Recommendation for a COUNCIL DECISION amending Council Decision 2010/320/EU of 10 May 2010 addressed to Greece with a view to reinforcing and deepening the fiscal surveillance and giving notice to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit
Date: 2010-08-19
Institutions: European Commission
Subjects: Greece, anti-crisis plan, budget deficit, budget policy, budgetary control, economic recession

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EUROPEAN COMMISSION 

Brussels, 19.8.2010 
COM(2010) 440 final 

Recommendation for a 

COUNCIL DECISION 

amending Council Decision 2010/320/EU of 10 May 2010 addressed to Greece with a view to 
reinforcing and deepening the fiscal surveillance and giving notice to take measures for the 
deficit reduction judged necessary to remedy the situation of excessive deficit 

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Recommendation for a 

COUNCIL DECISION 

amending Council Decision 2010/320/EU of 10 May 2010 addressed to Greece with a view to 
reinforcing and deepening the fiscal surveillance and giving notice to take measures for the 
deficit reduction judged necessary to remedy the situation of excessive deficit 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  functioning  of  the  European  Union  (TFEU),  and  in 
particular Article 126 (9) and Article 136 thereof,  

Having regard to the recommendation from the Commission, 

Whereas: 

(1) 
Article 136(1) (a) TFEU foresees the possibility of adopting measures specific to the 
Member States whose currency is the euro with a view to strengthening the coordination and 
surveillance of their budgetary discipline. 

(2) 
Article 126 establishes that Member States are to avoid excessive government deficits 
and  sets  out  the  excessive  deficit  procedure  to  that  effect.  The  Stability  and  Growth  Pact, 
which  in  its  corrective  arm  implements  the  excessive  deficit  procedure,  provides  the 
framework supporting government policies for a prompt return to sound budgetary positions 
taking account of the economic situation. 

On  27  April  2009,  the  Council  decided,  in  accordance  with  Article  104(6)  of  the 

(3) 
Treaty establishing the European Community that an excessive deficit existed in Greece. 

(4) 
On 10 May 2010, the Council adopted a Decision addressed to Greece under Article 
126 (9) and Article 136 with a view to reinforcing and deepening the fiscal surveillance and 
giving  notice  to  take  measures  for  the  deficit  reduction  judged  necessary  to  remedy  the 
situation of excessive deficit at the latest by the deadline of 2014.1 The  Council  established 
the following path for the deficit correction: government deficits not exceeding 8% of GDP in 
2010, 7.6% of GDP in 2011, 6.5% of GDP in 2012, 4.9% of GDP in 2013, and 2.6% of GDP 
in 2014. 

(5) 
According  to  the  forecast  available  at  the  time  the  Council  adopted  the  aforesaid 
Decision, real GDP was expected to contract by 4% in 2010 and 2.6 % in 2011, and recover 
afterwards, with growth rates of 1.1% in 2012, and 2.1% in 2013 and 2014. GDP deflator was 
expected  to  be  1.2%,  -0.5%,  1.0%,  0.7%  and  1.0%  from  2010  to  2014,  respectively.  Given 

1 

Council Decision 2010/320/EU (OJ L 145, 11.6.2010, p. 6). 

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economic developments in the meantime, the aforementioned real GDP growth rates remain a 
central scenario with balanced upside and downside risks, while the deflator is now forecast to 
be substantially higher for the initial years: 3½ %, 1¼% and ½% from 2010 to 2012. 

Greece has made good progress in the implementation of the measures required by the 
(6) 
Council Decision. In several areas, measures have been taken in advance of the requirements. 
This  has  been  the  case,  in  particular,  in  the  field  of  pension  reform,  reform  of  local 
administration and publication of monthly data on state revenue and expenditure. However, a 
number of adjustments are still necessary in each of these areas. 

(7) 
On  6  August  2010,  Greece  submitted  to  the  Council  and  the  Commission  a  report 
outlining the policy measures taken to comply with Decision 2010/320/EU. The Commission 
assessed  the  report  and  concluded  that  Greece  is  satisfactorily  complying  with  the  Council 
Decision of 10 May 2010.2  

In  the  light  of  the  above  considerations,  it  appears  appropriate  to  revise  the  Council 
(8) 
Decision in a number of respects, while keeping unchanged the deadline for the correction of 
the  excessive  deficit  and  the  respective  adjustment  path  for  the  deficit-to-GDP  ratios  and 
government debt.  

HAS ADOPTED THIS DECISION:  

Article 1 

Council Decision 2010/320/EU is amended as follows: 

(1) Article 2 (2) (a) is replaced by the following: 

"(a) 

fiscal  consolidation  measures  amounting to  at  least  3.2%  of  GDP  (4.3%  of  GDP  if 
carryovers from measures implemented in 2010 are considered) to be included in the 
draft  budget  for  2011:  a  reduction  in  intermediate  consumption  of  the  general 
government  by  at  least  EUR  300  million  compared  to  the  2010  level  (on  top  of 
savings stemming from the reform of public administration and of local government 
referred to in this paragraph), a freeze in the indexation of pensions (with the aim of 
saving EUR 100 million), a temporary crisis levy on highly profitable firms (yielding 
at least EUR 600 million in additional revenue per year in 2011, 2012 and 2013), a 
presumptive  taxation  of  professionals  (with  a  yield  of  at  least  EUR  400  million  in 
2011 and increasing returns by at least EUR 100 million per year in 2012 and 2013), 
a broadening of the VAT base by including certain services currently exempted and 
by moving 30% of goods and services from the reduced rate to the main rate (with a 
yield of EUR 1 billion), a phased-in green tax on CO2 emissions (with a yield of at 
least  EUR  300  million  in  2011),  the  implementation  by  the  Government  of  the 
legislation  reforming  the  public  administration  and  a  reorganisation  of  local 
government (with the aim of reducing costs by at least EUR 500 million in 2011, and 

2 

Commission Communication ‘Follow-up to the Council Decision of 10 May 2010 addressed to Greece, 
with  a  view  to  reinforcing  and  deepening  fiscal  surveillance  and  giving  notice  to  Greece  to  take 
measures  for  the  deficit  reduction  judged  necessary  to  remedy  the  situation  of  excessive  deficit,’ 
COM (2010) final XXX of [19] August 2010. 

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additional  EUR  500  million  in  each  year  2012  and  2013);  a  reduction  in 
domestically-financed investments (by at least EUR 500 million) by giving priority 
to investment projects financed by EU structural funds, incentives to regularise land-
use  violations  (yielding  at  least  EUR  1500  million  from  2011  to  2013,  of  which  at 
least EUR 500 million in 2011), a collection of revenue from the licensing of gaming 
(at  least  EUR  500  million  in  sales  of  licences  and  EUR  200  million  in  annual 
royalties), an expansion of the base of the real estate tax by updating asset values (to 
yield at least EUR 400 million additional revenue), an increased taxation of wages in 
kind,  including  by  taxing  car  lease  payments  (by  at  least  EUR  150  million);  an 
increased  taxation  of  luxury  goods  (by  at  least  EUR  100  million),  a  special  tax  on 
unauthorised  establishments  (to  yield  at  least  EUR  800  million  per  year),  a 
replacement  of  only  20%  of  retiring  employees  in  the  public  sector  (central 
government,  local  governments,  social  security  funds,  public  companies,  state 
agencies  and  other  public  institutions).  Measures  yielding  comparable  budgetary 
savings may be considered after consultation with the Commission;” 

(2) Article 2 (2) (b) is deleted. 

(3) Article 2 (2) (f) is replaced by the following: 

"(f) 

the  launch  of  independent  reviews  of  central  administration  and  of  existing  social 
programmes." 

(4) 

In Article 2 (2), following subparagraphs (j) and (k) are added: 

"(j) 

the establishment of a comprehensive central registry for public enterprises; 

(k) 

an  action  plan  with  a  timetable  for  concrete  actions  leading  to  the  creation  of  a 
central procurement authority.” 

(5) 

In Article 2 (3) following subparagraphs (m) to (r) are added: 

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"(m) 

an act disallowing local governments to run deficits at least until 2014; 

(n) 

(o) 

(p) 

publication of interim long-term projections of pension expenditure up to 2060 as set 
out in the July 2010 legislation covering the main pension schemes (IKA, including 
the pension scheme for civil servants, OGA and OAEE). 

an  act  establishing  an  upper  limit  of  EUR  50  million  for  the  annual  public  service 
obligation (PSO) contribution from the general government to railway operators for 
the  period  2011-2013  and  establishing  the  principle  that  the  State  provides  no 
additional explicit or implicit support to railway operators; 

a business plan for the Greek railways. The business plan specifies how operational 
activities  will  be  made  profitable,  including  covering  depreciation  costs,  as  from 
2011,  including  by  closing  loss-making  lines,  by  increasing  tariffs  and  by  reducing 
wages  and  staffing;  provides  a  detailed  sensitivity  analysis  on  the  implication  for 
wage costs of various scenarios for the outcome of collective agreement and provides 
information on several options concerning staff, and provides for the restructuring of 
the holding company, including the sale of land and other assets; 

(q) 

seeks  technical  assistance  from  international  experts  on  the  several  aspects  of  the 
efficiency  and  effectiveness  of  the  health  system  and  management  of  hospitals, 
aiming at enhancing efficiency and reducing waste; 

(r) 

enforces the payment of EUR 3 for regular outpatient services in public hospitals." 

(6) 

In Article 2 (4) the following subparagraph (b) is added: 

"(b) 

publication  of  comprehensive  long-term  projections  of  pension  expenditure  up  to 
2060 as set out in the July 2010 legislation reform. The projections shall encompass 
the supplementary (auxiliary) schemes, based on comprehensive set of data collected 
and  elaborated  by  the  National  Actuarial  Authority.  The  projections  shall  be  peer-
reviewed and validated by the EU Economic Policy Committee." 

(7) 

Article 2 (5) (b) is replaced by the following: 

"(b) 

measures implementing the conclusions of first phase of the independent functional 
reviews of central administration and social programmes;" 

(8) 

In Article 2(5) following subparagraphs (d), (e) and (f) are added: 

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"(d) 

(e) 

(f) 

an  act  revising  the  main  parameters  of  the  pension  system,  if  the  long-term 
projections provided by paragraphs (3)(n) and (4)(b) show that the projected increase 
in  public  pension  expenditure  would  exceed  the  limit  of  2.5  percentage  points  of 
GDP over 2009-2060; 

a revision of the functioning of supplementary/auxiliary public pension schemes with 
the  aim  of  stabilising  expenditure  and  guarantee  the  budgetary  neutrality  of  those 
schemes;  

a revision of the list of heavy and arduous professions to reduces its coverage to no 
more than 10% of labour force; the new list of difficult and hazardous occupations 
shall apply with effect from 1 July 2011 to all current and future employees." 

(9) 

In Article 2 (7) following subparagraph (c) is added: 

"(c) 

measures  implementing  the  conclusions  of  second  phase  of  the  independent 
functional reviews of central administration and social programmes;" 

(10)  Article 4 (2) (g) is replaced by the following: 

"(g) 

government expenditure pending payment, specifying those past due date." 

This Decision shall take effect on the day of its notification.  

Article 2 

Article 3 

This Decision is addressed to the Hellenic Republic. 

Done at Brussels, […] 

For the Council 
The President 
[…] 

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