Recommendation for a COUNCIL DECISION Amending Council Decision 2011/xxx/EU of 12 July 2011 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: 2011-10-26
Institutions: European Commission
Subjects: Greece, additional resources, anti-crisis plan, austerity policy, budget deficit, budgetary control, public debt

EUROPEAN COMMISSION 

Brussels, 26.10.2011 
COM(2011) 703 final 

Recommendation for a 

COUNCIL DECISION 

Amending Council Decision 2011/xxx/EU of 12 July 2011 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 

 
 
  
 
Recommendation for a 

COUNCIL DECISION 

Amending Council Decision 2011/xxx/EU of 12 July 2011 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 

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) 

(2) 

(3) 

(4) 

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. 

Article 126 TFEU 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 
Treaty establishing the European Community (TEC), that an excessive deficit existed 
in Greece. 

On  10  May  2010,  the  Council  adopted  Decision  2010/320/EU1  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.  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. 

1 

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

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(5) 

(6) 

Council  Decision  2010/320/EU  of  10 May  2010  addressed  to  Greece  has  been 
substantially  amended  several  times2.  Since  further  amendments  were  to  be  made,  it 
was recasted, on 12 July, in the interests of clarity. 

In  September  2011,  it  became  evident  that,  taking  into  account  budgetary  execution 
until  September,  with  unchanged  policies,  the  2011  target  for  the  deficit  would  be 
missed by a significant amount which would jeopardise  the overall  credibility of  the 
programme. In October 2011, the Greek government announced the measures aimed at 
minimising  the  slippage  in  the  2011  budget  and  presented  a  draft  budget  for  2012 
aimed  at  sticking  to  the  ceiling  for  2012  established  by  the  Council  decision.  These 
measures  will  be  legislated  until  the  end  of  October  2011.  Extensive  discussions  on 
these  measures  have 
the 
Commission's services. 

the  Hellenic  authorities  and 

taken  place  between 

(7) 

In  the  light  of  the  above  considerations,  it  appears  appropriate  to  amend  Decision 
2011/xxx/EU of 12 July 2011 in a number of respects, while keeping unchanged the 
deadline for the correction of the excessive deficit. 

HAS ADOPTED THIS DECISION: 

Article 1 

Article 2 of Decision 2011/xxx/EU is amended as follows: 

1. 

the following new paragraph is added after paragraph (6): 

"6A.  Greece shall adopt and implement the following measures without delay: 

A reduction in tax exemptions, in particular the tax-free personal income thresholds, 

(a) 
with the aim of increasing revenue by at least EUR 2 831 million in 2012;  

(b) 
A  permanent  levy  on  real  estate,  collected  through  the  electricity  invoices,  with  the 
aim of collecting at least EUR 1 667 million in 2011, and increasing amounts in subsequent 
years; 

(c) 
An  immediate  implementation  of  the  revised  wage  grid  for  civil  servants,  which 
contributes to reduce expenditure by at least EUR 101 million in 2011, and with a carry over 
of at least EUR 552 million for 2012, additional to savings provided in the MTFS (Medium-
Term  Fiscal  Strategy  through  2015,  of  June  2011).  This  reform  shall  cover  all  general 
government employees, except those covered by special wage regimes. These net savings take 
into  account  the  impact  of  this  measure  on  income  tax  and  social  contributions,  as  well  as 
bonuses to be paid to specific employee categories; 

(d) 
A  cut  in  main,  and  supplementary,  pensions,  as  well  as  in  lump  sums  paid  on 
retirement, with the aim of saving at least EUR 219 million in 2011 with a carry over of EUR 
446 million in 2012, additional to savings provided for in the MTFS; 

2 

Council Decision of 7 September 2010 (2010/486/EU), (OJ L 241, 14.9.2010, p. 12); Council Decision 
of 20 December 2010 (2011/57/EU), (OJ L 026, 29.1.2011, p. 15); Council Decision of 7 March 2011 
(2011/257/EU), (OJ L 110, 29.4.2011, p. 26). 

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Spending  by  the  Green  Fund,  is  capped  at  5  percent  of  its  deposits,  with  the  aim  of 

(e) 
saving EUR 360 million in 2012; 

(f)  Ministerial  decisions  or  circulars  concerning  the  measures  on  excise  on  natural  gas, 
heating oil and vehicle taxes provided for in the MTFS 

(g)  Ministerial  Decisions  to  uniformly  regulate  health  benefits  provided  by  the  several 
social security funds;(h) 
Legislation for the collection of the solidarity surcharge through 
tax withholding;  

(i) 
Ministerial  Decisions  that  initiate  closing,  merging  or  substantially  downsizing 
entities.  This  affects  KED,  ETA,  ODDY,  National  Youth  Institute,  EOMEX,  IGME,  OSK, 
DEPANOM, THEMIS, ETHYAGE and ERT, and 35 other smaller entities; 

Ministerial  Decision  specifying  the  disability  criteria  on  the  attribution  of  disability 

(j) 
pensions, consistent with achieving the MTFS saving objectives;  

(k) 

A Law to freeze the indexation of main and supplementary pensions through 2015; 

Finalisation  of  the  positive  list  for  pharmaceuticals  that  establish  prices  charged  to 

(l) 
social security funds. 

(m) 
Transfer  to  the  privatisation  fund,  the  "Hellenic  Republic  Asset  Development  Fund" 
(HRADF)  the  following  assets:  Alpha  Bank  (0.619%  of  shares);  National  Bank  of  Greece 
(1.234%  of  shares);  Piraeus  Bank  (1.308%  of  shares);  Piraeus  Port  Authority  (23.1%  of 
shares);  Thessaloniki  Port  Authority  (23.3%  of  shares);  Elefsina,  Lavrio,  Igoumentsia, 
Alexandropoulis,  Volos,  Kavala,  Corfu,  Patras,  Rafina,  Heraklion  port  authorities  (100%); 
Athens Water and Sewerage Company (27.3%); Thessaloniki Water and Sewerage Company 
(40%);  Regional  state  airports  (transfer  of  concession  rights);  Off-shore  natural  gas  storage 
facility  'South  Kavala'  (transfer  of  rights  of  current  and  future  concessions);  Hellenic 
motorways  (transfer  of  economic  rights  of  current  and  future  concessions);  Egnatia  odos 
(100%); Hellenic Post (90%); OPAP, SA (29%); 4 state buildings. 

Appointment of the legal, technical and financial advisors for at least fourteen of these 

(n) 
privatisations that are planned until end-2012. 

(o) 
Based  on  a  dialogue  with  social  partners  and  taking  into  account  the  objective  of 
creating  and  preserving  jobs  and  improving  the  firms’  competitiveness,  further  measures  to 
allow  the  adaptation  of  wages  to  economic  conditions.  In  particular:  the  extension  of 
occupational and sectoral collective agreements and the so-called favourability principle shall 
be suspended during the period of application of the MTFS in such a manner that firm-level 
agreements take precedence over sectoral and occupational agreements; firm-level collective 
contracts can be signed either by trade unions or, when there is no firm-level union, by work 
councils or other employees' representations, irrespective of the firms' size." 

2. 

in paragraph (7), point (a) is replaced by the following: 

"(a)  A  budget  for  2012  in  line  with  the  MTFS  targets  and  the  Council  Decision's  deficit 
ceilings;  update  and  made  public  information  on  the  several  measures  provided  for  in  the 
MTFS; and the tax and expenditure legislative acts that are necessary to implement the budget 
at the same time of the budget." 

3. 

in paragraph (7), point (d) is replaced by the following: 

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"(d) 
assessment  of  the  results  of  the  first  phase  of  the  independent  functional  review  of 
central  administration  which  will  result  in  an  action  plan  for  the  implementation  of 
operational policy recommendations. These recommendations shall determine how to achieve 
a more streamlined and effective public service, to define clear responsibilities and command 
lines of ministerial departments, eliminating overlapping competences, and to improve inter- 
and  intra-  mobility;  finalisation  of  the  ongoing  functional  review  of  existing  social 
programmes." 

4. 

in paragraph (7), the following points are added: 

"(i)  Appointment of advisors for the other privatisation transactions planned for 2012 and 
not included in paragraph (6A), point (n) of this Article; acceleration of state land ownership 
registration and secondary legislation on tourism housing and on land use; establishment and 
operation  of  a  new  General  Secretariat  of  Public  Property  handling  non-privatisable  public 
property  of  the  State,  working  together  with  the  newly  merged  KED/ETA  (real  estate 
management and tourism real estate institutions, respectively), which shall be preparing real 
estate  for  privatisation  of  commercial  and  tradable  assets.  The  aim  is  to  improve  the 
management  of  real  estate  assets,  clear  them  of  encumbrances  and  prepare  them  for 
privatisation; creation of six real estate portfolios by the HRDAF; adoption of the legal act on 
the transfer to the State of the mobile and immobile assets of entities that are closed; 

(j) 
the reform of revenue administration, through: the activation of a large-taxpayers unit; 
the removal of barriers to effective tax administration by implementing the key reforms of the 
new tax law, including replacing managers who do not meet performance targets, reassessing 
tax  auditors’  qualifications;  the  operation  of  the  newly  created  fast-track  administrative 
dispute  resolution  body  to  deal  rapidly  with  large  dispute  cases  (i.e.  within  90  days);  the 
centralisation of the functions of, and the merging of, at least 31 tax offices; 

(k) 
To  strengthen  expenditure  control:  appointment  of  permanent  financial  accounting 
officers  in  all  Ministries;  continuation  of  the  process  of  establishing  commitment  registries, 
which shall cover the whole general government; 

(l) 
Publication of a medium-term staffing plan for the period up to 2015 in line with the 
rule  of  1  recruitment  for  5  exits  which  applies  to  general  government  as  a  whole  without 
sectoral exceptions; transfer of about 15 000 staff currently employed by various government 
entities  to  the  labour  reserve,  and  placement  of  about  15 000  in  pre-retirement.  Staff  in  the 
labour reserve, and in pre-retirement, will be paid at 60 percent of their basic wage (excluding 
overtime and other extra payments) for not more than 12 months. This period of 12 months 
may be extended up to 24 months for staff close to retirement;  

in-depth 

(m)  Revision of the list of heavy and arduous professions and reduction its coverage to less 
functioning  of 
than  10  percent  of  employment.  An 
secondary/supplementary  public  pension  funds,  including  welfare  funds  and  lump-sum 
schemes with the aim of stabilising pension expenditure, guarantee the budgetary neutrality of 
these schemes, and ensure medium- and long-term sustainability of the system. The revision 
shall  achieve:  a  further  reduction  in  the  number  of  existing  funds;  the  elimination  of 
imbalances in those funds with deficits; the stabilisation of the current spending at sustainable 
level,  through  appropriate  adjustments  to  be  made  from  1  January  2012;  the  long-term 
sustainability of secondary schemes through a strict link between contributions and benefits."  

revision  of 

the 

5. 

in paragraph (8), the following points are added: 

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"(c)  Undertaking  of  the  second  phase  of  the  existing  functional  review  of  social 
programmes  which  include  a  more  detailed  review  of  specific  programmes,  aiming  at 
reducing excessive fragmentation, generating savings and creating efficiencies.  

Coverage  of  all  medical  acts  by  e-prescribing  (medicines,  referrals,  diagnostics, 
(d) 
surgery) in both national health system (NHS) facilities and providers contracted by EOPYY 
and  the  social  security  funds;  production  of  detailed  monthly  auditing  reports  by  NHS 
facilities and by providers; association of a lower cost-sharing rate to generic medicines that 
have  a  significantly  lower  price  than  the  reference  price  (lower  than  60  percent  of  the 
reference  price)  on  the  basis  of  the  experience  of  other  Member  States;  publication  by  the 
social security funds of an annual report on medicine prescription; adoption by all hospitals of 
commitment registers. 

(e)  Move  towards a  new centralised  procurement of pharmaceuticals and medical goods 
for  the  NHS  through  the  Supplies  Coordination  Committee  with  the  support  of  the 
Specifications  Committee,  using  the  uniform  coding  system  for  medical  supplies  and 
pharmaceuticals. 

In  order  to  strengthen  expenditure  control,  adoption  of  legislation  streamlining  the 

(f) 
procedure for submission and approval of supplementary budgets." 

6. 

paragraph (9) is added: 

"(9) Greece shall adopt the following measures by the end of June 2012: 

(a) 
Preparation of the measures to be adopted with the 2012 and 2013 budgets, initiation 
of  a  review  of  public  expenditure  programmes,  with  the  aim  of  identifying  measures 
amounting to 3 percent of GDP. The review shall draw on external technical assistance and 
shall  focus  on  pensions  and  social  transfers  (in  a  manner  that  will  preserve  basic  social 
protection); reduction of defence spending without prejudice to the defence capability of the 
country;  and  restructuring  of  central  and  local  administrations;  adjustments  to  special  wage 
regimes;  specification  of  further  rationalization  of  pharmaceutical  spending  and  operational 
spending of hospitals, and welfare cash benefits." 

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,  

For the Council 
The President 

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