COMMUNICATION FROM THE COMMISSION TO THE COUNCIL Follow-up to the Council Decision 2010/320/EU 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
Date: 2011-02-24
Institutions: European Commission
Subjects: Greece, anti-crisis plan, budget deficit, budget policy, budgetary control, economic recession

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EUROPEAN COMMISSION 

Brussels, 24.2.2011 
COM(2011) 85 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL  

Follow-up to the Council Decision 2010/320/EU 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 

SEC(2011) 240 final 

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COMMUNICATION FROM THE COMMISSION TO THE COUNCIL  

Follow-up to the Council Decision 2010/320/EU 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 

1. 

INTRODUCTION 

This  Communication  assesses  the  measures  implemented  by  Greece  in  the  period  between 
November 2010 and mid-February 2011 to comply with the Council Decision 2010/320/EU.1 
Action taken up to November was assessed in the Communication dated 9 December 2010.2 
Together with a companion Commission staff's report, prepared in liaison with the ECB,3 it 
also contributes to the assessment of compliance with the MEFP and the MoU,4 in the context 
of the loan facility agreement between Greece and the other euro-area Member States. 

This  assessment  is  based  on  the  report  submitted  to  the  Council  and  the  Commission  by 
Greece,5 and on the mission conducted by European Commission staff together with IMF and 
ECB  in  the  context  of  the  economic  adjustment  programme  which  is  being  financed  by 
bilateral loans by the euro-area Member States and an IMF's stand-by arrangement. The report 
submitted by Greece on 12 February 2011 discusses not only the fiscal measures that aim at 
reducing  the  government  deficit  ratio  in  2011,  but  also  the  wide-ranging  structural  reforms 
that are being adopted and implemented by the Greek government.  

2. 

THE COUNCIL DECISION OF 10 MAY 2010 

On 10 May 2010, the Council adopted Decision 2010/320/EU, under Articles 126(9) and 136 
TFEU, 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 by 2014.  

The Council Decision requires Greece to adopt a number of specific measures with the aim of 
keeping general government deficit below the following ceilings: 

•  EUR  18 508  million  (8.1  percent  of  GDP,  on  the  basis  of  the  recently  available  official 

GDP data) in 2010; 

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3 

4 

5 

OJ L 145, 11.6.2010, p. 6-11. 
COM (2010) 739 final. 
‘The Economic Adjustment Programme for Greece – Third Review,’ European Economy–Occasional 
Paper N° 77 (February 2011). The reader is referred to that document for a more detailed assessment of 
macroeconomic, financial, fiscal and structural reform developments. 
Memorandum  of  Economic  and  Financial  Policies,  and  Memorandum  of  Understanding  of  Specific 
Economic Policy Conditionality of 3 May, updated 22 November 2010. 
The  Economic  Adjustment  Programme  for  Greece  –  Report  submitted  in  accordance  with  Council 
Decision – February 2011. The report was submitted by the Greek government on 12 February 2011. It 
is available at: http://ec.europa.eu/economy_finance/eu/countries/greece_en.htm. 

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•  EUR 17 065 million (7.6 percent of GDP) in 2011; 

•  EUR 14 916 million (6.5 percent of GDP) in 2012; 

•  EUR 11 399 million (4.8 percent of GDP) in 2013 and 

•  EUR 6 385 million (2.6 percent of GDP) in 2014.6 

The  Decision  was  then  amended  on  7  September  2010  (Decision  2010/486/EU)7  and  20 
December  2010  (Decision  2011/57/EU).8  However,  the  aforementioned  ceilings  for  the 
general government deficit were kept unchanged. 

3. 

BUDGETARY EXECUTION  

The ESA-based government deficit target for 2010 has been missed. While the deficit ceiling 
as established in the Council Decision was EUR 18 billion (8 percent of GDP) for 2010, the 
deficit  is  estimated  to  have  reached  EUR  22  billion  (9.6  percent  of  GDP),  though  some 
uncertainty remains on the accuracy of this outcome. The margins of uncertainty are mainly 
related to the performance of state-owned enterprises and extra-budgetary funds classified in 
general  government,  social  security  and  local  government,  for  which  hard  infra-annual  data 
are not available yet. There are also uncertainties on the differences between cash payments 
and  underlying  expenditure.  The  first  complete  set  of  ESA-based  annual  data  will  not  be 
available before end-March 2011, to be published and validated by Eurostat in April.  

The ceiling for state primary payments (cash basis) for end-year (as established in the MEFP 
and MoU) has been respected. The outcome was EUR 61.1 billion against a ceiling of EUR 
67 billion. The over-performance of the criterion reflects under-execution of spending, which 
is  largely  related  to  effective  savings,  but  also,  to  a  postponement  or  delay  of  payments; 
information  on  expenditure  pending  payments  is  still  substandard.  According  to  available 
information, the amount of arrears accumulated in 2010 stands at above EUR 1.5 billion and 
will have to be settled in the course of 2011. 

The  government  primary  balance  (on  a  cash  basis  according  to  the  definition  that  are 
monitored under the MEFP and MoU) reached EUR 5.5 billion, against the ceiling of EUR 
5.7 billion. In the previous communication, the estimate was that the criterion could be missed 
by up to EUR 1.5 billion (0.6 percent of GDP), based on the assumption of zero accumulation 
of arrears.  

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8 

The ratios to GDP are indicative. In the Council Decision, the ratios-to-GDP refer to the nominal GDP 
figures available in May: 8.0, 7.6, 6.5, 4.9 and 2.6 percent of GDP for 2010 to 2014, respectively. The 
adjustment path established by the Decision requires that the annual increase in the general government 
consolidated gross debt does not exceed: EUR 34 058 million in 2010; EUR 17 365 million in 2011; 
EUR 15 016 million in 2012; EUR 11 599 million in 2013 and EUR 7 885 million in 2014. Taking into 
account  the  revised  debt  figures  at  the  end  of  2009  and  the  latest  nominal  GDP  projections,  this 
corresponds to debt ratios of 145, 155, 159, 19 and 17 percent of GDP for 2010 to 2014, respectively. 
OJ L 145, 11.6.2010, p. 6.  
OJ L 26, 29.1.2011, p. 15. 

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Table 1: State budget execution 

cash basis 
(EUR million) 

2009 

Jan - Dec 

2010 

% 
change 

Total revenue 

50531 

54240 

Revenue before refunds 
Tax refunds 
Capital revenue 

53443 
4952 
2040 

56147 
4979 
3072 

Total expenditure 

81403 

73694 

Primary expenditure 
Interest 
Capital expenditure 
Other 

57992 
12325 
9588 
1498 

51679 
13223 
8447 
345 

State Budget balance 

-30872 

-19454 

7,3 

5,1 
0,5 
50,6 

-9,5 

-10,9 
7,3 
-11,9 
-77,0 

-37,0 

May-
2010 
plans 

55715 

57800 
5100 
3015 

75187 

52633 
13209 
9000 
345 

-19472 

Source: General Accounting Office. 
Note:  This  table  does  no  include  payments  for  military  procurement 
(EUR 1 billion in 2010, declining by more 30 percent as compared to 
2009. 

The general government debt-to-GDP ratio in 2010 reached 142.5 percent, compared with the 
original  target  of  133  percent  of  GDP.  The  difference  is  mainly  stemming  from  the 
reclassification of public entities in the general government, included for the first time in 2009 
fiscal  accounts,  but  also  from  the  worse  than  anticipated  deficit  performance  in  2010. 
However, the ceiling for the increase in the government debt established by the Decisions has 
been respected (ceiling: EUR 34 058; estimated outcome: EUR 28 870). 

3. 

PROSPECTS FOR 2011 AND 2012-2014 

The  Greek  Government  has  confirmed  its  commitment  to  meet  the  fiscal  target  for  2011 
established  by  the  Council  Decision.  With  higher-than-expected  starting  deficit  and  debt 
levels,  and  lower-than-expected  GDP,  larger  consolidation  efforts  are  necessary.  The  fiscal 
strategy  remains  anchored  on  the  consolidation  path  agreed  in  May  2010.  The  Greek 
Government  therefore  decided  to  fully  recoup  the  ground  lost  in  2010,  in  order  to  restore 
rapidly  a  sustainable  fiscal  position,  keep  financing  needs  in  line  with  the  programme,  and 
support  market  confidence.  The  2011  budget–  adopted  by  the  Greek  Parliament  on  22 
December 2010 – contains 2¼ percent of GDP in new deficit-reducing measures. This brings 
total fiscal consolidation measures in 2011 – including those agreed in May – to 5¾ percent of 
GDP. About two thirds of the new measures agreed in November are on the expenditure side, 
and  most  of  them  are  of  a  structural  nature;  EUR  0.7  billion  (or  0.3  percent  of  GDP)  of 
measures are temporary.  

Most  of  the  fiscal  measures  underpinning  the  2011  deficit  target  have  been  legislated  and 
started being implemented.  Measures include cuts  in unproductive and untargeted spending, 
reduction in short-term contracts in the public sector, better targeting of universal household 
subsidies (like subsidies for heating fuel and family allowances), and better management and 
use of state assets, particularly in the collection of taxes in arrears. The 2011 budget also starts 
tackling two key structural problems – excessive health spending and losses by state-owned 
enterprises.  The  achievement  of  the  2011  budgetary  targets  implies  an  increase  in  total  tax 

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revenue  of  more  than  EUR  1.5  billion  (or  some  ¾  percent  of  GDP),  compared  with  2010, 
which  is  a  challenging  task  and  relies  much  on  concrete  results  from  the  fight  against  tax 
evasion and the increase in the efficiency of the mechanism 

According  to  the  2011  budget,  the  government  deficit  (ESA95)  would  be  EUR  16.8  billion 
(7.6  percent  of  GDP).  However,  based  on  the  latest  available  information  the  Commission 
services forecast that the 2011 ESA95 deficit could be at EUR 18.8 billion, (cut-off date for 
this forecasts 11 February 2011). Therefore, unless action is taken, the 2011 deficit would be 
¾  of  a  percentage  point  of  GDP  above  the  ceiling.  With  the  January  2011  state  budget 
execution (cash basis) performing below the monthly target, mainly due to a still weakening 
revenue side, the implied annual fiscal gap stems mainly from less favourable expectations for 
the  tax  bases  growth,  updated  estimates  for  the  fiscal  measures  to  be  implemented  in  the 
course  of  the  year,  as  well  as  a  base  effect  from  the  worse-than-expected  2010  outcome  of 
several  revenue  categories.  Moreover,  interest  expenditure  is  expected  to  be  higher  than 
budgeted. 

According to the Greek organic budget law, the government should prepare the medium-term 
fiscal strategy for 2012–15. The government will design the fiscal policy to be implemented 
over  the  medium  term,  with  the  view  to  reduce  the  general  government  deficit  below  3 
percent of GDP by 2014 and further afterwards. Commission services’ estimates suggest that 
the  fiscal  gap  between  a  baseline  no-policy  scenario  and  the  2014  target  set  in  the  Council 
Decision currently stands at around 8 percent of GDP (table 2), out of which, fiscal measures 
of  some  2  percent  of  GDP  had  already  been  identified  in  May,  though  revisions  of  their 
budgetary impact should not be excluded.  

The  government  has  already  announced  the  first  broad  lines  of  the  medium-term  budget 
strategy, a draft of which will be available by end-March, adopted by the Council of Ministers 
by mid-April and voted by Parliament by mid-May. The main elements of the strategy paper 
will  include:  (i)  prudent  macroeconomic  forecasts;  (ii)  baseline  revenue  and  expenditure 
projections for the state and for the other government entities; (iii) a description of permanent 
fiscal  measures,  their  timing  and  quantification;  (iv)  annual  spending  ceilings  for  each 
ministry  and  fiscal  targets  for  other  government  entities  through  2014;  (v)  post-measures 
fiscal projections for general government in line with the deficit and debt targets; (vi) longer-
term debt projections based on prudent macroeconomic projections, stable primary surpluses 
from  2014  on,  and  privatisation  plans.  A  number  of  ongoing  or  planned  fiscal  structural 
reforms  will  be  embedded  in  the  medium-term  strategy,  including:  (i)  the  reform  of  state-
owned  enterprises;  and  of  (ii)  extra-budgetary  funds  (legal  entities  of  the  public  sector  and 
earmarked accounts); (iii) the tax policy reforms; (iv) the reforms in the public wage system 
and  the  public  administration;  (v)  the  rationalisation  of  the  social  spending;  (vi)  and  cost-
spending. 
effective  planning 

(vii)  military 

the  public 

investment; 

and 

for 

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Table 2: Deficit accounting: Deficit from the previous year to the next 

EUR million 

Cumulative  
measures 

2010-
2014 

2012- 
2014 

% of GDP 

Cumulative 
measures 

2010-
2014 

2012-
2014 

2009 Deficit 

Nominal deficit drift in 2010 
Measures implemented in 2010 
Impact on ratio of nominal GDP growth 
2010 Deficit 

Nominal deficit drift in 2011 
Measures implemented in 2011  
Unidentified measures 
Impact on ratio of nominal GDP growth 
2011 Deficit (target) 

Nominal deficit drift in 2012 
Identified measures for 2012* 
Unidentified measures for 2012 
Impact on ratio of nominal GDP growth 
2012 Deficit (target) 

Nominal deficit drift in 2013 
Identified measures for 2013* 
Unidentified measures for 2013 
Impact on ratio of nominal GDP growth 
2013 Deficit (target) 

Nominal deficit drift in 2014 
Identified measures for 2014* 
Unidentified measures for 2014 
Impact on ratio of nominal GDP growth 
2014 Deficit (target) 

36150 

3880 
18000 
-- 
22030 

9226 
12450 
1741 
-- 
17065 

5455 
5575 
2029 
-- 
14916 

2218 
575 
5160 
-- 
11399 

491 
-1050 
5573 
-- 
6385 

18000 

30450 
1741 

36025 
3770 

5575 
3770 

36600 
8931 

6150 
8930 

35550 
14504 

5100 
14504 

15,4 

1,7 
7,8 
0,2 
9,6 

4,1 
5,5 
0,7 
0,1 
7,6 

2,4 
2,4 
0,9 
-0,1 
6,4 

0,9 
0,2 
2,2 
-0,2 
4,8 

0,2 
-0,4 
2,3 
-0,6 
2,6 

7,8 

13,5 
0,7 

15,7 
1,6 

2,4 
1,6 

15,5 
3,8 

2,6 
3,8 

14,6 
5,9 

2,1
5,9

* Measures for 2012, 2013 and 2014 identified and quantified in the original programme of May are subject to 
revision. 
Deficit in year t equals deficit in year t-1 plus nominal deficit drift in year t minus identified measures minus 
unidentified measures (and for the ratios: plus impact on ratio of nominal GDP). 

Deficit  drift  includes  the  increase  in  the  deficit  level  that  would  take  place  without  measures.  It  includes  in 
particular the structural increase in pension expenditure, the increase in interest expenditure and other structural 
increase in spending. The deficit drift has been calculated assuming wage freeze and the implementation of the 1-
to-5 rule between recruitments and exits. It also reflects the increase/decrease in revenue due to developments in 
tax bases. 

6. 

PROGRESS WITH STRUCTURAL REFORMS  

The structural reform agenda in Greece is being implemented. Progress has been achieved in 
structural  fiscal  reforms,  though  in  some  cases  slower  than  planned.  The  government  is 
strengthening  the  legislative  framework  to  fight  tax  evasion  and  to  modernise  the  tax 
administration.  Budgetary  institution  reforms,  including  the  General  Accounting  Office,  are 

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progressing - the government has set expenditure ceilings for the State and deficit targets for 
the general government and it has made progress in ensuring a timely provision of fiscal data, 
although  quality  and  scope  need  to  improve  further.  Fiscal  management  on  the  expenditure 
side of the budget also needs to improve, in particular with respect the investment budget and 
military procurement. Progress has been made with the healthcare reform - a first package of 
reforms  having  been  adopted  in  mid-February  2011.  However,  a  number  of  fiscal  structural 
measures have been delayed, including simplifying the public sector remuneration system and 
making  fully  effective  the  Single  Payment  Authority  (SPA).  Albeit  with  some  delay,  the 
preparation of the functional reviews of central administration and social programmes is now 
making progress. 

The  Government  has  committed  to  publish  an  inventory  of  state-owned  assets,  including 
stakes in listed and non-listed enterprises and commercially viable real estate and land. This 
will contribute to accelerate privatisation, the proceeds of which have been scaled up by the 
government to EUR 50 billion in 2011-2015, of which EUR 15 billion in 2011-2012. 

Progress with other structural reforms is ongoing, but as with fiscal structural reforms, there 
have  been  delays.  With  the  adoption  of  the  labour  law  in  December  and  the  legislative 
proposals on the opening of closed professions, Greece has effectively launched a new wave 
of structural reforms. An independent taskforce of education policy experts is being set up as 
a first step towards a reform in education. Legislative acts are adopted or are expected to be 
adopted shortly which aim to remove existing restrictions on the freedom to provide services, 
reform  the  energy  sector,  simplify  legislation  and  accelerate  the  process  of  licensing 
undertakings,  industrial  activities  and  professions,  as  well  as  modify  the  institutional 
framework of the Hellenic Competition Commission (HCC). 

7. 

COMPLETENESS OF REQUIRED INFORMATION 

The  report  submitted  by  Greece,  and  data  regularly  transmitted  to  the  Commission,  include 
most of the information requirements established by the Council Decision. In particular, the 
report  contains  detailed  information  on  concrete  measures  implemented  (and  to  be 
implemented) in order to comply with the Decision and their respective budgetary impact. 

Data  on  the  monthly  state  budget  execution  have  been  timely  provided  by  the  General 
Accounting Office, with the latest (for January 2011) having been published on 12 February 
2011. Moreover, data on the monthly evolution of arrears for the state and a large part of the 
non-state sectors of the general government is also provided, following the monthly updates 
published by the General Accounting Office. Although the level of detail for the annual data 
for the non-state sectors of the government has been improved, the provision of monthly data 
on  the  budgetary  implementation  by  social  security  funds,  extra-budgetary  bodies  and  local 
governments  remains  incomplete.  The  report  presents  the  development  of  the  number  of 
permanent  staff  in  the  public sector  since  the  end  of  2009,  including  permanent  staff  of  the 
central  administration,  public  entities,  local  authorities,  state  legal  entities  of  private  law, 
security forces, military personnel and clergy. The report contains the required information in 
relation  to  debt  issuance  and  reimbursements,  and  on  the  financial  situation  of  the  largest 
state-owned enterprises. Moreover, the report contains a wealth of information concerning the 

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implementation  of  structural  reforms  in  response  to  the  Council  Recommendation  of  16 
February 20109 and to comply with the MEFP and MoU. 

8. 

CONCLUSION  

The government deficit (ESA95 basis) ceiling for 2010 established by the Council Decision is 
estimated to have been missed by around EUR 4.1 billion and to have amounted to EUR 22 
billion (9.6 percent of GDP), instead of EUR 18.5 billion (8 percent of GDP). This amounts, 
however,  to  a  reduction  in  the  deficit  ratio  of  almost  6  points  as  compared  to  2009.  The 
government  debt  ratio  is  estimated  to  have  increased  from  127  percent  of  GDP  at  the  end 
2009 to 141 percent in 2010.  

For  2011,  the  budget  adopted  by  Parliament  is  in  line  with  the  Council  Decision  ceilings, 
though  further  action  will  be  needed  to  stick  to  the  deficit  ceiling.  The  Government  is 
currently  elaborating  further  durable  measures  that  will  be  necessary  to  keep  reducing  the 
deficit  in  subsequent  years.  In  particular,  the  government  has  already  announced  the  broad 
lines  of  a  medium-term  budget  strategy,  a  draft  of  which  will  be  available  by  end-March, 
adopted by the Council of Ministers by mid-April and voted by Parliament by mid-May. In 
the context of the medium-term strategy, permanent fiscal consolidation measures of at least 8 
percent  of  GDP  shall  be  needed,  of  which  6  percent  of  GDP  still  needs  to  be  identified,  to 
ensure the achievement of deficit targets up to 2014, and that the debt-to-GDP ratio is put on a 
sustainable downward path. A scaled-up privatisation plan is expected to reduce the debt ratio 
by almost 20 percentage points of GDP in five years. 

All  in  all,  despite  the  2010  fiscal  slippage,  Greece  is  getting  ready  to  take  the  necessary 
actions and to implement the required policies to remain on track, with a view to putting an 
end  to  the  excessive  deficit  by  2014,  as  required  in  the  Council  Decision.  Therefore,  the 
Commission concludes that Greece is satisfactorily complying with the Council Decision of 
10  May  2010,  responding  to  the  Council  Recommendation  of  16  February  2010  and 
implementing the measures outlined in the updated MEFP and MoU of 22 November 2010. 

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Council  Recommendation  (2010/190/EU)  to  Greece  of  16  February  2010  with  a  view  to  ending  the 
inconsistency  with  the  broad  guidelines  of  the  economic  policies  in  Greece  and  removing  the  risk  of 
jeopardising the proper functioning of the economic and monetary union (OJ L 83, 30.3.2010, p. 63). 

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ANNEX I:  MEASURES REQUIRED BY THE COUNCIL DECISION, TO BE ADOPTED BY END-DECEMBER 2010 

Measures (as required by Article 2(3) of the Council Decision) 
“Greece shall adopt the following measures by the end of December 2010: 

(a) the final adoption of the measures referred to in paragraph 2(a); 

(b)  the  implementation  of  legislation  strengthening  the  fiscal  framework.  This  should,  in 
particular, include the establishment of a medium-term fiscal framework, the creation of a 
compulsory  contingency  reserve  in  the  budget  corresponding  to  5  percent  of  total 
appropriations  of  government  departments,  other  than  wages,  pensions  and  interest,  the 
creation of stronger expenditure monitoring mechanisms and the establishment of a budget 
office attached to Parliament; 

(f) a significant increase in the absorption rate of structural and cohesion funds; 

(i) legislation simplifying and accelerating the process of licensing undertakings, industrial 
activities and professions; 

(j)  a  modification  of  the  institutional  framework  of  the  Hellenic  competition  authority 
(HCC)  with  a  view  to  increasing  its  independence,  establishing  reasonable  deadlines  for 
the  investigation  and  issue  of  decisions  and  entrusting  it  with  the  power  to  reject 
complaints; 

(k)  a  better  management  of  public  assets,  with  the  aim  of  raising  at  least  EUR  7  billion 
during the period 2011- 2013, of which at least EUR 1 billion in 2011 and proceeds from 
the sale of assets (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); 

(l) measures aiming at removing existing restrictions on the freedom to provide services; 

State of progress 

Observed. 

Partially observed. 

The  new  organic  budget  law  legislated  in  September  2010,  has  already  been 
applied with the 2011 budget law. The Government shall adopt by May 2011 
the  medium-term  fiscal  budgetary  framework  which  will  be  the  basis  for  the 
2012  budget.  The  budget  office  attached  to  Parliament,  while  legislated,  has 
not been created yet. 
Observed. 

Partially observed, delayed. 

The licensing law is expected to be voted in Parliament shortly.  

Ongoing, delayed. 

To be submitted to Parliament shortly. 

Observed. 

The government has announced the assets it intends to privatise in the course of 
2011-13. The plan should be revised in line with the government's intention of 
scaling up privatisation receipts to EUR 50 billion in 2011-2015. 

Ongoing with delay.  

Several measures to be legislated shortly. 

(m) a decree disallowing local governments to run deficits at least until 2014; reduction in 
transfers to local government in line with planned savings and transfers of competences; 

Observed. 

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

Observed.  

(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; the use of 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; 
and 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  aimed  at 
improving efficiency and effectiveness in the health system; 
(q) further reduction in operational expenditure by at least 5 percent yielding savings of at 
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; 
(s) means-testing of family allowances from January 2011 on yielding savings of at least 
EUR 150 million (net of the respective administrative costs); 

(t) reduction in the purchase of military equipment (deliveries) by at least EUR 500 million 
compared to the actual 2010 level; 

Ongoing. 

Several measures being legislated or implemented. 

Observed. 

Observed. 

Planned. 

To be assessed by end-year. 

(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; 

Observed.  

(v) changes in the management, pricing and wages of public enterprises yielding savings of 
at least EUR 800 million; 

Observed. 

(w) equalisation of taxation on heating oil and diesel oil after 15 October 2011, with the 
aim  of  fighting  fraud  and  yielding  at  least  EUR  400  million  in  2011  net  of  specific 
measures to protect the less prosperous population strata; 

Not observed. 

The  act  to  equalise  the  taxation of heating oil  and diesel  oil  has  not  yet  been 
legislated. The specific tax benefit to heating oil to be revoked applies only in 
autumn  and  winter,  so  that  a  delay  in  the  adoption  the  act  until  now  has  no 

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material impact on tax revenue and tax expenditure. 

(x)  increase  in  the  reduced  rates  of  VAT  from  5,5  %  to  6,5  %  and  from  11  %  to  13  %, 
yielding at least EUR 880 million and reduction in the VAT rate applicable to medicines 
and hotel accommodation from 11 % to 6,5 % with a cost not exceeding EUR 250 million, 
net of savings for social security funds and hospitals that result from the 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); 

(aa)  implementation  of  an  action  plan  to  accelerate  the  collection  of  tax  arrears  (at  least 
EUR 200 million); 

Observed. 

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

(cc) collection of revenue that results from the new framework of tax disputes and trials (at 
least EUR 300 million); 
(dd) revenue from the renewal of telecommunication licences that are about to expire (at 
least EUR 350 million); 

(ee) revenue from concessions (at least EUR 250 million); 

(ff)  a  restructuring  plan  for  the  Athens  transportation  network  (OASA).  The  objective  of 
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 March 2011; 
(gg) an act that limits recruitment in the whole general government to a ratio of not more 
than  one  recruitment  for  five  retirements  or  dismissals,  without  sector  exceptions,  and 
including  staff  transferred  from  public  enterprises  under  restructuring  to  government 
entities; 

(hh) acts to strengthen labour  market institution and establish that: firm-level agreements 
prevail  over  those  under  sector  and  occupational  agreements  without  undue  restrictions; 
firm-level collective agreements are not restricted by requirements regarding the minimum 
size  of  firms;  the  extension  of  sector  and  occupational  agreements  to  parties  not 
represented in negotiations is eliminated; the probationary period for new jobs is extended; 
temporal limits in the use of temporary working agencies are eliminated; impediments for 
greater  use  of  fixed-term  contracts  are  removed;  the  provision  that  establishes  higher 
hourly remuneration to part- time workers is eliminated; and a more flexible working-time 
management including part-time shift work is allowed for. 

Ongoing. 

Draft business plan available.  

Observed  

Partially observed. 

Law  3899/2010  establishes  that  firms  and  their  employees  may  agree  special 
firm-level  collective  agreements  (SFLCA)  that  deviate  in  peius  from  sector 
agreements. The new OMED board is in the process of being constituted. The 
requirements  on  extending  the  probationary  period  for  new  jobs  to  one  year, 
eliminating  temporal  limits  in  the  use  of  temporary  working  agencies  and 
eliminating  the  provision  that  establishes  higher  hourly  remuneration  to  part-
time workers have been observed. The required elimination of the extension of 

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sector  and  occupational  agreements  to  parties  not  represented  in  negotiations 
has  not  taken  place.  The  requirements  to  adopt  legislation  to  remove 
impediments  for  greater  use  of  fixed-term  contracts  and  to  allow  for  a  more 
flexible working-time management have not been fulfilled. 

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