tax administration and tax collection) and component 4.2 (Modernise the Public Administration), which will enhance the AML/CFT framework, as well as modernize and digitalise the relevant infrastructures and databases. In this context, EU directives have already been embedded in the Greek law to enhance transparency, expand the application of anti-money laundering and counter terrorism financing, such as through the transposition of the AMLD5 in October 2020 (Law 4734/2020 amending Law 4557/2018). National arrangements for the implementation of the plan The implementation of the recovery and resilience plan will be coordinated by the dedicated Coordination Agency (RRF). A tailored-made Management and Control System (hereafter MCS) has been set-up to control the implementation of the plan. The System is developed under the direct management of the Recovery and Resilience Facility Coordination Agency, which has the overall responsibility for the implementation of the national recovery and resilience plan and constitutes the single point of contact (“the coordinator”) between the Greek Authorities and the European Commission (EC). (See also section 4.8). The Greek plan foresees the use of the Recovery and Resilience Facility to support and strengthen the management and control system of the Recovery and Resilience Facility Coordination Agency to meet the increased obligations of the national plan and to enable its efficient and effective implementation. The financial support of specific activities, such as the close monitoring of projects’ progress, audits and on-the-spot inspections, certifications, provision of information and publicity actions, is considered essential for the achievement of the recovery and resilience plan’s purposes.

Gender equality and equal opportunities for all Regarding the gender equality and equal opportunities for all, the plan addresses the needs of women and several disadvantaged groups, particularly via the measures proposed under pillar 3 (employment, skills, and social cohesion). In 2020 the labour market participation rate of women in Greece was 51.8%, against 70.7% for men. Female labour market participation in Greece is one of the lowest among EU Member States, and significantly lower than the European average (66.8%). The third pillar of the Greek plan includes policies and measures strengthening the work life balance for both genders, and promoting female labour participation, in particular through investment in childcare. The creation of new childcare units (with emphasis on places for infants and children up to 2.5 years old), the creation of childcare facilities in private companies and development of a comprehensive learning curriculum will increase the coverage and quality of childcare services, thus enhancing equal opportunities for women to remain in the labour market. Equal opportunities are further addressed by labour market activation programmes for vulnerable groups such as persons with disabilities, migrants and guaranteed minimum income recipients as well as by initiatives to promote diversity awareness. Furthermore, the third pillar of the plan includes the strengthening of the Equality Observatory of the Ministry of Labour and Social Affairs, in order to support data collection and data processing, with a view to better describe inequalities and discrimination. This will also facilitate the assessment of progress made in the field of equality and equal opportunities for all. Consultation process Greece carried out a consultation process before submitting their Recovery and Resilience Plan. In line with the principle of good governance, Greece carried out a stakeholder consultation after the submission of the draft plan to the Commission in November 2020, and posted it on the Ministry of Finance’s website. The authorities received contributions and opinions on the reforms and investment from the local and regional authorities, industry, NGOs, social partners, Economic and Social Committee of Greece and other economic associations, totalling 24 bodies. A summary of the public consultation was published following the input collected in the consultation process and the comments received from the European Commission, the plan was redrafted and endorsed by the Council of Ministers at the end of March 2021. Then, it was presented to the public by the Prime Minister and a presentation was posted on the dedicated webpage. Greece then submitted a summary of the updated draft plan for discussion in the Parliament a few weeks prior to the official submission. It is foreseen that the plan will be introduced before the Parliament to be debated and put into law, after the adoption of the Council Implementing Decision. Additional consultation with key stakeholders is foreseen, with a view to further engaging them in the implementation phase. At the same time, a series of public events are being planned to increase ownership of the Plan. Technical support and InvestEU Greece is planning to use the Recovery and Resilience Facility to request technical support from the Commission through the Technical Support Instrument (TSI), Horizon Policy Support Facility and to finance the national compartment of InvestEU. Greece plans to request technical support from the Commission through the Technical Support Instrument (TSI), with the support of the Recovery and Resilience Facility, according to Article 7(2) of the RRF Regulation. The technical assistance is expected to increase the resilience and response capacity of the Greek healthcare system by modernising the quality of healthcare management framework, in particular by supporting the drafting of National Strategy for Quality Assurance, Patient Safety and Patient Engagement. The total estimated cost for the technical support requested to support these organizational reforms in the health system is EUR 0.5 million. Greece is also planning to use the Recovery and Resiliency Facility loans to finance the Members State compartment of InvestEU for an amount of EUR 500 million. This is alongside the other ways of using the RRF loans, via international financial institutions, commercial banks and an equity platform. Sectoral support for the design, implementation and evaluation of research and innovation policy reforms will also be available via the Horizon Policy Support Facility. The Technical Support Instrument (TSI) provides expertise in building capacities to implement the plan in a number of areas. These areas are clean energy, digital transformation, state aid, health system reform, non-formal education, customs, financial literacy, as well as for the overall implementation of the plan. Security self-assessment The Greek plan includes a security-self assessment for investments in digital capacities and connectivity, in line with the Article 18(4)(g) of the RRF Regulation. As regards investment in connectivity, in particular in 5G networks, the plan identifies the relevant security issues. It also details how those will be addressed, based on the common objective criteria included in the EU toolbox for 5G networks Cybersecurity. Strategic measures mentioned in the security self-assessment would need to be closely monitored during the implementation of the plan. Cross-border and multi-country projects The plan includes several cross-border and multi-country projects, mainly under the digital pillar (see section 4.6). There are investment projects related to the digital and R&D, such as the ‘5G corridors’ investment, that will also support the cross-border corridor Thessaloniki-Sofia-Belgrade and the ‘Small satellites’ investment, that will ensure interoperability with EuroQCI. In addition, the ‘Submarine fiber cables’ investment project will support the installation of submarine fibre cables to interconnect mainland Greece with its islands and with Cyprus. The plan also includes investing in a new high performance computing system (upgrading the existing one of the National Infrastructures for Research and Technology) and its interconnection with the EuroHPC supercomputers; the creation of a national Cybersecurity Operations Centre and its networking with similar centres of other Member States. It further includes the framework of the European Common Data Infrastructure Services and the interoperability of the cloud, i.e. the Supply of Central Cloud Computing Infrastructure and Services. Communication strategy The Communication Strategy described in the plan consists of: ·Coherent and effective information to multiple audiences regarding the reforms and investments undertaken by Greece under the Recovery and Resilience Facility, giving emphasis to audiences that «need to know» specific information to respond to the opportunities, obligations, etc. connected to the national recovery and resilience plan (people directly affected by investments or reforms included in the plan), including the wide dissemination of funding opportunities for potential recipients. ·Increasing awareness of the plan’s objectives, tangible benefits, and impact on citizens’ daily life. ·Information access on funded projects and reforms of the plan, facilitating the opportunity of any interested citizen or group to follow up on its implementation and thus promote the efficiency and transparency inherent to the national recovery and resilience plan, throughout the implementation period. ·Informing, coordinating and supporting recipients to design and implement their own communication actions by providing guidelines, monitoring, and networking. ·Introducing a citizen focused approach by telling project stories “on the ground” or locally to mobilize community participation and build up a sense of ownership of the plan. ·Ensuring the visibility of EU funding and provide the opportunity to citizens to fairly judge the difference made in their lives by the Recovery and Resilience Facility as both a national and an EU policy instrument. A dedicated website for the national recovery and resilience plan and the related projects will be established in order to provide a single-entry point for all interested parties (institutional organisations, recipients, enterprises, media, general public) who wish to get information. In an effort to increase the visibility of the plan and the EU role and funding, the Communication Strategy will integrate multiple activities/channels, such as communication through traditional media and with a strong public relations communication strategy, through Digital Campaigns on different platforms. Moreover, the Communication Strategy seeks to bring the recovery and resilience plan closer to the citizens by translating technical terms into simple, clear and reliable messages.

State aid State aid and competition rules fully apply to the measures funded by the Recovery and Resilience Facility. Union funds channelled through the authorities of Member States, like the RRF funds, become State resources and can constitute State aid if all the other criteria of Article 107(1) TFEU are met. When this is the case and State aid is present, these measures must be notified and approved by the Commission before Member States can grant the aid, unless those measures are covered by an existing aid scheme or comply with the applicable conditions of a block exemption regulation, in particular the General Block Exemption Regulation (GBER) declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 TFEU. When State aid is present and it requires notification, it is the duty of the Member State to notify State aid measures to the Commission before granting them, in compliance with Article 108(3) TFEU. In this respect, the State aid analysis carried out by Greece in the recovery and resilience plan cannot be deemed a State aid notification. In as far as Greece considers that a specific measure contained in the recovery and resilience plan entails de minimis aid or aid exempted from the notification requirement, it is the responsibility of Greece to ensure full compliance with the applicable rules. Irrespective of whether they comply with the EU’s State aid regime, measures taken under this framework should be compatible with the EU’s international obligations, in particular under World Trade Organization rules.

4.Summary of the assessment of the plan 4.1.Comprehensive and adequately balanced response to the economic and social situation The plan follows a holistic approach to achieve recovery, while enhancing socio-economic resilience. Overall, the plan is balanced and focuses on Greece’s main challenges that, besides the twin transition, relate to the country’s social and educational needs, the strengthening of the public administration and the justice and financial systems, the enhancement of competitiveness in key sectors, as well as the need to boost the productive potential of the economy by promoting research and innovation and improving the business environment. Greece submitted its National Reform Programme on 27 April 2021. The information provided in the National Reform Programme is being considered and jointly assessed in this Staff Working Document together with the recovery and resilience plan. Table 5 Coverage of the six pillars of the Facility by the Greek RRP components Green transition Digital transformation Smart, sustainable & inclusive growth Social and territorial cohesion Health, and economic, social and institutional resilience Policies for the next generation 1.1 Power Up ● ○ ● ○ 1.2 Renovate ● ○ ● 1.3 Recharge and refuel ● ○ 1.4 Sustainable use of resources, climate resilience and environmental protection ● ● ● ○ 2.1 Connect ● ○ 2.2 Modernise ● ● ● 2.3 Digitalisation of businesses ● ● ● 3.1 Increasing job creation and participation in the labour market ● ● ● ● ○ ● 3.2 Education, vocational education, training, and skills ● ● ● ● ○ ● 3.3 Improve resilience, accessibility and sustainability of healthcare ● ● ○ ○ ● 3.4 Increase access to effective and inclusive social policies ○ ● ○ ● ● ● 4.1 Making taxes more growth friendly, and improving tax administration and tax collection ○ ● ○ ● 4.2 Modernise the public administration ● ● ● 4.3 Improve the efficiency of the justice system ● ● ● ○ ● ○ 4.4 Strengthen the financial sector and capital markets ● ○ ● ○ 4.5 Promote research and innovation ○ ● ● ○ ● 4.6 Modernise and improve resilience of key economic sectors ● ● ● ● 4.7 Improve competitiveness and promote private investment and trade ● ● Loan Facility ● ● ● Total number of components that significantly contribute to pillar 11 14 10 8 7 5 Key: “●”component significantly contributes to the pillar; “○” component partially contributes to the pillar Green transition The recovery and resilience plan is designed to contribute to Greece’s green transition. The plan seems aligned with the priorities of the European Green Deal, the 2030 climate targets and the goal for climate neutrality by 2050. The plan also aims to address the specific targets of Greece’s National Energy and Climate Plan, and to incorporate the relevant Commission’s recommendations. In synergy with the draft national and territorial Just Transition Plans, the recovery and resilience plan takes into account the need to ensure a just transition, in view of the planned phase-out of lignite, and to tackle the challenge of energy poverty. Reforms and investments in pillar 1 are the main drivers of Greece’s efforts towards green transition. Component 1.1 aspires for the transition to a low-carbon energy model, the reduction in greenhouse gas emissions and the increase in the use of renewable energy sources. Investments in this area are expected to contribute to increasing the resilience of the electricity network, and to enhancing electricity interconnections between the islands and the mainland. Further, the component is intended to promote Greece’s national target for the total phase-out of lignite, mainly through a measure to restore the land and promote its alternative use, including for recreational and commercial purposes. Component 1.2 sets energy efficiency and climate mitigation and adaptation actions for Greece’s housing stock as a key priority. The component includes reforms and investments that promote the energy-efficient renovation and upgrade of buildings, with specific funds allocated for energy poor households. Further, the component covers measures on the implementation of urban and spatial planning, and the development of strategic green urban regeneration projects. The component is also expected to contribute to the national and EU climate objectives linked to the reduction of greenhouse gas emissions, and overall improve the cities’ resilience to climate change. Component 1.3 introduces reforms that enable the installation and operation of charging infrastructure for electric vehicles, in an attempt to move towards more green and sustainable transport. It provides for financial support for the installation of publicly accessible charging points for electric vehicles and foresees investments enhancing the electrification of urban and public transport. It also includes the development of the first CO2 storage facility in the country. Component 1.4 includes actions related to waste and water management, protection of the environment (reforestation initiatives and protection of biodiversity), and upgrading the capabilities of the c