COMMUNICATION FROM THE COMMISSION Assessment of action taken by Greece in response to the Council Decision 2011/734/EU of 12 July 2011 addressed to Greece, as amended by Council Decision 2013/6/EU of 4 December 2012, 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 - (May 2013)
Date: 2013-05-07
Institutions: European Commission
Subjects: Greece, budgetary control, budgetary discipline (EU), budgetary equilibrium, debt reduction, financial aid, gross domestic product, institutional reform, public debt, reflation, structural adjustment, tax reform

EUROPEAN 
COMMISSION 

Brussels, 7.5.2013  
COM(2013) 285 final 

COMMUNICATION FROM THE COMMISSION 

 Assessment of action taken by Greece in response to the Council Decision 2011/734/EU 
of 12 July 2011 addressed to Greece, as amended by Council Decision 2013/6/EU of 4 
December 2012, 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 - (May 2013) 

EN 

   EN 

 
 
 
 
  
 
1. 

INTRODUCTION 

This  Communication  assesses  the  measures  implemented  by  Greece  to  comply  with  the 
Council  Decision  2011/734/EU,  as  last  amended  by  Council  Decision  2013/6/EU  of 
4 December 20121. Together with the Commission services' Compliance Report, prepared in 
liaison with the ECB2, the Communication contributes to the assessment of compliance with 
the Memorandum of Understanding (MoU)3 in the context of the financing to Greece by the 
euro-area  Member  States,  through  the  European  Financial  Stability  Facility  (EFSF).  This 
assessment  is  based  on  the  Commission  services'  Spring  Forecast  2013  and  the  detailed 
assessment  made  in  the  review  of  the  economic  adjustment  programme,  conducted  by  the 
Commission services together with the IMF and ECB staff.  

2. 

THE COUNCIL DECISION OF 4 DECEMBER 2012 

On 4 December 2012, the Council adopted a Decision, 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 2016. This Decision itself amended the July 2011 Decision4, 
which  had  been  recast  to  consolidate  several  consecutive  amendments  of  Decision 
2010/320/EU  of  10  May  2010.  The  decison  required  Greece  to  make  an  improvement  of  at 
least 10 percentage points of GDP over the period 2009-14. 

The December 2012 amendment of the Council Decision required Greece to put an end to the 
the present excessive deficit situation as rapidly as possible and at the latest by a deadline of 
2016.  Greece  was  recommended  to  achieve  a  general  government  primary  deficit  not 
exceeding 1.5% in 2012 and general government primary surpluses of at least 0% of GDP in 
2013, 1.5% of GDP in 2014, 3.0% of GDP in 2015, and 4.5% of GDP in 2016. These targets 
were seen as implying an overall ESA-government deficit of 6.9 % of GDP in 2012, 5.4 % of 
GDP in 2013, 4.5 % of GDP in 2014, 3.4 % of GDP in 2015 and 2.0 % of GDP in 2016.  

In  cyclical-adjusted  terms,  the  primary  balance  targets  were  estimated  to  translate  into  an 
improvement in the cyclically-adjusted primary balance to GDP ratio from 4.1 % in 2012 to 
6.2 % in 2013 and at least 6.4% of GDP in 2014. The cyclically-adjusted government balance 
to GDP ratio was estimated at -1.3 % in 2012, +0.7 % in 2013 and +0.4 % in 2014.  

In  computing  these  targets  and  the  associated  required  fiscal  adjustment,  the  Decision 
excludes  from  ESA-definitions  all  proceeds  from  the  privatisation  of  financial  and  non-
financial  assets,  transactions  relating  to  bank  recapitalisations,  all  transfers  related  to  the 
Eurogroup statement of 21 February 2012 with regard to income of euro zone national central 
banks,  including  the  Bank  of  Greece,  stemming  from  their  investment  portfolio  holdings  of 
Greek  Government  bonds,  and  any  payments  from  loss-making  banks  beyond  those  which 
would accrue from the ELA guarantee fee structure existing on 30 September 2012. The same 
definition is also used in the context of the Greek Economic Adjustment Programme. 

1 
2 

3 

4 

OJ L 4, 9.1.2013, p. 40-45.  
‘The  Economic  Adjustment  Programme  for  Greece  –  May  2013,’  European  Economy–Occasional 
Paper  (forthcoming).  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 December 2012. 
Council Decision 2011/734/EU (recast) (OJ L 296, 15.11.2011, p. 38-52). 

2 

 
 
                                                            
Taking  into  account  the  impact  of  debt-reducing  measures  implemented  in  December  2012, 
the  targets  were  considered  consistent  with  a  general  government  consolidated  debt  ratio  to 
GDP of below 160% in 2016. 

3. 

ASSESSMENT OF EFFECTIVE ACTION TAKEN 

This assessment is based on the Commission services' Spring Forecast 2013 and the detailed 
assessment  made  in  the  review  of  the  economic  adjustment  programme,  conducted  by  the 
Commission services together with the IMF and ECB staff (see Table 1). It takes account of 
economic and budgetary conditions since 4 December 2012, when the last Council Decision 
was issued. 
Table 1: Comparison of key macroeconomic and budgetary projections5 
(Current projections versus Council Decision 2013/6/EU) 

% of GDP, except if noted otherwise 

2012

2013 

2014 

Real GDP growth (% change) 

General government balance 

Primary balance 

Cyclically-adjusted primary 
balance 

Cyclically-adjusted balance 

Council Decision 
Current projection 
Council Decision 
Current projection 
Council Decision 
Current projection 
Council Decision 
Current projection 
Council Decision 
Current projection 

-6,0
-6,4
-6,6
-6,3
-1,5
-1,3
4,1
4,5
-1,3
-0,5

-4,2 
-4,2 
-4,6 
-4,1 
0,0 
0,0 
6,2 
6,2 
0.7 
2,1 

0,6 
0,6 
-3,5 
-3,3 
1,5 
1,5 
6,4 
6,3 
0.4 
1,6 

Source: Commission services, Spring Forecast 2013 

For the very first time since the inception of the adjustment programme for Greece, the 
economic outlook is largely unchanged from that referenced in the Council Decision of 
December 2012. The forecast maintains a gradual return to GDP growth in 2014. Poorer than 
expected GDP data for the last quarter of 2012 led to an annual GDP decline of 6.4% in 2012 
compared  to  6.0%  the  time  of  the  Council  Decision,  implying  a  somewhat  higher  negative 
carry-over  into  2013.  However,  leading  conjunctural  and  financial  market  indicators  have 
shown an improvement in confidence about the recovery prospects of Greece. By end-April, 
the European Commission Economic Sentiment Indicator (ESI) for Greece has risen to a level 
suggesting  brightening  growth  prospects.  Bank  deposits  have  also  returned  to  the  Greek 
banking system following the second disbursement under the programme in December 2012. 
Timely action was taken to ring-fence subsidiaries of Cypriot banks from the restructuring of 
the  Cypriot  banking  system.  Nevertheless,  hard  indicators  currently  continue  to  provide 
negative signals, with industrial production, retail sales and construction output continuing to 
contract. Given the strong negative carry-over from 2012 and still falling domestic demand, a 
GDP  contraction  of  4.2%  continues  to  be  expected  in  2013.  A  moderate  recovery  led  by 
investment and exports is projected for the beginning of 2014, leading to annual GDP growth 
of 0.6% in 2014. 

5 Fiscal balances are based on Council Decision definitions (not ESA95 definitions). 

3 

 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
  
  
  
                                                            
Despite  a  somewhat  deeper  recession  in  2012  than  expected  at  the  time  of  the  Council 
Decision, fiscal developments outperformed the EDP target for the primary deficit by a 
small  margin  in  2012.  The  headline  primary  deficit  was  5.0%  of  GDP.  However,  the 
estimated  net  costs  associated  with  the  recapitalisation  and  resolution  of  banks  in  2012  are 
4.0% of GDP. Excluding these costs and other factors specified in the programme definition, 
the primary balance for EDP purposes was thus -1.3% of GDP, slightly better than the target 
in the Council Decision of 1.5% of GDP. Making similar adjustments to the headline deficit 
of  10.0%  of  GDP,  gives  an  overall  fiscal  deficit  consistent  with  the  Council  Decision 
definition  of  6.3%  of  GDP.  This  is  considerably  better  than  6.9%  of  GDP  included  in  the 
Council Decision, owing in part to lower interest payments stemming from the debt reducing 
measures  implemented  in  December  2012.  Turning  to  the  details  of  the  outturn,  on  the 
revenue  side,  direct  taxes  held  up  quite  well,  partly  compensating  for  weak  indirect  tax 
collection,  notably  VAT,  and  social  security  contributions.  On  the  spending  side,  the 
authorities  curtailed  discretionary  expenditures,  notably  operational  expenditures  and  public 
investment in view of the tight liquidity situation for the government resulting from delays in 
programme  disbursement.  Interest  payments  were  lower  owing  to  the  Private-sector 
involvement  (PSI)  initiative  and  December  debt-buy  back  and  implementation  of  debt-
reducing measures. 

Overall,  therefore,  the  2012  fiscal  outturn  out-performed  the  targets  in  the  Council 
Decision.  This  is  confirmed  by  an  assessment  of  the  cyclically-adjusted  fiscal  balances. 
Netting out cyclical factors, the cyclically-adjusted primary balance on the Council Decision 
definition was 4.5% of GDP in 2012, some 0.4 percentage points of GDP better than the 4.1% 
structural surplus in the Council Decision. The cyclically-adjusted budget deficit was -0.5% 
of GDP in 2012 compared to the -1.3% of GDP in the Council Decision. In comparison with 
2011, the cyclically-adjusted primary balance improved by 2.3 percentage points of GDP in 
2012,  whilst  the  improvement  in  the  cyclically-adjusted  balance  was  4.5  percentage  points, 
this latter larger figure reflecting the impact of the Private-sector involvement (PSI) initiative 
on debt interest payments. 

Effective measures have been taken to reach the targets for the primary deficit in 2013 
and 2014. The Greek budget adopted on 11 November 2012 included a package of additional 
revenue  and  expenditure  measures  of  EUR  9.2  billion,  some  5%  of  GDP,  with  the  aim  to 
reduce  the  primary  deficit  in  2013.  This  was  in  the  context  of  a  EUR  13.5  billion 
consolidation  programme  for  2013  and  2014,  set  out  in  the  Medium-Term  Fiscal  Strategy 
2013-2016. This very large and highly front-loaded package of fiscal consolidation measures 
for 2013 and 2014 (totaling over 6.5% of GDP) has been largely already implemented.  

Whilst  the  macroeconomic  scenario  projected  during  the  last  review  remained 
substantially  unchanged,  some  revenues  shortfalls  have  emerged  and  a  few  measures 
have not been implemented. Revenue shortfalls arose mainly in social security contribution 
collection  and  from  lower  than  expected  receipts  from  the  equalisation  in  the  tax  rates  on 
diesel oil. The fall in social security contribution collection is attributable to a large extent to 
the  expectation  of  the  future  debt  instalments  and  tight  liquidity  conditions.  The  weaker 
revenue from the taxes on fuel is explained largely by lower-than-anticipated consumption of 
fuel.  In  addition,  the  upwards  revision  of  the  tax  refunds  in  light  of  the  newly  discovered 
stock of the unaudited tax refund claims in 2012 also contributed to the net revenue shortfall. 
Shortcomings have occurred in the implementation of the progressive pensions cuts owing to 
technical reasons; the new wage grid has not been put in place for parliamentary staff and in 
some SOEs; and the levy on ship owners fell short of the envisaged amount. Taken together, 
these  implementation  shortfalls,  if  not  addressed,  would  have  resulted  in  the  budget  gap  of 

4 

 
 
EUR  137  million  in  2013  and  of  EUR  166  million  in  2014.    The  government  subsequently 
expressed  the  intention  to  proceed  towards  full  implementation  of  these  measures. 
Furthermore, some measures which were scheduled to come into force in 2013 and 2014 that 
had been agreed in the context of the previous MTFS 2011-14 were not implemented. These 
include the increase in social security contributions from the self-employed and an increase in 
public  transportation  ticket  prices.  Given  the  significant  yield  of  these  measures,  their  non-
implementation would have created a sizeable fiscal gap of about EUR 270 million in 2013 
and  more  than  EUR  700  million  in  2014.  Finally,  the  authorities  envisaged  a  significant 
reduction in the tax rates on the property tax paid through electricity bills. 

The  Greek  authorities  however  have  committed  to  implement  offsetting  measures  to 
avoid the emergence of a fiscal gap in 2013 and 2014. The Government decided to offset 
the non-implementation of previously agreed measures with the new measures to be adopted 
in the same sectors in order to minimise the operational risks. The non-implementation of the 
solidarity  contribution  for  self-employed  scheduled  for  2013  has  been  replaced  by  a 
tightening  of  pension  requirements  for  uninsured  individuals  and  through  audits  of  pension 
entitlements. The required savings related to the non-implementation of the increase in public 
transportation ticket prices is going to be substituted by reducing transfers to entities outside 
the  General  Government  and  through  the  rationalisation  of  public  services.  Concerning 
property taxes, the government will secure the projected revenue of EUR 1.9 billion from the 
property tax collected via the electricity bill, compensating the envisaged reduction of the rate 
by 15% with a broadening of the tax base. For 2014, the Government has committed to fully 
implement the solidarity contribution for self-employed. Additionally, the new real estate tax, 
which  is  expected  to  succeed  the  PPC  levy,  is  supposed  to  be  budget-neutral  ensuring  the 
annual  revenue  already  envisaged  in  the  MTFS.  Several  one-off  factors  also  play  a  role  in 
closing  the  budget  gap.  First,  transfers  of  income  from  the  Bank  of  Greece  to  the  state  are 
expected  to  be  extraordinarily  high  on  account  of  exceptional  profits.  Second,  the  newly 
devised settlement schemes are expected to facilitate the repayment of recently accumulated 
debt and recover some portion of lost revenues for the state.  Finally, savings have also been 
made on the heating oil subsidies, where budget appropriations were found to be too high.  

Overall,  the  targets  of  the  Council  Decision  are  expected  to  be  met  in  both  2013  and 
2014. The forecasts for the primary balance are 0.0% of GDP in 2013 and +1.5% of GDP in 
2014 in line with the targets set out in the Council Decision. The headline primary deficit is 
likely  to  be  higher  in  2013  as  a  result  of  the  further  bank  recapitalisation  and  resolutions 
operations. Their exact recording in the fiscal accounts depends on the timing and nature of 
these  transactions.  The  budget  deficit  is  expected  to  be  4.1%  of  GDP  in  2013  and  3.3%  of 
GDP in 2014, in both years performing somewhat better than the figures set out in the Council 
Decision. In cyclically-adjusted terms, the primary balance is expected to improve to 6.2% of 
GDP in 2013 and 6.3% of GDP in 20146. The cyclically-adjusted figures are almost exactly in 
line with the Council Decision, whilst the cyclically–adjusted general government balance is 
expected to be somewhat higher than in the Council Decision. 

The fiscal outlook beyond 2014 remains inherently uncertain. The fiscal outlook depends 
to a large extent on the strength of the economic recovery and progress in strengthening the 
tax  and  social  security  revenue  administrations.  Within  the  current  macroeconomic 
framework, additional measures of 1.8% of GDP in 2015 and 2.2% of GDP in 2016 would be 

6  

The Council Decision adjusts for the costs of bank resolution. Other expenditure and revenue one-offs 
reduce the nominal deficit in cumulative terms by EUR 1.5 billion in 2012 (about 0.7% of GDP), EUR 
1 billion in 2013 (0.5% of GDP) and about EUR 400 million in 2014 (0.2% of GDP). 

5 

 
 
                                                            
required to meet the primary balance targets of the Council Decision. Fulfilling the primary 
deficit targets however would bring the estimated government deficit to less than 3% of GDP. 
Discussions  on  fiscal  gaps  and  measures  to  fill  them  in  2015-16  will  be  taken  up  in  the 
context of the 2014 budget negotiations in the autumn. At that time, new macroeconomic data 
will provide more complete information on the precise size of any remaining gap. 

The outlook for sovereign debt sustainability remains broadly unchanged compared to 
December  2012.  There  have  been  no  major  changes  in  the  macroeconomic  scenario,  while 
public  finances  remain  on  track  to  reach  the  targets.  As  regards  the  profile  for  privatisation 
proceeds, only marginal timing revisions have been deemed necessary. The debt-to-GDP ratio 
is therefore still forecast to be on a declining path starting in 2014 and to fall below 160% in 
2016, assuming that the economic adjustment programme continues to be implemented.  

The  specific  fiscal  and  structural  fiscal  requirements  for  December  2012  and  March 
2013  in  the  Council  Decision  have  all  been  delivered  with  some  minor  exceptions  (see 
Annex table). A major income tax reform has been carried out that broadens the tax base and 
will  share  more  equally  the  tax  burden.  A  Secretary-General  of  Public  Revenues  has  been 
appointed and the autonomy of the tax administration has been enhanced. After some delay, 
the authorities have started to undertake key steps of a major reform of public administration, 
including completing staffing plans for all line ministries. On-going reform processes are well 
underway  to  deliver  the  other  outstanding  commitments,  e.g.  on  increasing  the  share  of 
generic  medicines  sold  by  pharmacies  and  improving  the  internal  control  of  all  hospitals. 
These will be monitored closely by Commission services. 

4. 

CONCLUSION  

Greece has taken effective action to remedy the situation of excessive deficit in compliance 
with  Council  Decision  2011/734/EU,  as  last  amended  by  Council  Decision  2013/6/EU  of 
4 December 2012. Greece has ensured an improvement in the structural balance in 2010-2012 
which is already larger than the at least 10 percentage points of GDP over the period 2009-14 
recommened  by  the  Council.  Greece  is  estimated  to  have  improved  its  structural  deficit  by 
13.5 percentage points of GDP from a 14.8% deficit in 2009 to an estimated 1.3% deficit in 
2012. The general government deficit is projected to have improved from 15.6% in 2009 to 
6.3% of GDP in 2012. 

Greece has successfully taken measures to contain the deficit in 2012 and the outturn in the 
primary deficit outperformed the target in the Council Decision. In order to put an end to the 
present excessive deficit situation as rapidly as possible in line with the Council Decision, the 
Greek authorities have also taken further decisive steps to consolidate their public finances in 
2013  and  2014.  The  Greek  budget  adopted  on  11  November  2012  included  a  package  of 
additional revenue and expenditure measures of EUR 9.2 billion, some 5% of GDP, with the 
aim  to  reduce  the  primary  deficit  in  2013.  This  was  in  the  context  of  a  EUR  13.5  billion 
consolidation  programme  for  2013  and  2014,  set  out  in  the  Medium-Term  Fiscal  Strategy 
2013-2016. This very large and highly front-loaded package of fiscal consolidation measures 
for 2013 and 2014 (totalling over 6.5% of GDP) has been largely already implemented.   

In the light of the above considerations, the Commission does not propose any amendment to 
the  Council  Decision  taken  in  December  2012.  The  targets  for  the  general  government 
primary surpluses should remain at least 0% of GDP in 2013, 1.5% of GDP in 2014, 3.0% of 
GDP in 2015, and 4.5% of GDP in 2016. This fiscal path continues to imply an improvement 
in the cyclically-adjusted primary balance to GDP ratio from 4.1% in 2012 to 6.2% in 2013 
and  at  least  6.4%  of  GDP  in  2014,  2015  and  2016.  Current  projections  for  the  government 

6 

 
 
balance show that these targets imply deficits of 4.1% of GDP in 2013 and 3.3% of GDP in 
2014 and cyclically-adjusted surpluses of 2.1% of GDP in 2013 and 1.6% of GDP in 2014.  

Despite  the  progress  in  the  budgetary  area  and  with  reforms  in  other  key  sectors  of  the 
economy, there are important risks that may affect the budgetary outcomes. The recovery of 
the economy is still facing the headwinds of the pronounced fiscal consolidation in 2013 and 
weak economic growth in the euro area. In addition, reforms in key areas such as the revenue 
administration  and  the  public  administration  may  face  resistance  from  vested  interests.  To 
deliver the projected recovery in GDP growth and resulting revenues in 2014, further progress 
is also needed on product and services market reforms. On the other hand, upside risks also 
exist, particularly if sustained strong policy implementation reduces uncertainty and supports 
confidence  and  help  contain  the  impact  of  the  recession  on  the  society  and  unemployment. 
Investment conditions could also improve, following the recapitalisation of the banks, through 
inflows of foreign capital and a stronger absorption of the EU funds. 

7 

 
 
ANNEX : Measures required by Council Decision 2011/734/EU, as amended by Council 
Decision 2013/6/EU of 4 December 2012 

(2) in Article 2, the following paragraph is inserted: 

Article  10a.  Greece  shall  have  adopted  the  following 
measures by 4 December 2012: 

OBSERVED. 
Adopted,  omnibus  Law  4093 
222/A/12.11.2012 

(Official 

Journal 

(a)  the  budget  for  2013  and  the  MTFS  through  2016,  as 
well  as  the  measures  as  described  in  Annex  IA  to  this 
Decision and the respective implementing legislation. The 
MTFS 
fiscal 
consolidation  measures  which  ensure  that  the  deficit 
ceilings  for  2012-2016,  as  established  by  this  Decision, 
are not exceeded and that the debt-to-GDP ratio is put on 
a sustainable downward path; 

shall  elaborate  on 

the  permanent 

(b) the presentation of an updated Privatisation Plan to the 
Greek  Parliament  and  the  publication  of  a  semi-annual 
update of the Asset Development Plan; 

(c)  the  transfer  to  the  portfolio  of  privatisation  assets  of 
the  HRADF  of  the  full  and  direct  ownership  (shares  or 
concession rights) of Egnatia Motorway and the regional 
ports  of  Elefsina,  Lavrio,  Igoumenitsa,  Alexandroupolis, 
Volos, Kavala, Corfu, Patras, Heraklion, and Rafina; 

OBSERVED. 
Uploaded on Ministry website 

OBSERVED. 
B2316/10-8-2012). 
Done 
Ports (decision 222/5.11.2012./FΕΚ 2996, 12 November 

Egnatia 

(Ref: 

for 

(d) ensuring the line Ministries and other relevant entities 
provide  the  General  Secretariat  for  Public  Property  with 
full access to the inventory of all real estate assets owned 
by the State; 

OBSERVED. 
The  appropriate  letter  has  been  sent  to  the  line 
ministries.  Line  Ministries  have  provided  the  requested 
information. 

the  amendment  and/or 

(e) 
the  repeal  of  statutory 
provisions  of  State-owned  enterprises  (PPC,  OLP  and 
OLTH  port  authorities,  HELPE,  EYATH  and  EYDAP, 
ports,  etc.)  that  diverge  from  private  company  law 
regarding  any  restrictions  on  voting  rights  of  private 
shareholders; 

(f)  legislation  to  define  the  role  and  qualifications  of  the 
Secretary-General  of  the  Tax  Administration  and  for  the 
Minister  of  Finance  to  delegate  decision-making  powers 
to the Secretary-General of the Tax Administration; 

and  making 

(g)  the  deployment  of  experienced  tax  auditors  towards 
activities  serving  the  immediate  revenue  imperatives,  by 
strengthening 
fully  operational  key 
enforcement  areas  such  as  the  large  taxpayer  unit  by 
transferring  100  auditors  from  other  duties,  and  by 
establishing  a  single  functional  unit  for  high-wealth 
individuals  and  high-income  self-employed  persons  and 
staffing this unit with 50 experienced tax auditors directly 
accountable 
the  Tax 
to 
Administration; 

the  Secretary-General  of 

8 

OBSERVED. 
Amended 
in 
(Article 2) 

the 

new 

Privatisation 

Law 

OBSERVED. 
(Omnibus) 
222/A/12.11.2012, Section E, Article 6 

4093 

Law 

(Official 

Journal 

(MD) 

decisions 

produced 

OBSERVED. 
Four  ministerial 
: 
-  MD  31/10/2012  to  transfer  100  auditors  to  Large 
Unit, 
taxpayers 
- MD 31/10/2012 to give competence to DEK Athens for 
High  Wealth  Individuals  (with  criterions  in  the  MD), 
- MD to transfer of 50 auditors to DEK Athens, signed 8 
November 2012 by Deputy Minister.   - Then to ensure 
another  MD  D2A  1157921 
adequate 
16/11/2012  was  issued  to  move  more  auditors  to  fill 
gaps. All auditors have reported to their new offices. 

staffing, 

 
 
 
 
(i) 

enterprises 

establishing 

(h)  a  Council  of  Ministers  act  (replacing  the  Council  of 
Ministers  act  adopted  on  29  October  2012),  aiming  at 
strengthening  budget  execution  and  enhancing  sound 
fiscal  management,  and  including, beyond  the provisions 
in  the  original  Council  of  Ministers  act,  additional 
that  Memoranda  of 
provisions: 
Cooperation  are  signed  by  end-December  of  each  year 
between the Ministry of Finance and the other Ministries 
or between the Ministries and managers of the supervised 
entities (thus covering the entire general government); (ii) 
strengthening  the  current  balanced  budget  constraints  for 
local governments in order for them to be more effective, 
including  corrective  and  sanctioning  mechanisms;  (iii) 
strengthening  the  current  monitoring  system  for  State-
an 
owned 
enforcement  mechanism  in  case  of  deviations  from  the 
specific  targets  identified  for  each  SOE;  and  (iv)  setting 
the  framework  for  defining  specific  targets  for  the 
coverage  of  operational  commitment  registers  for  local 
governments and SOEs to be established by December of 
each year. That Council of Ministers act shall also include 
mechanisms 
from  central 
government to address deviations from targets within the 
year  and  possibly  in  the  following  years,  while  ensuring 
that  arrears  are  not  increasing;  it  shall  make  explicit  that 
the  proceeds  from  the  privatisation  of  government  assets 
are paid directly into a segregated account to monitor cash 
flows,  avoid  diversion  of  official  financing  and  secure  a 
timely  debt  servicing;  and  it  shall  set  automatic  cuts  in 
expenditure  to  be  applied  as  a  rule  when  targets  are 
missed, while ensuring that arrears do not increase; 

for  correcting 

introducing 

transfers 

(SOEs) 

and 

(i)  a  set  of  measures  to  improve  the  current  financial 
situation  of  the  National  Organisation  for  Healthcare 
Provision  (EOPYY)  and  ensure  that  budgetary  execution 
is  closer  to  a  balanced  budget  in  2012  and  2013, 
including:  (i)  streamlining  the  benefit  package;  (ii) 
increasing cost-sharing for healthcare delivered by private 
providers;  (iii)  negotiating  price-volume  agreements  and 
revising case-mix agreements with private providers; (iv) 
revising  the  fees  for,  and  number  of,  diagnostic  and 
physiotherapy  services  contracted  by  EOPYY  to  private 
providers with the aim of reducing related costs by at least 
EUR 80 million in 2013; (v) introducing a reference price 
system for the reimbursement of medical devices; and (vi) 
progressively  increasing  the  contributions  paid  by  OGA 
members  to  the  average  of  those  paid  by  other  members 
of EOPYY; 

(j)  the  following  measures  relating  to  the  reimbursement 
of  medicines:  (i)  legislation  to  control  pharmaceutical 
spending  that  activates  contingency  measures  (including 
e.g.  an  across-the-board  cut  in  prices),  if  for  any  reason 
the  existing  automatic  claw-back  mechanism  is  not 
sufficient  to  achieve  the  target;  such  measures  shall 
produce an equivalent amount of savings; (ii) a ministerial 
decree,  setting  the  new  claw-back  threshold  for  2013 
(EUR 2,44 billion for outpatients); (iii) updating the price 

9 

OBSERVED. 
FEK A nr  228, date 18/11/2012 

OBSERVED. 
FEK no.3054/Β΄/18-11-2012 

OBSERVED. 
Entry  fee  introduced 
229A/19.11.2012 Article 11 par.1 (entry fee) 

.  Ref. 

  "Minibus"  act  FEK 

FEK 3035/B/15.11.2012 

FEK 3047/ B/ 16.11.2012 and FEK 3046/ B/ 16.11.2012 

FEK 

3057/B/18-11.2012

 
 
list  and  the  positive  list  of  reimbursable  medicines, 
particularly  by  establishing  the  reimbursement  of  only 
cost  effective  packages  for  chronic  diseases,  by  moving 
medicines from the positive to the negative and over-the-
counter lists and by introducing the reference price system 
developed  by  the  National  Organisation  for  Medicines 
(EOF). These lists must be updated at least twice a year in 
line  with  Council  Directive  89/105/EEC;  and  (iv)  the 
substitution of prescribed medicines by the lowest–priced 
product  of  the  same  active  substance  in  the  reference 
"generic 
by 
category 
substitution")."; 

(compulsory 

pharmacies 

(3)  in  Article  2,  paragraph  11  is  replaced  by  the 
following: 

"11. Greece shall adopt the following measures by the end 
of December 2012: 

(a)  a  tax  reform  of  personal  income  tax  and  corporate 
income  tax  that  aims  at  simplifying  the  tax  system, 
broadening  the  tax  base  and  eliminating  exemptions  and 
preferential regimes; 

(b)  the  necessary  primary  and  secondary  legislation  to 
ensure the swift implementation of the Privatisation Plan; 

(c) the establishment of a regulatory framework for water 
companies; 

to 

improve 

(d)  measures 
tax  administration, 
introducing  performance  assessments,  improving  the  use 
of  risk  assessment  techniques,  and  establishing  and 
reinforcing specialist debt management units; 

the 

(e)  the  preparation  and  publication  of  a  plan  for  the 
clearance  of  arrears  owed  to  suppliers  by  public  entities 
and of tax refunds; 

(f) the finalisation of the implementation of the reform of 
the 
functioning  of  secondary/supplementary  public 
pension funds; and the unification of all existing funds in 
the public sector; 

(g) legislation to extend the application of the 5 % rebate 
on  pharmaceutical  companies  (which  exists  for  hospital-
priced  medicines)  to  all  products  sold  in  EOPYY 
pharmacies; 

OBSERVED. 
25/1/2013 Law 4110 GG 17/Α/23-1-2012. 

OBSERVED, ONGOING. 

OBSERVED. 
The relevant law provisions were adopted by Parliament 
at  24/1/2013  (FEK  A29/5-2-2013).  The  JMD  for  the 
establishment  of  the  regulatory  framework  was  signed 
and published (FEK 679/22-3-2013). 

OBSERVED. 
11/4/2013 Law 4141 (GG 81/A/5-4-2013) sets the legal 
framework. 

OBSERVED.  

OBSERVED. 
The  target  of  ETEA  has  been  implemented  for  the 
supplementary funds. 

OBSERVED. 
Law.4093/FEK  222/12-11-12(IB2/5,6,8)  &  PNP/FEK 
229/19-11-2012 (article11/par.10). 

(h) an increase of the share of generic medicines to 35 % 
of the overall volume of medicines sold by pharmacies; 

NOT OBSERVED.  
Process is ongoing 

(i)  the  assignment  of  internal  controllers  to  all  hospitals 
and 
the  adoption  by  all  hospitals  of  commitment 
registers."; 

NOT 
OBSERVED.
Process  is  ongoing  though  not  finalised  but  action  plan 
and timeline provided. 

10 

 
 
 
(4) the following paragraphs are added to Article 2: 

"12. Greece shall adopt the following measures by the end 
of March 2013: 

(a)  issue  a  Ministerial  Decree  for  the  adjustment  of  end-
user prices for low-voltage customers; 

(b) update the MTFS, including by setting binding 3-year 
expenditure ceilings for government subsectors; 

(c) adopt staffing plans for line Ministries; 

(d)  establish  a  significantly  more  autonomous 
tax 
administration  and  specify  the  degree  of  autonomy, 
governance  framework,  accountability,  legal  powers  of 
the  head  of  the  tax  administration  and  the  initial  staffing 
of the organisation; 

OBSERVED.  

OBSERVED. 

OBSERVED. 

OBSERVED, ONGOING.  

 (e)  issue  and  make  public  a  new  fully-fledged  anti-
corruption  plan  for  the  civil  service,  including  special 
provisions for the tax and customs administration; 

OBSERVED. 
National  plan  has  been  produced.  Assessment 
positive. 

is 

(f)  make  fully  operational  a  standard  procedure  for 
revision of legal values of real estate to better align them 
with  market  prices  under  the  responsibility  of  the 
Directorate of Capital Taxation; 

(g)  transfer  40  new  real  estate  assets  (identified  as  "real 
estate assets lots 2 and 3" in the Privatisation Plan) to the 
HRADF. 

OBSERVED. 
NOT 
Owing to the complexity of the process, a rephrasing of 
the action is needed. 

OBSERVED.
NOT 
The first JMD for the transfer to HRADF of part of the 
40  assets  is  signed  and  published  (FEK  754/2-4-2013) 
The JMD for the others was prepared and expected to be 
signed very shortly.  

11