Recommendation for a COUNCIL DECISION amending for the second time Decision 2010/320/EU addressed to Greece with a view to reinforcing and deepening the fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit
Date: 2010-12-09
Institutions: European Commission
Subjects: Greece, anti-crisis plan, budget deficit, budget policy, budgetary control, economic recession

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EUROPEAN COMMISSION 

Brussels, 9.12.2010 
COM(2010) 740 final 

Recommendation for a 

COUNCIL DECISION 

amending for the second time Decision 2010/320/EU addressed to Greece with a view to 
reinforcing and deepening the fiscal surveillance and giving notice to Greece 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 for the second time 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 shall 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. 

(3) On 27 April 2009, the Council decided, in accordance with Article 104 (6) of the 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  (hereinafter  "the 
Decision").1 The Council established the following path for the deficit correction: government 
deficits  not  exceeding  EUR  18  508  million  in  2010,  EUR  17  065  million  in  2011,  EUR  14 
916 million in 2012, EUR 11 399 million in 2013 and EUR 6 385 million in 2014. 

(5) According to the forecast available at the time the Council adopted the Decision, real GDP 
was  expected  to  contract  by  4%  in  2010  and  2½  %  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 

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

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1.2%,  -0.5%,  1.0%,  0.7%  and  1.0%  from  2010  to  2104,  respectively.  Given  economic 
developments,  real  GDP  is  now  expected  to  contract  by  4¼%  in  2010  and  3%  in  2011  and 
recover  afterwards  with  growth  rates  of  1.1%  in  2012,  and  2.1%  in  2013  and  2014.  GDP 
deflators  are  now  expected  to  be  3.0%,  1.5%,  0.4%,  0.8%  and  1.2%  from  2010  to  2014, 
respectively. 

(6)  Eurostat  validated  the  Greek  government  deficit  and  debt  statistics  on  15  November 
2010,2  in  accordance  with  Council  Regulation  (EC)  No  479/2009.3  On  that  occasion,  the 
deficit  and  debts  series  for  the  years  2006-2009  were  revised  upwards.  The  government 
deficit ratio-to-GDP for 2009 was revised from 13.6% of GDP to 15.4% of GDP, while the 
debt ratio was revised from 115.1% of GDP to 126.8% of GDP.  

(7)  Greece  has  made  good  progress  in  the  implementation  of  the  measures  required  by  the 
Decision,  including  the  reduction  of  government  deficit.  However,  the  aforesaid  revision  in 
statistical  series  along  with  weak  revenue  collection  and  other  problems  with  budgetary 
implementation,  including  the  accumulation  of  payables  imply  that  the  government  deficit 
ceiling for 2010 will most likely be missed. This slippage will have to be fully offset in the 
course of 2011.  

(8)  On  24  November  2010,  Greece  submitted  to  the  Council  and  the  Commission  a  report 
outlining the policy measures taken to comply with the Decision. The Commission assessed 
the report and concluded that Greece is satisfactorily complying with the Decision.4  

(9)  In  light  of  the  above  considerations,  it  appears  appropriate  to  revise  the  Decision  in  a 
number of respects, while keeping unchanged the deadline for the correction of the excessive 
deficit  and  the  adjustment  path  for  the  government  deficit  and  the  increase  of  government 
debt in nominal terms.  

HAS ADOPTED THIS DECISION:  

Decision 2010/320/EU is amended as follows: 

Article 1 

1. 

in Article 1 (3), the second sentence, is replaced by the following: 

Based  on  November  2010  GDP  projections,  the  corresponding  path  for  the  debt-to-
'3. 
GDP ratio shall not exceed 143 % in 2010, 153 % in 2011, 157 % in 2012, 158 % in 2013 and 
156 % in 2014.'. 

2. 

in Article 2 (3), point (k) is replaced by the following: 

'(k) 
a better management of public assets, with the aim of raising at least EUR 1 billion in 
2011, and at least EUR 3 billion per year in 2012 and 2013; proceeds from the sale of assets 

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4 

Eurostat News Release 170/2010 of 15.11.2010 
OJ L 145, 10.6.2009. 
Commission Communication COM(2010) final …. of [9] December 2010. 

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(real  estate  and  financial  assets)  shall  be  used  to  redeem  debt  and  will  not  reduce  the  fiscal 
consolidation efforts to comply with the deficit ceilings in Article 1(2);'. 

3. 

in Article 2 (3), point (m) is replaced by the following: 

a decree disallowing local governments to run deficits at least until 2014; reduction in 

'(m) 
transfers to local government in line with planned savings and transfers of competences;'. 

4. 

in Article 2 (3), points (o) is replaced by the following: 

'(o) 
implementation  of  a  uniform  e-prescribing  system;  publication  of  the  complete  price 
list for the medicines in the market; application of the list of non-reimbursed medicines and of 
the  list  of  over-the-counter  medicines;  publication  of  the  new  list  of  reimbursed  medicines 
using  the  new  reference  price  system;  to  use  the  information  made  available  through  e-
prescribing  and  scanning  for  the  collection  of  rebates  from  pharmaceutical  companies; 
introduction  of  a  monitoring  mechanism  allowing  for  pharmaceutical  expenditure  to  be 
assessed  on  a  monthly  basis;  enforcement  of  co-payments  for  regular  outpatient  services  of 
EUR  5  and  extension  of  co-payments  to  unwarranted  visits  to  emergency  departments; 
publication  of  audited  accounts  for  hospitals  and  health  centres;  creation  of  an  independent 
taskforce  of  health  policy  experts  whose  task  is  to  produce,  by  end  May  2011,  a  detailed 
report  for  an  overall  reform  of  the  health  system  aiming  at  improving  efficiency  and 
effectiveness in the health system;’. 

5. 

in Article 2 (3), point (p) is deleted and the following points are added: 

further reduction in operational expenditure by at least 5 percent yielding savings of at 

'(q) 
least EUR 100 million; 

(r) 
further reduction in transfers yielding savings for the government as a whole of at least 
EUR  100  million.  The  beneficiary  public  entities  will  ensure  the  concomitant  reduction  in 
expenditure so that there is no accumulation of arrears; 

means-testing of family allowances from January 2011 on yielding savings of at least 

(s) 
EUR 150 million (net of the respective administrative costs); 

reduction  in  the  purchase  of  military  equipment  (deliveries)  by  at  least  EUR  500 

(t) 
million compared to the actual 2010 level; 

(u) 
reduction in pharmaceutical expenditure by social security funds by EUR 900 million 
owing  to  an  additional  reduction  in  drug  prices  and  new  procurement  procedures;  and  by 
hospitals (also including expenditure in equipment) by at least EUR 350 million; 

changes in the management, pricing and wages of public enterprises yielding savings 

(v) 
of at least EUR 800 million; 

(w) 
equalisation of taxation on heating oil and diesel oil after 1 October 2011, with the aim 
of fighting fraud and yielding at least EUR 600 million in 2011 (full-year impact of at least 
EUR 900 million) net of specific measures to protect the less prosperous population strata; 

(x) 
increase  in  the  reduced  rates  of  VAT  from  5.5  to  6.5  percent  and  11  to  13  percent, 
yielding at least EUR 880 million; and reduction in the VAT rate applicable to medicines and 
hotel accommodation from 11 to 6.5 percent with a cost not exceeding EUR 250 million, net 

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of  savings  for  social  security  funds  and  hospitals  that  result  from  lower  VAT  rate  on 
medicines; 

(y) 

intensification of the fight against smuggling on fuel (at least EUR 190 million); 

(z) 

increase in court trial fees (at least EUR 100 million); 

implementation  of  an  action  plan  to  accelerate  the  collection  of  tax  arrears  (at  least 

(aa) 
EUR 200 million); 

(bb) 

speeding up tax penalty collection (at least EUR 400 million); 

collection of revenue that results from the new framework of tax disputes and trials (at 

(cc) 
least EUR 300 million); 

revenue  from  the  renewal  of  telecommunication  licences  that  are  about  to  expire  (at 

(dd) 
least EUR 350 million); 

(ee) 

revenue from concessions (at least EUR 250 million). 

a restructuring  plan for the Athens transportation network (OASA). The objective of 
(ff) 
the  plan  shall  be  to  reduce  operational  losses  of  the  company  and  make  it  economically 
viable.  The  plan  shall  include  cuts  in  operational  expenditure  of  the  company  and  tariff 
increases. The required actions shall be implemented by January 2011. 

(gg) 
an act that limits recruitment in the whole general government to a ratio of not more 
than 1 recruitment for 5 retirements or dismissals, without sectoral exceptions, and including 
staff transferred from public enterprises under restructuring to government entities. 

6. 

in Article 2 (4), the following points are added: 

‘(c) 

clearance of arrears accumulated in previous years. 

a  multiannual  plan  of  structural  fiscal  consolidation  including  measures  of  at  least  5 

(d) 
percent of GDP that will ensure the deficit targets up to 2014; 

(e) 
an  anti-evasion  plan  which  includes  quantitative  performance  indicators  to  hold 
revenue administration accountable; legislation  to  streamline  the  administrative  tax  dispute 
and  judicial  appeal  processes  and  the  required  acts  and  procedures  to  better  address 
misconduct, corruption and poor performance of tax officials, including prosecution in cases 
of breach of duty;  

a  detailed  action  plan  with  a  timeline  to  complete  and  implement  the  simplified 

(f) 
remuneration system.  

(g) 
improvement in the accounting and billing systems of hospitals, through: finalising the 
introduction  of  double-entry  accrual  accounting  systems  in  all  hospitals;  the  use  of  the 
uniform coding system and a common registry for medical supplies; the calculation of stocks 
and flows of medical supplies in all the hospitals using the uniform coding system for medical 
supplies;  the  collection  of  co-payments  from  patients  in  all  NHS  facilities;  the  timely 
invoicing  of  treatment  costs  (no  later  than  2  months)  to  Greek  social  security  funds,  other 
Member  States  and  private  health  insurers; ensure  that  at  least  50  percent  of  the  volume  of 

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medicines  used  by  public  hospitals  by  end  of  2011  is  composed  of  generics  and  off-patent 
medicines by making compulsory that all public hospitals procure pharmaceutical products by 
active substance; 

(h) 
with  the  aim  of  fighting  waste  and  mismanagement  in  state-owned  companies  and 
yield fiscal savings of at least EUR 800 million, Greece adopts an act by end February 2011 
that: cuts primary remuneration in public enterprises by at least 10 percent at company level, 
limits secondary remuneration to 10 percent of primary remuneration, establishes a ceiling of 
EUR  4 000  per  month  for  gross  earnings  (12  payments  per  year),  increases  urban  transport 
tariffs by at least 30 percent; increases other tariffs; establishes actions that reduce operational 
expenditure  in  public  companies  between  15  to  25  percent;  and  adopts  an  act  for  the 
restructuring of the Athens urban transport network (OASA); 

a new regulatory framework to facilitate the conclusion of concession agreements for 

(i) 
regional airports; 

establishment of an independent taskforce of education policy aiming at increasing the 
(j) 
efficiency  of  the  public  education  system  (primary,  secondary  and  higher  education)  and 
reach a more efficient use of resources. 

7. 

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

‘(b) 
assessment  of  the  results  of  the  first  phase  of  the  independent  functional  review  of 
central administration, including the operational policy recommendations; completion of the 
review of existing social programmes;’; 

8. 

in Article 2 (5), the following points are added: 

further promoting the use of generic medicines through: compulsory e-prescription by 

'(h) 
active substance;’  

9. 

in Article 2 (7), point (c) is deleted and the following points are added: 

‘(d) 

a hospital case-based costing system to be used for budgeting purposes from 2013 on;  

acts to implement the operational recommendations of the first phase of the functional 
(e) 
review  of  public  administration  at  central  level  and  of  the  full  review  of  existing  social 
programmes. 

the  Single  Public  Procurement  Authority  starts  its  operations  with  the  necessary 
(f) 
resources to fulfil its mandate, objectives, competences and powers as defined in the Action 
Plan.’ 

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

Article 2 

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Article 3 

This Decision is addressed to the Hellenic Republic. 

Done at Brussels, […] 

For the Council 
The President 
[…] 

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