The second economic adjustment programme for Greece : second review – May 2013.
Date: 2013-10-11
Institutions: Directorate-General for Economic and Financial Affairs
Subjects: Greece, economic planning, economic reform, privatisation, structural adjustment

European Commission 

Directorate-General for Economic and Financial Affairs 

The Second Economic Adjustment Programme 
for Greece  

Second review – May 2013 

EUROPEAN ECONOMY 

Occasional Papers 148 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OUTLINE OF THE REPORT  

EXECUTIVE SUMMARY 

1. INTRODUCTION 

2. MACROECONOMIC AND FINANCIAL DEVELOPMENTS 

2.1 Macroeconomic Developments 
2.2 Financial Market Developments 

3. PROGRAMME IMPLEMENTATION 

3.1.  Fiscal Policy performance 

1 

7 

8 

8 
15 

19 

19 

3.1.1 Outperformance of the fiscal targets in 2012 and in the first three months of 

3.3.2. Tax policy reform 

3.2.2. Fiscal outlook for 2015-16 

3.3.3. Revenue administration reforms 

3.3.7. Upgrading the education system 

3.3.6. Modernising the healthcare system 

3.3.4. Public Financial Management Reform 

3.2.1. The Fiscal adjustment process in 2013-14 

3.3.5. Making the public administration more efficient and effective 

3.3. Structural reforms with budgetary relevance 

3.3.1. Privatising to boost efficiency in the economy and reduce public debt 

2013 
3.2. Fiscal Policy Outlook 

19 
21 
21 
23 
25 
25 
29 
30 
31 
33 
35 
36 
37 
3.4. Stabilising the financial system 
3.5. Strengthen labour market institutions and promoting employment39 
42 
3.6. Creating favourable conditions for economic activity 
42 
3.6.1. Promoting an efficient and competitive business environment 
43 
3.6.2. Reforming the judicial system to support economic activity 
43 
43 
46 
46 
47 
49 
49 
50 

3.8. Increasing the impact of structural and cohesion funds 
3.9. Technical Assistance and Monitoring 

3.7. Efficient Network Industries and Services 

3.7.5. Regulated professions and professional qualifications 

3.7.2. Electronic communications 

3.7.4. The Retail Sector 

3.7.1. Energy policy 

3.7.3. Transport 

4. Debt sustainability analysis and programme financing 

4.1. DEBT SUSTAINABILTY ANALYSIS 
4.2. programme financing 

51 

51 
53 

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Annex 1: Assessment of compliance with the Memorandum of 

Understanding on Specific Policy Conditionality 

Annex 2: Macroeconomic forecast 

Annex 3: Updated programme documents 

Letter of Intent 
Memorandum of Understanding  

a)  Memorandum of Economic and Financial Policies   
b)  Memorandum of Understanding on Specific Economic Policy conditionality 
c) 

Technical Memorandum of Understanding  

57 

59 

65 

  67 
  69 
  71 
  99 
169 

LIST OF BOXES 

Box 1. The documents for a comprehensive adjustment strategy ................................................................7 

Box 2. Preliminary assessment of the fallout of recent events in Cyprus.....................................................9 

Box 3. Labour Market Dynamics in Greece: an analysis of Okun’s Law ..................................................11 

Box 4. Competitiveness, exports and FDI ..................................................................................................14 

Box 5. Bank lending and the real economy................................................................................................17 

Box 6. The fiscal impact of bank resolution and recapitalisation in Greece. .............................................21 

Box 7. Key features of the new settlement schemes...................................................................................23 

Box 8. Eliminating waste and abuse of public money................................................................................24 

Box 9. Household indebtedness..................................................................................................................39 

Box 10.  The impact of policies on social welfare......................................................................................41 

Box 11. Financing the incentives for renewable energies ..........................................................................45 

Box 12. Structural Reforms and Investment in Infrastructure....................................................................47 

Box 13. Effects of Retail Market Reforms on prices and competition .......................................................48 

LIST OF TABLES 

Table 1. Macroeconomic scenario, main features (2011-2016) .................................................................13 

Table 2. Fiscal quantitative performance criteria (EUR bn).......................................................................20 

Table 3. Arrears to suppliers ......................................................................................................................20 

Table 4. Medium-term fiscal projections....................................................................................................23 

Table 5. Expected Privatisation Receipts ...................................................................................................27 

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Table 6. Privatisation Plan..........................................................................................................................28 

Table 7. Disbursements under the Greek adjustment programmes (EUR billion) .....................................53 

Table 8. Milestones for the disbursement of the sub-tranche of the 3nd release .........................................54 

Table 9. Financing programme: quarterly financing needs and disbursements of official assistance ........55 

LIST OF GRAPHS 

Graph 1. Economic Sentiment Indicator (ESI) and Greek Uncertainty index..............................................8 

Graph 2. Monthly deposits and government bond spreads...........................................................................8 

Graph 3. Industrial production, retail turnover and building permits ...........................................................8 

Graph 4. Employment: growth in hiring and net change in employment.....................................................8 

Graph 5. Contribution of GDP components to GDP growth ......................................................................10 

Graph 6. Arrears clearance and disbursement schedule of official funds...................................................10 

Graph 7. Nominal compensation per employee and unemployment ..........................................................11 

Graph 8. Monthly HICP developments and annual averages .....................................................................11 

Graph 9. Current Account components (% of GDP) ..................................................................................13 

Graph 10. Balances vis-à-vis the rest of the world .....................................................................................13 

Graph 11. Athens Stock Exchange Indices.................................................................................................16 

Graph 12. Greek 10-YR Bond Yield ..........................................................................................................16 

Graph 13. Bank deposits.............................................................................................................................16 

Graph 14. Credit to private sector (% change, y-o-y).................................................................................16 

Graph 15. Non-performing loans ratio .......................................................................................................17 

Graph 16. State primary payments – 2012, 2013 .......................................................................................20 

Graph 17. Government primary balance – 2012, 2013...............................................................................20 

Graph 18. Unemployment rates by age and gender....................................................................................40 

Graph 19. Long-term unemployment .........................................................................................................40 

Graph 20. Greece – General Government Debt (% of GDP) .....................................................................51 

Graph 21.   Dynamic profile of stress-test scenarios and overall impact in 2020 (% of GDP) ..................52 

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LIST OF GRAPHS INSIDE BOXES 

Graph 2.1. GDP components as % of GDP ..................................................................................................9 

Graph 2.2. Destination of Greek goods exports ...........................................................................................9 

Graph 2.3. Greek government bonds spreads with bund..............................................................................9 

Graph 2.4 ASE – Stock market volatility .....................................................................................................9 

Graph 3.1. Changes in the unemployment rate 2008-12: actual and Okun's Law predictions ...................11 

Graph 3.2. Okun's law in Greece................................................................................................................12 

Graph 4.1. Unit Labour Cost (ULC)...........................................................................................................14 

Graph 4.2. Relative Effective Exchange Rate (REER) ..............................................................................14 

Graph 4.3.  Employment share by employer's size in industry in 2009 (% of total industry labour force) 15 

Graph 4.4 FDI in EA countries (average 2000-2007 as % of GDP)...........................................................15 

Graph 5.1. Average  bank interest rates on new euro-denominated deposits and loans .............................18 

Graph 5.2. Average loans interest rate to non-financial corporations ........................................................18 

Graph 10.1. People at risk of poverty or social exclusion before and after social transfers in 2011 ..........41 

Graph 10.2. People at risk of poverty or social exclusion by type of household in 2011...........................42 

Graph 11.1. Proposed new measures to cover the RES account deficit .....................................................45 

Graph 13.1. HICP Main components of retail trade ...................................................................................48 

Graph 13.2. HICP Clothing and footwear ..................................................................................................49 

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ACKNOWLEDGEMENTS 

The report was prepared in the Directorate General Economic and Financial Affairs, under the 
direction of Matthias Mors, director and mission chief, and coordination of Gabriele Giudice, 
head of unit.  

Contributors: 

Matthias  Mors,  Chris  Allen,  Olfa  Alouini,  Stefan  Appel,  Zeta  Astra,  Karlis  Bauze,  Peghe 
Braila, Laszlo Butt, Pedro Cardoso, Giuseppe Carone, Jakob E. Christensen,  Riccardo Ercoli, 
Olivia Galgau, Luis García Lombardero, George Gavanas, Gabriele Giudice, Ignacio Gonzalez-
Vazquez, Loukas Kaskarelis, Zenon Kontolemis, Vasiliki Michou, Guillaume Prèvost, Kaspar 
Richter,  Christoph  Ungerer,  Carlo  Viviani,  Rafał  Wielądek,  Ana  Xavier,  and  Christos  Zavos. 
George Gavanas and Christos Zavos provided statistical assistance and were responsible for the 
layout.  

The report was prepared in liaison with the ECB. 

Comments on the report would be gratefully received and should be sent, by mail or e-mail to: 

Gabriele Giudice, 
European Commission, 
Unit ECFIN-G-3, 
CHAR 10/236, 
B-1049 Brussels. 
e-mail: ECFIN-G3-REQUESTS@ec.europa.eu 

The cut-off date for this report was 14 May 2013 

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EXECUTIVE SUMMARY  

EXECUTIVE SUMMARY 

This report provides an assessment of the progress made by Greece with respect to its Second Economic 
Adjustment  Programme,  based  on  the  findings  of  a  two-part  joint  Commission/ECB/IMF  mission  to 
Athens between 27 February and 11 April 2013. The report examines current macroeconomic, financial 
and  fiscal  developments,  assesses  compliance  with  programme  conditionality  and  makes  a  detailed 
assessment of the policy programme up to 2016.  

_____________________ 

Greece  continues  to  make  progress  under  the  Second  Economic  Adjustment  Programme.  Public 
finances  are  steadily  improving,  the  banking  sector  recapitalisation  has  reached  an  advanced  stage  and 
important  structural  reforms  are  being  implemented,  although  further  major  efforts  are  needed  to  fully 
deliver  the  delayed  public  administration  reform  and  to  make  the  new  semi-autonomous  revenue 
administration  effective  in  the  fight  against  tax  evasion.  Falling  unit  labour  costs,  supported  by  the 
successful labour market reform, are improving cost competitiveness, but an acceleration of product and 
services markets reforms is necessary to speed up the transmission from cost savings to prices.  

The economic outlook is largely unchanged from the previous Review, with prospects for a gradual 
return  to  growth  in  2014.  On  the  one  hand,  slightly-worse-than-expected  data  for  the  last  quarter  of 
2012  led  to  an  annual  GDP  decline  of  6.4%  in  2012  compared  to  6.0%  in  the  last  review,  implying  a 
somewhat  higher  negative  carry-over  into  2013.  On  the  other  hand,  leading  conjunctural  and  financial 
market indicators have shown improving confidence in 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  and  deposits  returned  to  the  Greek  banking  system  following  the  second 
disbursement under the programme in December 2012, albeit this trend has temporarily been affected by 
the recent developments in Cyprus. In contrast, current hard indicators continue to provide recessionary 
signals,  with  industrial  production  as  well  as  retail  and  construction  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, accelerating in 2015 and beyond.  

While Greece is quickly regaining cost competitiveness and the current account balance is clearly 
improving, the price adjustment is still insufficient. Falling unit labour costs, supported by successful 
labour  market  reforms,  are  bolstering  Greek  cost  competitiveness,  creating  new  business  opportunities 
and encourage job creation. The MoU target of reducing economy-wide nominal unit labour costs by 15% 
in the period 2012-2014 will likely be achieved, thereby regaining the 1995 labour cost competitiveness 
position relative to the euro area. The HICP is expected to decline by 0.8% in 2013 and 0.4% in 2014, 
with inflation well below the euro area average through 2016. The current account balance is expected to 
improve sharply from -11.7% of GDP in 2011 to -1.7% of GDP by 2014. While there is some evidence 
that lower wage costs have started to feed through into prices, a significantly stronger adjustment in prices 
than  has  been  observed  so  far  would  help  to  contain  the  fall  in  disposable  income  and  sustainably 
strengthen  Greece’s  competitiveness.  This  points  to  the  need  for  an  acceleration  of  structural  reforms 
aiming to enhance competition and further liberalise product and services markets.  

The  2012  fiscal  deficit  target  under  the  programme  has  been  met  with  a  comfortable  margin, 
despite the somewhat deeper-than-expected recession in 2012. The primary balance of -1.3% of GDP was 
slightly  better than  the programme  target  of  -1.5%  of GDP.1  The general  government  deficit  in  accrual 
terms has been reduced from 9.4% of GDP in 2011 to 6.3% of GDP in 2012.2 The underlying fiscal effort 
is even larger when taking into account the deep recession. The successful fiscal consolidation primarily 
reflects cuts in those public expenditure categories where the largest increases had been recorded before 

1 Using the programme definition, see footnote 2. 
2 The programme definition excludes from the ESA 95 figure the one-off costs for the support of the financial sector 
(of  some  4.4%  of  GDP  in  2012)  and  does  other  minor  adjustments  to  the  EDP  deficit  (the  figure  for  2012 
validated by ESTAT is 10.0% of GDP.) 

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                  European Commission 

                  The Economic Adjustment Programme for Greece. Second Review 

the  inception  of  the  first  programme  (notably  public  sector  wages  and  social  transfers).  Fiscal 
consolidation was also supported by improvements in the budgetary control procedures. All quantitative 
performance criteria under the programme and the indicative target for arrears were met. 

Measures have been agreed to avoid the emergence of a fiscal gap for 2013 and 2014 and to meet 
the programme targets for the primary deficit in both years. The very large and highly front-loaded 
package  of  fiscal  consolidation  measures  for  2013  and  2014  (totalling  over  6.5%  of  GDP)  has  been 
largely implemented. The mission identified revenue shortfalls of social contribution collection and from 
lower-than-expected receipts from the equalisation of tax rates on diesel oil. Moreover, the authorities had 
not  implemented  some  previously  agreed  measures,  most  notably  the  special  solidarity  contribution  for 
self-employed. To avoid the emergence of a fiscal gap, the authorities committed to implement offsetting 
measures  in  2013  (in  particular,  tightening  pension  eligibility  criteria  and  increase  in  cargo  tariffs)  and 
fully implement the special solidarity contribution for self-employed in 2014. In addition, several one-off 
factors play a role. First, transfers of Bank of Greece dividends to the budget are expected to be higher 
than  previously  anticipated  due  to  extraordinarily  high  income  in  2013.  Second,  newly  designed 
instalment  schemes  for  tax  and  social  security  contribution  debt  are  expected  to  generate  additional 
revenue  in  2013  and  in  2014.  The  mission  raised  concerns  about  the  authorities’  intentions  to  reduce 
specific  tax  rates.  To  largely  contain  the  revenue  shortfall,  the  authorities  broadened  the  tax  base  to 
compensate a reduction in the property tax (PPC levy) rate by 15% in 2013. Moreover, they agreed that, 
at this point in time, there is no fiscal space to consider a reduction in the VAT rate for restaurants and 
catering and that this issue be reassessed during the next review. 

The fiscal outlook beyond 2014 remains inherently uncertain. The fiscal outlook depends to a large 
extent on progress in strengthening the tax and social security revenue administrations. Within the current 
macroeconomic framework, the gaps are currently estimated at about 1.7% of GDP in 2015 and 2.1% of 
GDP in 2016. The task of filling the gap in 2015-16 will be taken up in the context of the 2014 budget 
negotiations in the fall. At that time, new macroeconomic data will provide more complete information on 
the precise size of any remaining gap. 

A comprehensive income tax reform was legislated in January 2013 that broadens the tax base and 
will share more equally the tax burden. The tax reform sets up a new tax system for the net income of 
the  self-employed  with  no  tax  allowance,  and  also  refocuses  the  corporate  income  tax  from  taxes  on 
dividends to profits taxation. It also eliminates special tax regimes and tax expenditures in order to share 
the burden of taxation more widely. The tax reform will greatly widen the tax base. The elimination of the 
tax allowance for the self-employed is expected to generate substantial additional revenue. Furthermore, 
by increasing the taxation of profits and reducing that of dividends, the reforms aim at reducing the tax 
avoidance.  The  success  of  the  reform  will  also  require  further  improvements  being  made  to  tax 
administration  and  the  replacement  of  the  Code  of  Books  and  Records  with  a  revised  and  greatly 
simplified  set  of  business  tax  accounting  rules.  The  tax  reform  is  expected  to  produce  net  revenues  of 
close to EUR 2 billion, with the full budgetary impact felt in 2014. The authorities are working on a new 
Income  Tax  Code  that  will  consolidate  and  simplify  existing  legislation,  making  it  more  accessible  to 
ordinary tax payers, as well as closing numerous tax loopholes to reduce the potential for the erosion of 
the tax base. A new law on taxation of real estate will be adopted by end-June for 2014 onwards ensuring 
the same revenues of the various property taxes which will be replaced. 

While  progress  was  made  in  the  organization,  much  work  remains  to  be  done  to  improve  the 
effectiveness of the revenue administration. Despite significant technical assistance, tax administration 
reform  has  so  far  fallen  short  of  what  is  needed  to  tackle  the  pervasive  problem  of  tax  evasion.  It  is 
commendable that the authorities have now agreed to adopt as a prior action the legislation to establish a 
semi-autonomous revenue administration, which will give to the Secretary General for Public Revenues 
significant  powers,  including  in  the  areas  of  HR  management,  organisational  structure,  the  power  to 
determine the wage scale of auditors and budgeting. Key services of the Ministry of Finance will be split 
to allow for the transfer to the General Secretariat for Public Revenue Administration (GSPR) of all tax-

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Executive summary 

relevant  services.  Moreover,  the  service  agreement  between  the  GSPR  and  the  General  Secretariat  for 
Information Systems will ensure the provision of remaining non-tax-related, but relevant, services, such 
as  hardware  administration.  However,  major  efforts  are  still  required  to  reorient  the  tax  administration 
from a compliance-oriented system based on a wide network of small offices to a more efficient structure 
based on risk assessment. A major upgrading in human capital, skills, management, staffing and training 
is  also  crucial.  The  strengthening  of  the  tax  administration  constitutes  a  key  pillar  of  the  fiscal 
consolidation  strategy.  Failure  to  deliver  the  targeted  improvement  in  collection  performance  would 
imply  the  need  to  seek  alternative  measures  to  close  the  emerging  fiscal  gap.  Separately,  the  newly 
designed instalment schemes for tax and social security contribution arrears are expected to terminate the 
detrimental practice of a multitude of instalment schemes carrying the features of tax amnesties. Putting 
the  framework  in  place  by  mid-2013  will  be  a  significant  challenge  and  requires  proper  capacity  for 
operating the schemes. 

Further  progress  was  made  in  improving  Public  Financial  Management  (PFM),  but  some 
weaknesses remain.  While expenditure reporting was strengthened including the health fund EOPYY in 
the  e-portal  and  a  tight  control  on  expenditures  helped  to  meet  the  target  for  last  year,  existing  budget 
execution  and  payment  processes  could  be  further  strengthened  through  more  efficient  procedures  and 
streamlining the excessive layers of control. After the completion of the previous review, a large amount 
of tax refunds was identified for which claims still need to be confirmed. In addition, while Greece has 
timely transposed the Late Payment Directive, its implementation requires both a further strengthening of 
the  PFM  framework  and  a  reform  of  the  overall  audit  system.  The  plan  for  the  clearance  of  arrears  is 
proceeding  at  a  slower  pace.  While  disbursements  have  now  started  and  reached  EUR  419  million  in 
February, the current plan for arrears clearance foreseeing the release of appropriations of almost EUR 6 
billion by July 2013 is delayed. It is crucial to complete the plan as soon as possible in order to give an 
impulse to the economy by injecting the liquidity that many firms need to survive.  

While  progress  has  been  made  in  preparing  assets  for  privatisation,  the  overall  speed  of  the 
privatisation process remains unsatisfactory. The end-December target for privatisation proceeds was 
missed by a wide margin and proceeds expected at end-2013 have been moderately revised downwards. 
The  majority  of  state-owned  enterprises  destined  for  privatisation  have  now  been  transferred  to  the 
privatisation  fund,  but  additional  efforts  are  needed  to  reinforce  the  momentum.  In  particular,  major 
efforts  are  needed  in  the  liberalisation  and  privatisation  in  the  energy  sector,  e.g.  to  provide  the 
restructuring plan of the incumbent electricity company PPC. Further action is also needed in relation to 
real estate assets. Inter alia, additional steps are needed to expedite approvals from the Court of Auditors, 
Council of State, and Competition Commission to reduce the overall time for the sale of assets. The final 
sale  of  assets  is  of  crucial  importance  for  financing  purposes,  but  also  to  bring  additional  investment, 
managerial expertise, efficiency and better governance to the enterprises involved. Additional measures 
are also needed to secure improved governance and transparency. 

While progress has been made since 2010 in downsizing the public administration, further reforms 
are  urgently needed to  render  it  efficient  and  effective. The 1:5  attrition  rule  (by  which  only  one  in 
five employees exiting from the public sector should be replaced by a newly hired employee), combined 
with  an  increase  in  early  retirements  is  expected  to  bring  about  the  targeted  reduction  of  public 
employment  by  at  least  150,000  in  the  period  2011-2015.  However,  in  itself  the  attrition  rule  does  not 
satisfy  the  need  to  hire  highly-qualified  and  young  employees  in  a  number  of  priority  areas  (e.g.,  tax 
administration).  While  increased  internal  mobility  –  including  through  the  scheme  introduced  last 
Autumn  –  is  necessary  to  improve  the  allocation  of  staff,  staffing  needs  cannot  always  be  met  through 
transfers within the civil service, owing to special qualification requirements. Mandatory exits from the 
civil service, and in sizeable amount, are therefore necessary and urgent to create the fiscal space for such 
hiring.  

Significant delays have occurred in the public administration reform, but the authorities have now 
taken  measures  to  speed  it  up.  The  authorities  are  committed  to  proceed  with  an  ambitious  public 

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                  European Commission 

                  The Economic Adjustment Programme for Greece. Second Review 

administration reform to be carried out in phases during 2013.  Whilst the milestone was not completed 
by end-February and no further transfers to the mobility scheme have so far taken place beyond the 2,000 
employees  transferred  in  Q4  2012,  by  end-April,  the  authorities  (i)  completed  staffing  plans  for  line 
Ministries  involving  206,000  staff;  (ii)  indicated  how  many  posts  will  concomitantly  be  abolished;  and 
(iii)  established  quarterly  targets  for  mandatory  exits  cumulating  to  4,000  by  end-2013  and  15,000  by 
end-2014. It was agreed during the mission, that for each of these exits, one person can be hired, thereby 
strengthening  the  rewards  for  pursuing  the  public  administration  reform.  According  to  the  authorities, 
exits will be the result of (i) disciplinary cases; (ii) due diligence evaluation of legal entities of public and 
private  law  leading  to  mergers  and  abolishment;  (iii)  evaluation  of  the  personnel  using  the  mobility 
scheme,  including  before  any  reallocation  to  a  new  position;  (iv)  voluntary  exits  from  the  mobility 
scheme (excluding personnel within 3 years of retirement); and (v) the elapse of a 12-month period in the 
mobility scheme. Moreover, the authorities confirmed their commitment to transfer 12,500 employees to 
the mobility scheme by June and 25,000 by December 2013. A strategy for the allocation of the hiring 
which would then become available for 2013 will be agreed by mid-2013. By June, the Greek authorities 
will also provide the staffing plans involving cumulatively 450.000 employees (covering the whole public 
administration by end-2013) and finalise the Human Resource strategy.  

Swiftly  finalising  the  recapitalisation  of  the  banking  sector  is  now  a  key  priority.  The  authorities 
have  reconfirmed  the  end-April  deadline  for  taking  the  necessary  decisions  to  carry  out  the 
recapitalisation,  in  line  with  the  programme.  All  four  Greek  core  banks will  be  recapitalised  separately 
and  have  now  called  their  extraordinary  general  assemblies,  which  are  expected  to  approve  the 
recapitalisation and initiate the subscription period for the rights issuance by April 30, at the latest. After 
the  recapitalisation  of  core  banks  is  finalised,  the  focus  will  shift  to  the  acquisition  of  bridge  banks, 
rationalisation and re-privatisation. The authorities will prepare a comprehensive financial sector strategy 
by mid-July, which will outline the targeted medium- to long-term landscape of the banking sector. In the 
meantime, the four core banks will have to acquire existing bridge banks and participate in purchase and 
assumption  transactions  with  other  banks  undergoing  resolution  and  to  immediately  start  ambitious 
operational  restructuring  –  including  the  downsizing  of  staff  and  the  branch  network.  Concerning  core 
banks that will not have been able to remain under private control, the strategy will include options and 
operational steps for the HFSF to promptly proceed with their privatisation.  Moreover, the governance of 
the  Hellenic  Financial  Stability  Fund  is  being  further  improved  in  order  to  ensure  the  independent 
oversight  of  individual  banks  that  have  received  HFSF  support  post-recapitalisation.  Against  these 
developments,  the  banking  sector  faces  a  challenging  macroeconomic  environment  and  a  perceptible 
deterioration  in  the  repayment  culture.  The  new  household  insolvency  framework  is  expected  to  help 
address the latter. 

The extensive labour market reforms in 2012 are delivering results in terms of wage flexibility and 
improved  unit  labour  cost  competitiveness.  The  recent  falls  in  labour  costs  should  help  mitigate  the 
effects  of  the  recession  on  employment.  A  temporary  public  work  programme  for  the  long-term 
unemployed  and  young  people  expected  to  be  introduced  shortly  will  provide  support  on  a  short-term 
basis until labour demand recovers in early 2015. Reforms to the Public Employment Service are planned 
to enhance opportunities for apprenticeships and vocational training and improve job matching, thereby 
contributing  to  improve  human  capital  and  productivity.  Other  reforms  will  lighten  labour  reporting 
requirements and foster compliance with labour laws, while steps to regenerate social dialogue are being 
taken.  

Product and service market reforms remain crucial for strengthening investment, innovation and 
competition,  complementing  the  reforms  in  the  labour  market.  There  is  some  preliminary  evidence 
that retail market reforms may have started to increase competition. Further action is planned to liberalise 
sales periods and trading days and hours. As a precondition for further substantive reforms in the energy 
market,  the  liberalisation  process  has  started  for  end-user  prices  for  low-voltage  customers.  Some 
progress has been made in the transport sector to relax restrictions on road haulage and to restructuring 
the railways sector. New strategies for liberalisation and growth are being implemented in the airport and 

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Executive summary 

maritime sectors. However, the still insufficient relative adjustment of prices suggests that an acceleration 
of product and services market reforms is needed to support the purchasing power of households, improve 
the  conditions  for  investment  in  human,  physical  and  knowledge  capital  to  increase  productivity,  and 
achieve a further sustained improvement in Greece’s competitiveness.  

Progress has also been made in improving the business environment. Concrete measures have been 
taken  to  rationalise  licensing  procedures  in  order  to  cut  red  tape  and  to  reduce  the  time  and  cost  of 
company  creation. Action  has  been  taken  to  begin removing restrictions  and  entry barriers  in regulated 
professions, although this has been a slow and long drawn-out process. Greece has also begun to deliver 
on  its  export  strategy  that  facilitates  trade,  simplifies  customs  operations  and  strengthens  its  trade  and 
investment promotion capacity. Nevertheless, much more needs to be done in structural policy terms to 
create the basis for renewed growth, which will have to rely more than in the past on private investment 
and  exports.  Further  delivery  on  microeconomic  reforms  is,  therefore,  imperative,  including  the 
liberalisation  of  the  energy  sector  and  the  transport  system  and  further  improvements  in  the  business 
environment.  

The  authorities  are  seeking  ways  to  improve  the  social  safety  net  within  the  current  budgetary 
envelope.  To  that  end,  the  Government  is  expected  to  report  on  policy  options  by  mid-2013.  That  is 
foreseen  to  include  at  least  the  creation  of  an  unemployment  assistance  scheme  for  the  long-term 
unemployed,  means  tested  and  targeted  to  the  poor  by  January  2014  and  the  creation  of  a  minimum 
income  scheme  (on  a  pilot  basis).  That  document  should  also  elaborate  on  the  articulation  of  these 
schemes with other active and passive labour policies and social transfers. 

The assessment of debt dynamics is broadly unchanged compared to December 2012. The debt-to-
GDP ratio is forecast to resume a declining path in 2014 and should become lower than 120% by 2021, 
assuming  that  the  economic  adjustment  programme  continues  to  be  fully  implemented.  As  the  debt-to-
GDP ratio will nevertheless remain elevated in the near future, full capital market access for Greece will 
remain challenging in the years ahead.  

Implementation risks to the programme remain formidable, but there are also some upside risks. 
The  key  risks  concern  the  government’s  perseverance  vis-à-vis  vested  interests,  not  least  given  the 
vulnerability  of  a  coalition  government  with  a  relatively  thin  majority.  Moreover,  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,  key  reforms  in  the  revenue  administration  and  the  public 
administration may face resistance, weakening the capacity to deliver the needed revenues and the wage 
bill  adjustment  while  missing  the  significant  efficiency  and  productivity  gains.  Should  product  and 
services market reforms not accelerate as foreseen under the programme, positive economic growth could 
not return in 2014 as foreseen. A failure to implement these reforms in time would thus amplify the social 
distress  coming  from  very  high  unemployment  and  from  the  pressure  exerted  on  the  population  by  the 
prolonged  recession  and  the  wide-ranging  economic  and  social  adjustment.  However,  there  are  also 
important upside risks. In particular, sustained strong policy implementation will help lift uncertainty and 
support confidence. There could also be a somewhat stronger impact from the liquidity injection expected 
from the clearance of government arrears and the initiatives to bring long-term unemployment to work, 
and from a more dynamic tourist season. Finally, investment could grow faster with the restart of major 
projects  such  as  in  motorways  and  a  strong  absorption  of  the  EU  funds,  if  the  banking  sector  is  in  a 
position to support after the recapitalisation, and with a stronger return of foreign capital. 

_____________________ 

With  the  adoption  of  the  measures  related  to  March  milestones  for  the  last  sub-tranche  of  the 
December release of EUR 49.1 billion, the latter will be fully disbursed, pending the request for the 
funds related to the bank recapitalisation. After the disbursement of EUR 34.3 billion last December, 
the EFSF Board of Directors agreed on 28 January 2013 on the disbursement of the sub-tranche of EUR 2 
billion related to the January milestones (a major tax reform has been concluded, electricity prices have 

5 

 
                  European Commission 

                  The Economic Adjustment Programme for Greece. Second Review 

begun to move towards market levels), as well as on the disbursement of EUR 7.2 billion to cover bank 
recapitalisation and resolution costs (although the latter has not been requested by the Greek authorities 
yet).  The  MoU  milestone  for  February  (the  update  of  the  public  financial  management  framework, 
including to set binding expenditure ceilings) was also achieved and the EWG of 21 February decided for 
the  disbursement  of  the  February  sub-tranche.  The  steps  taken  by  the  authorities  have  allowed  to 
significantly catch up with the delivery of the March milestones (related to the public administration and 
the  health  sector),  and  hence  the  disbursement  of  the  related  EUR  2.8  bn  from  the  EFSF  tranche 
remaining from the previous Review has been made by the EFSF on 3rd May. 

The Commission services recommend disbursement of EFSF funds, broadly corresponding to the 
planned  tranches  of  the  second  programme  for  Q1  and  Q2  2013,  conditional  on  continued 
implementation of the commitments undertaken by the Greek authorities as specified in the revised 
MEFP and MoU, including all prior actions. Estimated financing needs for the coming quarter to be 
covered  by  the  EU  equal  to  EUR  7.5  billion,  which  will  go  towards  funding  the  cash  needs  of  the 
government, including for the payment of arrears to the private sector and outstanding debt service. The 
disbursement will be made in two tranches, with the first one amounting to EUR 4.2 billion paid in May 
2013. The disbursement of the remaining amount will be made in June 2013, following achievement of 
new milestones (see Table 8).  

6 

 
 
 
 
 
 
 
 
 
 
 
1. 

1. INTRODUCTION  

1. 

2. 

3. 

4. 

INTRODUCTION  

This report provides an assessment of the progress made by Greece in respect of its Second 
Economic  Adjustment  Programme.  It  examines  current  macroeconomic,  financial  and  fiscal 
developments,  assesses  compliance  with  the  previously  agreed  programme  conditionality  and 
provides a detailed assessment of the policy programme up to 2016, agreed between the Greek 
Authorities  and  the  European  Commission,  ECB,  and  IMF  staff  teams.  The  agreed  economic 
adjustment  programme  is  set  out  in  a  Memorandum  of  Understanding  and  a  Memorandum  of 
Economic and Financial Policies (see Box 1 and Annex 3). The assessments and agreements are 
based upon the findings of a two-part joint Commission/ECB/IMF mission to Athens between 27 
February and 11 April 2013 and the continued interaction with the authorities, including through 
Commission staff based in Athens.  

Greece continues to make substantial progress under the economic adjustment programme 
(see  Box  2).  Abstracting  from  bank  resolution  costs  and  other  programme  adjustments,  the 
general  government  deficit  as  a  percentage  of  GDP  has  been  reduced  from  15.6%  in  2009  to 
9.4% in 2011 and 6.3% in 2012. However the underlying fiscal effort is much larger when taking 
account  of  the  severe  recession.  Whilst  public  finances  are  steadily  improving  in  line  with 
programme  objectives,  the  banking  sector  recapitalisation  has  reached  an  advanced  stage  and 
important structural reforms are being implemented. However, further major efforts are needed 
to fully deliver the delayed public administration reform and to make the new semi-autonomous 
revenue administration effective in the fight against tax evasion. Falling wages and unit labour 
costs, following labour market reforms, are improving cost competitiveness. 

The Adjustment Programme is supported through financing by euro area Member States 
and  the  IMF.  The  financing  by  the  euro  area  Member  States  takes  place  through  the  EFSF, 
whilst the IMF financing comes through the Extended-Fund Facility (EFF). Up to May 2013, the 
international  assistance  loans  disbursed  so  far  to  Greece  amount  to  EUR  200.9  bn.  Of  this 
amount, EUR 73.0 bn were disbursed within the first programme (EUR 52.9 bn have been paid 
by the euro area Member States and EUR 20.1 bn by the IMF). Within the second programme, 
the  EFSF  and the  IMF have already disbursed  EUR 127.9 bn  as  a part of  the  first  and  second 
releases  under  the  second  programme  (including  EUR  123.1  bn  from  EFSF  and  EUR  4.84  bn 
from the IMF).  

The  outline  of  the  report  is  as  follows.  The  second  section  examines  macroeconomic  and 
financial developments in the Greek economy, including a detailed macroeconomic scenario up 
to  2016.  Section  three  then  provides  the  analysis  of  programme  compliance  and  outlines  the 
policy  commitments  up  to  2016  that  have  been  agreed  between  the  Greek  Authorities  and  the 
Commission, ECB, and IMF staff teams. Comprehensive compliance tables, the macroeconomic 
forecast, and key programme documents are attached in Annex. 

Box 1. The documents for a comprehensive adjustment strategy  

The Economic Adjustment Programme is spelled out in a series of key documents: (1) the Council decision; (2) the 
'Memorandum  of  Understanding'  (hereafter  MoU),  and  (3)  the  'Memorandum  of  Economic  and  Financial  Policies' 
(hereafter MEFP), see Annex 3.  These documents outline the economic and financial policies that Greece commits 
to  implement  during  the  period  of  the  programme  (with  a  special  focus  on  the  remainder  of  the  year  and  the  two 
following years, in alignment with the annual budget and the agreed fiscal measures).  

The  EU  Council  decision  2011/734/EU,  last  amended  by  decision  2013/6/EU  of  4  December  2012  based  upon  a 
recommendation of the European Commission, sets the steps and deadlines to be respected to correct the situation of 
excessive deficit. The MoU and MEFP are drafted jointly by the Troika institutions (EC/ECB/IMF) and the Greek 
authorities.  They  are  subsequently  implemented  according  to  a  pre-agreed  timetable.  The  MEFP  describes  the 
broader policies, while the MoU specifies in a more detailed manner specific measures. The programme documents 
are  living  documents  and  are  modified  at  every  programme  review,  based  on  implementation  of  previous 
commitments and identification of new ones. The first programme documents were agreed upon in May 2010. The 
set of documents included in this publication constitutes the eighth subsequent version. 

7 

 
2. 

MACROECONOMIC AND FINANCIAL DEVELOPMENTS 

2. MACROECONOMIC AND FINANCIAL DEVELOPMENTS 

2.1 MACROECONOMIC DEVELOPMENTS  

1. 

In  the  first  quarter  of  2013,  conjunctural  and  financial  market  leading  indicators  have  shown 
improving  confidence  in  the  medium-term  recovery  prospects  of  Greece,  while  hard  indicators 
are  still  lagging.  With  the  programme  having  been  brought  back  on  track  in  late  2012  and  Grexit 
concerns  having  receded,  the  European  Commission  Economic  Sentiment  Indicator  (ESI)  for  Greece 
has risen to a level close to the Eurozone average by the end of April. Stock market volatility, a proxy 
for  economic  uncertainty,  fell  to  a  protracted  low  in  January  and  February,  before  temporarily 
increasing again as the negotiations on the support package for Cyprus reached a climax at the end of 
March (Graph 1). This general improvement in confidence was reflected inter alia in continued inflows 
of deposits to Greek banks and a further decline in Greek sovereign spreads (Graph 2). By contrast most 
hard indicators are still negative, with industrial production as well as retail and construction continuing 
to contract (Graph 3). However, early bookings suggest a notable improvement in tourist receipts this 
summer. At the bottom of the economic cycle, labour market developments remain fragile. While the 
fall in employment is slowing down due to increased hiring, the monthly unemployment rate continues 
to increase (Graph 4).  

Graph 1. Economic Sentiment Indicator (ESI) and 
Greek Uncertainty index  

Graph 2. Monthly deposits and government bond 
spreads 

100

Balance

95

90

85

80

75

2.5

1.5

0.5

-0.5

-1.5

-2.5

Jan-12

Apr-12

Jul-12

Oct-12

Jan-13

Apr-13

Greece ESI (lhs)

Uncertainty index (normalized, rhs)

Sources :  European Commission services' calculations, Thomson Reuters 
Note: The uncertainty index is computed as daily 30-day rolling -window standard 
deviation of Greek stock market returns. 

5

0

-5

-10

-15

-20

-25

%

bps

4 000

3 500

3 000

2 500

2 000

1 500

1 000

500

0

Jan-12

Apr-12

Jul-12

Oct-12

Jan-13

Apr-13

Deposits and repos of non MFIs in MFIs in Greece (excluding
the Bank of Greece, y-o-y % change, lhs)
10 year Greek Government Bond Yield, spread vs Bundes (bps,
rhs)

Sources : BoG, European Commission services' calculations, Thomson Reuters 

Graph 3. Industrial production, retail turnover and 
building permits 

Graph 4. Employment: growth in hiring and net 
change in employment 

10

5

0

-5

-10

-15

-20

%

%

60

40

20

0

-20

-40

-60

-80

Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13

Production Index in Industry (y-o-y % change, lhs)

Retail trade - Turnover Index (except automotive fuel, y-o-y %
change, lhs)
Greece, Building Permits (y-o-y % change, rhs)

%

40

30

20

10

0

-10

-20

-250

-275

-300

-325

-350

-375

-400

-425

Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13

Growth in hiring (y-o-y % change)

Y-o-y net change in employment (thousand persons, rhs)

Sources : EL.STAT. 

Sources : EL.STAT., OAED 

8 

 
 
 
 2. Macroeconomic and financial developments 

Box 2. Preliminary assessment of the fallout of recent events in Cyprus 

While the fallout from the events in Cyprus appears overall limited, it needs to be monitored closely. Key elements of the 
March agreement on the Cypriot economic adjustment programme included (i) a major restructuring of the Cypriot banking 
sector (including a bail-in of deposits above EUR 100,000), (ii) temporary capital controls as well as (iii) important additional 
fiscal consolidation measures.  While this agreement prevented a collapse of the Cypriot economy that could have resulted in 
serious adverse effects across the euro zone, the resulting reductions in private sector wealth, expected weaker bank credit 
growth  and  the  temporary  increase  in  general  economic  uncertainty  are    nevertheless  expected  to  lead  to  a  substantially 
sharper-than-previously-projected contraction of the Cypriot economy this year.  

•  The  direct  trade  impact  for  Greece  is  likely  to  be  limited,  since  only  4.8%  of  Greek  goods  exports  went  to  Cyprus  in 

2012, and total exports make up only about one quarter of Greek GDP3.  

•  Subsidiaries of Cypriot banks in Greece have been ring-fenced from the restructuring of the Cypriot banking system, and 
the direct financial exposure of Greek business and households to Cypriot banks appears to be limited. Hence the direct 
adverse effects on the balance sheets of Greek households and corporations can be expected to be small.  

•  The  immediate  effects  in  early  April  of  developments  in  Cyprus  included  a  temporary  increase  in  Greek  government 
bond spreads, a decline in Greek stock prices and a marked increase in stock market volatility. These have since largely 
faded away. 

Graph 2.1. GDP components as % of GDP

% of GDP

forecast

Graph 2.2.  Destination of Greek 
goods exports 

Exports of 
goods to 
Cyprus

160

120

80

40

0

-40

-80

2010

2011

2012

2013

2014

2015

2016

Imports of goods and services
Fixed capital formation
Private consumption

Exports of goods and services
Government consumption

Graph 2.3. Greek  government bond spreads with 
bund 

bps.

1200.0

1100.0

1000.0

900.0

800.0

700.0

Exports of 
goods to 
the other 
trade 
partners 
of Greece

Graph 2.4. ASE - Stock market volatility 

0.014

0.012

0.010

0.008

0.006

0.004

0.002

0.000

Jan 13

Feb 13

Mar 13

Apr 13

Jan 13

Feb 13

Mar 13

Apr 13

30 days rolling window

15 days rolling window

Source: Eurostat and Thomson –Reuters  

Chart 1Graph 2.1. GDP components as % of GDP              

Chart 2Graph 2.2. Destination of Greek goods exports      

Chart 3Graph 2.3. Greek government bonds spreads with bund      

Chart 4Graph 2.4 ASE – Stock market volatility      

3 Also incorporating bilateral data on trade in services available from the Balance of Payments statistics would give rise to an even lower 
share (4%) of all exports to Cyprus in total Greek exports. The Balance of Payments framework differs slightly in approaches to valuation 
from the available bilateral trade in goods statistics from the National Accounts.  

9 

             
 
 
 
  
 
 
 
                                                           
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

2. 

The macroeconomic assessment is broadly unchanged from the previous review. On the one hand, 
a slightly worse than expected end of 2012, leading to annual GDP decline of -6.4% instead of -6.0%, 
has  somewhat worsened  the carry-over  into  2013.  On  the other hand,  the  improvement  in  confidence 
following the December debt-reducing agreements has proven so far strong and resilient. Overall, 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 (Graph 5). High unemployment combined with reductions in wages 
and  social  transfers  are  expected  to  result  in  a  further  contraction  in  private  consumption  by  6.9%  in 
2013. Fiscal adjustment is estimated to be associated with a fall in government consumption by 4% in 
2013.  Continued  deleveraging  and negative  domestic  growth  continue  to  weigh on  credit  and  to hold 
back  the  recovery  of  private  investment.  However,  the  projected  clearance  of  government  arrears 
(Graph 6),  the  restarting  of  large-scale  highway projects  and  accelerated  absorption of  EU funds will 
provide  a  major  support  to  investment  already  through  this  year.  In  annual  terms,  investment  is 
projected  to fall  by  -4%  in 2013.  Net  trade  is  projected  to develop  more  positively.  Export  growth  is 
projected to turn positive at 3% in 2013, buoyed by a rebound in tourism receipts and further expansion 
in goods exports. However, weak Eurozone demand and limited availability of trade credit will delay a 
stronger expansion. Imports are expected to decline by a further 6.4% on the back of declining domestic 
consumption and investment. The rebound of the economy is expected to come no earlier than around 
the turn of the year. 

Graph 5. Contribution of GDP components to GDP 
growth  

Graph 6. Arrears clearance and disbursement 
schedule of official funds 

10

5

0

-5

-10

-15

%

forecast

40

35

30

25

20

15

10

5

2005

2007

2009

2011

2013

2015

External balance of goods and Services
Changes in inventories and net acquisition of valuables
Gross fixed capital formation
Total consumption
Gross domestic product at market prices (y-o-y %)

0
2012Q4

2013Q2

2013Q4

2014Q2

2014Q4

Disbursement schedule of official funds (bn EURs)

Arrears clearance schedule (bn EURs) (rhs)

4

3

2

1

0

Sources : European Commission 

Sources : European Commission 

Investment and exports are expected to lead the recovery, giving rise to a projected annual GDP 
growth of +0.6% in 2014. The recovery is then expected to accelerate in 2015 and 2016, with growth 
rates reaching 2.9% and 3.7% respectively. Falling unit labour costs, supported by structural reforms in 
the  labour  and  product  markets  and  the  improved  business  environment  will  bolster  Greek 
competitiveness, create new profitable business opportunities and encourage job creation. The clearance 
of  government  arrears  and  the  bank  recapitalization  will  support  private  sector  liquidity  and  improve 
access  to  credit.  Moreover  business  and  consumer  confidence  should  strengthen  through  continued 
determined programme implementation. The projected recovery is associated with further investment in 
export-related industries and a further opening up of the Greek economy to foreign direct investment, as 
well  as  with  expected  new  investment  associated  with  the  privatisation  programme.  Benefitting  from 
improved competitiveness, companies are expected to increasingly turn to international markets in the 
face of weak domestic demand. Private consumption as a percentage of GDP is projected to fall from 
73.4% in 2010 to some 68% in 2016, while the export to GDP ratio increases from 22.2% to 31% over 
the same period. Investment is also forecast to improve as structural reforms progressively feed-through 
and  the  Greek  economy  fully  recovers  to  potential  output.    However,  the  investment-to-GDP  ratio  at 
16.7% in 2016 will still be below its 2010 level of 17.6%. 

At the start of 2013, unemployment remains at a high level. As companies could no longer afford 
any labour hoarding as the recession extended over time, in the second half of 2012 unemployment has 
been  increasing  sharply,  well  beyond  what  simple  rules-of-thumb  such  as  Okun's  law  would  predict 
(see Box 3), leading to an average unemployment rate of 24.3% for the year. Long-term unemployment 
has  also  risen  fast  and  stood  at  65.3%  in  the  fourth  quarter  of  2012.  Supported  by  structural  reforms 

3. 

4. 

 10 

 
 
 
 
 
 
 
 
                  
 
 
 2. Macroeconomic and financial developments 

such as greater decentralization of wage bargaining, compensation per employee fell by -4.2% in 2012 
and is projected to fall by a further -7.0% in 2013. There is evidence that these labour cost declines are 
already  supporting  hiring  (see  chart  4).  Moreover,  a  major  increase  in  short-term  public  work 
programmes  from  mid-2013  can  be  expected  to  contribute  to  stronger  short-term  employment  at  the 
margin. However, the number of dismissals still remains high and the overall labour market is likely to 
remain weak until GDP begins to recover. Hence, the annual unemployment rate is projected to peak at 
27.0%  in  2013.  Once  the  recovery  gains  traction,  especially  the  frontloading  of  wage  adjustments  is 
projected to give rise to a relatively rapid and sustainable decline in unemployment to 26.0% in 2014 
and to 21.0% in 2016. 

Graph 7. Nominal compensation per employee and 
unemployment 

Graph 8. Monthly HICP developments and annual 
averages 

30

25

20

15

10

5

0

% 

forecast

2005

2007

2009

2011

2013

2015

Unemployment rate total (Eurostat Definition)

Nominal compensation per employee (total economy) (rhs)

6

4

2

0

-2

-4

-6

-8

6

5

4

3

2

1

0

-1

-2

y-o-y % 

forecast

Jan-
05

Jan-
06

Jan-
07

Jan-
08

Jan-
09

Jan-
10

Jan-
11

Jan-
12

Monthly HICP
2006 Annual Average
2008 Annual Average
2010 Annual Average
2012 Annual Average

Jan-
13

Jan-
16

Jan-
14

Jan-
15
2005 Annual Average
2007 Annual Average
2009 Annual Average
2011 Annual Average
2013 Annual Average

Sources : European Commission 

Sources : European Commission 

Box 3. Labour Market Dynamics in Greece: an analysis of Okun’s Law 

The  current  recession  has  witnessed  a  fundamental  break  in  the  Greek  historical  relationship  between  changes  in 
unemployment and output.  The notion of a rule-of-thumb relationship between the product and the labour markets, a so-
called  Okun’s  Law,  has  been explored  across  a  range  of  countries  and  time  periods.  An  overview  of  this  literature  can  be 
found in a recent NBER working paper “Okun’s Law: Fit at Fifty?” by L. Ball, D. Leigh and P. Loungani (2013). 

In 2009-2012, employment fell much more strongly than what would have been predicted on basis of a linear Okun’s 
Law  relationship  estimated  with  data  from  the  pre-crisis  period  1981-2008.  This  is  a  phenomenon  that  has  been  seen 
across European crisis countries during the last few years (see figure 3.1). Greece (along with Spain) stands out however – 
both in the severity of its crisis and in terms of deviations from “Okun’s Law”. 

Chart 5Graph 3.1. Changes in the unemployment rate 2008-12: actual and Okun's Law predictions 

pps.

5

4

3

2

1

0

-1

DE LU BE MT AT FI NL FR IT SK SI EE BG PT CY IE ES EL

Source: European Commission Services

Predicted

Actual

Note: Predicted values are out-of-sample forecasts based on an Okun-law coefficient of 0,2. 

In our interpretation, the major reasons for this breakdown in Okun’s Law lie in strong downward wage rigidities in 
the  initial  phases  of  the  Greek  recession,  in  the  deep  and  protracted  nature  of  the  recession  and  in  the  liquidity 
squeeze increasingly felt in particular by smaller and medium-sized companies. Remuneration was initially tied to some 
inertia in collective wage-setting agreements and minimum wage increases. While GDP contracted by -7.9% between 2008 
and  2010,  compensation  per  employee  rose  by  0.9%  over  the  same  period.  This  reflects  the  absence  of  a  downward 
adjustment  of  wages  that  could  have  contributed  to  stabilising  employment  when  aggregate  demand  contracted.  With  a 

11 

             
 
 
 
 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

cumulating  collapse  in  aggregate  demand  and  with  tight  external  financing  making  it  no  longer  possible  to  hoard  labour, 
firms were forced to cut costs. Entrepreneurs hence turned to labour shedding and downsizing production. This is shown in 
figure 3.2, where the increase in unemployment can be seen to be particularly pronounced compared to past experience in 
Greece. 

Chart 6Graph 3.2. Okun's law in Greece 

2012

2011

2009-2012

2010

2013

2009

1981-2008

2014

2015

2016

8

6

4

2

0

-2

-4

e
g
n
a
h
c

s
t
n
i
o
p
%

:
e
t
a
r

t
n
e
m
y
o
l
p
m
e
n
U

-8

-6

-4

-2

0
Real GDP: y-o-y % change

2

4

6

8

Source: European Commission services. 
Note: Data for the years 2013-2016 are forecast data. 

Through structural labour market reforms under the programme, labour costs are now falling fast. This is expected 
to  substantially  support  the  labour  market  going  forward.  Decentralization  of  wage  bargaining  and  reductions  in  the 
minimum wage have resulted in a decline in compensation per employee by 7.4% between 2010 and 2012. By 2014, wages 
are projected to have fallen by 17.4% relative to their peak in 2009. These structural developments, and this new downward 
flexibility of wages, is forecast to stimulate employment faster than predicted by the speed of the expected output recovery 
and the historical Greek version of Okun’s Law 1981-2008.  
An annual fall in unemployment is only expected in 2014 when aggregate demand is forecast to recover. Furthermore, 
while  falling  labour  costs  are  expected  to  contribute  significantly  to  rising  employment,  adverse  and  more  persistent 
structural factors continue to influence the labour market negatively. This includes shifts in employment across sectors of the 
economy, which are likely to aggravate sectorial labour market mismatches. 

Prices  are  projected  to  fall  in  2013,  driven  by  falling  labour  costs  and  weak  demand.  In  2012, 
despite  reductions  in  some  retail  prices,  the  impact  of  past  increases  in  indirect  taxes,  administered 
prices, energy costs and unprocessed food prices have resulted in overall moderate price inflation which 
decreased  steadily  throughout  the  year.  The  previous  review  projected  that  structural  product  market 
reforms, weak demand and falling labour costs would eventually feed through into declining prices. In 
fact, in line with this forecast, year-on-year growth of the HICP index has fallen from 1.6% in October 
2012  to  -0.2%  in  March  2013.  This  review  therefore  maintains  the  previous  projection  of  moderate 
HICP  price  declines  of  -0.8%  in  2013  and  -0.4%  in  2014  with  inflation  well  below  the  euro  area 
average in 2015 and 2016.   

The  Greek  current  account  balance  is  set  to  continue  to  improve  strongly  (Graphs  9  and  10  and 
Box  4).  In  2012,  the  trade  balance  has  improved  particularly  through  to  a  sharp  decline  in  imports, 
while the Private Sector Involvement (PSI) last spring led to a sharp drop in interest payments to the 
rest of the world. For 2013, the renewed growth of exports reflecting the increasing competitiveness and 
further contractions of imports are expected to improve the trade balance further. The December 2012 
debt reducing measures, especially  the reduction in Greek Loan Facility (GLF) margin as well as the 
return of profits from the SMP investment programme, are forecast to contribute to an improvement in 
the  net  primary  income  balance  and  current  transfers.  Overall,  the  current  account  deficit  (national 
accounts definition) shrunk from 11.7% of GDP in 2011 to 5.3% of GDP in 2012. It is forecast to fall to 
2.8% of GDP in 2013 and 1.7% of GDP in 2014. Considering overall net lending/borrowing including 
the  capital  account,  after  years  of  significant  net  borrowing  from  the  rest  of  the  world,  Greece  is 
expected to reach a balanced position by 2015.  

5. 

6. 

 12 

 
 
 
 
 
 
 
 
                  
 
 
 
 
 
 
 
 
 
 2. Macroeconomic and financial developments 

Graph 9. Current Account components (% of GDP)  Graph 10. Balances vis-à-vis the rest of the world 

15

10

5

0

-5

-10

-15

-20

-25

-30

% of GDP

forecast

2005

2007

2009

2011

2013

2015

Net current transfers

Net primary income

Net exports of services

Trade Balance

Current Account Balance

5

0

-5

-10

-15

-20

-25

% of GDP

forecast

2005

2007

2009

2011

2013

2015

Trade Balance

Current Account Balance

Net lending (+)/net borrowing (-)

Sources : European Commission 

Sources : European Commission 

7. 

This  baseline  forecast  includes  expected  improvements  in  competitiveness  and  the  business 
environment stemming from planned and on-going structural reforms. Any delays in programme 
implementation  in  either  fiscal  or  structural  areas  may  create  new  uncertainty,  deter  investment  and 
hold  back  demand.    Spill-overs  from  developments  in  Cyprus  cannot  be  excluded,  though  they  are 
likely  to  be  contained.    On  the  upside,  sustained  strong  policy  implementation  will  help  reduce 
uncertainty  and  support  confidence.  Also  the  liquidity  injection  resulting  from  the  repayment  of 
government arrears in 2013 may drive a stronger-than-forecast improvement in private sector demand. 
A stronger-than-projected rebound in domestic demand could also benefit from more favourable credit 
conditions as the banks’ access to funding is expected to improve after recapitalisation, through further 
net-inflow  of  deposits  and  lessening  dependence  upon  Emergency  Liquidity  Assistance  (ELA). 
Employment  growth  may  also  respond  faster  than  expected  to  lower  wage  costs  and  investment  may 
pick up more robustly than projected.   

Table 1. Macroeconomic scenario, main features (2011-2016) 

Real GDP (growth rate)

Final domestic demand contribution*

Net trade contribution

Employment (growth rate)

Unemployment rate (Eurostat definition)

Compensation of employees, per employee

Unit labour cost (growth rate)

HICP inflation 

Current account balance (% of GDP)

Net borrowing vis-à-vis RoW (% of GDP)

General Government deficit (% of GDP)**

General Government primary surplus (% of GDP)**

2011

-7.1

-10.1

-0.4

-5.6

17.7

-3.4

-2.4

3.1

-11.7

-9.8

-9.4

-2.3

2012

-6.4

-10.4

0.0

-8.3

24.3

-4.2

-6.4

1.0

-5.3

-2.9

-6.3

-1.3

2013

2014

2015

2016

-4.2

-6.1

0.4

-3.5

27.0

-7.0

-6.3

-0.8

-2.8

-1.1

-4.1

0.0

0.6

-1.1

0.0

0.6

26.0

-1.5

-1.5

-0.4

-1.7

0.0

-3.3

1.5

2.9

1.7

0.0

2.6

3.7

3.1

0.0

4.0

24.0

21.0

0.0

-0.3

0.6

-1.0

0.8

-2.1

3.0

1.5

1.8

1.1

-0.7

1.0

-0.8

4.5

General Government debt (% of GDP)

170.3

156.9

175.2

175.0

169.8

160.9

* Excluding change in inventories and net acquisition of valuables

** Program definition

Source: European Commission 

13 

             
 
 
 
 
 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

Box 4. Competitiveness, exports and FDI 

Greece  is  quickly  regaining  cost  competitiveness  after  the  significant  losses  in  the  past  decade.  In  the  run-up  to  the 
crisis, a spiral of increasing domestic wages and prices drove up Greek nominal unit labour costs (ULCs). In the period 1995 
to 2010, Greek ULCs and the HICP index increased by 21.1% and 17.0% respectively relative to Euro area trading partners. 
To promote a stronger Greek domestic export base that can compete on global markets, to reduce dependence on imports and 
to narrow the Greek current account deficit, reversing these previous wage and price excesses has been a vital goalpost of the 
Greek adjustment programme from the outset. 

By 2014, Greece is projected to have regained its 1995 labour cost competitiveness position relative to the Euro area. 
Supported  by  wide-ranging  structural  labour  market  reforms,  such  as  broader  use  of  decentralized  wage  bargaining  and 
reductions in the minimum wage, and reduction in other non-wage labour costs, compensation per employee fell by a further 
-4.2%  in  2012  and  is  forecast  to  decline  by  -7.0%  in  2013  and  by  -1.5%  in  2014.  These  declines  have  not  yet  been  fully 
reflected in prices as measured by the HICP or the GDP deflator (see main forecast text), though HICP deflation is forecast in 
Greece in both 2013 and 2014. Between 2012 and 2014, the HICP real effective exchange rate is forecast to fall by 5.9%. 

Chart 7Graph 4.1. Unit Labour Cost (ULC)           

Chart 8Graph 4.2. Relative Effective Exchange Rate (REER)       

15

10

5

0

-5

-10

Graph 4.1. Unit Labour Cost (ULC)

Graph 4.2. Relative Effective Exchange Rate (REER)

y-o-y%

forecast

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Inflation (GDP deflator growth)
Real Compensation per Employee
Productivity Contribution (negative sign)
Nominal unit labour cost
ULC in Euro Area

110

105

100

95

90

85

80

2005=100

forecast

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

REER ULC relative to EA

REER GDP deflator relative to EA

REER HICP relative to EA

Source: European Commission

Source: European Commission

On  the  back  of  these  cost  competitiveness  gains,  export  growth  has  started  to  pick-up  from  a  low  base.  In  spite  of 
continued  weakness  in  the  Euro  area,  recent  policy  uncertainty  in  Greece  and  tight  access  to  trade  credit  for  Greek 
companies,  Greek  goods  exports  have  been  resilient  in  2011  and  2012.  Buoyed  by  increased  petroleum  exports  in  an 
environment of rising oil prices, extra-EU exports of goods have already increased strongly by 86.9% in 2010 and 34.1% in 
2011.    With  lower  labour  costs,  Greek  products  are  expected  to  compete  more  successfully  in  domestic  as  well  as  non-
domestic markets and inward investment into Greece is becoming an increasingly attractive option. Nevertheless, in spite of 
such progress, Greece has room to further strengthen its export sector: 

•  From 2000 to 2012, exports of goods and services increased 8.8 per cent of GDP in the EU but only 2.1 per cent of GDP 

in Greece. Hence, Greece was the EU country with the lowest export-to-GDP ratio in 2012, as it was in 2000.  

•  Exports of goods and services of just over EUR52 bn in 2012 were almost EUR10 bn less than imports, leaving Greece 

with a substantial trade deficit. 

•  While Greece has done well in fuel exports, the performance of other goods exports is weak. For example, manufacturing 
exports declined from 4.7 per cent of GDP in 2000 to 3.8 per cent of GDP in 2012, the lowest level among EU countries 
after Cyprus.  

•  Services contribute to the weak export performance. Exports of services declined from 14.4 per cent of GDP to 12.7 per 
cent of GDP in Greece from 2000 to 2012, while they increased from 8.1 per cent of GDP to 10.9 per cent in the EU. As 
a result, Greece dropped from the 11th to the 16th position in terms of the export of services-to-GDP ratio in the EU.   

Chart  
The government has made improving the export performance a key policy priority. With domestic demand still weak, 
enterprises look increasingly to find customers abroad both within and outside of Europe to sell products ranging from agri-
food products, wine, construction materials, chemical products, to pharmaceuticals.  Based on the April 2012 National Export 
Strategy, and with the support of the Task Force for Greece and other institutions, reforms are proceeding in three areas: 

•  Trade facilitation: the government adopted a reform road-map in November 2012 aiming at reducing time and costs for 
Greek  traders.  The  set  of  25  actions  includes  simplifying  issuing  of  licences  and  certificates,  optimizing  customs 
operations  and introducing  digitized  procedures. Business  process  analysis  of  procedures  for  exporting  fresh  fruits  and 
white cheese has led to concrete proposals for simplification and improvements. 

 14 

 
 
 
 
 
 
 
 
                  
 
 
 2. Macroeconomic and financial developments 

•  Customs operations: the reforms focus on reducing and simplifying export procedures, implementing electronic customs 
procedures  and  introducing  a  streamlined  risk-based  customs  system.  Optimized  procedures  will  be  tested  in  pilots  at 
customs offices at Athens airport and Piraeus port and then rolled out to all customs offices. 

•  Export promotion: the government will adopt in spring 2013 a strategy and road map to strengthen Greece's trade and 
investment promotion capacity with particular focus on exports including institutional adjustments and developing tools 
and instruments to better support Greek businesses abroad. 

Improving  the  export  performance  will  also  depend  on  addressing  other  structural  non-cost  impediments.  Two 
especially deep-rooted issues are highlighted in the graphs below:  

•  Small  scale  of  production:  Greek  domestic  firms  lack  the  size  to  reap  the  full  benefits  of  economies  of  scale  in 
production, of establishing an international distribution network and of developing a global brand. In 2009, 45.7% of total 
employment  in  industry  was  in  companies  with  0  to  9  persons  employed  (compared  to  6.4%  in  Ireland  and  19.5%  in 
Spain).    To  encourage  growth  of  successful  Greek  businesses,  the  Greek  adjustment  programme  has  put  significant 
emphasis on quickly recapitalizing the Greek banking system and on monitoring and facilitating credit access for small 
and  medium-size  enterprises  (SMEs).As  part  of  the  EU  cohesion  policy,  the  “Joint  European  Resources  for  Micro  to 
Medium  Enterprises”  (JEREMIE)  program  offers  subsidized  loans  to  SMEs.    The  Ministry  of  Development, 
Competitiveness  and  Shipping  launched  an  “Internationalisation  –  Business  Competitiveness”  programme  to  provide 
grants  raising  the  visibility  of  Greek  companies  abroad.  The  National  Fund  for  Entrepreneurship  and  Development 
(ETEAN) supports entrepreneur credit access by co-investing funds with banks to provide loans at favourable terms to 
SMEs.  The  EU  cohesion  policy  2014-2020  will  continue  to  have  a  strong  focus  on  supporting  SMEs  and 
entrepreneurship. 

•  Poor track-record of attracting foreign direct investment (FDI): FDI is a crucial financing source and incubator of 
best-practice  know-how  for  the  domestic  export  base.  Steadfast  implementation  of  structural  reforms  under  the 
programme is needed to provide the long-needed improvements in the business environment, to make for a stable judicial 
system  and  to  lower  entry  barriers.  Combined  with  lower  labour  costs  and  the  temporary  depressed  value  of  Greek 
investment  assets,  it  is  projected  that  Greece’s  FDI  performance  will  improve  substantially  in  the  coming  years.      A 
particular  success  story  for  the  gains  from  foreign  involvement  has  been  the  concession  of  China’s  Cosco  Pacific  at 
Piraeus Container Terminal. As part of a commitment by Cosco to upgrade the port’s infrastructure and to turn Piraeus 
into a Mediterranean transportation hub, EUR620m in investment were pledged, raising capacity by 60%. Between 2010 
and  2012,  under  Cosco’s  management,  container  traffic  in  Piraeus  already  more  than  tripled,  while  traffic  in  other 
Mediterranean  ports  increased  by  about  20%.  According  to  a  study  by  the  National  Bank  of  Greece  (April  2013),  the 
resulting  increase  in  Greek  container  handling,  including  knock-on  gains  to  related  industry  clusters,  could  contribute 
EUR5.1bn to Greek value added and create more than 125,000 jobs by 2018.C 

Chart 9Graph 4.3.  Employment share by employer's size in industry in 2009 (% of total industry labour force)       

Chart 10Graph 4.4 FDI in EA countries (average 2000-2007 as % of GDP)         

Graph 4.4. FDI in EA countries (average 2000-2007 as % of 
GDP)

% of GDP

Graph 4.3. Employment share by employer's 
size in industry in 2009 (% of total industry 
labour force) 

%

50
45
40
35
30
25
20
15
10
5

From 0 to 9
persons
employed

From 10 to
19 persons
employed

Greece

From 20 to
49 persons
employed
Ireland

From 50 to
249 persons
employed

250 persons
employed or
more

Spain

15

13

11

9

7

5

3

1

-1

Source: European Commission

Source: European Commission
Note: The graph is truncated at 15% of GDP, while the actual value for Luxembourg is 339.5% .

2.2 FINANCIAL MARKET DEVELOPMENTS  

8. 

Following  the  financial  volatility  caused  by  political  uncertainty  in  mid-2012,  the  financial 
situation steadily improved in the second half of 2012. Between August and December 2012, yields 
on  10-year  government  bonds  dropped  from  approximately  25%  to  12%.  Following  the  Eurogroup 
decision on the second disbursement in December 2012, yields continued to decrease reaching lows of 
approximately  10.6%  in  the  first  quarter  of  2013.  The  Athens  Stock  Exchange  also  showed 
improvement in January 2013, recording an increase of 28% year-on-year. However, Greek bank stocks 
extended losses, recording prices 57% lower over the same period. On the positive side, thanks to the 

15 

             
 
 
 
 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

timely sale of Cypriot branches operating in Greece to a Greek bank, there has been only very limited 
contagion from events in Cyprus. 

9. 

The  deleveraging  in  the  banking  sector  has  continued,  but  the  liquidity  position  of  credit 
institutions is improving. As of January 2013, the total balance sheet of Greek credit institutions had 
contracted  by  a  rate  of  7%  year-on-year.  On  the  other  hand,  domestic  deposits  have  recovered 
significantly from the lows recorded in the aftermath of the dual elections. From mid-June 2012 to end-
March 2013, domestic deposits have seen an increase of approximately 12% (EUR 17 bn). Central bank 
liquidity has continued to be provided to the sector, including via emergency liquidity assistance (ELA), 
although, overall banks managed to decrease their dependence on central bank funding in Q1 2013. 

Graph 11. Athens Stock Exchange Indices 

Graph 12. Greek 10-YR Bond Yield 

Index

7000

6000

5000

4000

3000

2000

1000

0
2008

bps

45

40

35

30

25

20

15

10

5

2009

2010

2011

2012

2013

ASE Banks Index

ASE General Index

0
2008

2009

2010

2011

2012

2013

            Source : Thomson - Reuters 

            Source : Thomson - Reuters 

Graph 13. Bank deposits 

Graph 14. Credit to private sector 
(% change, y-o-y) 

bn EURs

300

250

200

150

100

50

0
Jan-07

Jan-08

Jan-09

Jan-10

Jan-11

Jan-12

Jan-13

yoy %

30

25

20

15

10

5

0

-5

-10

2007

2008

2009

2010

2011

2012

Jan-13

Total deposits

Sight deposits

Households

Enterprises

Private sector(total)

Source: Bank of Greece 

Source: Bank of Greece 

5. 

Greek  banks  continue  to  face  the  consequences  of  the  recession  and  the  inability  of  some 
borrowers to service their debt obligations, while credit to the economy continues to decline (see 
Box 5). Non-performing loans (NPLs) increased, reaching 24.2% of total loans on a solo level by end 
2012  (57.3%  of  these  NPLs  were  attributed  to  the  corporate  sector),  up  from  16.5%  of  total  loans  at 
end-2011 (see Graph 15). Restructured loans amounted to 5.3% of total loans for the same period, up 
from  4.6%  of  total  loans  at  end-2011.  Some  42.4%  of  the  restructured  loans  related  to  the  corporate 
sector.  The  coverage  of  NPLs  including  restructured  loans  by  provisions  decreased  from  49.1%  to 
39.5%  from  end-2011  to  end-2012.  At  the  same  time,  credit4  to  the  domestic  economy  declined  by 
6.8%, with a reduction in loans to consumers by 3.6%, for mortgages by 2.8% and to corporations by 

4 Loans and advances to customers. 

 16 

 
 
 
 
 
 
 
 
                  
 
 
 
 
 
 
                                                           
 2. Macroeconomic and financial developments 

9.6%. Furthermore, write-offs increased by 168% to EUR 3.9 bn (1.7% of total loans and up from 0.6% 
in  end-2011)  while  recoveries  reduced  by  approximately  56.8%  to  EUR  34  million,  during  the  same 
period.  

6. 

Banks  have  continued  their  efforts  to  adjust  their  business  models  to  the  harsh  economic 
environment. By end-2012, Net Interest Income (NII) of banks on a solo basis decreased by 36% year-
on-year to EUR 5 bn. During the same period, profits-after-tax amounted to EUR -8.8 bn versus EUR -
4.1 bn in 2011. At the same time however, Total Operating Expenses have decreased by 17%, led by 
reductions in staff costs (-18.8%) and General Administrative Expenses (-6.2%).  

Graph 15. Non-performing loans ratio 

%

30

25

20

15

10

5

0

2007

2008

2009

2010

2011

2012

Source : Banks' financial statements 

Box 5. Bank lending and the real economy 

The  Greek  enterprise  sector  largely  relies  on  bank  credit  as  its  source  of  financing.  External  financing  is  crucial  for 
companies to make fixed capital investments and to finance their operational needs. Bank loans are the most attractive and 
widely available source of external finance, especially for the SMEs that are the dominant form of corporate organisation in 
Greece.  Insufficient  bank  credit  supply  in  comparison  to  the  corresponding  demand  can  thus  significantly  affect  current 
production and lead to a decline in investment. Conversely, cuts in net worth in the context of the recession can influence 
negatively the capacity of households and businesses to service outstanding loans, which puts further strain on the banking 
sector.  To  a  large  extent  this  reflects  depressed  internal  demand  and  poor  economic  prospects,  which  require  banks  to 
upwardly adjust their assessment of credit risks and consequently result in credit contraction.  

Bank  credit  continued  to  contract  in  2012,  reflecting  inter  alia  the  adverse  impact  of  the  crisis  on  domestic  credit 
demand. The annual rate of change of total credit towards non-financial corporations and for housing and consumer loans 
turned  increasingly  negative  in  2012.  The  demand  for  loans  has  clearly  fallen,  resulting  from  lower  domestic  demand, 
increased uncertainty and also higher refinancing cost. Furthermore, banks become more concerned about the quality of their 
lending  during  the  prolonged  economic  recession  in  view  of  increased  credit  risks  and  an  increasing  number  of  non-
performing  loans.  This  has  been  compounded  by  moral  hazard  caused  by  the  damaging  household  insolvency  framework 
(“Katseli law”) that severely undermined repayment incentives. In addition, capital constraints resulting from the erosion of 
banks’ capital due to PSI and on-going recession, prevented banks from extending new credit. Moreover, a number of other 
factors  have  also  negatively  influenced  the  supply  of  bank  loans.  In  particular,  severe  liquidity  constraints  in  the  banking 
sector  have  resulted  from  the  loss  of  access  to  international  money  and  capital  markets  and  from  the  outflow  of  retail 
deposits.  Once the core banks will be recapitalised by the HFSF, they should gradually regain access to funding markets and 
deposits should continue to return to the banking sector.  

The  weak  economic  short-term  prospects  show  up  in  weak  credit  developments  in  Greece,  affecting  particularly 
SMEs.  The  recent  EC/ECB  survey5  on  the  access  to  finance  of  the  SMEs  from  April  to  September  2012  suggests  that 
constraints in access to credit have been particularly important for SMEs. The percentage of rejected applications for banking 
loans was the highest in Greece in comparison to rest of the euro-area, while the percentage of applications that were fully 
satisfied / serviced was among the lowest. The trend in the percentage of rejected applications has been clearly upward over 
the last three years. An increasing proportion of SMEs considered it unlikely that banks would provide them with access to 
credit and therefore have not tried to obtain a loan. Such a trend is not surprising due to the substantial deterioration of the 
private sector’s balance sheet.  
Higher  costs  of  funding  have  translated  into  higher  costs  for  businesses.  Interest  rates  on  loans  to  non-financial 
enterprises in Greece are significantly higher than in other euro area countries. This is partly due to the premium banks have 

5 http://www.ecb.int/stats/money/surveys/sme/html/index.en.html 

17 

             
 
 
 
 
 
                                                           
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

to charge for higher credit risk and in order to offset increased provisioning needs. Higher interest rates also stem from the 
need to attract deposits and the lack of access to international funding markets. Due to their temporary undercapitalisation 
and lack of eligible collateral, banks have had to rely to some extent on ELA which comes at a higher cost than the regular 
Eurosystem funding (see chart 1).  Interest rates on time deposits have continuously risen from end-2009 to mid-2012. This 
development is the result of banks competing for scarce deposits through offering high nominal returns on deposits by non-
financial corporations and households. The inflow of deposits observed in the last semester of 2012 helped ease the rising 
trend  of  the  interest  rates  associated  with  deposits.  During  2012,  bank  lending  rates  for  new  loans  in  Greece  saw  a 
downwards movement. The principal effect seems to stem from loan restructuring operations, since other new loans have in 
fact contracted sharply.   

Chart 11Graph 5.1. Average  bank interest rates on new euro-denominated deposits and loans              

Chart 12Graph 5.2. Average loans interest rate to non-financial corporations 

Graph 5.1.  Average  bank interest rates on new euro-
denominated deposits and loans

%
8

7

6

5

4

3

2

1

0
Sep-02

Sep-04

Sep-06

Sep-08

Sep-10

Sep-12

Average deposits interest rate (lhs)
Average loans interest rate (lhs)
Interest rate spread (rhs)

Source: Bank of Greece

Graph 5.2.  Average loans interest rate to non-
financial corporations

%

5

5

4

4

3

3

2

%
8

7

7

6

6

5

5

4

4

3
Oct-08

Jun-09 Feb-10 Oct-10

Jun-11 Feb-12 Oct-12

Average loans interest rate to non-financial corporations

Source: Bank of Greece

The  declining  creditworthiness  of  borrowers  is  one  important  factor  behind  these  trends.  When  an  economy 
experiences a downturn, the net worth of borrowers decreases and problems associated with information asymmetry between 
borrowers and debt providers increase (Bernanke and Gertler 1989). For instance, a decline in borrowers net worth increases 
incentives for borrowing firms to undertake more risky investments because they now have less to lose if their investments 
goes sour (Jensen and Meckling 1976; Myers 1977). In order to alleviate the increased levels of problems associated with 
information asymmetry, lenders may increase the level of monitoring by imposing more restrictive covenants or increase the 
interest rates on new loans or even decline credit to firms that seek additional borrowing (Stiglitz and Weiss 1981). In the 
specific case of Greece, the latter action by lenders seems to be the main driver behind the reduction in supply of external 
funds to the firms.  An example is given by the difficulties to advance in 2011-12 with the motorway concessions projects, a 
substantive  part  of  the    EU-funded  infrastructural  investment  in  Greece,  as  banks  deemed  their  participation  non-
remunerative  in  absence  of  important  changes  to  the  projects  (now  being  agreed  and  implemented)  as  traffic  demand 
projections had been significantly revised downwards following  the crises.  

The  consolidation  and  recapitalisation  of  the  banking  system  is  thus  vital  for  increasing  bank  credit  to  support  the 
expected economic recovery in Greece.  This requires full respect of the well-defined timetable for the consolidation and 
recapitalisation of the Greek banking sector. Only well-capitalised banks can support the economic recovery. Furthermore, 
for sufficient provision of credit to the economy the repair of borrowers’ balance sheets is needed.  

 18 

 
 
 
 
 
 
 
 
                  
 
 
 
 
 
3.  PROGRAMME IMPLEMENTATION 

3. PROGRAMME IMPLEMENTATION 

3.1.  FISCAL POLICY PERFORMANCE 

3.1.1 Outperformance of the fiscal targets in 2012 and in the first three months of 2013 

7. 

8. 

9. 

10. 

Despite a somewhat deeper recession in 2012 than expected at the time the last Review (see 
section  2.1)  fiscal  developments  outperformed  programme  targets  by  a  small  margin  in 
2012. The end-December performance criteria for the general government primary cash balance 
and the state budget primary spending were met. On the revenue side, direct taxes held up quite 
well compared to targets, which partly compensated weak indirect tax collection, notably VAT. 
Social  contributions  were  adversely  affected  by  expectations  of  a  new  generous  settlement 
scheme for social security debt (see Box 7), which created incentives to non-compliance. 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. 

The headline deficit in 2012, including the cost of support to the banking sector, amount to 
10% of GDP. The estimated costs associated with the recapitalisation and resolution of banks in 
2012  are  about  4.4%  of  GDP,  (see  Box  6  on  the  fiscal  impact  of  bank  resolution  and 
recapitalisation in Greece). Excluding these costs and other factors specified in the programme 
definition, the programme primary balance is -1.3% of GDP, slightly better than the programme 
target  of  -1.5%  of  GDP.  The  overall  fiscal  deficit  consistent  with  the  programme  definition  is 
equal to 6.3% of GDP, slightly better than 6.6% of GDP projected in the last review, and some 
1.0 percentage point of GDP better than the 7.3% of GDP deficit included in the original second 
programme  of  February  2012.  The  deeper  economic  downturn  in  2012  than  anticipated  at  the 
last Review implies that the structural balance improved by more than expected in 2012.   

All other performance criteria and the indicative target on the general government stock of 
domestic  arrears  for  end-2012  were  also  met  (see  table  2  below).  The  stock  of  outstanding 
expenditure arrears of general government fell to EUR 8.1bn at the end of 2012 from EUR 8.6 
bn at end-September thanks to payments from both the regular budget and the arrears clearance 
plan.6  Outstanding  tax  refund  arrears  remained  broadly  unchanged  compared  with  end-
September as repayments of old arrears were offset by the accumulation of the new ones.7 

The cash primary balance for the state performed better than the authorities targets in the 
first  three  months  of  2013.  Revenue  performance  continued  to  improve  slightly  in  March 
compared to the weak outcome in January. However, the improvement is mainly driven by lower 
tax refunds and higher EU inflows while recurring revenues continue to underperform. This is 
mainly explained by weaker than expected indirect taxes, which is partly a result of low sales of 
fuel.  Direct  taxes  continue  to  outperform  targets  due  to  higher  property  taxes  and  better 
collection of tax arrears. Primary expenditures were lower than budgeted mostly stemming from 
lower  than  expected  transfers  to  the  social  budget,  wages  and  investment  spending.  However, 
preliminary  data  shows  that  new  arrears  were  accumulated  in  the  period  until  end-February, 
offsetting the arrears clearance up to that point. 

6 The definition used for the targets for the stock of domestic arrears exclude certain types of arrears and the numbers are therefore 

not totally compatible with the total stock arrears outstanding.  

7 The amount of tax refund arrears do not yet reflect the newly discovered tax refund arrears, which are discussed in greater detail in 

section 3.3.4. 

19 

 
                                                           
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

Graph 16. State primary payments – 2012, 2013 
(cumulative, EUR million) 
Outcomes and quarterly criteria  

Graph 17. Government primary balance – 2012, 2013 
(cash basis, cumulative balance, EUR million) 
Outcomes and quarterly criteria 

60000

50000

40000

30000

20000

10000

0

Performance 
criteria 2012

Performance 
criteria 2013

Ceilings

Outcome 

n
a
J

b
e
F

r
a

M

r
p
A

y
a
M

n
u
J

l
u
J

g
u
A

p
e
S

t
c
O

v
o
N

c
e
D

n
a
J

b
e
F

r
a

M

r
p
A

y
a
M

n
u
J

l
u
J

g
u
A

p
e
S

t
c
O

v
o
N

c
e
D

2012

2013

Performance 
criteria 2012

Performance 
criteria 2013

3000

1000

-1000

Outcome

-3000

-5000

-7000

n
a
J

b
e
F

r
a

M

r
p
A

y
a

M

n
u
J

l
u
J

g
u
A

p
e
S

t
c
O

v
o
N

c
e
D

n
a
J

b
e
F

r
a

M

r
p
A

y
a

M

n
u
J

l
u
J

g
u
A

p
e
S

t
c
O

v
o
N

c
e
D

2012

2013

Source: GAO and Commission services. 

Source : GAO and Commission services. 

Table 2. Fiscal quantitative performance criteria (EUR bn) 

end Sep 2012

end Dec 2012

end Mar 2013 

Data 

Criterion 

Data 

Criterion 

Data 4/

Criterion 

Performance criteria 1/

1. Floor on the modified general government primary 
cash balance 1/
2. Ceiling on state budget primary spending 1/
3. Ceiling on the overall stock of central government 
debt 1/
4. Ceiling on the new guarantees granted by the 
central government /2
5. Ceiling on the accumulation of new external 
payments arrears on external debt contracted or 
guaranteed by general government  3/
6. Ceiling on the Stock of Domestic Arrears (narrow 
definition) 1/

Indicative targets
7. Ceiling on the Stock of Domestic Arrears (General 
Government Definition) /1

-2.0
38.3

308

0.2

0.0

0.9

1.3

1/ As of end of period in the target's quarter.

2/ Applied cumulatively from Oct 1, 2012

3/ Applies on a continuous basis from program approval.

4/ Preliminary calculations to be discussed with the authorities

     Source: European Commission services calculations. 

-6.3
44.4

340

0.0

0.0

0.0

0.0

-2.8
55.4

311

0.1

0.0

2.9

7.6

-3.8
56.8

340

0.2

0.0

3.6

8.0

1.7
11.8

1.5
13.9

313.3

347.0

0.2

0.0

2.6

7.0

0.2

0.0

3.0

4.5

Table 3. Arrears to suppliers 

(EUR million) 

31-Mar-12 30-Jun-12 30-Sep-12 31-Dec-12 31-Mar-13
523.0
1 039.0
1 902.0
4 098.0
341.0
7 903.0
245.0  

536.0
995.0
1 765.0
4 432.0
366.0
8 094.0
723.6

934.0
971.0
1 790.0
4 492.0
385.0
8 572.0
738.1

916.0
979.0
1 630.0
3 979.0
374.0
7 878.0

796.0
1 075.0
1 556.0
3 808.0
373.0
7 608.0

Total State
Local Government
Hospitals
Social Security Funds
Extrabudgetary funds
Total General Government
Tax arrears

Source: General Accounting Office. 

20 

 
 
 
 
 
 
 
 
                     
 
 
 
 3. Programme implementation 

Box 6. The fiscal impact of bank resolution and recapitalisation in Greece. 

Greece is in the process of consolidating and recapitalising its banking sector and resolving a number of non-viable 
banks. The government plays a vital role in this process, including by funding the operations of the Hellenic Financial 
Stability  Fund  (HFSF)  that  have  a  significant  impact  on  the  fiscal  accounts.  This  box  describes  the  general 
statistical principles guiding the fiscal treatment of public interventions to support financial institutions, and 
looks more specifically at the case of Greece.  
The key issue at stake in assessing the impact on fiscal accounts is whether or not a capital injection carried 
out  by  the  government  (directly  or  via  an  intermediary)  is  considered  as  a  capital  transfer  (increasing  the 
government deficit) or as an acquisition of equity (a financial transaction with no deficit impact). Under certain 
conditions, an injection may be split between these categories. In general terms, if the government is acting as any 
other shareholder would do to seek a market rate of return, then the transaction is regarded as an investment in equity 
(financial  transaction);  if  the  operation  serves  broader  economic  or  social  policy  aims,  including  by  meeting  bank 
losses, then it is booked as a government expenditure (capital transfer). 

Greece  has  applied  two  models  for  bank  resolution  in  2012.  The  net  fiscal  impact  (capital  transfer)  of  the 
public intervention is currently estimated at 4% of GDP. However, the gross support is higher, at 4.4% of GDP, 
as revenues from guarantees and interest receivables are excluded. In the case of Proton (now known as Nea Proton) 
and Hellenic Postbank, these were both split into a 'bad' and a 'good' bank. The bad banks are under liquidation, while 
the  'good'  banks  received  the  commercially  performing  assets  of  the  old  bank  and  its  liabilities,  including  all  the 
deposits.  As  the  liabilities  exceeded  the assets  in  these  cases,  the  HFSF  had  to  inject  funds  into the 'good'  bank to 
cover the difference (funding gap). The 'good' bank (also known as a Temporary Credit Institution or a Bridge Bank) 
must then be re-privatised as soon as feasible. The second model was applied to the takeover by Piraeus Bank and 
National  Bank  of  Greece  of  Agricultural  Bank  of  Greece  (ATE)  and  a  few  Co-operative  (regional)  banks, 
respectively. Under this scheme, the HFSF injected into the receiving financial institution the funds required to cover 
the funding gap, while the rump or 'bad bank' (i.e. nonperforming assets) is set for liquidation. In both models, the 
HFSF  has  claims  on  the  proceeds  from  the  liquidation  of  the  problematic  assets  of  the  'bad'  bank,  which  could 
improve fiscal results as assets are liquidated and claims partially repaid. 

Further bank recapitalisation and resolution operations are expected in 2013 and their recording depends on 
the exact nature and timing of these transactions. Even though a preliminary bridge advanced recapitalisation took 
place  in  2012  (EUR24.2  bn),  this  is  considered as  a  loan  by  statistical  authorities  and  its  expected  conversion  into 
equity will be analysed for possible deficit effects for 2013, once all the operations in 2013 are completed. The total 
size  of  the  recapitalisation  and  resolution  programme  is  EUR50  bn.  The  final  impact  on  the  deficit  of  the  bank 
recapitalisation in 2013 will depend on the degree and terms of private sector participation and losses of the banks 
and  forward  looking  business  plans  of  the  banks.  Statistical  authorities  will  make  a  judgement  on  a  bank-by-bank 
basis. 

While  the  recording  in  terms  of  EDP  deficit  will  be  done  according  to  the  principles  outlined  above,  when 
assessing compliance with programme targets any expenditure resulting from these operations will be treated 
as a one-off effect and is therefore excluded from the fiscal targets under the programme, which focus on the 
underlying fiscal developments. Given the size of the operations, significant deviations between the EDP deficit and 
the "programme" deficit can be expected. The funding needs are however taken into account in the debt projections, 
as the government received loans from the EFSF in 2012 and 2013 for these operations. Henceforth, the debt analysis 
includes EUR 41 bn EUR for 2012 and additional EUR 7.2 bn EUR in 2013. 

3.2. FISCAL POLICY OUTLOOK 

3.2.1. The Fiscal adjustment process in 2013-14 

11. 

Measures have been agreed to avoid the emergence of a fiscal gap for 2013 and 2014 and 
the  programme  targets  for  the  primary  deficit  are  expected  to  be  met  in  both  years.  The 
very large and highly front-loaded package of fiscal consolidation measures for 2013 and 2014 
(totalling  over  6.5%  of  GDP)  agreed  in  the  previous  Review  has  been  largely  implemented.  
Moreover, for the very first time since the inception of the adjustment programme for Greece, 
the macroeconomic scenario projected during the last review remained substantially unchanged. 
Nevertheless,  the  mission  identified  some  revenue  shortfalls  and  that  the  authorities  had  not 
implemented some previously agreed measures. 

21 

             
 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

12. 

13. 

14. 

15. 

16. 

The  mission  identified  revenue  shortfalls  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  availability  of  future  debt  instalments  and  tight  liquidity  conditions.  The 
weaker  revenue  from  the  taxes  on  fuel  is  explained  largely  by  the  lower-than-anticipated 
consumption  of  fuel.  In  addition,  the  upwards  revision  of  tax  refunds  in  light  of  the  newly 
discovered  stock  of  unaudited  tax  refund  claims  in  2012  also  contributed  to  the  net  revenue 
shortfall. 

A  few  measures  have  not  been  fully  implemented.  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 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 authorities now 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  (see  Box  8  on  Eliminating 
waste of public money). 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.  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 (see Box 7) 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 programme targets for the primary deficit are expected to be met in both 2013 
and 2014. However, the headline primary deficit is likely to be higher in 2013 as a result of the 
further  bank  recapitalisation  and  resolutions  operations.  Their  recording  in  the  fiscal  accounts 
depends on the exact timing and nature of these transactions (see Box 6 above).  

22 

 
 
 
 
 
 
 
 
                     
 
 
 
 3. Programme implementation 

Box 7. Key features of the new settlement schemes 

In view of the liquidity constrained taxpayers and sharp rise in tax and social security contribution debt in the 
past two years, the authorities have developed new instalment schemes. The schemes also attempt to break with 
the past, when there was a wide array of schemes, with non-standardised conditions and many of them carried the 
features of tax amnesties. To give an example, under one such scheme, social security debts could be paid off over 96 
months  with  a  50  %  discount  on  surcharges.  Entrance  into  the  schemes  was  quasi  automatic,  opening  the  way  to 
obtain tax clearance or social security clearance certificates, after which the debtor often dropped out. The wide array 
of schemes made the collection system very inefficient and induced moral hazard with respect to staying current on 
tax  and  social  security  payments.  Moreover,  it  offered  incentives  to  "debt  shopping"  to  enter  the  scheme  with  the 
most generous conditions. 

The authorities have developed two new schemes; a basic scheme of permanent nature and a temporary "fresh 
start"  scheme.  The  basic  settlement  scheme  is  designed  to  replace  all  former  schemes  used  for  tax  debt 
collection as well as for social security debt collection. The new basic scheme will be much stricter than former 
schemes.  It  will  be  opened  to  viable  and  liquidity  constrained  taxpayers,  with  eligibility  being  assessed  prior  to 
entering the scheme. For big debtors, a third party assessment of the viability of the debt schedule will be required. 
For  the  highest  level  of  debt,  collateral  will  have  to  be  provided.  There  will  be  no  reduction  of  past  surcharges. 
Interest above market rates will be charged on the outstanding obligations to discourage the use of the tax or social 
security delays in payment as loans. Most importantly, the duration of the plans will not exceed 12 months, except for 
debt related to one-off taxes (e.g. inheritance tax), where a duration of up to 24 months will apply. 

Besides  this  basic  scheme,  a  special  "Fresh  start"  scheme  will  be  opened  temporarily,  under  specific 
conditions.  The  plan  will  apply  only  to  "old"  debt  i.e.  debt  incurred  before  December  2012.  To  be  eligible,  the 
debtors will have to be current in 2013 on all tax payments and social security contribution payment obligations. This 
plan will differ from the basic scheme in its duration (up to 48 months and terminating not later than June 2017), and 
by the fact that some incentive will be provided to enter the scheme, in the form of reduction of past surcharges up to 
50%. To encourage compliance with payments the reduction will materialise only upon completion of the plan. Any 
failure  to  comply  would  entail  the  immediate  requirement  to  pay  all  remaining  principal  and  surcharges.  The 
remaining conditions of the "Fresh start scheme" will be broadly the same as the condition of the basic scheme. 

3.2.2. Fiscal outlook for 2015-16 

17. 

The projections beyond 2014 remain inherently uncertain. The fiscal outlook depends to a large 
extent on the strength of the recovery and improvement in taxpayer capability to service their tax 
obligations, as well as gains made from strengthening the tax and social security administrations. 
The gaps are currently estimated to be about 1.7% and 2.1% of GDP in 2015-16 respectively8. 
The  task  of  filling  the  gap  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. 

Table 4. Medium-term fiscal projections 

In % of GDP

2012

2013

2014

2015

2016

Primary balance

General government balance

-1.3

-6.3

0.0

-4.1

1.5

-3.3

3.0

-2.1

4.5

-0.8

1/ The fiscal numbers in the table are consistent with program definitions as laid out in the 
technical memorandum of understanding (TMU). The main differences compared with the 
ESA-95 definition are the exclusion from the program definition of ANFA and SMP profit 
transfers, most sales of non-financial assets, and costs related to bank resolutions and 
recapitalisations. 

Source: European Commission services 

8 The gaps are slightly smaller than those mentioned in the 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…” (Ref: COM(2013) 285 final)  as of 7th May 2013, reflecting a slight 
readjustment of the fiscal projections in light of recent information assessed after the cut-off date for the Communication. 

23 

             
 
 
 
 
 
 
                                                           
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

Box 8. Eliminating waste and abuse of public money  

Reducing waste of public money and abuses is a key element for the success of the programme. Recent steps in the 
area  of  pensions  are  encouraging  as  they  show  the  intention  to  carry  out  policies  more  effectively,  and  suggest 
enhanced ownership of the programme. The Ministry of Labour is now closely monitoring the eligibility of pension 
beneficiaries, and increased its audit since the end of 2011 to check the eligibility criteria for main pensions and in 
2012 for disability pensions.  

For the main pensions, the Ministry of Labour promoted a census among the different Social Security Funds (SSFs) 
in order to clean the list from individuals no longer entitled to receive pensions. Cross-checks of personal data with 
social  security  numbers  were  also  performed  in  order  to  check  compliance  with  pension  ceilings  for  individuals 
entitled  to  receive  more  than  a  single  pension.  The  census  set  a  deadline  for  pensioners  to  present  the  necessary 
information to check their eligibility to pension. After the expiration of the deadline, all the pensions which were not 
proved  to  be  properly  documented  were  suspended.  Significant  part  of  them  where  subsequently  restored  as 
recipients provided the necessary documentation. The first savings, about EUR 30 million, materialized only in 2012 
because a few SSFs set different deadlines. Given the promising results on a small sample, the Government decided 
in  November  2012  to  extend  these  audits  to  all  SSFs.  The  savings  resulting  from  the  completion  of  the  census  of 
pensioners are expected to amount to about EUR 170 million on annual basis. The same procedure will be extended 
in 2013 to the recipients of pensions of survivors, to detect if there are people receiving these benefits without being 
entitled.  

Table 1. Projections of the final outcomes from the census of pensioners 

Νο. of pensioners 
no longer 
eligible

average pension

annual yield

2013 

2014 

Census of main pensions

Gross Savings from SSFs

Gross Savings from the Public Sector

Total Savings (SSF & Public Sector)

29 604

2 277

31 881

676

310

493

168 281 592

144 423 232

23 858 360

8 470 260

8 470 260

0

176 751 852

152 893 492

23 858 360

Census on pensions of survivors 

Gross Savings from SSFs

Gross Savings from the Public Sector

Total Savings (SSF & Public Sector)

TOTAL nr of ineligible pensions

estimated nr of 
non eligible 
pensions 

13 234

3 673

16 907

48 787

average pension

annual yield

2013 

2014 

441

670

74 335 200

41 517 120

32 818 080

29 533 252

29 533 252

0

1 111

103 868 452

71 050 372

32 818 080

Source: European Commission services and Ministry of Labour 

Through  the  reform  of  disability  pension  system  legislated  in  2010,  Greek  authorities  decided  a  revision  of  the 
disability status and to reduce by 2015 the disability pensions to not more than 10 per cent of the overall number of 
pensions. The reform, implemented through the establishment of new structures and procedures for the assessment of 
disability status, is now bringing first results. The Government established special Committees (KEPA) in order to 
provide a unified assessment when a disability decree certification is needed for social provisions (disability pensions 
or disability benefits). Out of a total of 256,000 recipients more than 14,000 beneficiaries were re-assessed in 2012 
achieving  already  savings  of  about  EUR  30  million  from  the  assessment  of  a  just  small  sample  (only  5%  of  the 
overall number of recipients). Encouraged by the 2012 results, the government is planning to increase significantly 
the number of re-assessments in 2013-16, by boosting the productivity of KEPA's Committee, and to extend the same 
assessment  to  permanent  disability  pensions  and  to  disability  benefits  paid  by  the  State,  the  SSFs  and  the  local 
governments. 

24 

 
 
 
 
 
 
 
 
                     
 
 
 
 
 
 
 3. Programme implementation 

Table 2. 2011-12 Number of disability pensions 

2011

2012

Νο. of 
disability 
pensioners
130.926

33.577

121.302

2.03

4.625

%  of total

10,87%

10,16%

14,94%

3,44%

6,45

Νο. of 
disability 
pensioners
108.519

30.552

110.799

1.904

4.401

%  of total

 9,26 %

 8,94 %

14,13%

2,99

6,13%

IKA_ETAM

OAEE

OGA

ETAA

NAT

Total nr of disability pensioners

292.46

 11,8%

256.175

 10,53%

Total nr of pensioners

2.477.762 

2.433.263 

Source: Ministry of Labour 

Table 3. 2012 Outcome and projections for the audits of disability pensions and benefits 

Number of disability pensions assessed
Savings (mln €)

100% cut in pension (25% of assessed)
75% cut in pension (20% of assessed)
50% cut in pension (5% of assessed)

Total Savings (mln €)

2012
14 738

12.1
14.5
3.3
30

Disability benefits paid by SSFs
Number of Assessments
Savings from cut in 22% of assessed (EUR 
mln)

Disability benefits paid by the State and LGs

Number of Assessments
Savings from cut in 43% of assessed (EUR 
mln)
Total Savings (mln €)

Source: Ministry of Labour 

2016
34 000

2013-2016
102 000

2013
34 000

39.6
31.0
6.1
77

2013

2 000

1.3

2014
34 000

48.6
29.2
4.9
83

2014

2 000

2.0

2015
34 000

42.1
25.3
4.2
72

2015

2 000

2.0

42.1
25.3
4.2
72

2016

2 000

2.0

20 000

20 000

20 000

20 000

18.7

20.0

37.2

39.1

37.2

39.1

37.2

39.1

172.5
110.7
19.3
303

2013-2016

8 000

7.2

80 000

130.2

137.4

3.3. STRUCTURAL REFORMS WITH BUDGETARY RELEVANCE  

3.3.1. Privatising to boost efficiency in the economy and reduce public debt 

18. 

19. 

While  progress  has  been  made  in  preparing  for  privatisation,  the  overall  speed  of  the 
privatisation  process  remains  unsatisfactory.  Although  a  number  of    transactions  were 
concluded  toward  the  end  of  2012,  the  end-December  target  for  privatisation  proceeds  was 
missed  by  a  wide  margin.  Successful  transactions  included  the  sale  of  IBC  and  State  Lottery. 
Advance  bidding  procedures  also  took  place  to  facilitate  the  sale  of  the  gas  companies 
(DEPA/DESFA) while the sale of the gaming company OPAP was recently completed. 

Progress has now been made in the preparation of assets for privatisation. The majority of 
state-owned enterprises have been transferred to the privatisation fund. Additional efforts were 
made  towards  establishing  regulatory  authorities  for  water  companies,  ports  and  airports.  The 
privatisation process for airports is well defined while the authorities are committed to finalize a 
concrete  ports  privatisation  strategy  through  concessions.  A  new  centralised  state  aid  unit  will 
also facilitate the timely and effective clearance of state aid-related issues.  

20. 

Despite  the  significant  progress  in  the  preparation  of  assets,  the  overall  speed  of  the 
privatisation  process  is  not  satisfactory.  Additional  efforts  are  therefore  needed  to  reinforce 

25 

             
 
 
 
 
 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

the momentum and increase predictability of asset sales. Importantly, additional steps are needed 
to expedite approvals from the Court of Auditors, Council of State, and Competition Committee 
to reduce the overall time for the sale of assets. The final sale of assets is of crucial importance 
for financing purposes, but also to bring additional investment, managerial expertise, efficiency 
and better governance to the enterprises involved.  

Major efforts are needed given the delays and scale of challenges in the liberalisation and 
privatisation  of  the  energy  sector,  in  particular  to  provide  the  privatisation  plan  of  the 
incumbent electricity company PPC. In particular, a number of key issues need to be resolved 
such  as  reducing  arrears,  ensuring  greater  liquidity  and  fair  competition  in  the  wholesale 
electricity  market,  developing  competition  and  consumer  choice  in  retail  markets,  and 
facilitating  a  cost-efficient  increase  in  renewable  energy  sources.  These  issues  are  all 
interconnected and need to be considered in the context of an integrated framework (see section 
3.7.1), which addresses the competitive distortions to the electricity market in a timely manner. 
In parallel with the reform of the electricity market and the rebalancing of the RES account, the 
Government presented a plan to restructure and privatise PPC, providing for the full ownership 
unbundling  of  ADMIE,  the  creation  of  a  new  vertically  integrated  company  endowed  with 
sufficient  capacity  to  be  a  viable  competitor,  and  the  privatisation  of  PPC  itself.  The  process 
should be completed within 2015.  

Given the high  share  of  real  estate  assets  in  expected privatisation proceeds, accelerating 
progress in this area remains crucial. Legal complexities are however likely to be a drag on 
realised  proceeds  in  the  short-term.  Preparatory  work  has  begun  to  secure  the  pipeline  for  the 
transfer  of  full  and  direct  ownership  of  1,000  commercially  viable  real  estate  assets  to  the 
HRADF  (targeting  250  transfers  per  quarter)  and  for  the  identification  of  the  other  3150  real 
estate assets that have been preselected and pre-valued by the HRADF. The authorities already 
identified  the  first  batch  of  250  real  estate  assets  which  have  been  already  transferred  to  the 
privatisation  fund.  A  more  comprehensive  strategy  for  privatising  real  estate  assets  is  needed, 
including  by  fully  identifying  the  assets  and  expected  proceeds  and  defining  an  efficient  and 
expedient  approach  to  preparing  real  estate  property  for  privatisation  (including  clearing 
ownership issues, dealing with zoning and land use issues).  

Alternative  methods,  such  as  asset  securitisation,  will  be  assessed  that  could  raise 
additional  revenues  beyond  what  is  currently  foreseen  in  the  privatisation  plan.    Such 
efforts  could  be  targeted  at  the  private  sector  and  in  particular  the  international  investor 
community and would therefore need to be carefully prepared. As a first step, the authorities will 
bring  all  remaining  non-operational  properties  (e.g.,  those  under  the  Ministry  of  Defence, 
Agriculture)  into  a  unified  framework  where  it  could  be  managed  more  efficiently  by 
maximising economies of scale. 

Expected proceeds have been maintained compared to the previous compliance report. The 
cumulated amount of proceeds expected by end-2020 have been retained based on current policy 
measures and commitments. The previously agreed corrective fiscal policy reaction mechanism 
will  be  triggered  if  the  privatisation  outcomes  undershoot  the  targets  for  two  consecutive 
quarters. 

Additional  measures  are  also  needed  to  secure  improved  governance  and  transparency. 
The  HRADF  has  committed  to  publish  semi-annual  updates  of  its  Asset  Development  Plan, 
including  a  portfolio  overview  describing  the  assets  it  manages  for  privatisation,  a  timeline  of 
planned tenders and targets for total receipts for the current and following year. These measures 
are essential to build confidence among the general public that the privatisation process is aimed 
at maximising value for the tax payer.  

21. 

22. 

23. 

24. 

25. 

26 

 
 
 
 
 
 
 
 
                     
 
 
 
 3. Programme implementation 

Table 5. Expected Privatisation Receipts 

By the end of: 

2012 
2013 
2014 
2015 
2016 
2017 
2018 
2019 
2020 

Cumulative receipts since 
2012 (EUR bn) 
0.1 
2.6 
4.5 
6.5 
                     8.5 
10.9 
14.2 
17.8 
22 

Source: European Commission services. 
Note:  Cumulative  receipts  are  considered  within  the  2012-2020 
period, excluding the EUR 1.6 bn generated since June 2011.  

27 

             
 
 
 
n/a
Q2/13
Q2/13
Q2/13

Q3/13

Q3/13

Q2/14

Q4/13

Q1/14

Q2/14

Q2/14

Q4/13

Q2/14

Q3/14

Q3/14
n/a

n/a

Q4/12
Q3/13

Q4/13

n/a
2012 Q1
Q1
Q4

2013 Q1

Q1

Q2

Q2

Q2

Q2

Q2

Q3

Q3

Q3

Q3
n/a

II. Concessions

n/a

2011 Q4
2013 Q1

Q1

Q2

Q2

Q3

European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

Timing of Privatizati
(Launch of Tender) (submission)

Binding offers Project

I. State-owned enterprise/share sale

Table 6. Privatisation Plan 

Intermediate Steps

2 Airplanes
Public Gas (DEPA)
Public Gas (DESFA)
Football Prognostics Organization (OPAP)

Horserace Betting Organization (ODIE)

Thessaloniki Water (EYATH)

Hellenic Vehicle Industry (ELVO)

Hellenic Petroleum (HELPE)

Mining and Metallurgical Company (LARCO)

Railways (Trainose)

Athens Airport (AIA)

Hellenic Post (ELTA)

M odification of statutory provision at time of privatization.

State aid clearance (DG Comp).

Proceed with the phase B of the tendering process and finalize selection (April 2013 - DONE ).
Launch of tender (M arch 2013- DONE). Law for clarifying responsibilities between Jockey Club 
and the New Concessionaire (M ay 2013). Law for clarifying the taxation regime of the Concession 
(M ay 2013)
Establish regulatory framework (M arch 2013 - DONE). Establish pricing policy (M ay 2013) and 
amend the license (November 2013). 
Transaction structure to be determined and agreed (M ay 2013). EC (DG Comp) consent (M ay 
2013).

Following divestment of DEPA.
Agreement on privatisation structure (DG Comp) is a key prerequisite. Law for establishing a new 
company (June 2013).
Trainose will be transferred to HRADF (M arch 2013 - DONE). - Comfort letter from EC (DG 
Comp) for TRAINOSE State Aid investigation clearance (M ay 2013).

Agree on extension and sale process with Hochtief  (June 2013).
M inisterial decisions for (i) the determination of the content of universal service (DONE) and (ii) 
the compensation mechanism for USP drafted and prenotified to DGComp  (further clarifications/ 
amendments asked by EC are being processed by HR & ELTA).

Athens Water (EYDAP)

Establish regulatory framework (M arch 2013 - DONE). Establish pricing policy (September 2013) 
and amend license (February 2014). Settlement of receivables from the State (February 2014).

Hellenic Defense Systems (EAS)

Public Power Corporation (PPC)
Casino Mont Parnes

Identify assets for privatization (M ay 2013). State Aid formal investigation clearance (pending 
discussions with DGComp) 

Government approves and announces PPC restructuring and privatisation plan (April 2013). 

Pending European Court decision

Hellenic Motorways

State Lottery
Small ports and marinas

Regional airports 

Q4/13

Egnatia Odos

Q1/14

n/a

Thessaloniki Port (OLTH),Piraeus Port 
(OLP) & Large regional ports
South Kavala Gas Storage

2014 Q2

Q4/2014

Digital Dividend

n/a

n/a

Mining rights

III. Real Estate

2011 Q4

2012 Q1

Q1

Q1

Q4/12

2013 Q1

Q1

Q1

Q1

Q1

Q1

Q4

Q4/13

Q3/12

Q1/13

Q2/13

Q1/13

Q2/13

Q4/13

Q2/13

Q3/13

Q4/13

n/a

n/a

Hellenikon 1

IBC

Cassiopi

Afantou

Buildings abroad

Sale/repo 28 buildings

Astir Vouliagmenis

Paliouri

HEY

Agios Ioannis

Real Estate lot 2

Real Estate lot 3

Source: HRADF update on projects under development.

1/ ESCHADA = zoning and land planning permit.

28 

Negotiations for the restart of projects currently in progress. Agreement with CJVʼs regarding 
claims reached. Recommencement of construction expected in M ay 2013. Ratification of reset 
agreement by Parliament, after consent by Lenders and EU granted (expected in July 2013).
Court of auditors approval - DONE

Resolve issues related to urban zoning  (M ay 2013).
Clarify state aid related issues (before launch of the 2nd phase - estimated M ay/June 2013). 
Establish regulatory framework (April 2013).
Launching of tender process dependent on: a) agreement/finalisation with M inistry of Development 
on key characteristics of the concession and conclusion of business plan (DONE) b)decision on 
tolling policy/toll collection system (DONE) c) treatment of Piraeus loan granted to Egnatia Odos 
SA and legislative settlement of such arrangement (April 2013)

State aid clearance (DG Comp). Submit privatization strategy (April 2013). Establish regulatory 
framework (April 2013 - DONE). 

Decision on the best exploitation option (December 2012 - DONE).
Entire process led by M inistry of Development. Adopt secondary legislation for: a. TV stations 
(June 2013 - tbc with M in Dev) and b. analogue switch-off date (June 2013 - tbc with M in Dev). 
Launch tender for TV network providers (June 2013).

Transfer of Hellinikon SA ownership to HRADF (Pending decision: December 2012- DONE). 
Launch Phase B of tender process (December 2012 - DONE). Bids will be submitted end of 
December 2013

ESCHADA submission (DONE). Have approval from Court of Audit (December 2012- DONE).

Right of surface establishment and creation of the SPV (June 2013). ESCHADA submission 
(October 2012 - DONE).
All intermediate steps have been fulfilled. Binding offers submission (M ay 2013 ), subject to 
timely issuance of decision by the Council of State.  ESCHADA submission (June 2013)
Launch tender process (December 2012- DONE). Tender concluded for 4/6 buildings. Court of 
Audit approval.  Launch of tender for the remaining 2 buildings (M ay 2013).
All intermediate steps have been fulfilled. Launch the first phase of tender (M arch 2013 - DONE). 
Launch second phase (M ay 2013). 
Finalize the negotiations  with NBG - DONE. Transfer EOT property to HRADF (M arch 2013 - 
DONE). Launch the request for EoI (April 2013 - DONE). ESCHADA submission (September 
2013).
Launch tender process (December 2012 - DONE). Transfer of asset to HRADF (M arch 2012-
DONE). Launch second phase (April 2013). 
Launch tender process (February 2013-DONE). Transfer of asset to HRADF (M arch 2013-
DONE). Launch second phase (April 2013). 
All intermediate steps have been fulfilled. Launch the first phase of tender (M arch 2013 - DONE). 
ESCHADA submission (January 2014).
The 40 properties already identified are transferred to HRADF (M arch 2013 - DONE). 
At least 1,000 real estate properties to be transferred to HRADF (December 2013). The first 250 
real estate assets are transferred to HRADF (April 2013).

 
 
 
 
 
 
 
 
                     
 
 
 
 3. Programme implementation 

3.3.2. Tax policy reform 

26. 

A comprehensive income tax reform was legislated on 11 January 2013 that broadens the 
tax  base  and  will  share  more  equally  the  tax  burden.  The  implementation  will  have  effect 
from 1 January 2013, although the full budgetary impact will only be realised in 2014. The tax 
revenue implications of the reforms have been taken into account in the revised MTFS. The tax 
reform sets up a new tax system for the net income of the self-employed with no tax allowance 
and also refocuses the corporate income tax from taxes on dividends to profits taxation. The tax 
reform also eliminates special tax regimes and tax expenditures in order to share the burden of 
taxation more widely.  

27. 

The main elements of the tax reform are as follows:  

•  A simplification of the personal income tax with three rate bands instead of the current eight 
rates with an enhanced tax credit. Through these reforms, some one million wage and salary 
earners and pensioners will be taken out of the personal income tax. 

•  The  elimination  of  selective  tax  credits  (on  mortgage  interest  payments,  life  insurance 

payments, and student expenses etc.) 

•  The conversion of personal tax allowances for children into means-tested benefits. 

•  The  introduction  of  a  new  integrated  tax  regime  for  the  self-employed  and  professionals 
with  an  initial  tax  rate  of  26%  rising  to  35%  after  EUR  50,000  and  with  no  personal  tax 
allowance. 

•  A restructured tax regime for corporate profits with a corporate tax rate of 26% and a tax on 
distributed  dividends  of  10%,  resulting  in  a  gross  tax  rate  on  distributed  profits  of  33.4% 
(instead  of  former  tax  rates  of  20%  and  25%  respectively  resulting  in  a  gross  tax  rate  of 
40%).  

•  The elimination of special tax regimes based on imputed income, such as those currently in 

place for farmers and seamen. 

28. 

29. 

30. 

31. 

The tax reform will greatly widen the tax base. The elimination of the tax allowance for the 
self-employed is expected to generate substantial additional revenues, given that well over half 
the self-employed declare incomes less than the standard allowance of the personal income tax 
of EUR 5,000 per year. Furthermore, by increasing the taxation of profits and reducing that of 
dividends, the reforms aim at reducing the tax avoidance induced by the transferring of profits to 
other EU countries. However the increase in the effective corporate tax rate from 21% to 26% 
may  adversely  affect  non-equity  financing  of  investment.  The  success  of  the  reform  will  also 
require  further 
the  successful 
implementation  of  the  revised  and  greatly  simplified  set  of  business  tax  accounting  rules  that 
will replace the excessively-complicated Code of Books and Records. 

improvements  being  made 

tax  administration  and 

to 

The tax reform is also expected to produce net revenues of close to EUR 2 bn with the full 
budgetary impact felt in 2014.  Most of the gains will come from the elimination of existing 
allowances  and  credits,  including  the  personal  allowance  for  the  self-employed,  and  from  the 
reshaping of the corporate income tax. On the basis of appropriate auxiliary measures, such as 
the retention of presumptive income for the self-employed, an overall revenue gain of EUR 2 bn 
(some 1% of GDP) could be envisaged.  

Complementing the tax reform, the authorities are working on a new Income Tax Code to 
be  adopted  by  the  end  of  June  2013.  The  new  Code  will  consolidate  and  simplify  existing 
legislation,  making  it  more  accessible  to  ordinary  tax  payers,  as  well  as  closing  numerous  tax 
loopholes to reduce the potential for the erosion of the tax base. 

The  authorities  have  also  committed  to  adopt  legislation  to  extend  collection  of  the  real 
estate tax through 2013 via electricity bills (via PPC) and to plan well in advance a reform 
of property taxes for 2014. Given the extraordinary collection of property taxes in 2013 due to 

29 

             
 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

the  backlog  of  property  taxes  due  in  2011-12,  the  Government  secured  the  2013  property  tax 
collection through the electricity bill reducing by 15% the rates. In order to respect the budgetary 
targets for 2013 the government decided to broaden the tax base. Therefore  the legislation will 
introduce  four  changes:  (i)  a  reduction  of  15  percent  in  the  rate;  (ii)  imposition  of  the  tax  on 
buildings  not  legally  exempted  from  municipal  duties;  (iii)  calculation  of  tax  on  buildings 
outside urban planning zones on a different basis (based on average legal value for the relevant 
municipality); and (iv) implementation of the tax on all buildings which are leased to the state by 
non-exempted private owners. Separately, a new law on taxation of real estate will be adopted by 
end-June  for  2014  onwards.  The  new  real  estate  taxation  regime,  which  will  consolidate  a 
number of now separate taxes, will be designed to be budget neutral ensuring a annual revenue 
of at least EUR 2.7 billion as already envisaged in the MTFS. 

3.3.3. Revenue administration reforms 

32. 

33. 

34. 

35. 

Important progress has been made in establishing the framework for a semi-autonomous 
revenue administration. The authorities will adopt the necessary legislation as a prior action, in 
particular in the areas of organisational structure, budgeting, human resources management, and 
the power to determine the wage scale of auditors. Extensive discussions have taken place with 
the  authorities  to  ensure  the  integration  of  the  units  with  relevant  functions  of  the  General 
Secretariat  for  Information  Systems  (GSIS)  and  the  Corps  for  the  Prosecution  of  Financial 
Crimes.  All  services  of  direct  tax-relevance  will  be  transferred  to  the  Secretary  General  for 
Public Revenue Administration (SGPR). A service agreement between the SGPR and the GSIS 
will  ensure  the  provision  of  other  relevant  services,  such  as  hardware  administration.  The 
establishment  of  the  new  semi-autonomous  structure  will  need  to  be  supported  by  several 
accompanying measures. 

The efforts to progress in the fight against tax evasion, money laundering and corruption 
have  been  reinforced,  but  still fall  short  of  full  adequacy.  A  revised  version of  the code of 
books and records, renamed Code of Tax Recording of Transactions, has entered into force, and 
work on a new Tax Procedure Code is on-going. The specialized units created to deal with high 
wealth  individuals,  and  with  large  taxpayers,  are  slowly  improving  their  effectiveness.  The 
number of audits is still low, but the results in term of tax collection are improving. New best 
practice techniques, based on risk assessment and enhanced use of third party information, are 
progressively being put in place. The deployment of new IT tools in all tax offices is also well 
underway. To foster the fight against corruption, a national plan has been approved that includes 
specific  measures  for  the  tax  administration.  Cash  payments  in  tax  offices  will  be  completely 
abolished before the end of the semester. A reorganization has been carried out that concentrates 
collection functions in the large debtor unit and in the largest tax offices.  

The new Secretary General for Public revenue has started to put in place the tools needed 
for  performance  management,  clarified  corporate  targets,  and  realigned  staff  to  achieve 
clear objectives centred on effective revenue collection. It is too early to assess results. In the 
first quarter, EUR 1.3 bn of "old" tax debt of prior years was collected, which is more than last 
year. However, during the same period, EUR 3.5 bn of new debt has accumulated, of which only 
EUR  200  million  has  been  collected.  The  number  of  audits  completed  by  the  new  specialized 
units is not yet on track to meet targets. There is a need to reorient staff towards priorities, such 
as the large debtors unit and the large taxpayers unit. 

It is urgent to address the structural weaknesses of the tax administration. Even with a new 
Secretary general to drive the reform process, huge efforts are still required to reorient the tax 
administration  from  a  system  based  on  continuous  bureaucratic  contact  with  the  taxpayers 
through  a  wide  network  of  small  offices  to  a  more  concentrated  and  efficient  structure  that 
focusses on fighting tax evasion and tax collection. The revenue administration has about 14,000 
staff,  but  has  an  aging  workforce  with  half  of  its  staff  over  the  age  50  and  a  quarter  over  55. 
More and better skilled staff is needed. Auditors are a scarce resource with only 1,250 auditors 

30 

 
 
 
 
 
 
 
 
                     
 
 
 3. Programme implementation 

36. 

in the entire tax administration in January 2013. The objective of 2,000 auditors by June 2013 
will  be  difficult  to  meet  owing  to  recruitment  lags  and  limited  financial  incentives.  Staff 
retention is also difficult. There is a shortage of supervisory and management staff in key sectors 
and even some key HQ units are under-staffed. Additional staff are also needed in the small, but 
well-performing, compliance section and for debt and collection.  

The authorities also designed a new two-tier instalment framework (see Box 7). The same 
principles  will  be  applicable  to  both  social  security  debt  and  tax  debt.  The  newly  designed 
schemes  will  end  the  previous  practices  of  a  multitude  of  instalment  schemes  carrying  the 
features of tax amnesties. The new schemes involve shorter duration of the plans, above-market 
interest  rates  paid  on  outstanding  obligations,  and  tightened  eligibility  criteria  (requirement  of 
proof  of  viability  and  tax  compliance).  The  agreed  arrangement  consists  of  two  schemes:  a 
permanent basic instalment scheme and a temporary and exceptional “fresh” start scheme. The 
latter  is  granted  on  a  one-time  basis  to  facilitate  the  repayment  of  the  stock  of  old  debt  and  it 
foresees  higher  numbers  of  instalments.  The  focus  in  coming  months  will  be  on  putting  the 
framework in place by mid-2013, which is an ambitious deadline, and ensuring proper capacity 
for operating the schemes. 

3.3.4. Public Financial Management Reform 

37. 

38. 

39. 

In 2012 the government managed to exercise tight control on expenditures, although some 
spending arrears were accumulated. In 2012 the under-execution of expenditures in cash was 
significant and much higher than the accumulation of spending arrears. This helped to deliver the 
2012 headline general government primary deficit target. The end-2012 structural benchmark on 
the coverage of entities and accuracy of reporting on the e-portal was missed by a small margin. 
However,  in  2012  EOPYY,  an  entity  created  by  merging  the  largest  four  health  insurance 
schemes,  started  to  report  on  the  e-portal.  The  end-March  2013  targets  are  within  reach.  The 
database of the e-portal has been expanded to allow more detailed provision of information from 
the commitment registers. 

Significant  progress  is  still  needed  in  preventing  the  build-up  of  arrears,  especially  tax 
arrears.  After  the  completion  of  the  previous  review  a  large  amount  of  unaudited  tax 
refunds claims was identified (about EUR 2.1 bn). The claims relate mainly to CIT and VAT 
tax  refunds  that  were  submitted  last  years.  Another  significant  part  of  this  amount  is  due  to 
arrears owed to other government entities. This is deficit-neutral as it represents an expenditure 
for  the  State  and  is  at  the  same  time  a  revenue  for  another  General  government  entity.  The 
statistical impact on the fiscal accounts of recognising these claims will depend on the time when 
they are validated. Part of the unrecorded tax refund arrears is of a structural nature (as it reflects 
lower permanent net revenues than originally thought) and therefore has a carry-over effect on 
subsequent years. This effect has been taken into account in the revenue projections for 2013 and 
onwards. However, a sizeable part of these arrears relates to earlier years and ideally should have 
been  validated  and  recorded  at  that  time  without  affecting  future  years  and  their  official 
validation  (and  expected  repayment)  in  2013  will  therefore  only  have  a  one-off  impact  on  the 
fiscal  accounts  in  2013.  To  avert  an  unexpected  accumulation  of  similar  arrears  in  future,  the 
Government decided to start the electronic recording (and monitoring) of all claims even before 
they are validated. 

Both a further strengthening of PFM and a reform of the overall audit system are required 
to  respect  the  payment  delays  envisioned  by  the  EU  Directive  on  late  payment. 
Implementation of this Directive requires payment of invoices within 30 days in principle, or 60 
days in exceptional cases. The significance of a timely transposition and implementation of the 
Late Payment Directive has been highlighted in the Commission Communication on Action for 
Stability, Growth and Jobs that assesses the role of the Directive in restoring normal lending to 
the  economy:  in  Europe  96%  of  bankruptcies  are  due  to  late  payments  or  other  objective 
problems.  In  the  current  economic  situation,  the  problem  of  late  payment  becomes  even  more 

31 

             
 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

urgent  and  must  be  addressed.  The  transposition  and  implementation  of  the  Directive  is 
particularly  challenging  in  Greece  as  statistics  for  late  payments,  both  in  business  to  business 
(B2B)  transactions  and  between  public  authorities  and  businesses  (PA2B),  are  amongst  the 
worse in Europe, according to the European Late Payment Index of Intrum Justitia. Timely and 
correct transposition and implementation of Directive 2011/7/EU will also correct some current 
discrepancies  between  European  and  Greek  legislation,  as  it  would  help  closing  two  pending 
cases  of  infringements,  therefore  avoiding  economic  sanctions  which  could  be  linked  to  them. 
However, a further strengthening of the Public finance management is required to cope with the 
implementation of the payment delays envisioned by the Directive (30 days in principle, 60 days 
in  exceptional  cases),  and  avoid  the  economic  sanctions  foreseen  for  lack  of  compliance  with 
such  delays.  In  this  respect,  the  Government  will  propose  a  realistic  timetable  for  further 
progress  in  PFM  with  a  view  to  streamlining  payment  procedures  and  shortening  payment 
periods, taking into account the timetable already outlined for the completion of the Enterprise 
Resource Planning (ERP) project. Another relevant challenge ahead is to design and put in place 
a  full-fledged  monitoring  system  for  implementation  of  the  Public  Investment  Budget  (PIB) 
before the decentralization of its management at the regional level takes place. 

The current plan for arrears clearance foreseeing the release of appropriations of almost 
EUR 6 bn by July 2013 is now being implemented but with delays. A plan for the clearance 
of  past  arrears  was  set  up  in  November  2012.  In  December,  the  relevant  authorities  started  to 
process requests more effectively. According to General Accounting Office (GAO) Financing – 
payment  of  arrears  monthly  bulletin  about  1.5  bn  of  released  appropriations'  requests  were 
completed by February 2013 (out of the EUR 7.8 bn of outstanding arrears as of 31/12/2011). 
The amount actually paid in February was only EUR 419 million, still a small proportion of the 
total  outstanding.  The  Government  advocates  that  the  initial  backlog  regarding  hospitals  is 
behind  them  and  therefore  the  entire  amount  of  requests  could  be  completed  by  July  2013. 
Although it is understandable that the procedure could have been slow at the inception due to the 
need to set up the entire process and that after February a catching up effect is reasonable, the 
completion of the requests by July appears to be a very ambitious objective. For this to happen, it 
is necessary to guarantee administrative capacity by staffing the necessary units with the proper 
expertise.  The  government  is  well  aware  of  the  challenges  and  stands  ready  to  adopt  the 
necessary steps. It is crucial to complete the plan as soon as possible in order to give an impulse 
to the economy by injecting the liquidity that many firms need to survive. 

A  set  of  corrective  mechanisms  to  secure  fiscal  commitments  is  under  preparation  and 
progressively  delivered.  At  the  end  of  last  Review,  programme  implementation  was  enriched 
through the adoption of legislation to set up a system of corrective mechanisms per sub-sector of 
expenditures. For the central government sector, memoranda of cooperation were subsequently 
signed between line Ministries and Ministry of Finance (MoF) in order to set up monthly targets 
for  their  expenditures  and  a  monitoring  system  able  to  detect  significant  deviations  from  the 
targets.  During  the  year,  the  same  procedure  will  be  used  to  sign  Memoranda  of  cooperation 
between line ministries and their supervised entities. The system will be tested though 2013 to 
check  if  the  new  tools  are  able  to  strengthen  the  effectiveness  of  binding  ceilings  for  central 
government  expenditures.  Binding  ceilings  were  also  introduced  in  the  healthcare  sector  for 
pharmaceutical expenditures and illness benefits. Such ceilings are enforced through a system of 
monthly  targets  which  are  regularly  compared  with  the  budget  execution  in  order  to  detect 
deviations  and  trigger  corrective  mechanisms  to  bring  the  expenditure back  to  the  targets  (e.g. 
claw-back  mechanism  for  pharmaceutical  expenditures  and  a  revision  of  the  list  of  illness 
benefits). For local governments (LGs), the pre-existing balanced budget rule was strengthened 
through an ex-ante assessment of the budgets submitted by the LGs, to evaluate the credibility of 
the revenue projections and consequently of the expenditure projections. An Observatory was set 
up to carry out this analysis of the budgets, and it can recommend changes to the budget of LGs 
if  the  projections  submitted  are  neither  robust  nor  credible.  Once  annual  budgets  are  assessed 
and made realistic, monthly targets are identified. Monthly budget execution is evaluated against 

40. 

41. 

32 

 
 
 
 
 
 
 
 
                     
 
 
 3. Programme implementation 

the targets, and when significant deviations from the monthly targets occur for a specific LG, the 
latter  is  forced  to  adopt  corrective  mechanisms  to  avoid  a  freeze  of  transfers  from  the  State 
Budget.  A  similar  mechanism  has  been  set  up  for  State  owned  enterprises  (SOEs).  Monthly 
targets  for  their  economic  results  are  set  up  and  monitored  against  execution.  If  a  deviation 
occurs  during  the  year,  the  SOE  has  to  adopt  measures  to  respect  the  targets.  In  the  event  of 
inertia, the State suspends transfers and can also remove the Board. All these new mechanisms, 
introduced on an experimental basis through the update of the MTFS in February, will be fully 
operational  soon.  The  system  of  corrective  mechanism  for  SOEs  has  been  prepared  more 
carefully in advance and therefore will be fully operational and fully consistent with the MTFS 
starting  from  April.  The  one  applying  to  LGs  needs  more  time  to  ensure  the  system  is  fully 
consistent with the MTFS. Preparatory work is on-going and moving in the right direction. 

It  becomes  urgent  for  Greece  to  have  its  own  Fiscal  Council  fully  operational  soon 
following the entry into force of the Two Pack9.  After the resignation of the entire Board of 
the  Parliamentary  Budget  Office  (PBO)  in  September  2011,  a  new  Scientific  Committee 
composed of 4 members was appointed last December. The staffing process and the cooperation 
with Ministry of Finance started already although it will take some time before the PBO will be 
fully operational. Regarding its competences, the current legislation foresees a strong role of the 
Parliamentary  Committees  in  delimiting  the  scope  of  the  Office.  The  priorities  are  to  build  its 
credibility and independency from the Government but also to clarify its objectives in order to 
cope with the regulation envisaged in the Two Pack following the European best practices. 

42. 

3.3.5. Making the public administration more efficient and effective 

43. 

44. 

While progress has been made since 2010 in downsizing the public administration to make 
the wage bill more compatible with fiscal targets, further reforms are urgently needed to 
render  the  public  administration  more  efficient  and  effective.  The  government  already 
committed  in  the  first  Economic  Adjustment  Programme  to  reduce  public  employment  by  at 
least  150,000  in  the  period  2011-2015.  The  reduction  by  79,923  up  to  the  end  of  2012  is  the 
result of the application of a 1:5 attrition rule (by which only one in five employees exiting from 
the public sector should be replaced by a newly hired employee), combined with an increase in 
early  retirements.  Despite  progress  with  downsizing,  a  more  targeted  approach  with  respect  to 
the hiring, mobility and exit of staff is now warranted to allow for a rejuvenation and upgrading 
of human capital, skills and performance in the public administration.  

However,  mixed  reform  ownership  led  to  numerous  delays  in  implementing  public 
administration  reforms.  The  Greek  authorities  took  first  steps  for  the  public  administration 
reform, but a number of the requirements set in the programme have not yet been achieved, and 
much more remains to be done. At the end of 2012, the so-called mobility scheme was created, 
through which staff would be reallocated to new positions, or exit to the private sector after a 12-
month  period.  Employees  receive  75%  of  their  salary  while  in  the  scheme.  The  new  law  on 
mobility  has  been  legislated,  the  Secretary  General  of  Coordination  has  been  appointed,  an 
action plan for the assessment of the public entities has been drafted. As a prior action for the 
previous review, 2,000 employees were transferred to the mobility scheme by November 2012. 
The  bulk  of  these  transfers  came  from  employees  of  secondary  education  performing 
administrative tasks whose positions were abolished or staff who were recruited without passing 
a competition. Around 900 employees in disciplinary cases were suspended, and received up to 
one third of their salary.  

45. 

The  steps  related  to  the  March  "milestone"  on  public  administration  reform  were  taken 
with  significant  delay.  It  was  the  basis  for  the  disbursement  of  the  last  sub-tranches  of  the 

9 The Two-Pack comprises two Regulations designed to further enhance economic integration and convergence amongst euro area 

Member States.The Regulations were adopted on 13th May 2013.  

33 

             
 
 
 
 
                                                           
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The Second Economic Adjustment Programme for Greece. Second Review 

second disbursement. The Greek authorities were expected by end-February to have completed 
the  functional  review  and  staffing  plans  not  only  of  the  central  administration,  but  also  of  the 
decentralised entities supervised by the ministries. The Greek authorities were also expected to 
use  these  plans  to  identify  redundant  positions  and  set  quarterly  targets  for  mandatory  exits 
through  end-2014.    As  of  end-April,  the  authorities  adopted  staffing  plans  covering  211,500 
employees and indicated also the resulting number of  abolished positions. In some cases, such 
plans  would  reflect  significant  reforms  of  the  structure  and  policies  of  the  ministries  involved 
(e.g. ministry of Defence). No transfers to the mobility scheme beyond the 2,000 employees in 
Q4  2012  have  so  far  taken  place.  Nevertheless, the  authorities  confirmed  their  commitment  to 
transfer 12,500 employees to the mobility scheme by June, based on the identified pool of about 
19,000  staff  in  the  various  line  ministries  and  entitiesto  be  assessed  by  that  date.  Overall, 
implementation  risks  are  high  owing  to  the  envisaged  back-loaded  process  of  identifying  and 
transferring staff to the mobility scheme.  

A  derogation  from  the  general  1:5  attrition  rule  for  mandatory  exits  is  expected  to 
strengthen the reform momentum. The authorities have established quarterly targets for exits 
for the remainder of 2013 and for 2014, cumulating to 4,000 mandatory exits by end-2013 and 
15,000 mandatory exits by end-2014. In itself, the attrition rule does not satisfy the need to hire 
new staff, in particular young and highly-qualified employees, in several priority areas (e.g., tax 
administration). Owing to special qualification requirements, these staffing needs cannot always 
be  met  through  transfers  within  the  civil  service.  In  order  to  create  the  fiscal  space  for  such 
priority hiring, mandatory exits form the civil service are necessary and possible, given the large 
number  of  positions  that  will  be  abolished  in  the  course  of  the  ongoing  reform  as  well  as  the 
large  number  of  pending  disciplinary  cases.  The  programme  provides  that  for  each  mandatory 
exit  one  person  can  be  hired,  thereby  strengthening  the  benefits  from  pursuing  the  public 
administration  reform.  Particular  emphasis  has  been  placed  during  the  review  mission  on  the 
identification  of  how  exists  could  be  achieved.  According  to  the  authorities,  exits  will  be  the 
result of (i) disciplinary cases; (ii) due diligence evaluation of legal entities of public and private 
law  leading  to  mergers  and  abolishment;  (iii)  evaluation  of  the  personnel  using  the  mobility 
scheme,  including  before  any  reallocation  to  a  new  position;  and  (iv)  voluntary  exits  from  the 
mobility scheme (excluding personnel within 3 years of retirement); and (v) the elapse of a 12-
month  period  in  the  mobility  scheme.  A  strategy  for  the  allocation  of  the  hiring  which  would 
then become available for 2013 will be agreed by mid-2013. 

The  Authorities  are  also  working  to  finalise  a  comprehensive  human  resources  strategy. 
This  would  encompass  all  the  key  areas  of  human  resources  management,  from  the  selection 
process to the hiring and allocation, evaluation, training, disciplinary procedures and the roles of 
the  senior  managers.  The  authorities  also  have  to  proceed  with  the  assessment  of  personnel 
competences  and  performance,  where  progress  has  been  very  limited  so  far.  The  latter  is 
expected to be completed for the whole public administration – in parallel with the staffing plans 
- by end-2013. 

Greece  needs  to  make  significant  progress  on  public  procurement  reform,  given  the 
potential  scope  of  fiscal  savings.  The  Greek  Authorities  have  completed  the  regulatory 
framework  of  the  Single  Public  Procurement  Authority  (SPPA),  Greece's  watchdog  in 
procurement policy. In February 2013, the SPPA submitted an ambitious plan for the recast of 
all Greek legislation on public procurement, with a view to having it completed by end year. The 
Government has also produced plans for the development of the e-procurement platform and for 
the  creation  of  Central  Purchasing  Bodies  for  the  procurement  of  standard  (non-health)  goods 
and  services.  On  the  former,  it  is  essential  that  steps  are  taken  to  develop  the  e-procurement 
platform, whilst complying with best practices, so as to eventually extend its use across all levels 
of  public  administration.  On  the  latter,  the  Government  needs  to  identify  standard  goods  and 
services  to be tendered  through  Central Purchasing  Bodies  and define  a  timeframe  and  mix  of 
incentives / compulsion techniques for the Greek public sector to buy via those. 

46. 

47. 

48. 

34 

 
 
 
 
 
 
 
 
                     
 
 
 3. Programme implementation 

3.3.6. Modernising the healthcare system 

49. 

50. 

51. 

Health sector reform continues and the authorities are focusing on the implementation of 
the  legislative  steps  taken  in  autumn/  winter  2012,  such  as  the  merging  of  all  existing 
individual  health  insurance  schemes  into  EOPYY,  the  National  Organisation  for  the 
Provision of Health Services. Currently, the authorities are managing the process of merging all 
the  inherited  assets  (e.g.  buildings)  and  streamlining  administrative  and  medical  staff.  Indeed, 
with  the  merging  of  all  health  insurance  schemes  an  important  reduction  in  the  number  of 
contracts and in the effective number of medical doctors has been observed. In addition, EOPYY 
has  started  to  implement  a  number  of  measures  to  control  costs  not  only  in  the  area  of 
pharmaceuticals  but  also  regarding  diagnostic  tests,  physiotherapy,  rehabilitation  and  dialysis 
services  and  doctors'  consultations  and  hospitalisation  with  private  providers.  Such  measures 
include  reduced  fees  for  providers,  increased  patient  fees  when  using  private  providers  and  a 
limitation in the number of reimbursed consultations/ tests. The authorities are now monitoring 
the impact of such policies. Existing evidence, though limited to the last month of 2012, appears 
to  suggest  that  indeed  in  some  areas,  costs  are  going  down.  EOPYY  has  also  developed  a 
reporting tool to monitor cash revenues and spending on a monthly basis.  

EOPYY  still  faces  several  challenges  which  need  to  be  addressed.  Due  to  stronger  than 
expected  unemployment,  contributions  in  2012  were  lower  than  what  had  been  originally 
budgeted  and  have  not  been  equalised  across  all  population  groups  (despite  the  doubling  of 
OGA's contributions). The lack of control over spending in 2012, combined with lower revenues 
than  expected,  led  to  an  accruals  deficit  of  EUR  1  bn.  Part  of  the  deficit  was  reflected  in  an 
accumulation  of  accounts  payables  which  adds  to  the  large  stock  of  inherited  arrears  towards 
private suppliers and ESY (NHS) hospitals. The authorities are committed to settle those arrears 
until the end of 2013, on the basis of EUR300 million a month. Paying off these arrears will be 
crucial for the financial health of health sector suppliers but also and importantly to give EOPYY 
the  much  needed  negotiation  ability.  Also,  EOPYY,  just  as  the  social  security  funds  prior  to 
EOPYY, continues to pay ESY (NHS) hospitals with a large delay and potentially less than the 
overall treatment costs. This in turn impacts negatively on hospitals ability to pay suppliers, thus 
generating  arrears  on  the  hospital  side.  Such  situation  suggests  that  budgeting  and  costing 
procedures will have to be further improved although some significant steps have been taken (for 
example  analytical  accounting  and  diagnostic-related  group  procedures  are  slowly  being 
implemented).  More  generally,  a  strong  assessment  /  business  intelligence  unit  needs  to  be 
created  to  monitor  and  analyse  all  the  financial  and  activity  data  that  is  now  available,  draft 
reports and draw operational conclusions and early warnings for policy making.  

Regarding pharmaceuticals, a very significant reduction in public spending with outpatient 
pharmaceuticals  can  be  observed  for  2012  (about  1bn)  confirming  that  the  target  set  for 
2012 has been achieved with public expenditure (following rebates and clawback) standing 
at  about  EUR2.85bn.  This  is  the  result  of  a  set  of  measures  on  pricing  (changes  in  external 
reference  pricing),  prescription  (e-prescription  and  by  active  substance),  dispensing  (mandated 
generic  substitution)  and  reimbursement  (internal  reference  price  equal  to  the  cheapest  of  all 
medicines  in  each  active  substance,  definition  of  positive  and  negative  lists)  as  well  as  the 
application  of  the  clawback  system  for  the  first  half  of  2012  and  the  use  of  compulsory  e-
prescription.  A  number  of  companies  (12)  did  not  pay  their  required  clawback  amount.  Their 
respective  products  are  now  to  be  moved  to  the  negative  list,  if  not  yet  done.  E-prescription 
covers  now  between  85-90%  of  all  pharmaceutical  prescriptions  and  provides  real-time 
information  for  continuous  monitoring  and  assessment  of  doctors'  prescription  behaviour  and 
pharmacists' dispensing behaviour.  

52. 

in  the  pharmaceutical  area. 
However,  some  challenges  can  also  be 
Notwithstanding  compulsory  prescription  by  active  substance  or  INN  (international  non-
proprietary name) prescription, there are reports that doctors continue prescribing medicines by 

identified 

35 

             
 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

brand  name  rather  than  active  substance.  To  address  this,  the  authorities  have  introduced  an 
automatic  blockage  mechanism  in  the  e-prescription  system  that  blocks  prescription  by  brand 
name for doctors who go above the 15% ceiling for branded prescribing set by law. Generic use 
is still low (about 18% market share in both volume and value) and the target set for 2012 (35% 
in  volume)  has  not  been  achieved.  There  appears  to  be  a  large  backlog  (1200)  of  generic 
medicines  awaiting  a  price.  Not  pricing  these  generic  medicines  reduces  the  potential  for 
competition  in  the  sector  and  related  lower  prices,  therefore  foregoing  potential  significant 
savings  for  public  and  private  spending.  Authorities  have  committed  to  start  pricing  these 
medicines at a pace of 400 medicines a month, which means that the full process will take some 
months to be accomplished. In general, the pricing mechanism should be made more transparent 
to reduce the number of complaints and reduce potential confusion caused by several revisions 
of the same list. The implementation of the Active Pharmaceutical Ingredients (API) system in 
pharmacies to allow for e-registration of manual prescriptions has been delayed compared to the 
original  plan  of  October  2012.  On  e-prescription  the  authorities  should  now  strongly  focus  on 
introducing  compulsory  prescription  protocols  for  some  therapeutic  groups  and  ensuring  a 
proper use of IDC10. 

In  terms  of  monitoring  and  control  of  prescription  an  important  step  has  been  the 
extension of the e-prescription to the prescription of diagnostic tests. This will allow for a 
better understanding of what is happening in this area. The system already alerted to the fact that 
there  was  a  dramatic  increase  in  diagnostic  prescriptions  between  the  1st  and  2nd  semester  of 
2012  (about  30%).  The  authorities  should  focus  on  ensuring  that  the  degree  of  coverage  of  e-
prescription for diagnostics, now still rather low, reaches 90% soon. 

Important steps have been taken by the hospital sector and in implementing hospital sector 
reform. In addition to savings observed in areas such as pharmaceuticals and medical supplies, 
important  steps  have  been  taken  in  terms  of  hospital  network  rationalisation.  The  authorities 
have effectively merged the about 130 hospitals into 84 hospitals and in the process eliminated 
about 11,000 beds. Some further hospital mergers/closures are planned. This may be conducive 
to  a better distribution  of  staff  and heavy equipment  across  hospitals.  Internal  controllers have 
been  allocated  to  most  hospitals  and  first  steps  have  been  taken  to  introduce  analytical 
accounting  in  hospitals,  with  the  authorities  having  now  defined  a  timeline  for  its  full 
implementation  by  end  September  2013,  with  some  delay  compared  to  the  original  plan. 
Centralised procurement of some medical devices and hospital pharmaceuticals has taken place 
and  could  produce  substantial  savings  but  need  to  be  extended  to  cover  a  wider  area  of 
purchasing.  

A  number  of  challenges  need  to  be  addressed  also  here.  Staff  mobility  is  still  limited  and 
further steps should be taken to ensure that staff is allocated to areas of need, most notably in 
less  urban  areas.  In  addition,  more  effort  should  be  put  on  reforming  emergency  and  on-call 
structures to increase efficiency and quality of care and reduce overtime work. Also, for much of 
2012,  the  use  of  centralised  framework  contracts  was  not  compulsory  and  as  a  result  a 
substantial  amount  of  tendering  was  still  done  at  the  level  of  individual  hospitals.  Authorities 
have now imposed a compulsory use of the centralised framework contracts as maximum price. 
Moreover,  the  procurement  plan  over  the  next  three  years  does  not  envisage  a  substantial 
increase of the share of the spending covered by centralised tendering procedures. The share of 
generics,  while  seeing  an  important  increase  up  to  27%,  remained  below  the  target  of  50%  at 
hospital  level.  The  authorities  need  to  reconsider  and  established  more  ambitious  targets  for 
centralised procurement and ensure that the share of generic medicines used in hospitals reaches 
the target. 

53. 

54. 

55. 

3.3.7. Upgrading the education system 

56. 

The education sector is finally undergoing progressive changes. While reforming the Greek 
education  sector  is  challenging  due  to  its  social  and  budgetary  importance,  a  number  of  key 

36 

 
 
 
 
 
 
 
 
                     
 
 
 3. Programme implementation 

reforms are underway. A concrete and well-defined Action Plan provides twice yearly (June and 
December)  guidelines  for  the  improvement  of  effectiveness  and  efficiency  of  the  education 
system  in  order  to  catch-up  to  the  EU  average.    Laws  4009/2011  and  4076/2012  on  higher 
education  aim  to  secure  changes  such  as  the  introduction  of  governing  boards  (which  may 
include  non-academic  managers),  the  financial  autonomy  and  responsibility  of  universities, 
mergers of institutions, and the internationalisation of curricula, have started to be implemented 
(ATHINA project) and are expected to be completed by spring 2014. On primary and secondary 
education, a concrete evaluation policy of schools and teachers is on-going and expected to be 
completed  by  autumn  2013.  Schools'  self-assessment  project  (reported  on  a  quarterly  basis), 
implying the revision of curricula, the introduction of teachers' evaluation, recurrent training of 
teachers, upgrading and extension of all-day schools, is continuing and advancing smoothly. 

3.4. STABILISING THE FINANCIAL SYSTEM 

57. 

58. 

59. 

60. 

The viability and capitalization of the Greek banking system is being restored in order to 
support  economic  recovery  and  maintain  the  protection  of  depositors.  The  recapitalisation 
of  the  Greek  banking  sector  is  progressing  and  has  reached  its  final  stage.  As  Greek  banks 
suffered heavy losses on both their investments in Greek Government Bonds and their loans due 
to the long recession of the Greek economy, their recapitalisation has become crucial to maintain 
the  banking  sector's  capability  to  support  the  real  economy.  Based  on  the  viability  assessment 
exercise  conducted  by  the  Bank  of  Greece  (BoG),  the  four  core  banks  are  entitled  to  receive 
funds from the Hellenic Financial Stability Fund (HFSF) during their recapitalisation, while the 
non-core banks need to secure their capital fully from private sources. New regulations on banks' 
capital requirements were adopted by the BoG aligning banks' capital metrics to the minimum 
Core Tier 1 ratio of 9% of risk-weighted assets, which became binding as of end-March 2013. 
The financial sector programme envelope of EUR 50 bn is deemed sufficient to cover the cost of 
recapitalisation and resolution of Greek banks, while also providing a buffer for the next stress 
test exercise, which will examine the robustness of Greek banks’ solvency buffers in the context 
of the updated programme macro-economic projections.  

Greek  authorities  have  committed  to  devise  and  implement  a  comprehensive  banking 
sector strategy that aims to further consolidate the banking sector and reswiftly privatise 
banks falling under HFSF control. The aim of the strategy is to create a leaner, cost efficient, 
competitive and well capitalised banking sector, which is able to support the economic recovery. 
Therefore,  core  Greek  banks  will  continue  to  act  as  integrators  of  smaller  domestic  banks  as 
appropriate.  The  strategy  will  also  include  options  and  operational  steps  for  the  HFSF  to 
promptly proceed with the disposal of the shares to the private sector of the core banks that will 
not have been able to remain under private control. 

By  end-April  2013,  the  core  banks  are  expected  to  have  completed  all  corporate  actions 
required for the private sector rights issue subscription. All four core banks have convened 
their annual shareholders meeting in a way that quorum and hence a decision could be reached 
on the recapitalisation process before the end April deadline, as per the agreed Memorandum of 
Understanding (MoU). Two banks have indicated to the Bank of Greece that they are likely to be 
able  to  reach  the  10%  private  investment  threshold  during  the  subscription  period,  which  will 
take place from May-June 2013. The financial settlement of the entire recapitalisation process is 
expected to be completed by 14 June 2013. 

In  February  2013,  shareholders  of  NBG  and  Eurobank  executed  a  voluntary  share 
exchange  transaction,  whereby  there  was  an  agreement  for  87%  of  Eurobank  shares  to  be 
exchanged  to  NBG  shares.  The  two  banks  indicated  that  the  legal  merger  of  the  two  entities 
cannot take place before the recapitalisation deadline of end April as set in the Memorandum of 
Understanding  (MoU).  Consequently  the  management  of  both  banks  were  requested  by  the 

37 

             
 
 
 
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The Second Economic Adjustment Programme for Greece. Second Review 

61. 

62. 

63. 

64. 

Greek  authorities  to  execute  their  recapitalisation  as  separate  legal  entities  under  the  same 
framework and within the deadline applicable to all banks in Greece. If both banks were to be 
recapitalised  fully  by  the  HFSF,  the  latter,  as  the  new  majority  owner,  may  decide  on  any 
potential  consolidation  among  the  core  banks  after  it  will  have  developed  a  comprehensive 
banking sector strategy.  

Governance framework of the banks’ has been strengthened. Monitoring trustees in all four 
core banks have been appointed and have already issued their first quarterly report on the banks 
governance and operations. Additionally, relationship frameworks between each of the four core 
banks  and  the  HFSF  will  be  developed  on  the  basis  of  international  best  practices,  in  order  to 
ensure  that  the  banks  are  run  on  a  commercial  basis.  The  frameworks  differentiate  between 
banks  that  remain  under  private  control  and  those  that  have  become  fully  controlled  by  the 
HFSF.  

The  governance  of  the  HFSF  will  be  strengthened  further.  The  overhaul  of  the  HFSF 
governance  structure  is  proceeding  further.  A  two-tier  management  system,  with  a  General 
Council  and  an  Executive  Board  has  been  established.  An  additional  package  of  HFSF 
governance reforms will be adopted by parliament which, among others, adds two independent 
members to the HFSF General Council (increasing the number of its members from 5 to 7). In 
addition, the HFSF internal regulations will be amended to rationalize the division of tasks and 
responsibilities between the General Council and the Executive Board. Furthermore, in order to 
reinforce HFSF independence, the legislation will be amended to clarify the non-public nature of 
the Fund.  

Hellenic  PostBank  (TT),  a  State-owned  bank,  was  resolved  via  the  establishment  of  a 
bridge  bank  on  January  18th  2013.  In  the  context  of  the  resolution  framework,  the  Bank  of 
Greece  asked  domestic  and  foreign  institutions  and  investors  to  submit  their  offers  for  the 
acquisition  of  the  assets  of  TT.  As  this  procedure  did  not  lead  to  a  favourable  conclusion,  the 
Minister  of  Finance  issued  a  decision  regarding  the  establishment  of  a  bridge  bank  (“good 
bank”), to which all deposits and sound assets (performing loan portfolios and securities) of TT 
were transferred. The remaining assets have been put into liquidation, the proceeds of which will 
be used to cover the claims of third parties and those of the HFSF. The newly established bank, 
which operates under the company name “New Hellenic Postbank”, has been granted a license 
by  the  Bank  of  Greece  and  was  capitalized  by  the  Hellenic  Financial  Stability  Fund,  which  is 
currently its sole shareholder. The HFSF is currently taking actions to make major reductions in 
the  operational  costs  of  the  bank,  including  through  significant  reductions  in  the  number  of 
employees  and  restructuring  of  its  loan  portfolio,  with  the  objective  of  making  the  bank 
attractive to potential acquirers and concluding its sale expeditiously.  

The  consolidation  of  the  banking  sector  is  continuing  beyond  the  sales  of  Emporiki  and 
Geniki  banks.  On  April 22nd  2013,  the  Piraeus  Bank  acquisition  of  Millennium  Bank,  the 
subsidiary of BCP Portugal has been concluded. Piraeus Bank agreed to pay EUR 1 million to 
buy Millennium while Millennium agreed to recapitalize their Greek unit with EUR 400 million 
and to participate in the Piraeus Bank’s rights issuance with another EUR 400 million. The latter  
improves  Piraeus  Banks'  efforts  to  raise  the  minimum  10%  of  capital  needs  from  the  private 
sector.  As  Piraeus  Bank  received  state  aid,  the  Directorate-General  for  Competition  of  the 
European  Commission  had  to  ensure  that  no  state  aid  was  used  to  fund  the  acquisition  of 
Millennium and that the acquisition was not damaging the long-term viability of Piraeus Bank. 
Based on the above mentioned criteria, and also under the condition that Piraeus Bank does not 
buy back its own shares from BCP Portugal, the services of DG Competition communicated to 
the  Greek  authorities  that,  under  state  aid  rules,  they  had  no  objections  to  the  proposed 
acquisition. 

65. 

Piraeus Bank has also acquired three branches of Cypriot banks. At the end of March 2013 
Piraeus  Bank  singed  sale  contracts  with  Cyprus  Popular  Bank,  Bank  of  Cyprus  and  Hellenic 

38 

 
 
 
 
 
 
 
 
                     
 
 
 3. Programme implementation 

Bank  whereby  it  acquired  selected  assets  and  liabilities,  in  particular  all  loans  and  deposits 
originated by the branches of these banks in Greece. The operational integration of the branches 
in Piraeus Bank has started immediately and already showed good progress.  

Box 9. Household indebtedness.  

Due to the on-going economic recession in Greece, an increasing number of households experienced problems 
with  serving  their  debts,  as  disposable  income  and  asset  values  have  been  decreasing.  With  NPLs  reaching 
23.3% on a solo level by end-September 2012, the situation in this area requires an immediate response.  
The current legislation is prone to distortions. Law 3869/2010 provides a right for over-indebted individuals to fill 
a  petition  to  the  Court  in  order  to  seek  a  debt  adjustment.  The  latest  official  figures  indicate  that  26,86910  debtors 
have  filed  Court  petitions.  The  debtor,  upon  filing  for  a  petition,  asks  –  and  in  most  of  the  cases  receives  -  a 
temporary order by the Court for a cessation of payments (both the principal and interest) until the Court decision. 
Due to a big stock of pending cases in the Courts, the hearings are scheduled to take place at the earliest in 4-5 years. 
It is expected that more over-indebted individuals will file Court petitions under the current framework, continuing to 
undermine  the  debt  payment  culture  of  the  country  while  increasing  moral  hazard.  To  discontinue  the  current 
practice,  it  is  envisaged  to  introduce  mandatory  payments  during  the  waiting  period  till  the  Court  decision.  This 
provision will strengthen the extrajudicial settlement process and reduce pending court cases.  

In order to alleviate the dire financial situation of currently solvent debtors, a new "Facilitation program" will 
be introduced. An eligible borrower (eligibility criteria that takes into account the debtor’s income and assets) after 
filing  an  application  would  receive  a  grace  period  of  up  to  four  years.  During  this  grace  period,  the  borrower  is 
obligated to pay only  reduced interest or a part of the initial instalment, which is capped at a certain debt-to-income 
ratio. Unpaid interest on the loan will be capitalized. 

There are similarities with other plans currently being designed or recently introduced elsewhere in Europe. 
This  envisaged  Greek  Facilitation  program  partly  resembles  the  similar  Spanish  framework;  however,  there  are 
certain  differences  in  the  applicability  criteria  and  terms  of  the  program.  The  Spanish  program  “Mortgage  Debt 
Restructuring  Measures”  to  protect  mortgage  holders  without  resources  was  established  with  Spanish  Royal  Law 
Decree 6/201211 on 10 March 2012. Portugal addressed a comparable issue in Law 58/2012 on 9 November 2012, 
which  creates  an  extraordinary  protection  regime  for  debtors  of  residential  mortgage  loans  in  special  economic 
needs12.  

3.5. STRENGTHEN LABOUR MARKET INSTITUTIONS AND PROMOTING EMPLOYMENT 

66. 

67. 

Labour  market  reforms  are  opening  the  way  for  a  market  more  reactive  to  changing 
economic conditions. Whereas as expected the recent wage flexibility has not been sufficient to 
overcome the very high unemployment triggered by the marked reduction in economic activity, 
the recent falls in labour costs are likely to have allowed the mitigation of the toll of the still on-
going recession into employment headcounts. In fact, whereas evidence available might be too 
short to draw firm conclusions, in the course of 2012, wage flexibility has coincided with milder 
rates  of  job  shedding.  Falling  wages  have  been  leading  to  falling  unit  labour  costs,  with 
productivity also edging up recently thereby further helping cost competitiveness. That pick up 
in labour productivity bodes well for hiring once economic growth gathers pace.  

Following  the  very  extensive  reforms  made  in  2012,  the  Greek  authorities  will  make 
further improvement in labour legislation. Those include: the decision-making mechanism for 
the updates of the statutory minimum wage rates that will prevail once the current freeze expires; 
reductions in non-wage labour costs by cutting social contribution rates and by streamlining red 
tape  on  firms  work  arrangements  reporting  requirements;  fostering  formality  and  compliance 
with labour laws and contracts and tackling undeclared work. 

10 Based on official data of the 6th September 2012, by the Magistrate Court of Athens 
11 http://www.boe.es/boe/dias/2012/03/10/pdfs/BOE-A-2012-3394.pdf  
12 http://www.bportugal.pt/en-US/OBancoeoEurosistema/ComunicadoseNotasdeInformacao/Pages/combp20121205.aspx  

39 

             
 
 
 
 
                                                           
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The Second Economic Adjustment Programme for Greece. Second Review 

68. 

Addressing  the  very  high  unemployment  requires  policies  that  complement  the  recent 
labour market reforms. Those additional changes should push labour demand and higher skill 
levels from the supply side. These latter factors hinge also upon improvements in the business 
environment and product and service market reforms leading to more investment by opening up 
sectors and rendering producing in Greece more attractive. The competitive pressure that comes 
from opening up markets should lead to a stronger transmission of falling labour costs to prices, 
thereby strengthening purchasing power. 

Graph 18. Unemployment rates by age and gender

Graph 19. Long-term unemployment 

60

50

40

30

20

10

0

30

25

20

15

10

5

0

08

09

Total

10

11

12

13

Women

Youth (under 25)

08

09

10

11

12

13

Total

Long-term

Source: European Commission services 

Source: European Commission services 

69. 

70. 

71. 

Support  to  the  unemployed  is  being  stepped  up.  The  policy  agenda  includes  the  need  to 
address  the  persistently  high  unemployment  resulting  from  unavoidable  adjustments  to 
overcome  deep-rooted  imbalances  in  the  economy.  This  requires  helping  the  jobless  in 
remaining  integrated  in  the  labour  market  and  not  losing  their  labour  skills.  That  is  to  be 
achieved by facilitating the transition of workers across occupations and sectors, by improving 
the  quality  of  training  and  favouring  the  matching  between  demand  and  supply.  Fostering  the 
employability of the disadvantaged groups, notably the long-term unemployed and the entrants 
into the labour market should get particular attention. There is also a need to soften the hardship 
of joblessness with some income replacement within the existing budgetary envelopes.  

A  number  of  initiatives  are  being  taken  in  the  sphere  of  active  labour  market  policies, 
notably as the authorities are preparing an Action Plan with a multi-pronged strategy to 
support  the  unemployed.  First,  an  expansion  of  short-term  public  work  programmes  for  the 
long-term  unemployed  and  young  people  not  in  education,  employment  or  training.  This  is  a 
measure of emergency and temporary nature while labour demand remains sluggish with those 
programmes  expected  to  be  rolled  out  as  of  mid-2013  and  up  and  until  early  2015.  Second, 
enhancing  training  schemes  and  re-skilling  the  unemployed  and  young  people,  also  by 
promoting  the  training  by  potential  future  employers  in  the  private  sector  and  learning  on  the 
job.  Third,  supporting  job  matching  between  the  unemployed  and  potential  employers  and 
activation  of  the  unemployed  through  the  reform  of  the  Public  Employment  Service.  Finally, 
minding the need to lift human capital levels on a medium to long-term basis, opportunities for 
apprenticeships  and  vocational  training  with  the  dual  training  system  at  secondary  education 
level  will  be  leveraged  and  their  linkage  with  employers  reinforce  to  increase  the  chances  of 
professional integration of those graduates.  

The authorities are seeking ways to improve social safety nets within the current budgetary 
envelopes.  To  that  end,  the  Government  is  expected  to  report  on  policy  options  by  mid-2013. 
That is foreseen to include at least the creation of an unemployment assistance scheme for the 
long-term unemployed, means tested and targeted to the poor by January 2014. That document 
should  also  elaborate  on  the  creation  of  minimum  income  scheme  (on  a  pilot  basis)  and  the 
articulation of these schemes with other active and passive labour policies and social transfers. 
An  integrated  approach  was  called  for  in  order  to  foster  fairness  as  well  as  effectiveness  in 
supporting the needed, departing from the fragmented approach often seen in the past. Shall the 

40 

 
 
 
 
 
 
 
 
                     
 
 
 
 3. Programme implementation 

fiscal space be found within the existing overall budgetary envelopes, the front-loading of those 
schemes could be considered once there are designed. 

Box 10.  The impact of policies on social welfare 

The Greek social context remains highly challenging.  Relative to other euro area countries, Greece had the highest 
poverty  rate  in  2011  before  the  implementation  of  the  latest  economic  adjustment  package.  The  social  protection 
system is characterized by the fragmentation of benefits with limited overview and planning (Amitsis, 2012).  
The current social welfare system does not comprise a general income support mechanism. The coverage of the 
benefits  is  limited  to  the  insured  population  and  excludes  some  of  the  most  vulnerable  groups  such  as  the  young 
unemployed.  In  2012,  youth  unemployment  had  reached  55%.  The  unemployment  benefit  can  be  claimed  only  by 
workers made redundant that had paid unemployment insurance contributions and, depending on contributory record, 
up  to  12  months.  Hence,  youth  and  long  term  unemployed  are  excluded  from  the  scope  of  the  scheme.  Therefore, 
actions to limit long term unemployment through active labour market policies are planned to be introduced in 2014.  

The limited social benefit system in Greece contrasts with the systems elsewhere in the euro area and is largely 
unable to reduce the high poverty rate. Eurostat calculates the rate of people at risk of poverty or social exclusion 
before social transfers, which refers to the situation of people either at risk of poverty, or severely materially deprived 
or living in a household with a very low work intensity. In 2011, this rate was even a little higher in euro area than in 
Greece  (25.4%  and  24.8%  respectively).  In  contrast,  after  accounting  for  social  transfers  the  poverty  rate  falls  to 
16.9% in the euro area compared with a 21.4% rate in Greece (Graph 1). 

Chart 13Graph 10.1. People at risk of poverty or social exclusion before and after social transfers in 2011 

% 

30

25

20

15

10

5

0

Before social transfers

After social transfers

Greece

Euro area

Some  categories  of  households  are  at  particular  risk.  In  particular,  poverty  is  on  the  rise  particularly  among 
households  with  a  primary  earner  who  is  unemployed  (Graph  2).  Comparing  with  the  poverty  rate  of  euro  area  in 
2011,  Greece  has  higher  poverty  rates  in  all  categories  of  household  types.  But  the  differences  seem  to  be  sharply 
higher in the categories where there is at least one unemployed (two adults younger than 65 years, two adults, at least 
one over 65 years).  A comparison of poverty rates between different types of household shows that the category with 
the highest risk of poverty or social exclusion13 is the single person with dependent children, with a rate over 55%. 
Child  benefits  are  only  substantial  for  large  families,  with  three  children  or  more.  Benefits  to  help  unprotected 
children living in poor families and lone parents also exist, but the current family benefit system massively favours 
large  families,  does  considerably  less  for  families  with  fewer  than  three  children,  and  even  less  for  single  parent 
households.  
The Greek social welfare system is poorly targeted and coverage of the poorest is inadequate. Only 50% of the 
beneficiaries  belong  to  the  poorest  30%  of  the  population  (Amitsis,  2012).  Given  the  tight  fiscal  context,  some 
prioritization  is  necessary  for  the  rebalancing  of  the  social  welfare  system.  Families,  and  especially  single  parents, 
need more effective support. For this reason, the Single allowance child support has been instituted since 01/01/2013. 
This benefit will be granted to the first child of the family and is 40 Euros per month for each dependent child of the 
family. Also, the pilot program for a minimum guaranteed income (established by law 4093/2012), which will begin 

13 At risk of poverty or social exclusion, refers to the situation of people either at risk of poverty, or severely materially deprived or 
living in a household with a very low work intensity. Among others, target groups of "those at risk of social exclusion" may be 
identified as destitute people, migrants, refugees, drug addicts, alcoholics or victims of criminal violence (Source: Eurostat).  

41 

             
 
 
 
 
 
 
                                                           
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

in 01/01/2014, will work complementary to the existing policies for combating poverty and social exclusion, working 
as an ultimate welfare safety net for individuals and families facing extreme poverty.   

Chart 14Graph 10.2. People at risk of poverty or social exclusion by type of household in 2011 

%

60

50

40

30

20

10

0

Single
person

Households
without
dependent
children

Two adults
younger
than 65
years

Two adults,
at least one
aged 65
years or
over

Households
with
dependent
children

Single
person with
dependent
children

Two adults
with one
dependent
child

Greece

Euro area

References 

Amitsis, G., (2012), "Developing activation discourses in an era of fiscal constraints – Policy challenges for the rudimentary Greek 
Welfare State", European Social Policy Network, 10th Annual Conference 2012, Paper for STREAM No. 7 

Matsaganis, M., (2011), "The welfare state and the crisis: the case of Greece", Journal of European social policy 21:501 

3.6. CREATING FAVOURABLE CONDITIONS FOR ECONOMIC ACTIVITY 

72. 

The  implementation  of  wide-ranging  structural  reforms  remains  the  prerequisite  for 
stabilizing the economy and laying the foundations for economic growth. Whilst significant 
implementation  delays  occurred  in  2012  on  account  of  the  political  uncertainty,  considerable 
new  commitment  to  the  structural  reform  agenda  has  been  shown  by  the  new  government. 
Nevertheless,  further  efforts  are  needed.  For  example,  despite  reductions  in  wages  and 
productions costs stemming from labour market reforms, retail and producer prices have not yet 
fallen  commensurately.  To  foster  competitiveness  and  support  the  citizens’  purchasing  power, 
product and services markets need to be comprehensively reformed by removing the remaining 
unnecessary  restrictions  and  barriers  to  entry  that  currently  impede  competition  and  price 
adjustment.  In  many  areas,  such  as  business  environment,  energy,  transport,  retail  trade  and 
regulated  professions,  ambitious  reforms  have  been  designed  and  are  being  implemented.  The 
strong ownership of the reform agenda by the Greek government remains essential to maintain 
reform momentum and to restore growth and jobs to the economy. 

3.6.1. Promoting an efficient and competitive business environment  

73. 

The Government has adopted measures leading to a reduction in time and cost of company 
creation. In addition it has made progress in the implementation of the 2011 law on licensing of 
manufacturing  activities.  However,  the  Government  is  cumulating  delays  in  the  issuance  of 
secondary  legislation  of  the  August  2011  law  on  licensing  of  environmental  projects  and 
activities.  This  legislation  is  needed  to  achieve the  simplification  envisaged  under  that  law.  In 
the  area  of  trade  facilitation,  after  the  presentation  of  a  roadmap  and  the  opening  up  of  the 
customs  brokers'  profession,  the  government  is  taking  steps  to  simplify  and  improve  business 
procedures. However, there are delays in flagship measures needed for Greece to emerge as an 
important regional transport and logistics hub, such as allowing 24/7 operations at Greece's two 
largest  customs  offices  in  the  port  of  Piraeus  and  the  Athens  International  Airport.  Looking 
forward, the Government has committed to further rationalise investment licensing procedures, 
with a view to reducing the number of licenses required by the Greek public administration, as 
well as to streamline the processes and responsibilities for issuing permits. 

42 

 
 
 
 
 
 
 
 
                     
 
 
 
 
 
 3. Programme implementation 

3.6.2. Reforming the judicial system to support economic activity 

74. 

The Ministry of Justice initiated steps in 2010-2012, to reduce the case backlog in courts: 
introduction  of  fees  (to  reduce  the  number  of  claims),  mediation  (to  derive  claims  from  the 
courts), reduction in the number of judges on the bench for simple cases (to foster increase of 
productivity), and introduction of the "pilot case" system (to deal efficiently with large number 
of similar claims). There was some progress achieved as regards work done in parallel to create 
statistical court data. The Council of state reduced the case backlog, achieving a clearance rate of 
136  %.14  The  administrative  courts  of  first  instance  reduced  their  case  backlog  before  the 
strike.15  There  is  also  a  large  number  of  cases  (36,000  or  about  more  than  6  months  inflow), 
awaiting  a  ruling  of  pilot  cases  by  the  Council  of  State  to  be  cleared  by  the  1st  instance 
administrative courts. More recently, as a consequence of the abstention of judges, the progress 
in backlog reduction came to a standstill. However other important reforms took place, such as 
the reorganization of the Magistrate's courts. More reforms are still in preparation, such as the 
review of the code of civil procedure, prepared by a legislative committee,16 and legislation to 
introduce a compulsory review of administrative decisions before going to court.17 This should 
help  further  reduce  the  number  of  cases  going  to  administrative  courts.  The  wide  ranging  e-
justice  plan  that  should  help  modernisation  and  achieve  an  even  greater  computerization  and 
general  interconnection  of  the  courts  was  further  revised  and  financing  was  secured.  On  anti-
corruption,  the  Ministry  of  Justice  produced  the  required  "Fully-fledged  action  plan",  with 
specific measures for the tax administration. A law is in preparation to create the framework for 
the National coordinator and its competences.  

3.7. EFFICIENT NETWORK INDUSTRIES AND SERVICES 

3.7.1. Energy policy 

75. 

76. 

The Government is continuing its implementation of the Third Energy Package. Following 
the  adoption  of  law  4001/2011,  the  legal  unbundling  of  the  electricity  transmission  system 
operator  (ADMIE)  has  been  completed  and  the  European  Commission  has  issued  its 
certification.  The  reform  of  the  electricity  market  is  following  the  roadmap  agreed  with  the 
Greek authorities. Following a report published by RAE in December 2012, the Government will 
present  the  reform  in  May  and  adopt  it  in  June,  following  an  assessment  by  the  Commission 
services on compatibility with State Aid provisions.   

Severe  liquidity  crises  have  arisen  in  2012  for  both  PPC  and  DEPA,  the  state-owned 
electricity and gas incumbents. A rise in unpaid consumer bills, liquidity tensions in the Greek 
banking  system  and  the  structural  deficiencies  of  the  Greek  energy  market  have  severely 
worsened their cash position. In response to this liquidity crisis, the Government granted in June 
2012  emergency  funding  to  PPC  and  to  DEPA  (EUR110  million  and  EUR100  million, 
respectively)  through  the  Consignment  Deposit  and  Loans  Fund.  As  a  temporary  measure 
ameliorating  the  liquidity  tensions  in  the  Greek  electricity  market,  the  state  guarantees  by  the 
Consignment  Deposit  and  Loans  Fund  were  extended  in  December  by  a  maximum  of  further 
three  months.  In  March,  the  Government  further  extended  the  loans,  conditional  to  the 
introduction of an amortisation plan that should achieve full reimbursement of the loans by the 
end of May 2013 for PPC and by the end of July 2013 for DEPA. 

77. 

Financing  problems  have  also  arisen  in  the  RES  account  that  is  designed  to  fund 
renewables. LAGIE, the Greek electricity market operator, has accumulated unsustainable debts 

14 136 % of cases settled compared to new registrations. 
15 Submerging, as a consequence, the administrative appeal courts… 
16 Called a task force in the MoU. 
17 June 2013 action. 

43 

             
 
 
 
                                                           
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

due  to  overly  generous  -and  insufficiently  financed-  renewable  energy  support  schemes 
(especially  for  Photovoltaic  -  PV),  which  it  manages  (see  Box  11).The  Authorities  have  taken 
measures in 2012 to reduce the high debt levels in the balance sheet of LAGIE. Lower PV feed-
in-tariffs  (including  for  rooftop  PV)  were  approved  and  the  RES  levy  (i.e.,  the  fee  financing 
feed-in-tariffs  through  the  electricity  bill)  was  raised  in  August  2012  and  January  2013. 
Moreover, the Parliament adopted in November 2012 a temporary - and retroactive - solidarity 
contribution on  revenues  from  renewable  energy  installations.  In  spite  of  this,  new  projections 
showed a widening gap between the incentives to pay and the available financing up to the end 
of 2014. The Government is therefore introducing new measures (see Box 11) that should bring 
the  deficit  in  the  RES  account  to  zero  by  the  end  of  2014.  It  is  important  that  the  issue  is 
addressed in a structural manner to avoid excessive burdens to consumers.  

Further  structural  measures  need  to  be  taken  to  reform  the  Greek  electricity  market. 
These  include  the  liberalization  (and  full  cost  recovery)  of  end-user  prices  for  low  voltage 
customers except the vulnerable ones, the entry of new companies in the generation market, and 
a comprehensive reform of the electricity market. Low-voltage end user prices have already been 
increased  in  January  2013,  with  a  second  increase  planned  for  1  May  2013,  with  a  view  to  a 
complete liberalisation of end-user prices as of 1 July 2013. Whilst there is political resistance to 
increase low voltage end-user prices, cost recovery-based electricity tariffs are needed to foster 
the entry of new generation companies in the market, to help the incumbent electricity company 
cope with liquidity tensions, and to reduce electricity costs for industry. 

The  privatisation  process  of  PPC  has  not  started  yet.  However,  the  Government  has 
presented  a privatisation  and restructuring plan  that  provides  the  full  ownership unbundling of 
ADMIE  (the  transmission  system  operator),  the  creation  and  privatisation  of  a  new  vertically 
integrated company endowed with sufficient capacity to be a viable competitor, and the sale of a 
17% share of PPC itself currently owned by HRADF. The process should be completed within 
the first quarter of 2016. 

The  unbundling  of  DESFA  (the  gas  company’s  Transmission  System  Operator)  has  been 
delayed.  However,  prior  to  last  disbursement,  the  Government  amended  law  4001/2011  to 
provide  for  the  ITO  unbundling  option  for  DESFA.  DESFA  has  subsequently  applied  for 
certification to RAE (the independent sectorial regulator), but this has not yet been issued. It is 
important  that the  Government  catches  up with  cumulated delays  in  the  unbundling of  the gas 
company as it is prepared for privatization.   

Legislation  has  also  been  passed  to  facilitate  fuel  distribution.  This  encompasses  the 
liberalization  of  the  opening  hours  of  petrol  stations,  easing  the  opening  of  petrol  stations  by 
supermarkets,  eliminating  unjustified  restrictions  in  the  transportation  of  fuel  by  independent 
retailers,  as  well  as  to  ease  the  import  of  oil  and  of  oil  products  (in  the  context  of  the 
transposition  of  the  Directive  of  Security  of  Oil  Stocks).  Additional  measures  will  be  adopted 
before  year-end  to  remove  regulatory  restrictions  hindering  competition  in  the  wholesale  and 
retail fuel sector, as per Opinion no. 29/VII/2012 of the Hellenic Competition Commission. 

78. 

79. 

80. 

81. 

44 

 
 
 
 
 
 
 
 
                     
 
 
 3. Programme implementation 

Box 11. Financing the incentives for renewable energies  

The  financing  of  renewable  energy  incentives  in  Greece  comes  from  numerous  sources.  According  to  the 
provisions  of  art.  143  of  law  4001/2011,  the  market  operator  (LAGIE)  and  the  Distribution  System  Operator 
(DEDDIE) recover the sums paid to RES producers through a special account (RES account) managed by LAGIE. 
Sources of revenues for this account are: a contribution from retail suppliers; a special RES levy paid by consumers 
(ETMEAR); a levy from the production of electricity from lignite; revenues from the sale of unused CO2 allowances; 
and a part of the revenues from the TV license fee. An additional source since 2012 is a solidarity contribution, with 
rates  between  25%  and  30%  of  the  revenues  received,  paid  by  producers  of  electricity  from  photovoltaic  plants 
(excepting  rooftop  plants);  and  of  10%  paid  by  the  producers  from  other  RES  sources.  The  solidarity  contribution 
will be in effect from July 2012 to June 2014, with the possibility of extension for one year. 

In  spite  of  the  introduction  of  the  solidarity  contribution  and  of  the  raise  in  ETMEAR,  the  system  remains 
financially unsustainable. At the end of 2012 the deficit of the RES account was EUR333.5 million. According to 
the  latest  data  provided  by  the  Ministry  of  Energy  on  the  basis  of  a  preliminary  report  by  LAGIE,  the  cumulative 
deficit is projected to rise to EUR825 million by the end of 2013 and to some EUR1.68 bn by the end of 2014.  

The Ministry of Energy and Environment is introducing further measures to correct the situation and bring 
the  deficit  in  the  RES  account  to  zero  by  the  end  of  2014  (see  graph).  A  bill    presented  to  Parliament  and 
additional  non-legislative  measure  will  provide  inter  alia  for:  the  extension  of  the  solidarity  contribution  for  six 
months  until  December  2014;  the  introduction  of  an  additional  solidarity  contribution  of  an  average  7%  for  plants 
that will come online after the entry into force of the law; a progressive increase of the ETMEAR levy on consumers 
to EUR27/MWh from the current level of EUR9.32; a change in the mechanism for the contributions of suppliers to 
the RES account18 ; measures designed to slow the PV penetration in the system; lower than expected Feed-in Tariffs 
(FIT) for CHP plants; and further reductions in FIT tariffs for new installations. The consumer levy is estimated to 
make up a little more than half the overall financial contribution of these new measures. These measures should all be 
adopted by June 2013. 

Chart 15Graph 11.1. Proposed new measures to cover the RES account deficit 

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

FIT reduction

New FIT for CHP

Suppliers' RES account
contribution change

Solidarity contribution
extension to 31/12/14

Additional solidarity
contribution

Lower PV penetration

Consumers RES levy
increase

Source: Ministry of Energy 

Whilst  this  package  of  measures  is  necessary,  further  measures  will  need  to  be  taken  to  ensure  financial 
balance in the longer term. The solidarity contribution can only be extended until the end of June 2015. The Greek 
authorities  therefore  are  discussing  with  PV  plant  owners  a  voluntary  scheme  to  permanently  reduce  their  rates  of 
return. Such reduction will have to compensate for the possible gap of more than EUR400 million per year that will 
open in July 2015, following the expiry of the solidarity contribution. Moreover, the system is still heavily dependent 
on two sources of revenues – the SMP and the revenues from CO2 allowances – that are uncertain by definition. 

18 Previously it was based on the System Marginal Price (SMP) only; henceforth it will instead be based on the SMP plus the other 

costs for which the supplier receives compensation. This change will remove excess profits from suppliers. 

45 

             
 
 
 
 
 
                                                           
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The Second Economic Adjustment Programme for Greece. Second Review 

3.7.2. Electronic communications 

82. 

The Government has made some progress in issuing legislation leading to the release of the 
digital  dividend.  In  December  2012,  the  Authorities  amended  the  frequency  and  broadcasting 
plans  to  allocate  and  authorise  the  use  of  the  digital  dividend  to  electronic  communication 
services. The next step is the launch of the public consultation on the tender procedure for the 
assignment of the digital dividend to electronic communication services, to be followed by the 
tender itself. It should be noted that the deadlines provided for in the MoU could be extended by 
a Commission Decision. Such a decision would grant Greece derogation from the deadline of the 
Radio Spectrum Policy Programme (RSPP) for the completion of such procedures, which in any 
case, cannot be extended beyond June 2014. Therefore, it is important to take steps leading to the 
release of the digital dividend, given the proximity of the above-mentioned deadline.  

3.7.3. Transport 

83. 

84. 

85. 

86. 

87. 

Major  strategic  changes  are  underway  in  the  transport  sector.  Substantial  progress  has 
recently been made with the restructuring of the railways sector, including approving the legal 
changes  to  spin off  the  services  provision and  real  estate  businesses  and  to  transfer  the rolling 
stock to the state. Previous reforms are now being implemented, such as relaxing restrictions on 
licenses  for  both  road  haulage  and  occasional  passenger  transport  to  provide  the  scope  for 
greater  market  access.  Restrictions  have  also  been  removed  on  the rental  of pickup  trucks  and 
vans, on chauffeur services and to allow shuttle services by hotels and tour agencies to use small 
vans and off-terrain vehicles thus reducing transport prices and  strengthening the tourism sector, 

In  the  airport  and  maritime  sectors,  new  strategies  for  growth  are  being  designed.  These 
sectors are now leading the way in establishing an independent regulatory framework, through a 
clear separation between administrative responsibilities and commercial activities. Based on the 
national  airport  strategy,  the  authorities  launched  the  privatisation  process  by  designing  two 
airport clusters for sale, with the rest of the airports being grouped in a separate company which 
will have a ring-fenced and transparent financing mechanism. This privatisation strategy benefits 
from  prior  best  practices.  It  will  provide  concession  agreements  to  cap  airport  charges  at  an 
average regional benchmark level with the aim of preserving the competitiveness of the tourism 
sector.  Additional  efforts  will  be  realized  to  improve  the  competitiveness  position  of  Athens 
International Airport given its importance for the overall competitiveness of the sector.  

Important  reforms  are  also  underway  in  the  maritime  sector.  These  aim  to  increase  the 
flexibility  of  the  routing  changes  while  reducing  the  minimum  service  requirement  burden  on 
companies and providing for additional vessel flexibility. In the next quarters, the authorities will 
assess the impact of reforms, and adopt further steps to increase the flexibility of the sector. The 
authorities are preparing to launch key assets for privatisation, mainly through concessions, with 
the aim to ensure sustainable and self-financing port authorities, to attract additional capital and 
managerial  expertise  and  improve  the  competitiveness  of  the  sector  from  a  regional  and 
international perspective. 

Additional policies are in the pipeline to ensure a better intermodal connectivity between 
different  means  of transport,  by  better prioritising  public  spending  (including  EU funds),  by 
creating a transportation and logistics hub, and by better exploiting Greece's regional competitive 
advantage in this vital economic sector.  

With  some  delay,  progress  has  been  made  in  the  negotiations  to  restart  the  work  on  the 
motorways  concessions.  The  Greek  government  and  the  concessionaires  have  reached  an 
agreement  on  claims;  the  negotiations  now  continue  between  the  concessionaires  and  the  43 
Greek and international banks financing the projects and are expected to be completed promptly. 
To deal with a possible withdrawal of a bank it has been agreed that part of the resulting gap in 
the financing will be covered by the NSRF, whereas the Greek government also negotiated and 
secured  a  loan  of  650  m  euros  from  the  EIB.    The  Greek  authorities  plan  to  restart  work 

46 

 
 
 
 
 
 
 
 
                     
 
 
 3. Programme implementation 

immediately  and  estimate  that  the  re-launch  of  the  projects  will  lead  to  the  creation  of  25.000 
new  jobs.  These  projects  are  important  components  of  the  envelope  co-funded  by  the  EU 
structural funds, and their restart will contribute to accelerate the absorption of the envelope.  

Box 12. Structural Reforms and Investment in Infrastructure  

Greece has a strategic position as the Mediterranean face of the Balkans region. It has enormous potential as a 
logistics hub, serving both the South-eastern European region and the EU as a whole (see Tsekeris et al, 2011). Greek 
ports can play an increasingly important role as an entrepôt for trade with Asia, particularly China, the Middle East 
and North Africa, as well as shorter shipping links with Turkey and the Black Sea region. Improved shipping, rail and 
motorway links with the Danube, Italy, Croatia, Bulgaria and Romania are essential for Greece to be able to play this 
role. Enhancements to air transport and ICT infrastructures will also be needed. Greece can also play an important 
role  as  a  key  linkage  in  international  oil  and  gas  pipelines,  including  the  Southstream  and  Nabucco  natural  gas 
pipelines.  

Theoretical  and  empirical  work  has  shown  that  improvements  in  the  quantity  and  quality  of  public 
infrastructure  have  a  positive  impact  on  growth  in  the  medium  and,  possibly,  in  the  long  run  (Rutkowski, 
2009).  Achieving  an  adequate  level  of  public  infrastructure  can  address  bottlenecks  and  enhance  the  productive 
capabilities  of  the  economy,  thus  boosting  economic  growth.  Productive  public  investments  raise  the  marginal 
productivity of private capital and can lead to potential crowding-in of private investment. In an empirical analysis, 
Mamatzakis  (2002)  indicated  that  a  one  per  cent  increase  in  public  infrastructure  enhances  the  productivity  of  the 
Greek industrial sector by 0.14 per cent. On the other hand, higher public capital, if excessive or not well targeted to 
the needs of the economy, may also crowd out private investment. This risk seems to be prevalent in countries with 
weak institutions or those that lack openness in trade and financial terms (Cavallo and Daude, 2011). 

In order to achieve positive impacts, good project assessment, planning and implementation of infrastructure 
investment  is  essential.  Strong  complementarities  exist  between  different  types  of  infrastructure  investment 
(transport, energy, broadband) and good network inter-linkages are essential to achieve economies of scale and scope. 
It  is  thus  crucial  that  adequate  planning,  cost-benefit  analysis,  and  on-going  monitoring  and  evaluation  are  carried 
out.  Only  in  this  way  can  the  positive  network  effects  and  positive  externalities  for  private  investment  be  fully 
achieved and exploited. The development of the National Strategic Reference Framework for the Structural Funds in 
the next programming period of 2014-2020 provides the right context for such strategic planning and the authorities 
are taking up the opportunity. 
A  second  condition  for  success  is  the  efficient  and  competitive  operation  of  infrastructure  services.  The 
economic  adjustment  programme  has  thus  placed  a  high  importance  on  structural  reforms  to  transport.  Removing 
restrictions on licensing for road haulage and occasional passenger transportation increases competition and reduces 
costs for infrastructure users. The privatisation and other reforms to port and airport infrastructure increase efficiency 
and boost the returns to private and public investment. In this way, the value of new infrastructure can be maximised 
and the infrastructure investment can make a substantial contribution to sustainable new growth and jobs. 

References 
Cavallo,  E.A.,  C.  Daude,  (2011)  "Public  investment  in  developing  countries:  A  blessing  or  a  curse?"  Journal  of  Comparative 
Economics, 2011, Volume 39, pp. 65-81.  

Mamatzakis, E.C., (2002) "Public infrastructure and private output: an application to Greece" Journal of Economic Development, 
December 2002, Volume 27, Number 2, pp. 143-160. 

Tsekeris, Th., Ch. Tsekeris and G. Karabelias (2011) "Exploring the role of Greece in the development of infrastructure networks in 
South-eastern Europe" Transition Studies Review, September 2011, Volume 18, Issue 1, pp. 99-111. 

Rutkowski, A., "Public investment, transport infrastructure and growth in Poland" DG ECFIN Country Focus, Volume 6, Issue 11, 
December 2009. 

3.7.4. The Retail Sector 

88. 

The Greek government is reviewing the regulatory framework on retail. This includes a law 
of  1946  containing  the  basic  (and  outdated)  regulation  of  this  sector  as  well  as  a  ministerial 
decision from 2009 deriving from it, spelling out the conditions for the distribution of goods and 
services.  A  draft  law  amending  the  1946  law  on  retail  has  been  submitted  to  the  Commission 
services  in  February  2012.  The  draft  is  in  compliance  with  the  Hellenic  Competition 
Commission's  Opinion  24/VII/2012,  thus  scrapping  various  modalities  of  public  sector 

47 

             
 
 
 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

intervention  such  as  quantitative  restrictions  and  maximum  profit  margins  for  wholesale  and 
retail.  In  addition,  the  Greek  government  notified  to  the  Commission  services  the  draft 
ministerial decision accompanying the above-mentioned law, as per the procedure provided for 
in  Directive  98/34.  The  assessment  made  by  the  Commission  services  revealed  issues  on  the 
labelling  provisions,  so  the  government  will  prepare  a  revised  ministerial  decision  to  address 
these  concerns.  In  the  context  of  legislative  work  on  retail  policy,  the  mission  has  argued  in 
favour  of  increasing  retailers'  decision  power  on  promotion  and  sales  policies  throughout  the 
year, as well as for increasing Sunday trading. The government is preparing new legislation to 
allow trade shops to operate seven Sundays a year, as well as small surface shops to operate on 
Sundays all year around. Finally, for over-the-counter (OTC) products, the government agreed to 
replace  the  current  system  of  fixed  margins  with  maximum  ones.  As  a  next  step,  the  sales  of 
selected products (e.g., vitamins) in other points than pharmacies will be permitted.  

Box 13. Effects of Retail Market Reforms on prices and competition  

In  the  context  of  the  economic  adjustment  programme,  the  Greek  Government  has  adopted  a  number  of 
measures designed to modernise and increase competition in retail markets. Important measures introduced in 
the first semester of 2012 included the abolition of the prohibition of selling merchandise at prices below cost and the 
simplification of the system of submission of wholesale price lists and cost elements to the Ministry of Development. 
These  measures  could  have  increased  price  flexibility  and  reduced  the  scope  for  collusion  in  price  setting.  At  the 
same  time,  a  number  of  restrictions  in  the  retail  sector  were  removed  in  November  2012,  including  restrictions  on 
product  categories  in  supermarkets  (such  as  baby  milk,  tobacco,  newspapers  and  magazines);  eliminating  the 
minimum  space  requirements  for  the  sale  of  food  products;  allowing  mixed  shops  to  sell  goods  other  than  food, 
subject to hygiene and food and safety standards; allowing the sale of pre-packaged meat, cheese and fish products in 
supermarkets;  and  addressing  labour  market  restrictions  inter  alia  by  delinking  the  working  hours  of  employees  in 
retail outlets from the opening hours. 

Analysis  of  the  behaviour  of  food  and  other  retail  prices  has  confirmed  that  some  significant  reductions  in 
retail prices have occurred as a result of these measures (see Development Ministry, 2012). The prices of main 
components of retail trade (food and non-alcoholic beverages, household appliances, audio-visual, photographic and 
information  equipment,  personal  care,  furniture  and  carpets,  clothing  and  footwear)  in  Greece  have  decreased 
particularly in July 2012 following the implementation of the measures (see graph 15.1). This is in contrast with price 
developments in the rest of the euro area, where these prices tended to rise.  In particular, whilst the prices of food 
and non-alcoholic beverages in Greece fell by -0.54% in December 2012 compared to a year earlier, prices for the 
same goods in the euro area increased by 3.03% over the same period.  

Chart 16Graph 13.1. HICP Main components of retail trade 

110

Index

105

100

95

90

85

Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12

Food and non-alcoholic beverages
Household appliances
Audio-visual, photographic and information processing equipment
Personal care

Source: Eurostat 

However, many retail prices in Greece are still amongst the highest in the EU. There is also evidence of lack of 
competition in other parts of retailing. For example, price data on footwear and clothing shows that there is intense 
competition in the twice yearly sale periods, whilst prices were held at high levels at other times of year (see graph 
15.2). This suggests some retailer collusion may exist at least during non-sale periods. Sales in Greece have a brief 
duration of one month, twice a year. Discounts during this period are much greater in contrast with Euro area, where 
the  percentage  of  discounts  is  lower  but  the  duration  of  sale  periods  is  longer.    In  order  to  provide  consumer 
protection and increase efficiency and competition, Greece is adopting more European patterns of retail trade. Among 

48 

 
 
 
 
 
 
 
 
                     
 
 
 
 
 3. Programme implementation 

the forthcoming regulations that are to be implemented in June 2013, there is a provision for removal of restrictions 
in order to permit more freely discounts, promotions, and offers outside and during sale periods, more sale periods 
combined  with  more  flexibility  in  the  duration  of  the  sales,  and  increased  flexibility  in  retailers'  opening  hours  on 
Sundays. This should increase competition, reduce prices, and widen choice for consumers throughout the year. 

Chart 17Graph 13.2. HICP Clothing and footwear 

Index

110

105

100

95

90

85

80

75

70

65

Dec-10 Apr-11 Aug-11 Dec-11 Apr-12 Aug-12 Dec-12

Greece

Euro area

Source: Eurostat 

References 
Υπουργείο Ανάπτυξης, Ανταγωνιστικότητας, Υποδομών, Μεταφορών & Δικτύων (2012), "Η Ελληνική αγορά γίνεται φθηνότερη. 
Η εξέλιξη των τιμών το 2012"  - Ministry of Development, Competitiveness, Infrastructure, Transports & Networks (2012), "Greek 
market becomes cheaper. The evolution of prices in 2012" (in Greek) 

3.7.5. Regulated professions and professional qualifications 

89. 

The  implementation  of  the  2011  law  on  regulated  professions  needs  to  be  completed, 
following  up  the  big  push  in  November  2012.  The  Government  has  drafted  implementing 
regulations on stevedores, tourist guides, private education centres and accountants, provided for 
in  the  legislation  adopted  prior  to  the  December  2012  disbursement.  The  mission  has  also 
assessed legislative proposals covering among others, antique dealers, welfare units regulated by 
the Ministry of Health, professions under the Greek ministry of civil protection, which reflect the 
opinions  of  the  Hellenic  Competition  Commission  on  the  justification  and  proportionality  of 
specific restrictions. In addition, there is on-going work on the draft code of lawyers, with the 
mission's focus on the provisions on the entry and re-entry into the profession, on commercial 
communications,  activities  reserved  in  exclusivity  to  lawyers  and  on  minimum  fees  for  legal 
services.  With  the  outstanding  issues  having  been  clarified,  the  Government  should  adopt 
pending  legislation,  so  as  to  complete  the  implementation  of  the  2011  law  on  regulated 
professions. Looking forward, the focus will be on the evaluation of the activities reserved to the 
engineering  and  other  technical  professions,  as  well  as  the  reassessment  of  the  registration 
requirements  of  professionals 
interest 
considerations.  The  authorities  also  committed  to  review  the  impact  of  de-regulation  of 
professional  activities  by  completing  a  study  examining  the  degree  to  which  the  20  largest 
professions have been liberalized, including developments with respect to new entrants and price 
changes. 

their  respective  associations  against  public 

to 

3.8. INCREASING THE IMPACT OF STRUCTURAL AND COHESION FUNDS 

90. 

Greece  did  not  achieve  the  very  ambitious  absorption  target  of  the  programme  in  2012  that 
required that payment claims of EUR 3.73 bn. Submitted payment claims amounted to EUR 3.25 
bn with an absorption rate of 49.2%, well above the EU average of 46.4%. The absorption target 
for 2013 is EUR 3.89 bn The Greek authorities have been working on improving the monitoring 
of  the  implementation  of  the  priority  projects  and  on  the  simplification  of  the  project 

49 

             
 
 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

implementation.  A closer method to monitor the priority projects that are not progressing was 
agreed, guidelines for the SMEs were issued to ensure support is targeted to the development of 
the  economy  and  job  creation  and  legislation  was  issued  shortening  deadlines  and  simplifying 
procedures  on  contract  awards  according  to  the  requirements  of  the  programme.  A  number  of 
actions have been identified simplifying procedures in order to accelerate the absorption of the 
structural funds. The absorption rate for the first three months of 2013 has already risen steeply 
to 56.1%. 

3.9. TECHNICAL ASSISTANCE AND MONITORING 

91. 

Greece  is  receiving  technical  assistance  coordinated  by  the  Commission's  taskforce  and 
provided  by  the  Commission,  Member  States,  the  IMF,  World  Bank  and  other  sources. 
Technical  assistance  (TA)  concerns  several  areas  which  are  crucial  for  the  success  of  the 
programme.  Recent  examples  of  such  major  contributions,  include  work  in  such  fields  as  tax 
administration and the fight against tax evasion, public financial management, the reform of the 
public administration, as well as in a range of projects improving the business environment. By 
providing advice based on best practice, TA contributes to enhancing the government's capacity 
to implement policies. It also helps to increase programme ownership, via the exchange of views 
and policy options between the government and the TA providers.19 Greece, the Eurogroup and 
the  Commission  have  agreed  TA  should  help  further  strengthening  of  Greece's  institutional 
capacity  in  delivering  the  agreed  policies.  With  this  objective  in  mind,  the  Commission  is 
significantly strengthening its presence on the ground in Greece. This will bolster its capacity to 
provide and coordinate technical assistance. Moreover, a continuous monitoring will contribute 
to the timely and full implementation of the programme. 

19 For  more details on the several TA projects, the reader is referred to the quarterly reports by the Commission's Task Force for 

Greece. 

50 

 
 
 
 
 
 
 
 
                     
 
 
 
                                                           
4.  DEBT SUSTAINABILITY ANALYSIS AND PROGRAM FINANCING 

4. DEBT SUSTAINABILITY ANALYSIS AND PROGRAMME FINANCING  

4.1. DEBT SUSTAINABILTY ANALYSIS 

92. 

The outlook for debt sustainability of the Greek sovereign remains broadly unchanged compared 
to the December compliance report (Graph 20). There have been no changes in the macroeconomic 
scenario, while public finances remain on track to reach the targets.  Moreover, Greece is still expected 
to  clear  EUR  8  bn  in  arrears  in  2012  -  2013,  albeit  with  a  slightly  revised  quarterly  profile20.    As 
regards  privatisation  proceeds,  only  marginal  downward  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 
120%  by  2021,  assuming  that  the  economic  adjustment  programme  continues  to  be  implemented.  As 
the debt-to-GDP ratio will nevertheless remain elevated in the near future, full capital market access for 
Greece will remain challenging in the years ahead.  

Graph 20. Greece – General Government Debt (% of GDP)  

P
D
G

f
o
%

180

160

140

120

100

80

60

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

memo : baseline December 2012

General government debt, % GDP

Source: Commission services. 

93. 

The results from the stress test scenarios of the previous review remain valid and show the impact 
of various risks on the baseline debt-to-GDP ratio (Graph 21). The details of the scenarios21 are: 

•  Economic growth: The impact of annual upward or downward revision of the real GDP growth rate by 

1 p.p. each year from 2013 onwards. 

•  Interest rates: The impact of a downward revision by 50bps (positive shock with a zero interest floor) 

or an upward revision of 150bps of the interest rate applying to Greek debt..  

•  Privatisation proceeds: The stress scenarios assume that privatisation proceeds through end-2020 are 

EUR 8 billion higher or lower than in the baseline. 

•  Fiscal performance: In the shock scenarios the primary balance is either 0.5 percentage points of GDP 

higher than assumed in the baseline, or 1 percentage point worse in the negative scenario.  

•  Combined shock: In such a scenario it is assumed that (i) GDP growth is 1 p.p. below the baseline; (ii) 
privatisation proceeds would be EUR 8 billion below the baseline; and (iii) the primary surplus would 
be 1 p.p. below the baseline. Conversely, the positive scenario shows (i) privatisation proceeds being 
EUR 8 billion higher than the baseline; (ii) GDP growth being 1 p.p. above the baseline; and (iii) the 
primary surplus being 0.5 p.p. above the baseline.  

20 The current debt projections also assume that the deferral of interest applies to all euro area loans and that Greece can refinance itself at 

EFSF conditions until it has regained market access, in line with the assumptions underpinning the DSA in December 2012..  

21  For  full  details,  see  section  4.1.2  of  the  "The  Second  Economic  Adjustment  Programme  for  Greece:  First  Review  –  December  2012" 

European Economy Occasional Papers 123, December 2012. 

51 

 
 
 
 
 
 
                                                           
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The Second Economic Adjustment Programme for Greece. Second Review 

Graph 21.   Dynamic profile of stress-test scenarios and overall impact in 2020 (% of GDP) 

200

180

160

140

120

100

80

60

40

Baseline
Lower privatization proceeds

Higher privatization proceeds

200

180

160

140

120

100

80

60

40

Baseline Higher interest rates Lower interest rates

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

200

180

160

140

120

100

80

60

40

200

180

160

140

120

100

80

60

40

Baseline

Higher output

Lower output

Baseline

Higher primary surplus

Lower primary surplus

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

200

180

160

140

120

100

80

60

40

Baseline
Combined negative shock

Combined positive shock

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

Source: European Commission services calculations 

140

135

130

125

120

115

110

105

100

Upside risk

Baseline

Downside risk

Privatization

Interest rates

Fiscal
performance

Output

 52 

 
 
 
 
 
 
 
 
                  
 
 
 
 
 
 
 
4. Debt sustainability analysis and program financing 

4.2. PROGRAMME FINANCING  

94. 

Until early May 2013, disbursements under the programme amounted to EUR 200.9 bn, including 
four tranches of the second disbursement under the first review of the second programme and EUR 7.2 
bn made available in January 2013 to cover bank recapitalisation and resolution costs (see Table 7).  

Table 7. Disbursements under the Greek adjustment programmes (EUR billion) 

1st programme
1st disbursement
2nd disbursement
3rd disbursement
4th disbursement
5th disbursement
6th disbursement
1st programme - Total disbursements
2nd programme
1st disbursement

Past disbursements

Euro-area Member States

IMF

18 May 2010

13 September 2010

19 January 2011

16 March 2011

15 July 2011

14 December 2011

14.5

12 May 2010

6.5

6.5

14 September 2010

21 December 2010

10.9

16 March 2011

13 July 2011

7 December 2011

8.7

5.8

52.9

5.5

2.5

2.5

4.1

3.3

2.2

20.1

EFSF 1

IMF

12 March, 10 April and 25 April 2012

29.7

19 March 2012

1.6

Total

20.0

9.0

9.0

15.0

12.0

8.0

73.0

Total

1st tranche2
2nd tranche3
3rd tranche
4th tranche
5th tranche4
6th tranche
7th tranche
Total
1st tranche5
2nd tranche5
3rd tranche
4th tranche
Total

2nd disbursement

12 March, 10 April and 25 April 2012

19 March 2012

10 April 2012

19 April 2012

10 May 2012

28 June 2012 

17 and 19 December 2013

28 and 31 January 2013

28 February 2013
3 May 2013

4.9

5.9

3.3

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4.2

1.0
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34.3

9.2

2.8
2.8
49.1

123.1

176.0

16 January 2013

3.24

4.84

127.9

24.9

200.9

2nd programme - Total disbursements till May 2013 

1st programme and 2nd programme - Total disbursements till May 2013

Source: European Commission and EFSF 

95. 

With  the  adoption  of  the  measures  related  to  March  milestones  for  the  last  sub-tranche  of  the 
December release of EUR 49.1 billion, the latter would be fully disbursed, pending the request for 
the  funds  related  to  the  bank  recapitalisation.  After  the  disbursement  of  EUR  34.3  billion  last 
December,  the  EFSF  Board  of  Directors  agreed  on  28  January  2013  on  the  disbursement  of  the  sub-
tranche of EUR 2 billion conditional on fulfilling the January milestones (the adoption of the income 
tax reform, electricity prices have begun to move towards market levels), as well as on the disbursement 
of EUR 7.2 billion to cover bank recapitalisation and resolution costs (although the latter has not been 
requested by the Greek authorities yet). The MoU milestone for February (the update of Medium-Term 
Fiscal Strategy, including setting binding 3-year expenditure ceilings for government sub-sectors) was 
also achieved and the EWG of 21 February decided for the disbursement of the February sub-tranche. 
The steps taken by the authorities have allowed to significantly catch up with the delivery of the March 
milestones (related to the public administration and the health sector), and hence the disbursement of 
the  related  EUR  2.8  bn  from  the  EFSF  tranche  remaining  from  the  previous  Review  was  made  on  3 
May 2013. 

96. 

With  the  disbursements  made  since  the  December  release  Greece's  liquidity  position  has  been 
signincantly improved. The increased liquidity allowed the Greek debt management agency to achieve 
the planned T-bill stock reduction in January and early February. The T-bill stock in early May stands 
at EUR 15 bn (compared to EUR 18.4 bn at the end of 2012).  

53 

 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

97. 

The  release  of  the  disbursement  related  to  the  completion  of  the  second  review  broadly 
corresponds  to  the  planned  tranches  of  the  second  programme  for  Q1  and  Q2  2013.  Estimated 
financing needs for the coming quarter to be covered by the EU equal to EUR 7.5 billion, which will go 
towards funding the cash needs of the government, including for the payment of arrears to the private 
sector and outstanding debt service. The disbursement will be made in two tranches, with the first one 
amounting  to  EUR  4.2  billion  paid  in  May  2013.  The  disbursement  of  the  remaining  amount  will  be 
made in June 2013, following achievement of milestones (see Table 8 below). 

Table 8. Milestones for the disbursement of the sub-tranche of the 3nd release 

Milestones for June Disbursement (from MoU, May actions) 

Area 

MOU section 

Appoint  the  national  coordinator  for  anti-corruption,  the  coordination 
committee and  its  chairman, and  the advisory committee, and  second 
the eight staff provided for by the law. (May 2013) 

Facilitate  the  resolution  of  unsustainable  household  debt,  by  passing 
legislation  to  introduce  a  new  'Facilitation  programme'  and  revising 
law  3869/2010  to  address  the  implementation  shortfalls  identified 
during its first three years of enactment (end-May). 

Building  upon  the  report  of  RAE  published  in  December  2012  and 
RAE  recommendations,  the  authorities  will  present  to  the  EU 
Commission Services before end-May 2013 for consultation a detailed 
action  plan  with  identified  time  bound  steps  and  a  date  for  its 
substantial completion, for the transition of the electricity market to the 
EU  Target  Model.  This  plan  will  establish  competition,  stimulate 
entry, reflect the reforms of PPC, and remove market distortions; and it 
will not entail State Aid. 

2.3.2.12 

(Fight against tax 
evasion, money 
laundering and 
corruption) 

(financial sector, 
household debt) 

3.7.4 and 
3.7.5 

(Energy, electricity 
market) 

6.1.5.1 

 54 

 
 
 
 
 
 
 
 
                  
 
 
 
4
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d
u
l
c
n
I

/
1

/
2

/
3

55 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

 56 

 
 
 
 
 
 
 
 
                   
                  
Annex 1: Assessment of compliance with the Memorandum of Understanding 
on Specific Policy Conditionality 

ANNEX 1: ASSESSMENT OF COMPLIANCE WITH THE MEMORANDUM OF UNDERSTANDING ON SPECIFIC POLICY CONDITIONALITY 

                 ANNEX 

This section is available in the online version of the document at the site of DG ECFIN, namely at the webpage: 

 http://ec.europa.eu/economy_finance/publications/occasional_paper/2013/op148_en.htm  

57 

  
 
 
 
 
 
 
 
 
 
 
                  
 
 
 
 
 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

 58 

 
 
 
 
 
 
 
 
                   
                  
 
                 ANNEX 

Annex 2: Macroeconomic forecast 

ANNEX 2: MACROECONOMIC FORECAST 

Table A1: USE AND SUPPLY OF GOODS AND SERVICES (volume)

Annual % change

2011

2012

2013

2014

2015

2016

1. Private consumption expenditure
2. Government consumption expenditure
3. Gross fixed capital formation
3a.  - of which, construction 
3b.  - of which, equipment 

4. Final domestic demand 
5. Change in inventories + net acquisitions of 
    valuables (as % of GDP)
6. Domestic demand
7. Exports of goods and services 

7a.  - of which goods
7b.  - of which services

8. Final demand 
9. Imports of goods and services 

9a.  - of which goods
9b.  - of which services

10. Gross domestic product at market prices

Contribution to change in GDP

11. Final domestic demand
12. Change in inventories + net acq. of valuables
13. External balance of goods and services 

-7.7
-5.2
-19.6
-21.0
-18.1
-9.3

-0.4
-9.7
0.3
4.0
-3.0
-8.0
-7.4
-6.4
-10.9
-7.1

-10.1
-0.4
2.4

-9.1
-4.2
-19.2
-22.7
-17.3
-9.7

-0.4
-9.8
-2.4
1.8
-6.7
-8.4
-13.8
-14.8
-9.5
-6.4

-10.4
0.0
3.6

-6.9
-4.0
-4.0
-5.1
-3.4
-5.9

0.0
-5.6
3.0
3.0
3.3
-3.8
-6.4
-6.8
-5.6
-4.2

-6.1
0.4
2.7

-1.6
-6.2
8.4
7.0
10.0
-1.1

0.0
-1.1
4.6
4.1
5.1
0.1
-1.9
-2.0
-1.7
0.6

-1.1
0.0
1.8

1.4
-4.8
11.3
10.1
13.0
1.7

0.0
1.7
5.5
5.0
6.0
2.6
1.2
1.2
1.2
2.9

1.7
0.0
1.2

2.2
-4.0
14.5
11.7
17.0
3.1

0.0
3.1
4.7
4.3
5.1
3.5
2.7
2.7
2.7
3.7

3.1
0.0
0.6

Table A2: USE AND SUPPLY OF GOODS AND SERVICES (value)

Annual % change

2011

2012

2013

2014

2015

2016

1. Private consumption expenditure
2. Government consumption expenditure
3. Gross fixed capital formation
3a.  - of which, construction 
3b.  - of which, equipment 

4. Final domestic demand
5. Change in inventories + net acquisition of valuables
6. Domestic demand
7. Exports of goods and services 

7a.  - of which, goods
7a.  - of which, services

 8. Final demand
 9. Imports of goods and services 

9a.  - of which goods
9a.  - of which, services

10. Gross domestic product at market prices 

11. Gross national income 
12. Compensation of employees
13. Gross operating surplus and mixed income
14. Gross value added at basic prices 

14a. - of which, labour costs, including self-employed

15. Taxes net of subsidies

15a. - taxes on products
15b. - subsidies on products

16. Gross domestic product at market prices 

-4.6
-11.0
-19.4
-21.1
-17.8
-8.1

-7.1
5.7
12.6
-0.4
-5.0
-1.3
0.7
-8.8
-6.1

-6.2
-9.0
-4.5
-6.2
-8.8
-5.7
-5.7
-7.9
-6.1

-8.2
-5.1
-19.4
-23.1
-17.6
-9.3

-9.7
0.1
5.6
-5.4
-7.9
-10.2
-10.7
-8.1
-7.1

-3.8
-12.7
-2.8
-6.9
-12.2
-8.5
-8.4
3.1
-7.1

-7.6
-8.2
-5.1
-6.2
-4.5
-7.4

-7.8
2.4
2.4
2.5
-5.7
-7.0
-7.3
-6.0
-5.3

-6.4
-10.3
-2.7
-5.4
-10.3
-4.3
-4.2
0.1
-5.3

-2.0
-6.7
7.2
5.4
8.9
-1.6

-1.6
4.2
3.7
4.7
-0.3
-2.2
-2.3
-2.0
0.3

-0.5
-1.3
1.3
0.4
-0.9
-0.9
-0.8
0.4
0.3

1.7
-4.8
11.5
10.3
13.2
2.0

2.0
5.6
5.1
6.1
2.8
1.1
1.1
1.1
3.4

3.0
1.9
4.2
3.5
2.6
2.2
2.1
0.4
3.4

3.3
-3.2
14.9
12.2
17.5
4.1

4.1
5.0
4.6
5.4
4.3
2.7
2.7
2.7
4.8

4.6
4.7
4.6
4.7
5.6
5.7
5.6
0.4
4.8

59 

  
 
 
 
 
 
 
 
 
 
 
                  
 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

Table A3: COSTS AND PRICES

% change in implicit price deflator

2011

2012

2013

2014

2015

2016

1. Private consumption expenditure
2. Government consumption expenditure
3. Gross fixed capital formation
3a.  - of which, construction 
3b.  - of which, equipment 

4. Final domestic demand
5. Domestic demand
6. Exports of goods and services 

6a.  - of which, goods
6b.  - of which, services

7. Final demand
8. Imports of goods and services 

8a.  - of which, goods
8b.  - of which, services

9. Gross domestic product at market prices
10. Terms of trade of goods and services

10a. - of which, terms of trade of goods
10b. - of which, terms of trade of services

11. HICP

3.4
-6.2
0.3
-0.1
0.4
1.3
2.8
5.4
8.2
2.6
3.3
6.6
7.6
2.4
1.0
-1.1
0.6
0.3
3.1

0.9
-0.9
-0.2
-0.6
-0.4
0.5
0.1
2.6
3.8
1.4
0.6
4.1
4.8
1.5
-0.8
-1.3
-1.0
-0.2
1.0

-0.8
-4.4
-1.1
-1.2
-1.1
-1.5
-2.4
-0.6
-0.6
-0.8
-1.9
-0.6
-0.5
-0.4
-1.1
-0.2
-0.1
-0.4
-0.8

-0.4
-0.5
-1.1
-1.5
-1.0
-0.5
-0.5
-0.4
-0.4
-0.4
-0.4
-0.3
-0.3
-0.3
-0.4
-0.1
-0.1
-0.1
-0.4

0.3
0.0
0.2
0.2
0.2
0.3
0.3
0.1
0.1
0.1
0.3
-0.1
-0.1
-0.1
0.4
0.2
0.2
0.2
0.6

1.1
0.8
0.4
0.4
0.4
1.0
1.0
0.3
0.3
0.3
0.8
0.0
0.0
0.0
1.1
0.3
0.3
0.3
1.1

Table A4: LABOUR MARKET AND LABOUR COST

Annual % change

2011

2012

2013

2014

2015

2016

1. Gross value added at 1995 basic prices
2. Employment ('000)
3. GVA per occupied person 
4. Compensation of employees (per employee)
4a. - of which, private sector per head
4b. - of which, general government per head

5. Unit labour costs (1995=100)

6. Total population
7. Population of working age (15-64 years)
8. Total labour force

9. Total employment

9a(i). - of which, employees
9a(ii). - of which, self-employed
9b(i). - of which, private sector
9b(ii). - of which, general government

10. Unemployment
  10a. Calculated unemployment rate (%) (National accounts definition)

-6.6
-5.6
-1.0
-3.4
-6.2
3.3
-2.4

-0.1
-0.6
-0.3

-5.6
-5.8
-5.3
-4.6
-9.9
39.5
16.5

-6.2
-8.3
2.4
-4.2
-6.5
-1.3
-6.4

-0.1
-0.8
-0.8

-8.3
-8.9
-7.3
-9.1
-5.1
37.3
22.8

-4.2
-3.5
-0.7
-7.0
-7.4
-5.8
-6.3

0.0
-0.3
0.0

-3.5
-3.5
-3.5
-3.2
-4.8
12.0
25.5

0.6
0.6
0.0
-1.5
-0.7
-1.5
-1.5

0.0
-0.2
-0.8

0.6
0.2
1.4
1.6
-3.7
-4.7
24.5

2.9
2.6
0.3
0.0
0.8
0.4
-0.3

0.0
-0.1
0.0

2.6
1.9
3.9
3.9
-3.2
-8.1
22.5

3.7
4.0
-0.3
1.5
2.7
1.2
1.8

0.0
-0.1
0.1

4.0
3.2
5.5
5.4
-3.0
-13.5
19.5

 60 

 
 
 
 
 
 
 
 
                   
                  
 
 
 
 
 
 
 
 
Table B1: USE AND SUPPLY OF GOODS AND SERVICES (value, in EUR billion)

levels

2010

2011

2012

2013

2014

2015

2016

                 ANNEX 

1. Private consumption expenditure
2. Government consumption expenditure
3. Gross fixed capital formation
4. Final domestic demand (1+2+3)
5. Change in inventories + net acquisition of valuables
6. Domestic demand (4+5)
7. Exports of goods and services 

7a.  - of which, goods
7b.  - of which, services

8. Final demand (6+7)
9. Imports of goods and services 

9a.  - of which goods
9b.  - of which, services

10. Gross domestic product at market prices ( 8-9 )

10a. - of which, external balance of goods and services

11. Gross national income at market prices (10+11a)

11a. Balance of primary income with rest of the world

12. Compensation of employees
13. Gross operating surplus and mixed income
14. Gross value added at basic prices

14a. - of which, labour costs, including self-employed

15. Taxes net of subsidies (15a-15b)

15a. - taxes on products
15b. - subsidies on products

 16. Gross domestic product at market prices (14+15)

163.1
40.7
39.2
243.0
-0.2
242.8
49.4
23.3
26.1
292.2
70.0
55.1
14.9
222.2
-20.6

215.9
-6.2
80.5
117.5
195.2
122.2
26.93
27.4
0.4
222.2

155.6
36.2
31.6
223.4
2.0
225.4
52.2
26.3
26.0
277.7
69.1
55.5
13.6
208.5
-16.9

202.5
-6.0
73.3
112.2
183.1
111.4
25.39
25.8
0.4
208.5

142.8
34.4
25.5
202.6
0.9
203.5
52.3
27.8
24.5
255.8
62.1
49.6
12.5
193.7
-9.7

194.7
1.0
64.0
109.0
170.5
97.8
23.2
23.6
0.4
193.7

131.9
31.6
24.2
187.6
0.0
187.6
53.6
28.4
25.2
241.2
57.7
46.0
11.7
183.5
-4.1

182.2
-1.3
57.4
106.1
161.3
87.8
22.2
22.6
0.4
183.5

129.2
29.5
25.9
184.6
0.0
184.6
55.8
29.5
26.3
240.4
56.4
44.9
11.5
184.0
-0.6

181.4
-2.6
56.7
107.5
161.9
87.0
22.0
22.5
0.4
184.0

131.4
28.0
28.9
188.3
0.0
188.3
58.9
31.0
27.9
247.2
57.0
45.4
11.6
190.2
1.9

186.9
-3.3
57.7
112.1
167.7
89.3
22.5
22.9
0.4
190.2

135.7
27.1
33.2
196.1
0.0
196.1
61.9
32.4
29.5
258.0
58.6
46.6
11.9
199.4
3.3

195.5
-3.9
60.5
117.2
175.6
94.2
23.8
24.2
0.4
199.4

Table B2: LABOUR MARKET AND LABOUR COST (in EUR billion unless otherwise stated)

levels

2010

2011

2012

2013

2014

2015

2016

1. Gross value added at 1995 basic prices
2. Employment ('000)
3. GVA per occupied person (1:2)
4. Compensation of employees (per employee)
4a. - of which, private sector per head
4b. - of which, general government per head

5. Unit labour costs (4:3) (1995=100)

6. Total population
7. Population of working age (15-64 years)
8. Total labour force

8a. -calculated activity rate (%) (8:7)

9. Total employment

9a(i). - of which, employees
9a(ii). - of which, self-employed
9b(i). - of which, private sector
9b(ii). - of which, general government
9c. Calculated employment rate (9:7)

10. Unemployment

  10a. Calculated unemployment rate (%) (10:8)

171.5
4711.7
36.4
25.9
23.9
30.9
71.2

160.2
4446.8
36.0
25.1
22.4
31.9
69.5

150.3
4076.2
36.9
24.0
21.0
31.5
65.1

144.0
3933.5
36.6
22.3
19.4
29.7
61.0

11307.6
7522.4
5340.4
71.0

11300.0
7474.6
5323.7
71.2

11290.1
7414.8
5280.0
71.2

11290.1
7392.6
5281.8
71.4

4711.7
3103.6
1608.1
3813.0
898.7
62.6
628.7

11.8

4446.8
2924.6
1522.2
3637.0
809.7
59.5
876.9

16.5

4076.2
2664.8
1411.4
3307.5
768.6
55.0
1203.8

22.8

3933.5
2571.5
1362.0
3201.8
731.7
53.2
1348.3

25.5

144.9
3957.1
36.6
22.0
19.3
29.2
60.1

11290.1
7377.8
5242.0
71.1

3957.1
2576.6
1380.5
3252.7
704.4
53.6
1284.9

24.5

149.1
4060.0
36.7
22.0
19.4
29.3
59.9

11290.1
7370.4
5240.8
71.1

4060.0
2625.6
1434.4
3378.1
681.9
55.1
1180.8

22.5

154.6
4222.4
36.6
22.3
19.9
29.7
61.0

11290.1
7363.1
5243.8
71.2

4222.4
2709.6
1512.8
3560.8
661.6
57.3
1021.4

19.5

61 

  
 
 
 
 
 
 
 
 
 
 
                  
 
 
 
 
 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

Table B3: EXTERNAL BALANCE

levels

2010

2011

2012

2013

2014

2015

2016

1. Exports of goods (fob)
2. Imports of goods (fob) 
3. Trade balance (goods, fob/fob) (1-2)

3a. p.m. (3) as % of GDP

4. Exports of services (a)
5. Imports of services (a)
6. Services balance (a) (4-5)
6a. p.m. 6 as % of GDP

7. External balance of goods & services (3+6)

7a. p.m. 7 as % of GDP

8. Balance of primary incomes and current Transfers

8a. - of which, balance of primary income
8b. - of which, net current Transfers
8c. p.m. 8 as % of GDP

9. Current external balance (7+8)

9a. p.m. 9 as % of GDP
10. Net capital transactions
11. Net lending (+)/ net borrowing (-) (9+10)

11a. p.m. 11 as % of GDP

23.3
55.1
-31.8
-14.3
26.1
14.9
11.2
5.0
-20.6
-9.3
-7.8
-6.2
-1.6
-3.5
-28.4
-12.8
3.9
-24.5
-11.0

26.3
55.5
-29.3
-14.0
26.0
13.6
12.4
5.9
-16.9
-8.1
-7.6
-6.0
-1.6
-3.7
-24.5
-11.7
4.1
-20.4
-9.8

27.8
49.6
-21.8
-11.3
24.5
12.5
12.1
6.2
-9.7
-5.0
-0.6
1.0
-1.5
-0.3
-10.3
-5.3
4.6
-5.7
-2.9

28.4
46.0
-17.6
-9.6
25.2
11.7
13.4
7.3
-4.1
-2.2
-1.0
-1.3
0.3
-0.5
-5.1
-2.8
3.2
-1.9
-1.1

29.5
44.9
-15.5
-8.4
26.3
11.5
14.8
8.1
-0.6
-0.3
-2.5
-2.6
0.1
-1.4
-3.1
-1.7
3.2
0.1
0.0

31.0
45.4
-14.4
-7.6
27.9
11.6
16.3
8.6
1.9
1.0
-3.7
-3.3
-0.4
-1.9
-1.8
-1.0
3.3
1.5
0.8

32.4
46.6
-14.2
-7.1
29.5
11.9
17.5
8.8
3.3
1.6
-4.7
-3.9
-0.8
-2.4
-1.4
-0.7
3.4
2.0
1.0

 62 

 
 
 
 
 
 
 
 
                   
                  
 
 
 
 
 
 
 
 
 
 
 
  
 
                 ANNEX 

C1: FISCAL ACCOUNTS AND FORECAST 1/

2011

2012

2013

2014

2015

2016

Levels (in EUR billion)

Total revenue
Indirect taxes
Direct taxes
Social contributions
Sales
Other current resources
Capital transfers received

Total expenditure
Intermediate consumption
Compensation of employees
Social transfers other than in kind
Interest
Subsidies
Other current expenditure
Gross fixed capital formation 
Other capital expenditure

Measures to be identified

Primary balance

88.4
26.6
18.0
27.4
5.6
5.7
5.0

108.0
9.8
25.9
47.5
14.9
1.0
2.6
3.6
2.9

0.0

-4.7

85.4
24.3
19.0
26.5
5.8
4.7
4.9

97.6
9.5
24.2
44.4
9.7
1.0
2.3
3.5
3.1

0.0

-2.6

General Government balance

-19.6

-12.3

Total revenue
Indirect taxes
Direct taxes
Social contributions
Sales
Other current resources
Capital transfers received

Total expenditure
Intermediate consumption
Compensation of employees
Social transfers other than in kind
Interest
Subsidies
Other current expenditure
Gross fixed capital formation 
Other capital expenditure 2/

Measures to be identified

Primary balance

General Government balance

42.4
12.8
8.6
13.2
2.7
2.7
2.4

51.8
4.7
12.4
22.8
7.1
0.5
1.2
1.7
1.4

0.0

-2.3

-9.4

44.1
12.6
9.8
13.7
3.0
2.4
2.5

50.4
4.9
12.5
22.9
5.0
0.5
1.2
1.8
1.6

0.0

-1.3

-6.3

80.1
23.3
17.8
25.1
4.9
4.3
4.7

87.7
9.0
21.7
39.5
7.5
0.7
2.0
4.0
3.3

0.0

0.0

-7.5

% of GDP

43.7
12.7
9.7
13.7
2.7
2.3
2.6

47.8
4.9
11.8
21.5
4.1
0.4
1.1
2.2
1.8

0.0

0.0

-4.1

80.48
23.1
19.1
25.2
4.8
4.1
4.2

86.47
8.0
20.6
38.9
8.7
0.7
1.9
4.2
3.4

0.0

2.8

-6.0

43.7
12.6
10.4
13.7
2.6
2.2
2.3

47.0
4.4
11.2
21.1
4.8
0.4
1.1
2.3
1.8

0.0

1.5

-3.3

81.0
23.4
19.4
25.6
4.9
4.2
3.5

88.4
7.9
20.4
39.6
9.8
0.6
2.2
4.4
3.5

3.2

5.7

-4.1

42.6
12.3
10.2
13.5
2.6
2.2
1.8

46.4
4.2
10.7
20.8
5.1
0.3
1.1
2.3
1.8

1.7

3.0

-2.1

84.0
24.7
20.0
26.9
5.0
4.4
3.0

89.7
7.9
20.1
40.2
10.5
0.6
2.3
4.4
3.6

4.2

9.0

-1.6

42.1
12.4
10.0
13.5
2.5
2.2
1.5

45.0
4.0
10.1
20.2
5.3
0.3
1.1
2.2
1.8

2.1

4.5

-0.8

Memorandum item:
General Government balance (ESA-95 defintion)

-9.5

-10.0

…

…

…

…

1/ The numbers in the table are consistent with program definitions as laid out in the technical memorandum of understanding (TMU). The 
main differences compared with the ESA-95 definition are the exclusion from the program definition of ANFA and SMP profit transfers, 
most sales of non-financial assets, and costs related to bank resolutions and recapitalisations. 

63 

  
 
 
 
 
 
 
 
 
 
 
                  
 
 
 
 
European Commission 

The Second Economic Adjustment Programme for Greece. Second Review 

Debt
Change in debt
Government deficit (+ is a deficit) 1/
Stock-flow adjustment

Debt
Change in the ratio
Contributions:
Primary balance (+ is a deficit) 1/
“Snow-ball” effect
Stock-flow adjustment

C2: GOVERNMENT DEBT

2011

2012

2013

2014

2015

2016

355.2
26.6
19.6
7.0

170.3
22.4

2.3
16.8
3.4

levels (EUR billion)

321.5
17.6
7.5
10.1

% GDP

175.2
18.3

0.0
12.8
5.5

322.1
0.6
6.0
-5.4

175.0
-0.1

-1.5
4.3
-2.9

303.9
-51.3
12.3
-63.5

156.9
-13.5

1.3
18.0
-32.8

323.0
1.0
4.1
-3.1

169.8
-5.2

-3.0
-0.6
-1.6

320.8
-2.2
1.6
-3.8

160.9
-8.9

-4.5
-2.5
-1.9

1/ The numbers in the table are consistent with program definitions as laid out in the technical memorandum of understanding 
(TMU). The main differences compared with the ESA-95 definition are the exclusion from the program definition of ANFA and 
SMP profit transfers, most sales of non-financial assets, and costs related to bank resolutions and recapitalisations. 

 64 

 
 
 
 
 
 
 
 
                   
                  
 
 
 
 
 
Annex 3: Updated programme documents 

ANNEX 3: UPDATED PROGRAMME DOCUMENTS 

Letter of Intent 

Memorandum of Understanding 

d)  Memorandum of Economic and Financial Policies 

e)  Memorandum of Understanding on Specific Economic Policy conditionality  

f)  Technical Memorandum of Understanding  

  67 

  69 

  71 

  99 

169 

65 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 66 

 
 
HELLENIC REPUBLIC – LETTER OF INTENT 

67 

 
 
 
 
 68 

 
 
 
 
 
69 

 
 
 
 
 
 70 

 
 
MEMORANDUM OF ECONOMIC AND FINANCIAL POLICIES 

Outlook and Strategy 

Recent macroeconomic developments have been broadly in line with program 

1. 
projections. The economic situation remains difficult, with the economy continuing to contract 
and unemployment reaching an unacceptably high level. However, following the resumption of 
program disbursements in December, liquidity conditions and confidence indicators have 
improved. At the same time, the fiscal consolidation has continued, and the current account has 
improved, reflecting a better trade balance and lower interest payments following the debt 
restructuring in 2012. In addition, inflation continues to decline and is expected to become 
negative in 2013, placing it the lowest among euro area member countries. This should help 
restore competitiveness and cushion the impact on household income of recession and ongoing 
wage adjustment. Against this setting, and based on firm program implementation, we continue 
to expect growth to turn positive in 2014. We will monitor possible fallouts from developments 
in Cyprus, but at this juncture no significant modifications are needed to the program’s 
macroeconomic framework.   

Full and timely implementation of our economic program remains the key to 

2. 
recovery. The main priorities for this review, within the overall program objectives, include:  

 

Improving tax administration. Reforms in this area are an overarching objective of this 
review. They will help improve revenue collection, which is critical to distribute more 
fairly the burden of fiscal adjustment, and avoid the need for socially-difficult measures.  

  Supporting economic growth and employment. Our efforts in this area focus on: 
advancing the clearance of spending and tax refund arrears to improve liquidity, 
adopting new frameworks for restructuring viable debtors, finalizing bank 
recapitalization and restructuring, and key structural reforms to improve competition, 
foster investment and strengthen competitiveness. 

  Strengthening the social safety net. While our economic reforms are stabilizing the 

economy and laying the basis for recovery, unemployment will remain too high for some 
time. Thus, to enhance and better target the social safety net, in particular to facilitate 
employment creation, several measures have been developed using EU structural funds. 

Fiscal Institutional Reforms  

Revenue administration 

To give reforms greater chance of traction, the government is committed to 

3. 
strengthening the independence of the revenue administration. This is critical to insulate it 
from political pressure, and to accelerate the necessary changes in organizational structure, 
quality of personnel, and operating procedures. To that end, we will take a 2-step approach to 
modernize the organization of the revenue administration and grant it more autonomy: 

  As a prior action for the review we will adopt legislation to: (i) transfer to the revenue 
administration the Ministry of Finance internal affairs department, and all tax and 

71 

 
customs administration related functions within the General Secretariat for Information 
Systems and within the Corps for the Prosecution of Financial Crimes; (ii) create a five 
member advisory board comprised of high level experts to be appointed by the Minister 
of Finance (two of which will be persons with significant international experience working 
in tax administration); (iii) provide that any advice of MAREG to the revenue 
administration on organizational matters has to be given within a 14 day time frame; (iv) 
enable the Secretary General for Public Revenue Administration (SGPR) to determine the 
conditions for hiring under the control of ASEP; (v) create a budget code that 
encompasses all organizational units of the revenue administration (to enable a separate 
and unified budget allocation for approval by parliament starting with the 2014 budget); 
(vi) establish a small financial management unit in the revenue administration to 
coordinate the preparation and implementation of the revenue administration’s budget 
(while maintaining the role of the GDFS as overall budget coordinator and financial 
controller for the Ministry of Finance’s aggregate budget appropriation); and (vii) 
authorize the SGPR to determine a grading and promotion system for the revenue 
administration, subject to the approval of the Minister of Finance. Finally, we will also 
reconvene the institutional reform working group (IRWG), which will be chaired by the 
SGPR, and whose reports will be shared with the Minister of Finance and the 
EC/ECB/IMF. The TMU (¶28) specifies the prior action in more detail. 

  To implement the reforms legislated through the prior action, we will:  

o  By end-July (i) establish the mandate and composition for the advisory board 
and hold its first meeting; (ii) transfer all personnel functions and budget 
allocations of the IAD and the revenue-related departments of GSIS to the 
revenue administration, and draft and implement the service-level agreement 
between the SGPR and the GSIS; (iii) review the delegation of competencies to 
the SGPR and GDFS in the Ministry of Finance, and if necessary assign the 
authority to the SGPR to reallocate expenditures across budget lines in 
accordance with the general rules set out in Organic Budget Law 2362/1995; and 
(iv) complete the screening and adopt legislation to address the constraints to 
the autonomy of the revenue administration.  

o  By end-October 2013, and as a structural benchmark, the SGPR will approve the 

new organizational structure, staffing numbers, grading system, and 
classification, and qualification and appointment processes of the revenue 
administration. Separately, by end-October 2013, we will transfer the revenue-
related functions, personnel, and budget allocation of SDOE under the revenue 
administration. 

o  By end-2013, approve the 2014 revenue administration budget—with full 

flexibility for the SGPR to reallocate funds among non-wage recurrent spending. 

o  By end-March 2014, transition staff to the new organizational structure of the 

revenue administration. 

We are also continuing our efforts to strengthen the legal framework governing 

4. 
tax administration operating procedures:  

72 

 
 
 
 
 
      
 
  As a prior action for the review we will pass legislation to: (i) simplify the procedure to 
classify debt as uncollectable, and suspend collection activities on uncollectable debt 
(subject to a joint decision with the Court of Audit for amounts more than €1.5 million); 
(ii) remove the legal requirement to audit all tax declarations for the previous 10 years, 
and allow audit cases to be selected on the basis of modern risk analysis; and (iii) 
implement indirect audit methods and allow their application to any open tax audit (to 
bring wealth and expenditures into the determination of taxable income); (iv) replace the 
quasi-judicial review committee with a full internal review process within the revenue 
administration (the Internal Review Unit will be operational by end-August 2013); and 
(v) reduce the payment requirement to file a VAT return to a minimum.  

  We will revise the AML legislation by end-June 2013 to (i) ensure that the General 
Secretariat of public revenues (GSPR) is represented at the Board of the Financial 
Intelligence Unit (FIU); (ii) enable the GSPR to obtain from the FIU information relevant to 
individual tax audits and debt collection cases; (iii) require that information on relevant 
cases of failure to pay confirmed debt over €50,000 be transmitted to the FIU (for 
purposes of implementing the AML law); and (iv) require the FIU to promptly inform the 
GSPR when assets are frozen in relation to the laundering of proceeds of tax crimes.  

The revenue administration is taking several further steps to make its operations 

5. 
more efficient:  

  Regarding audit activities, we have expanded third party data collection to financial 

institutions to facilitate audit in past years. Alongside these efforts, we have consolidated 
the audit of capital remittance cases in the HWI unit, and have started targeted selection 
of cases. Finally, by end-June, all line ministries having a financial relationship with 
taxpayers or beneficiaries will utilize their tax identification number in financial 
transactions with them. The use of tax identification numbers will be made compulsory 
for all official transactions with the whole public administration by end-2013. 

  Concerning the collection of debts, we have assigned additional staff, and have 

expanded the case base of the large debtor unit (LDU) to debts exceeding €1.5 million. 
Further, we will complete the consolidation of debt collection functions into the largest 
DOYs by end-September 2013. We will closely monitor the collection performance of the 
LDU, and once it performs effectively we will establish a second LDU. To increase the 
efficiency of enforced debt collection, we will complete the development of an IT system 
allowing immediate access to information about existence of bank accounts held by 
taxpayers, and about the current balance on the account, which we will implement on a 
pilot basis by end-July 2013, with full implementation by end-September 2013. 

  Personnel management. One of our key priorities is to increase the number of qualified 
staff in the front lines to help improve revenue collection. To that end, we will finalize by 
end-July 2013 the external recruitment of 200 auditors, to boost audit and debt 
collection capacity. In addition, we will commence the delivery of basic audit training and 
will complete the certification of 2,000 auditors, and we have appointed the head of the 
HWI unit and will assign additional supervisors to the LTU and HWI units by mid-June to 

73 

 
ensure new staff are effectively managed. We are amending the law for performance 
assessment, and the SGPR has specified and implemented new criteria for assessment of 
auditors. We have published a strategic anti-corruption plan and a code of ethics for the 
revenue administration that, among other things, addresses conflict of interest and 
protects whistleblowers. 

We are taking steps, based on international practice, to facilitate tax refunds and 

6. 
collection in the exceptional economic circumstances that Greece currently faces:  

  Elimination of the tax refund backlog. The backlog of gross tax refund claims 

(including those made by general government entities) has reached €2.7 billion at end-
February, well above the normal amount of float. To help reduce the backlog: (i) we have 
repaid €721 million since end-November 2012; and (ii) we will develop systems to 
process refund requests more quickly (beyond the new targeted audit case selection for 
validating VAT refund claims developed in March, we will develop systems for income 
taxes by July; and electronic submissions of VAT tax refund claims by August).  

  Revised installment schemes. We remain committed to enforce collection of tax and 

social security contributions (SSC), and will not introduce any new amnesty schemes, nor 
extend any existing ones. We have made several changes, to strengthen our installment 
schemes: 

o  Basic installment plan. The key features of this permanent scheme will include: 
(i) tightened eligibility (proof of viability and tax compliance will be required); 
(ii) payment of market interest rates plus a premium on outstanding balances; 
(iii) enforced collection upon default on a payment; and (iv) a maximum of 12 
monthly installments (except for a specific list of taxes of a non-current or 
extraordinary nature for which installments of up to 24 months would be allowed).  

o  Fresh start plan. On a one-time basis, in parallel to the normalization of the 

economic situation, we have made our framework for granting tax debt and SSC 
payment arrangements more flexible. Two key changes will be made. First, taxpayers 
will be allowed to pay pre-existing tax and SSC debts (not already subject to an 
installment arrangement), and to consolidate debt from other schemes. Payments 
will be in equal monthly installments not extending beyond June 2017. There will be 
a reduction in the surcharge by at most 50 percent upon full payment of the debt. 
This will accommodate viable taxpayers whose capacity to pay is temporarily affected 
by the current business cycle. Second, reduced documentation requirements will 
apply for tax and SSC debts below €75,000. Under this scheme, compliance with 
current tax and SSC obligations is mandatory, full collateral will be required for large 
rescheduled amounts (over €300,000), and enforced collection upon default will 
apply. 

o  To implement these arrangements, as a prior action for this review we will adopt 

legislation that regulates the conditions of these installment schemes. The legislation 
will set the date of opening application into the new scheme no later than July 1, 

74 

 
 
 
 
 
      
 
2013. Entry into existing tax and SSC debt instalment schemes that do not extend 
past June 30, 2017 and do not offer more generous terms and conditions than the 
fresh start scheme (concerning the effective interest rate and the surcharge 
reduction), will be allowed up until June 30, 2013. The law will specify which schemes 
remain open until June 30, 2013. Entry into all other schemes will be discontinued 
upon submission of this legislation to parliament. Entry into these two installment 
schemes will be disallowed for debtors who are in default on another scheme after 
the submission of the law to parliament. We will include the provisions for the basic 
installment plan regarding taxes in the tax procedural code by end-June 2013. There 
will be no further changes in the terms and conditions of installment schemes, and 
no new special schemes will be introduced. To ascertain compliance with the agreed 
principles, by end-December 2013 we will conduct an audit of the implementation of 
installment schemes by the revenue administration. 

7. 
We will continue to strengthen collection capacity in social security funds. We have 
established a special working group to examine the arrears stock across the four largest SSFs, to 
assess collectability, and identify collectible arrears for transferring them to the new single 
collection entity by end-June 2013. Subsequently, the working group will develop a framework 
for coordination and integration of tax and SSC arrears collection. To help reduce 
noncompliance we will introduce a revised surcharge regime for late payment of SSC by June 
2013 that combines a penalty and an above market interest rate. We will repeal the application 
of the Code for Collection of Public Revenue for collection of SSC, and enact a new legal 
framework for public revenue collections in line with international best practice by end-February 
2014. 

We will continue to monitor and measure the results of our reform efforts and 

8. 
strengthen accountability to the public: 

  We will establish a process within the SGPR to monitor and report on administrative and 

operational requirements set out in the MEFP. 

  We have set monthly targets for the key performance indicators (KPIs) on debt collection 
and audit of large taxpayers and high-wealth individuals, to help ensure that our reforms 
translate into concrete results. Meeting these KPI targets for end-April will be a prior 
action for the review (Annex I). Regarding our full set of KPIs, we propose going forward 
to eliminate the target on the number of tax cases submitted to the state prosecutor, 
revise the amount of old debt for end-June, and revise the number of completed risk-
based full-scope audits for large taxpayers and audits for HWI for end-June and end-
December (Annex II).  

  We have launched a website easily accessible to the public where we will publish 

statistics on KPIs, including on tax evasion cases sent to the FIU. This will help ensure 
public accountability.  

75 

 
Public Financial Management 

We will continue to advance our public financial management reform agenda, in 

9. 
support of stronger controls and improved transparency:  

  Budgeting. By August 2013, we will modify the organic budget law to strengthen 

medium-term budgeting (the MTFS), including by: (i) establishing three-year expenditure 
ceilings for line ministries and the health care sector (on a rolling basis and binding for 
the first two years); (ii) establishing binding annual budget balance targets for local 
governments; (iii) identifying performance targets for state enterprises;  (iv) requiring 
that in future budgets 10 percent of discretionary state budget appropriations be frozen 
ex-ante (and released in the second half of the year provided general government fiscal 
targets are met), and (v) strengthening the functioning of commitment registers, 
including their treatment of carryover of end-year outstanding commitments. By end-
June, we will issue a Joint Ministerial Decision indicating a common methodology for 
local government budget preparation and budget adoption by year-end and 
establishing a clear review process of local government budgets by the Observatory of 
Local Authorities, in order to ensure consistency with the MTFS targets. 

  Spending controls. We continue to take steps that will limit the possibility of 

accumulation of arrears, including by: (i) expanding the number of entities with 
functioning commitment registers (focusing on all 41 social security funds) and 
expanding the registers to public investment budgets; (ii) finalizing by end-June 2013 
with a joint ministerial decree the organizational structures of the General Directorates of 
Financial Services (GDFS) (as the next step, we will fully staff the GDFSs in all line 
ministries); and (iii) filling accounting officer positions that have recently become vacant. 
Furthermore, to strengthen commitment controls and maintenance of and reporting 
from commitment registers, by October we will issue a new circular to clarify issues and 
provide guidance on functioning of the system, including carry-over of end-year 
outstanding commitments to the following year. 

  Fiscal reporting. We aim to strengthen fiscal reporting for the social budget and arrears. 
We are developing a social budget monitoring framework, which covers EOPYY, SSFs, 
hospitals, and the Manpower Agency. We will roll out the detailed fiscal reporting system 
to the SSFs by end-September and EOPYY by end-2013 to ensure GFSM- and ESA95-
consistent fiscal reporting. In the area of arrears, from May, we will publish in the 
monthly general government budget execution bulletin the amount of disbursed tax 
refunds and payments on expenditure arrears as cash payments within the fiscal balance. 
In the third quarter of 2013 we will begin reporting to the EC/ECB/IMF (on accrual basis) 
all existing tax refund claims according to the date in which they were incurred. 

We are committed to timely clearance of the existing stock of arrears and to 

10. 
prevent their re-emergence (Table 1b). Despite the provision of significant financing to general 
government entities by the Ministry of Finance (€3.2 billion), we missed our end-March indicative 
target specifying a ceiling for domestic arrears. To bring the program back on track, we will take 
several targeted measures to accelerate clearance processes in lagging entities. First, we will 

76 

 
 
 
 
 
      
 
 
directly disburse funds to hospitals once their arrears claims are cleared for payment. Second, we 
will accelerate efforts to help spending agencies meet the conditions for arrears clearance (as 
noted above, we are committed to ensure that SSF commitment registers are functioning, and to 
encourage better uptake, we will activate legislation to sanction SSFs (and other general 
government entities) that do not utilize commitment registers and do not report on the e-
portal). Third, we have established a working group that will report in close consultation with the 
IMF and TFGR technical advisors on options to streamline the arrears payment processes, so as 
to accelerate arrears clearance and help us achieve conformity with the EU directive on 
combating late payments (Directive 2011/7/EU). On the basis of the findings of this group, by 
June 2013 we will identify actions that will immediately shorten some procedures, and by 
October 2013 we will draw medium-term recommendations, including accompanying legislation 
(where required) to implement it. Finally, to ensure that nothing is being omitted, the Ministry of 
Finance will conduct an audit of commitment registers and health related arrears records 
maintained by EOPYY and the SSFs by August, 2013, and will launch a tender for an independent 
external auditor by September 2013 to complete an audit of EOPYY’s outstanding stock of 
accounts payable towards third parties by end-March 2014 (including those of predecessor SSF’s 
before the creation of EOPYY on January 2012). 

11. 
To monitor progress towards our public financial management reforms, we have 
extended our key performance indicators. As a prior action for the review, we have set KPIs 
for end-March for the percentage of government entities reporting on the e-portal (to ensure 
implementation of controls and reporting) and the discrepancy between arrears reported on the 
e-portal and through monthly surveys (to verify complete and accurate reporting); these end-
March KPI targets have been met (Annex III). We will continue to monitor implementation of 
PFM reforms through structural benchmarks for end-June and end-December 2013 (Annex IV). 

Fiscal Policy 

12.  We are taking steps to ensure full implementation of our fiscal strategy for 2013–
14: 

  We will adopt, as prior action, legislation to extend collection of the real estate tax 

through 2013 via PPC. The legislation will introduce four changes: (i) a reduction of 15 
percent in the rate; (ii) imposition of the tax on buildings not legally exempted from 
municipal duties; (iii) calculation of tax on buildings outside urban planning zones on a 
different basis (based on average legal value for the relevant municipality); and (iv) 
implementation of the tax on all buildings which are leased to the state by non-
exempted private owners. Separately, a new law on taxation of real estate will be 
adopted by end-June. The new real estate taxation regime, which will consolidate a 
number of now separate taxes, will be designed to deliver revenue consistent with real 
estate tax projections in the adopted medium-term fiscal strategy. 

  We are committed to fully implement all other agreed fiscal measures for 2013–14 not 

yet in place (such as the solidarity contribution for the self employed in 2014), or to fully 
offset them if agreed during program reviews. In this context, we will remove all 
remaining ineligible pensioners from the pension rolls by end-June 2013.  

77 

 
  We will consider reduction in certain tax rates (e.g., VAT on food and catering), provided 

that over-performance generates sustainable fiscal space. The fiscal space for this 
measure will be assessed in the context of the next program review. 

13.  We remain committed to public administration reforms, in support of our medium 
term fiscal targets, and of a more effective civil service. We did not observe the end-
February structural benchmark related to staffing plans and establishing targets for mandatory 
exits, but our work is progressing, and we have taken actions to bring it back on track: 

  As a prior action for the review, we will: (i) adopt consistent staffing plans for 

government entities covering 206,000 employees; (ii) approve quarterly plans for 15,000 
mandatory exits cumulative through end-2014, including 4,000 by end-2013 (with a 
significant fraction frontloaded); (iii) approve annual overall employment ceilings for the 
general government through 2016 (consistent with the already approved MTFS); (iv) vote 
the necessary legislative changes in order to streamline and accelerate the disciplinary 
procedure to show the commitment of the government; (v) implement a permanent 
monitoring mechanism for the disciplinary procedure and provide data regarding the 
pending cases and the pace of dealing with the stock of cases; and (vi) eliminate any 
existing legal provision forcing the state to put personnel of legal entities of private law, 
whose positions are abolished, in the mobility scheme.  

  Evaluation, rational reallocation of personnel through mobility, and quality renewal 
through exits are the tools in our efforts to improve the effectiveness of the public 
sector. Exits will be the result of (i) disciplinary cases; (ii) due diligence evaluation of legal 
entities of public and private law leading to mergers and abolishment; (iii) evaluation of 
the personnel using the mobility scheme, including before any reallocation to a new 
position, to remove unmotivated or less qualified personnel; (iv) voluntary exits from the 
mobility scheme (excluding personnel within 3 years of retirement); and (v) the lapse of a 
12-month period in the mobility scheme. 

  To further advance our reform agenda during 2013, we will; (i) ensure that cumulatively 

12,500 employees have been placed in the mobility scheme by end-June 2013; 
(ii) complete staffing plans for 450,000 employees (cumulative) by end-June; (iii) 
complete staffing plans for all general government entities by end-December 2013; and 
(iv) complete assessment of individual employees by end-2013. The quarterly targets for 
exits and entries into the mobility scheme are proposed to become indicative targets 
under the program (Table 1b).  

  Our exit program will make room to hire new staff, and we will use this room to address 
areas where we face deficits of skilled staff. We will hire one new employee for each 
mandatory exit through the various channels noted above. If our assessment at any point 
shows that we are no longer on track to achieve our aggregate targets, we will reduce 
this hiring ratio. For all other attrition, our hiring ratio will remain 1:5, as envisioned in the 
program. By end-June 2013, we will define detailed hiring plans for 2013, in consultation 
with the EC/ECB/IMF. 

78 

 
 
 
 
 
      
 
14.  We will continue to strengthen the social safety net, to cushion the crisis impact on 
the most vulnerable segments of our society: 

  Employment programs. We remain committed to expand public and social work 
programs and training programs to fight long-term and youth unemployment and 
support jobless households. We will both leverage EU funding and involve the private 
sector to the extent possible. Thus we introduced in April a youth internship and 
employment voucher program under the Youth Action Plan. The program, with €180 
million co-funded by the European Social Fund, will support vocational training and 
internships for 45,000 individuals up to 29 years of age over a six-month period. In 
addition, we aim to increase the number of entrants into the apprenticeship and 
vocational training programs, such as the professional schools for apprenticeship of the 
Manpower Employment Organization (OAED). 

  Social protection. We have passed legislation to launch two pilot programs, which will 
be implemented no later than 2014—an income-tested program that targets long-term 
unemployed and provides income payable for a year, and a minimum income guarantee 
scheme for families in areas with a difficult socioeconomic profile. We will implement the 
new child benefit law, and make the first payments no later than end-June 2013. We will 
launch in July 2013 a Health Voucher Program that will provide 100,000 long-term 
uninsured citizens with access to primary healthcare services, and, with funding from the 
European Social Fund, we plan to extend the program to more beneficiaries while 
expanding the coverage of healthcare services. We commit to fill any other gaps in social 
safety nets that become apparent, within the existing overall budget envelope, and to 
identify additional resources to frontload and expand the various programs. 

15.  We remain committed to strong safeguards to limit fiscal risks from quasi-fiscal 
activities:  

  Tax investment incentives. We will streamline tax investment incentives, fold them into 
the income tax law through an amendment by September 2013, and incorporate their 
cost in the medium term fiscal framework. To this end, by end-July 2013, we will catalog 
and quantify all tax incentives currently existing in legislation and private contracts.  

  Subsidies. We will establish sunset provisions for all earlier subsidy commitments if they 
have not been claimed within three years of approval, and put limits on the overall 
envelope of future subsidies.  

  Renewable energy. While we have taken actions to reform our renewable energy 

policies (RES), costs are escalating faster than we had expected. To help eliminate the 
projected debt of €1.7 billion in the RES account by end-2014, as a prior action, we will 
adopt legislation to: (i) a reduce the feed in tariffs for photovoltaic renewables by at least 
45 percent, (ii) increase the solidarity contribution by an average of 7 percent for new 
projects; (iii) introduce new feed in tariffs for CHP systems (relevant MD to be issued by 
July 2013; (iv) introduce mandatory letters of guarantee (relevant MD to be issued by 
March 2014); (v) allow investors to receive back their letters of guarantee when they 

79 

 
withdraw projects; and (vi) levy a fee on production licenses (relevant MD to be issued by 
April 2014). We will also increase on July 1, 2013 the RES Special Levy consistent with the 
provisions of the law requiring RES debt to be eliminated by end-2014. Separately, to 
improve liquidity in the electricity system, reduce arrears, and cut subsidies, we will fully 
liberalize low voltage end-user tariffs by July 1, as already agreed. 

Financial Sector Policies  

To finalize the framework for recapitalization, we have aligned our capital metrics 

16. 
to a minimum core tier I ratio of 9 percent of risk-weighted assets, which has become 
binding from end-March 2013. As part of the recapitalization exercise, the share of deferred 
tax assets (which can count as core capital on the basis of expected future profits) will be 
limited to 20 percent of CT1 as calculated using EBA methodology. Banks initiated in April 2013 
a new round of liability management exercises conducted in respect of the remaining 
subordinated instruments, as we committed last November to the Eurogroup. Through these 
means we will seek to provide additional private capital, which will not count as part of the 
minimum 10 percent of private sector capital subscription required to maintain private control. 

17.  We are nearing completion of recapitalization of the core banks. This will ensure 
that the banking system is solidly anchored on four pillar banks that have been assessed as 
viable by the Bank of Greece: 

  Each of the four core banks sent an invitation in April for its shareholders to join 

extraordinary general meetings, the purpose of which was to increase their capital 
separately in the amount notified by the Bank of Greece in December 2012 and within 
the other parameters of the existing recapitalization framework. All four meetings with 
quorum of shareholder attendance have taken place. Following the relevant approvals, 
the subscription period of 15 calendar days as prescribed by law will start. 

  Two of the four core banks have informed the BoG that they expect to be able to raise 
10 percent of the capital in the form of common shares from private sources, which will 
allow them to remain under private management per our recapitalization framework. A 
third one informed the authorities they would require the HFSF to fully subscribe the 
capital share increase. The private sector participation in the capital increase of the 
fourth core bank remains uncertain until the subscription period concludes. The 
management of all core banks has been informed by the BoG that they should 
henceforth focus on the finalization of the recapitalization process, and day-to-day 
management, until their recapitalization is finalized.   

18. 
The next steps will be defined on the basis of a comprehensive financial sector 
strategy. As soon as feasible, and in any case no later than July 15, a comprehensive banking 
sector strategy (structural benchmark) will be developed by the HFSF, the BoG, and the MoF, in 
cooperation with the EC/ECB/IMF. In the meantime, all four pillar banks will be able to continue 
to act as integrators of smaller domestic banks as appropriate. Only upon finalization of this 
banking sector strategy could any consolidation in the form of merger among the four pillar 
banks be considered. The strategy will include options and operational steps for the HFSF to 

80 

 
 
 
 
 
      
 
promptly proceed with the disposal of the shares to the private sector of the core banks that will 
not have been able to remain under private control.  

The resolution of undercapitalized noncore financial institutions is proceeding as 

19. 
envisaged under the program:   

  HFSF-controlled bridge banks. In January 2013, we established a second bridge bank, 

the New Hellenic Postbank, with the HFSF being its sole shareholder. The HFSF is 
currently taking actions to make major reductions in the operational costs of the bank 
including through a significant reduction in the number of employees, and to restructure 
its loan portfolio, with the objective of making the bank attractive to potential purchasers 
and concluding its sale by July 15, 2013 (rephased structural benchmark from end-
January 2013). Concerning the sale of Nea Proton bank, with the core banks currently 
focused on completing their recapitalization, we are shifting the sale deadline from May 
to July 15, 2013 to increase chances that it is acquired through an open bid process.  

  Other undercapitalized noncore banks. Our timeline for resolution of undercapitalized 
non-core banks remains unchanged. Specifically, for those noncore banks that have not 
met their capital requirement, the Bank of Greece will take appropriate measures in 
coordination with the HFSF. They will assess options to minimize the cost to taxpayers, 
including purchase and assumption transactions by any of the four core banks, while 
guaranteeing the security of depositors.   

  Cooperative banks. To support our strategy in this sector, by end-September 2013 we 
will revise our legal and regulatory frameworks for cooperative banks to align it with the 
best international practices. 

We will take no fiscal policy actions that would undermine the solvency of banks. 

20. 
Law 3723/2008 has been amended to ensure that banks will not be required to pay any 
dividends on preference shares, or fees in lieu of this, unless the banks are profitable. 

The BoG will continue with enhanced supervision of banks. This will also apply to 

21. 
resolved banks and those that have been placed under public control, including any core banks 
that fail to show their ability to receive sufficient private investment to remain under private 
control. In addition, we will ensure that banks will not take any discretionary corporate action 
that would increase their capital needs. 

We are preparing for the stress testing envisaged to be completed by end-2013 

22. 
under the program. To that end, we will finalize by end-July a new stress testing methodology, 
determined in consultation with the EC/ECB/IMF, with specific focus on the adequacy of loan loss 
provisioning.  

We are committed to preserve sufficient banking system liquidity in line with 

23. 
Eurosystem rules: 

81 

 
  The BoG, following the procedures and rules of the Eurosystem, stands ready to continue 
disbursing adequate and appropriate emergency liquidity support in a timely manner if 
needed. 

  The BoG will request banks to provide standardized quarterly balance sheet forecasts 

(funding plans). The banks’ funding plans will be based on the program macroeconomic 
forecasts. Banks shall set out a path towards achieving a sustainable funding model by 
means of broadening their funding base and reducing over time their reliance on 
extraordinary central bank liquidity support. Funding plans will serve as a tool for the 
BoG to monitor this process and assess whether the banking system’s plans at the 
aggregate level are consistent with the program’s macroeconomic framework. 

We will improve the management of assets in liquidation. To facilitate effective 

24. 
management of bad assets, we will by May 2013 revise the regulatory framework and remove 
the operational restrictions identified in the end-February 2013 assessment report of 
Bain&Company, published by the BoG. To ensure an effective implementation of this strategy, 
we will adopt by June 2013 amendments to the existing special liquidation laws, following 
consultation with the EC/ECB/IMF staff. We will widen the range of options that could facilitate a 
timely, cost effective disposal and/or restructuring of these assets. To assess progress in this 
area, the BoG will adopt a reporting framework with quarterly updates on progress made 
starting in June 2013.  

We will enhance the legal regime for household insolvency to provide for more 

25. 
effective resolution of bad debts while protecting the payment culture and avoiding 
unnecessary losses. We will, in consultation with EC/ECB/IMF staff, establish a framework to 
assist distressed borrowers by end-June 2013. It will take effect as soon as the necessary 
regulations to implement it can be put in place (at the latest by end-August 2013). We will also, 
in consultation with EC/ECB/IMF staff and as soon as possible, introduce measures aimed at 
deterring applications for court cases under Law 3869/2010, and borrowers who are subject to 
the provisions of laws 3869/2010 and 4128/2013 will be subject to the new framework for 
distressed borrowers, once it has been implemented. Specifically, to enhance the legal 
framework we will:  

  By end-June 2013, pass legislation to introduce a new “Facilitation Program” targeted at 

low-income individuals in deep financial distress to facilitate the resolution of 
unsustainable household debt. Key features of this new scheme will include: (i) eligibility 
criteria that take into account the debtor’s income and assets (supported by verification 
procedures); (ii) oversight of the facilitation program by the BoG; (iii) borrower 
repayment defined using criteria based on affordability; (iv) periodic review of the 
financial conditions of participating debtors to assess their continued eligibility and 
proper level of payments; (v) a clear timetable to close the window of the program. The 
BoG will assess the implementation of this program within six months of its adoption. 

  By end-June 2013, revise law 3869/2010 to address the implementation shortfalls 

identified during its first three years of enactment. In particular, we will introduce a 
definition of acceptable living expenses for use as guidance by the judiciary, mediators, 

82 

 
 
 
 
 
      
 
and the banks and a standard definition of cooperating borrowers, which will be used to 
provide protection only to those borrowers who are fully cooperating in the resolution 
process. 

  By end-June 2013, adopt enabling legislation to establish a framework, consistent with 
the recapitalization framework for banks that will provide long-term solutions for over-
indebted borrowers (including for those viable borrowers who are not eligible to 
participate in the facilitation program). It will include initiatives (to be specified further in 
regulations by end-August) to: (i) address shortfalls in existing laws that limit the 
effectiveness of debt resolution activities; (ii) standardize the assessment procedure for 
borrower cases; (iii) introduce a standard list of loan restructuring tools to be used by 
banks; (iv) enhance access to free budgeting and legal advice services for citizens; and (v) 
encourage borrowers and lenders to participate in debt resolutions through non-judicial 
means. We shall also introduce steps to reduce excessive court waiting times, and to 
ensure that eligible debtors will choose to participate in the facilitation program. 

26. 
We will step up our measures to minimize the significant risks associated with the 
rapid deterioration of bank loan portfolios. The BoG will, in cooperation with the HFSF (and in 
accordance with their memorandum of understanding), and in consultation with the EC/ECB/IMF: 
(i) assess by end-September 2013, with the assistance of an independent third party, the 
effectiveness of established frameworks and policies to deal with troubled assets; and 
(ii) establish key performance indicators (KPIs) covering the troubled assets portfolio status, the 
operational response by banks, and follow-up resolution actions (KPI definitions will be set no 
later than August 2013 and bank reporting will start by October 2013 on a quarterly-basis) and 
(iii) closely monitor banks’ NPL resolution strategy, policy and operational targets, and intervene 
where necessary, in order to ensure that distressed borrowers receive prompt and sustainable 
long-term solutions.  

Strengthening our financial institutions governance framework will ensure their 

27. 
continued viability and protect taxpayers: 

  HFSF governance structure. The authorities support the HFSF in its efforts for an 

ambitious and swift operational restructuring of all banks in which it has a significant 
stake, with the aim to reduce operational costs and increase profitability, thereby 
fulfilling its mandate to minimize costs for the taxpayer. HFSF governance reforms have 
been adopted by parliament to add 2 independent members to the HFSF General 
Council, increasing the number of its members from 5 to 7 (prior action). In addition, 
the HFSF internal regulations will be amended to rationalize the division of tasks and 
responsibilities between the General Council and the Executive Board. Furthermore, in 
order to strengthen HFSF independence, the legislation will be amended to clarify the 
non-public nature of the Fund. 

  Relationship frameworks between the HFSF and banks. We will publish the 

relationship frameworks between the HFSF and banks that have received capital infusion 
from the HFSF, as soon as the amount of the injection will be known, upon completion of 
the subscription period, and in any case no later than May 31st. The frameworks define 

83 

 
the role of HFSF as a shareholder on the basis of best international practices. They 
ensure that the HFSF has limited influence in the bank’s commercial decisions, and 
clearly define the responsibilities of managers and the HFSF’s veto rights. For banks that 
do not remain under private management, the relationship frameworks aim at ensuring 
that each bank remains a separate economic unit with independent powers of decision. 

  Clarifying competencies and responsibilities. We will develop and publish no later 

than end-May 2013 a memorandum of understanding governing the relationship of the 
HFSF as a shareholder and the BoG’s role regarding the oversight of banks that have 
received state aid. 

  Due diligence. The BoG will adopt measures to address the governance weaknesses 

identified in the due diligence of core banks. Banks will submit to the BoG in end-May 
2013 plans to address identified operational governance weaknesses—including 
safeguards on loans to related parties and risk concentration. These plans will include 
clear timetables for full implementation by end-December 2013. In the event plans are 
inadequate, the BoG will take measures that may include the removal of board members 
and managers, and/or suspension of private shareholders (which would prevent them 
from participating in bank recapitalization). 

Structural Reforms 

28.  We will continue to adjust our labor market policies to increase flexibility, reduce 
administrative burdens, and reduce unemployment. We will adopt before end-May a 
framework for future statutory minimum wage setting, in line with program commitments. 
Looking forward, to reduce the administrative burden on businesses we will significantly 
streamline labor reporting requirements by end-September, following a comprehensive review 
to be completed by end-July. In the context of this work we will adjust sanctions for violations of 
labor law by end-July, by better linking punishments to the severity of violations, and will focus 
detection on more severe cases. Finally, in light of the many recent labor reforms introduced 
during the program, we will compile a Labor Code by end-2013, which will eliminate possible 
inconsistencies and increase transparency. 

Building on earlier product and service market liberalization reforms, we will take 

29. 
further steps to reduce frictions and improve productivity: 

  Regulated professions. We made substantial additional progress towards meeting the 
end-2012 structural benchmark on regulated professions. We have eliminated in this 
context restrictions including minimum fees, specific entry restrictions, and the 
mandatory use of services, for several important professions and economic activities 
(including for bake-off installations, welfare units, outdoor trading, and tourist guides). In 
addition, we will adopt by end-June 2013 a new Code of Lawyers, which will include a 
removal of the reference to "exclusivity" for the research of mortgage books and land 
registry, and liberalize trading petroleum; as well as by mid-July issue secondary 
legislation to liberalize chartered valuers and actuaries. During the second half of 2013 
we will also take steps to liberalize the engineering professions. The government will not 
introduce additional restrictions in regulated professions, and will guard against any 

84 

 
 
 
 
 
      
 
decisions by the public administration that effectively restores them. We remain 
committed to complete by July 2013 a study of the 20 largest professions examining the 
degree to which they have been liberalized, including results with respect to new 
entrants and price changes.  

  Transportation services. This is a key service sector for Greece in light of the country’s 
large shipping fleet, and large tourism industry. To assist the shipping sector, we will 
clarify by end-June in a circular that individual labor contracts can be negotiated freely, 
once the collective agreement has expired. To help strengthen the competitiveness of 
our tourism sectors, for domestic ferry services we have increased the flexibility of 
routing, reduced manning obligations, and by end-June will reduce and limit to fewer 
categories mandatory ticket discounts. By end-October, we will assess the impact of 
these reforms, and adopt further steps to increase the competitiveness of the sector. In 
addition, as part of our national airport strategy, we have placed a cap on the airport 
fees for the regional airports that are slated for privatization, to keep their fees in line 
with regional competitors. We will continue to work on improving the effectiveness of 
Athens airport.  

  Retail trade. By end-June we will: (i) adopt a new law that will further liberalize the retail 
market, including by removing restrictions against discounts outside sale periods, and 
increasing flexibility in retailers' opening days; and (ii) for over-the-counter (OTC) 
products, replace the current system of fixed margins with maximum ones. In addition, 
by end-September 2013, we will allow the sales of selected products (e.g., vitamins) in 
other points than pharmacies.  

  Reducing red tape. To address border-related red-tape, on a pilot basis we have 

increased working shifts in the Athens airport to 24/7 and expanded service in Piraeus 
port to two shifts for exports, and will do the same for imports in July 2013. We have 
simplified export and custom procedures, utilizing risk based audits in line with EU best 
practices, and will extend the risk based audits to imports in November. Also, the e-
customs system already supports the electronic submission of all export declarations, for 
which we will now introduce e-signature, and we will also implement the same system 
for imports by November 2013. We will also continue our effort to reduce regulatory 
barriers to competition, and based on an OECD assessment, will prepare in parallel draft 
legislative amendments by end-September 2013 covering construction materials, retail 
and food processing industries, as well as the tourism sector. In addition, based on the 
results of the application of the Standard Cost Model (SCM) by the OECD in 13 key 
sectors, we will propose by end-October 2013 the needed legislative amendments to 
reduce administrative burdens. 

30. 

Reforms to strengthen market-supporting institutions will focus on the following:  

 

Judicial reforms. We have made progress in this area including by reducing the 
administrative case backlog at the Council of State (including tax cases), publishing 
quarterly information on court performance, and rationalizing the system of magistrate 
courts to improve efficiency. We are also preparing draft amendments to the Code of 

85 

 
Civil Procedure aimed at streamlining the judicial process, which we will present to 
EC/IMF/ECB by end-May 2013. We will reallocate by end-September 2013 judges to the 
administrative courts with the highest backlog, as well as adopt an action plan to reduce 
civil and commercial cases backlogs, including draft legislation providing for compulsory 
mediation for small claims. By end-July 2013, we will present to EC/IMF/ECB a first 
assessment of the operation of the magistrates’ courts. 

  Anti-corruption. We are determined to aggressively tackle corruption, which 

undermines public trust, the business environment, and the efficiency of government 
operations. In line with program commitments, we have published an anti-corruption 
action plan. In this context, as a first step, the Government will by end-June 2013 (i) 
submit draft legislation to bring the anti-corruption legal framework in line with relevant 
international standards; and (ii) initiate under the National Anti-Corruption coordinator 
the implementation of the relevant actions contained in the above action plan.  

31.  We have taken steps to ensure that the privatization program remains on track:  

  The government has made progress in preparing assets for sale, including by finalizing 
the regulatory frameworks for airports and water, and transferring a further 250 real 
estate plots to the Fund. As next steps, the government will aim to complete the state 
aid clearance for the ports, and DEFSA. Further, we have adopted a plan for the full 
ownership unbundling of ADMIE and PPC, the creation and privatization of a new 
electricity company based on some PPC assets, and the privatization of PPC itself with a 
view to starting the process within 2013 and completing it by January 1, 2016. In 
addition, the HRADF will tender the 40 real estate assets that were transferred to the 
Fund in early 2013.  

  To compensate for delays in finalizing some envisaged transactions, the HRADF will: 

(i) accelerate other sales (which could include buildings and certain land plots, as well as 
moving forward some of the tenders, e.g. small ports and marinas); and (ii) take steps to 
expedite approvals by working with the Court of Auditors, Council of State, and 
Competition Committee to reduce required time. 

  We will examine the scope for raising private sector funds by targeting international 

investors through the securitization of real estate assets. The assets examined for such 
operations will fall outside the universe of those foreseen for privatization through 2020. 
Moreover, it will be ensured that such securitizations do not in any way slow down the 
privatization process foreseen in the current program.  

  To increase transparency in the privatization process, we have published the quarterly 

financial statement of the HRADF together with its balance sheet.  

86 

 
 
 
 
 
      
 
87 

Progr.ActualProgr.ActualPerformance criteria 1. Floor on the modified general government primary cash balance 1/-3.8-2.81.51.72. Ceiling on state budget primary spending 1/56.855.413.911.83. Ceiling on the overall stock of central government debt 340311347313.34. Ceiling on the new guarantees granted by the central government 2/0.20.13. Ceiling on the overall stock of central government debt  0.20.25. Ceiling on the accumulation of new external payments arrears on external debt contracted or guaranteed by general government  3/0.00.00.00.06. Ceiling on the Stock of Domestic Arrears (narrow definition) 3.62.93.02.6Indicative targets7. Ceiling on the Stock of Domestic Arrears (General Government Definition) 8.07.64.57.08. Floor on privatization receipts 4/3.200.000.10.11/ Applies cumulatively from start of the target's calendar year.2/ Applies cumulatively from Oct 1, 2012.3/ Applies on a continuous basis from program approval.4/ For 2012, cumulative from program approval. For 2013, cumulative January 1, 2013.Mar-13Table 1a. Greece: Quantitative Performance Criteria (Billions of euros, unless otherwise indicated)20122013Dec-12 
 
 
 
 
88 

20142015Jun-13Sep-13Dec-13Dec-14Dec-15Performance criteria1. Floor on the modified general government primary cash balance 1/-1.2-0.8-0.3……2. Ceiling on state budget primary spending 1/26.038.853.2……3. Ceiling on the overall stock of central government debt  347335.0335.0……4. Ceiling on the new guarantees granted by the central government 2/0.00.00.0……5. Ceiling on the accumulation of new external payments arrears on external debt contracted or guaranteed by general government  3/0.00.00.0……6. Ceiling on the stock of domestic arrears (narrow definition) 2.01.00.0……7. Floor on Privatization Receipts 4/…1.8………Indicative targets1. Floor on the modified general government primary cash balance 1/………2.03.62. Ceiling on state budget primary spending 1/………49.446.33. Ceiling on the overall stock of central government debt  ………3303304. Ceiling on the new guarantees granted by the central government 2/………0.00.05. Ceiling on the accumulation of new external payments arrears on external debt contracted or guaranteed by general government  3/………0.00.06. Ceiling on the stock of domestic arrears (narrow definition) ………0.00.07. Ceiling on the stock of domestic arrears of the general government 3.01.50.00.00.08. Floor on privatization receipts 4/1.1…2.54.36.39. Mandatory Exits (head count, in thousands) 4/ 5/…2.04.015.0…10. Transfers to the Mobility Scheme (head count, in thousands) 4/12.5…25.0……1/ Applies cumulatively from start of the target's calendar year.2/ Cumulative from April 1, 2013.3/ Applied on a continuous basis since program approval.4/ Cumulative from January 1, 2013.5/ For the Mandatory Exits, quarterly targets have also been set for 2014 (cumulative from April 1, 2013): Q1: 5000; Q2: 9,000; Q3: 11,000, and Q4: 15,000.Table 1b. Greece: Program Quantitative Performance Criteria (Billions of euros, unless otherwise indicated)2013 
 
 
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92 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ReviewAvailability DateActionTotal DisbursementsMillions of SDRsPercent of quotaBillions of euros 1/March 15, 2012Board approval of EA1,399.1           127.01.6First ReviewMay 31, 2012Observance of end-December 2012 performance criteria, completion of first and second reviews 3/.........Second Review 2/August 31, 2012Observance of end-December 2012 performance criteria, completion of first and second reviews 3/2,798.2           254.03.3Third ReviewFebruary 28, 2013Observance of end-2012 performance criteria, completion of third review 4/1,506.8           136.81.8Fourth ReviewJuly 25, 2013Observance of end-June 2013 performance criteria, completion of fourth review1,506.8           136.81.8Fifth ReviewSeptember 29, 2013Observance of end-June 2013 performance criteria, completion of fifth review1,506.8           136.81.8Sixth ReviewNovember 30, 2013Observance of end-September 2013 performance criteria, completion of sixth review1,506.8           136.81.8Seventh ReviewFebruary 28, 2014Observance of end-December 2013 performance criteria, completion of seventh review1,506.8           136.81.8Eighth ReviewMay 31, 2014Observance of end-March 2014 performance criteria, completion of eighth review1,506.8           136.81.8Ninth ReviewAugust 31, 2014Observance of end-June 2014 performance criteria, completion of ninth review1,506.8           136.81.8Tenth ReviewNovember 30, 2014Observance of end-September 2014 performance criteria, completion of tenth review1,506.8           136.81.8Eleventh ReviewFebruary 15, 2015Observance of end-December 2014 performance criteria, completion of eleventh review1,506.8           136.81.8Twelfth ReviewMay 31, 2015Observance of end-March 2015 performance criteria, completion of twelfth review1,506.8           136.81.8Thirteenth ReviewAugust 31, 2015Observance of end-June 2015 performance criteria, completion of thirteenth review1,506.8           136.81.8Fourteenth ReviewNovember 30, 2015Observance of end-September 2015 performance criteria, completion of fourteenth review1,506.8           136.81.8Fiftheenth ReviewFebruary 29, 2016Observance of end-December 2015 performance criteria, completion of fifteenth review1,506.4           136.81.8Total23,785.32,158.828.0Source: IMF staff projections.1/ Exchange rate of January 5, 2012.   2/ Purchases and disbursements sum the total available upon completion of the first and second reviews.Table 5. Greece: Schedule of Proposed Purchases under the Extended Arrangement, 2012–16Purchases   3/ End-December 2012 performance criteria became controlling for the purchase that was made upon completion of the first and second reviews in January, 2013. A waiver of applicability of these performance criteria was requested due to the lack of information on performance as of end-December.4/ End-March 2013 performance criteria have now become controlling for the purchase that would be made upon completion of the third review in May 2013. 
 
 
G

R

E

E

C

E

94 

IndicatorEnd-April 2013Debt collectionCollection of new debts in the current year (percent of new debt in the year)11.0%Tax audits and collection of large tax payersNumber of risk-based full scope audits in the year66Number of risk based temporary audits in the year 134Audits and collection of high wealth individualsNumber of completed risk-based audits in the year146   Source: IMF staff.Annex I. Prior Action: Key Performance Indicators on Tax AdministrationTarget 1/   1/ Cumulative audits from end-2012. 
 
 
 
 
 
  
95 

Indicator2012 Target 1/End-Dec.End-Dec. End-Jun.End-Dec.Debt collectionCollection of tax debts as of the end of the previous year2,0001,09911401,900Collection of new debts in the current year (percent of new debt in the year)20.0%10.5%14.0%24.5%Tax audits and collection of large tax payersNumber of risk-based full scope audits in the year 2/30076176596Number of risk based temporary audits in the year 3/325271260680Of which: field audits 100188Collection full scope audits in the year (percent of assessed tax and penalties)50.0%64.5%65.0%75.0%Collection temporary audits in the year (percent of assessed tax and penalties)50.0%49.2%45.0%55.0%Audits and collection of high wealth individualsNumber of completed risk-based audits in the year 4/1,300444280910Collection of assessed audits in the year (percent of assessed tax and penalties)50.0%78.4%40.0%65.0%Internal control and human resource integrityMoF audit of assets of managers of local tax offices 5/50110MoF audit of assets of auditors 5/50130   Source: Ministry of Finance; and IMF staff.   5/ The audit is performed by the Internal Affairs Directorate of the MoF.Annex II. Key Performance Indicators on Tax Administration2012 Actual 1/    2/ If the actual amount of tax and penalty assessed is less than €107 million in April, the targeted number of audits in June will be increased to ensure achievement of overall annual amount of tax and penalty assessed of at least €668 million.   4/ If the actual amount of tax and penalty assessed is less than €28 million in April, the targeted number of audits in June will be increased to ensure achievement of overall annual amount of tax and penalty assessed of at least €187 million.   3/ If the actual amount of tax and penalty assessed is less than €40 million in April, the targeted number of audits in June will be increased to ensure achievement of overall annual amount of tax and penalty assessed of at least €313 million.2013 Target 1/   1/ Cumulative audits from January of each year. 
 
 
 
 
 
96 

IndicatorEnd-March 20132012 entity coverage 1/91%New entities 2/55%2012 entity coverage 1/2% New entities 2/30%   Source: IMF staff.   1/ Includes old entities with 2011 spending above €1 million.    2/ Includes new entities in the end-Septemeber 2012 ELSTAT register with spending above €1 million.Annex III. Prior Action: Key Performance Indicators on Public Financial Management ReformsTarget a. Percent of institutional units (State and general government entities) reporting on the E-portal of GAO total budget allocations (including any revisions), pending outstanding commitments, unpaid commitments, and arrears data (for both ordinary and investment) at the end of each month, based on data from their commitment registers, is above the target.b. Discrepancy between the total arrears to third parties of non-state general government entities reported under the E-Portal of GAO using data from commitment registers and the total arrears reported through monthly surveys, i.e. the sum across all entities of the absolute value of (arrears monthly survey less arrears E-portal) divided by total arrears multiplied by 100, is below target. 
 
 
 
 
 
97 

Indicator2012 Target2012 ActualEnd-Dec.End-Dec.End-Jun.End-Dec.2012 entity coverage 1/90%85%2013 entity coverage 2/80%97%2012 entity coverage 1/1%4%2013 entity coverage 2/10%1%2013 entity coverage 2/65%93%   Source: Ministry of Finance; and IMF staff.   2/ Includes new entities in the end-Septemeber 2012 ELSTAT register with spending above €1 million.   1/ Includes old entities with 2011 spending above €1 million. Annex IV. Key Performance Indicators on Public Financial Management a. Percent of institutional units (State and general government entities) reporting on the E-portal of GAO total budget allocations (including any revisions), pending outstanding commitments, unpaid commitments, and arrears data (for both ordinary and investment) at the end of each month, based on data from their commitment registers, is above the target.b. Discrepancy between the total arrears to third parties of non-state general government entities reported under the E-Portal of GAO using data from commitment registers and the total arrears reported through monthly surveys, i.e. the sum across all entities of the absolute value of (arrears monthly survey less arrears E-portal) divided by total arrears multiplied by 100, is below target.c. Percentage of institutional units (State and general government entities) reporting on the E-portal of GAO all the prescribed items with financial information of the circular on commitment registers at the end of each month, based on data from their commitment registers, is above the target.2013 Target 
 
 
 
 
 
98 

 
 
 
 
GREECE 

Memorandum of Understanding 
on 
Specific Economic Policy Conditionality 

The  disbursements  of  financial  assistance  to  Greece,  by  the  European  Financial 
Stability  Facility  (EFSF),  are  subject  to  quarterly  reviews  of  conditionality  for  the 
duration  of  the  arrangement.  The  release  of  the  tranches  is  based  on  observance  of 
quantitative  performance  criteria  and  a  positive  evaluation  of  progress  made  with 
respect  to  policy  criteria  in  Council  Decision  2011/734/EU  of  12  July  2011  (as 
amended;  hereinafter  the  Council  Decision),  the  memorandum  of  economic  and 
financial policies (MEFP) and in this Memorandum of Understanding.  

The  annex  on  data  provision  is  part  of  the  Memorandum  and  how  well  it  has  been 
respected will be considered in the assessment of compliance. 

Greece  commits  to  consult  with  the  European  Commission,  the  ECB  and  the  IMF 
staff  on  the  adoption  of  policies  falling  within  the  scope  of  this  Memorandum 
allowing sufficient time for review. The Government publishes a quarterly report in 
line with Article 4 of the Council Decision. 

In  line  with  the  conclusions  of  the  euro-area  summit  of  26  October  2011,  the 
Government  will  fully  cooperate  with  the  Commission,  the  ECB  and  the  IMF  staff 
teams to strengthen the monitoring of programme implementation, and will provide 
the  staff  teams  with  access  to  all  relevant  data  and  other  information  in  the  Greek 
administration.  

The ownership of the programme and all executive responsibilities in the programme 
implementation remain with the Greek Government. 

99 

 
 
 
 
 
 
GREECE 

Memorandum of Understanding 
on 
Specific Economic Policy Conditionality 

1 

2 

Achieving sound public finances .......................................................................................... 104 

Structural reforms with budgetary relevance ....................................................................... 106 

2.1 

Privatising to boost efficiency in the economy and reduce public debt ............................. 106 

2.2 

Tax policy reform ................................................................................................................. 107 

2.3 

Revenue administration reforms ........................................................................................ 107 

2.3.1 

2.3.2 

2.3.3 

2.3.4 

2.3.5 

2.3.6 

Organization ................................................................................................................ 109 

Fight against tax evasion, money laundering and corruption ..................................... 109 

Tax and revenue collection ......................................................................................... 110 

Tax dispute .................................................................................................................. 112 

Management of the State Revenue Service ................................................................ 112 

Tools ............................................................................................................................ 112 

2.4 

Public Financial Management Reforms ............................................................................... 112 

2.5 

Safeguards for the delivery of fiscal commitments ............................................................. 115 

2.5.1 

2.5.2 

2.5.3 

2.5.4 

2.5.5 

2.5.6 

Enhancing national budgetary rules in line with the EU's Fiscal Compact .................. 115 

Budget preparation and implementation ................................................................... 115 

Monitoring and reporting ............................................................................................ 116 

Corrective and sanctioning mechanisms ..................................................................... 116 

Transparency, accountability and oversight ............................................................... 116 

Debt servicing account ................................................................................................ 117 

2.6 

Other institutional requirements ........................................................................................ 117 

2.7  Making the public administration more efficient and effective ......................................... 117 

2.7.1 

2.7.2 

Reforming the public administration .......................................................................... 118 

Fighting corruption ...................................................................................................... 119 

2.8 

Avoiding waste and increasing quality through sound public procurement ...................... 119 

2.9 

Completing the pension reform to secure sustainability .................................................... 122 

2.10  Modernising the health care system ................................................................................... 123 

2.10.1  Governance ................................................................................................................. 123 

2.10.2 

Controlling pharmaceutical spending ......................................................................... 123 

100 

 
 
 
2.10.3 

Reviewing the provision of medical services contracted by EOPYY ............................ 126 

2.10.4  National Health System (NHS) service provision ......................................................... 126 

2.10.5 

Centralised procurement ............................................................................................ 128 

2.11  Upgrading the education system ........................................................................................ 128 

3 

Stabilising the financial system ............................................................................................ 128 

3.1 

Framework for restructuring and strengthening of the banking system ............................ 129 

3.2 

Funding ................................................................................................................................ 129 

3.3 

State-owned preference shares of the banks ..................................................................... 130 

3.4 

Adaptation of banking supervision ..................................................................................... 130 

3.5 

Follow up stress testing ....................................................................................................... 130 

3.6  Management of assets under liquidation ........................................................................... 130 

3.7 

Review of legal insolvency frameworks .............................................................................. 130 

3.8  Minimisation of significant risks associated with the deterioration of banks loan portfolios

131 

3.9 

Governance of financial institutions ................................................................................... 132 

3.10 

Loan and Consignment Fund ............................................................................................... 133 

4 

Strengthening labour market institutions and promoting employment ................................ 133 

4.1 

Reforms in the wage-setting system ................................................................................... 133 

4.2 

Reducing non-wage labour costs ........................................................................................ 133 

4.3 

Lowering compliance costs, fighting undeclared work and informality ............................. 134 

4.4  More transparent and enforceable labour law ................................................................... 134 

4.5 

Support to the unemployed ................................................................................................ 134 

5 

Creating favourable conditions for economic activity ........................................................... 135 

5.1 

Promoting an efficient and competitive business environment ......................................... 136 

5.1.1 

5.1.2 

5.1.3 

5.1.4 

Rationalising / eliminating quasi-fiscal charges .......................................................... 136 

Reducing procedural and other administrative burden .............................................. 136 

Enhancing competition and promoting better regulation .......................................... 138 

Growth Strategy .......................................................................................................... 139 

5.2 

Reforming the judicial system to support economic activity .............................................. 139 

5.2.1 

5.2.2 

Review of the code of civil procedure ......................................................................... 139 

Judicial statistics .......................................................................................................... 139 

101 

 
 
5.2.3 

5.2.4 

5.2.5 

5.2.6 

5.2.7 

Tax case backlog reduction ......................................................................................... 139 

Non-tax case backlog reduction .................................................................................. 139 

Development of e-justice applications in courts ......................................................... 140 

Promotion of pre-trial conciliation and mediation ..................................................... 141 

Other measures on judicial reform ............................................................................. 141 

6 

Efficient Network Industries and Services ............................................................................ 142 

6.1 

Energy policy ....................................................................................................................... 142 

6.1.1 

6.1.2 

6.1.3 

6.1.4 

6.1.5 

6.1.6 

Unbundling effectively network activities from supply activities ............................... 142 

Provisions regarding the privatisation of PPC and DESFA: .......................................... 143 

Ensuring that electricity prices reflect costs ............................................................... 143 

Providing for a financially sustainable development of renewable energy sources ... 143 

Planning the development of the electricity market in the medium to long term ..... 144 

Fuel distribution .......................................................................................................... 145 

6.2 

Electronic communications ................................................................................................. 146 

6.3 

Transport ............................................................................................................................. 147 

6.3.1 

6.3.3 

6.3.4 

6.3.2 

Road ............................................................................................................................. 147 

Aviation ........................................................................................................................ 147 

Railways ...................................................................................................................... 148 

Maritime Activities and Ports ...................................................................................... 148 

6.4 

The Retail Sector .................................................................................................................. 149 

6.5 

Regulated professions, professional qualifications and provision of services .................... 150 

6.5.1 

6.5.2 

6.5.3 

6.5.4 

Removing restrictions to the access to and exercise of regulated professions ............ 150 

Additional measures .................................................................................................... 150 

Easing the recognition of professional qualifications ................................................. 151 

Services Directive: exploiting the information benefits of the Point of Single Contact
151 

7 

Increasing the impact of structural and cohesion funds ........................................................ 152 

8  Monitoring .......................................................................................................................... 154 

8.1 

Statistics ............................................................................................................................... 154 

9 

Annexes ............................................................................................................................... 155 

9.1 

Privatisation plan and intermediate steps .......................................................................... 155 

Regulated professions: regulated professions / economic activities whose regulatory 

9.2 
framework needs to be adjusted to applicable opinions of the Hellenic Competition Commission 
and other requirements .................................................................................................................. 156 

102 

 
 
9.3 
Agreed roadmap between the Greek Ministry of Justice and the EC/IMF/ECB for the review 
of the code of Civil Procedure ......................................................................................................... 158 

9.3.1 

9.3.2 

Code of civil procedure ................................................................................................ 158 

Study on cost of litigation ............................................................................................ 158 

9.4 

Statistics to be published by the Ministry of Justice ........................................................... 159 

9.5 

Non-exhaustive list of regulations on port work for review under the new port strategy . 161 

9.6 

Provision of Data ................................................................................................................. 162 

103 

 
 
1  Achieving sound public finances 
The primary deficit in 2012 was around 1.3% of GDP, lower than the targeted 1.5% of GDP thanks to 
under-execution  of  discretionary  expenditures  and  stronger  than  expected  outturn  in  local 
governments,  state-owned  enterprises  and  extra  budgetary  funds,  which  more  than  offset  weak 
revenue performance and collection of social security contributions.  

The mission identified fiscal shortfalls that threatened the achievement of the targets in 2013-14. The 
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. Furthermore, although the vast majority of 
the  very  large  and  highly  front-loaded  package  of  fiscal  consolidation  measures  for  2013  and  2014 
agreed  in  the  previous  review  had  been  implemented,  a  few  measures  were  not  fully  implemented 
(progressive pensions cuts; the new wage grid for parliamentary staff and in some SOEs; and the levy 
on  ship  owners  fell  short  of  the  envisaged  amount).  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. 

The authorities committed to implement offsetting measures to avoid the emergence of a fiscal gap in 
2013 and 2014. The Government decided to offset with the new measures in the same sectors in order 
to minimise the operational risks. Accordingly, the solidarity contribution for self-employed scheduled 
-  which  has  not  been  implemented  for  2013  -  has  been  replaced  by  a  tightening  of  pension 
requirements  for  uninsured  individuals  and  through  audits  of  pension  entitlements.  The  increase  in 
public transportation ticket prices has been substituted by a reduction in transfers to entities outside the 
General Government and the rationalisation of public services. The government will secure revenues 
of  EUR  1.9  billion  in  2013  by  extending  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 programme targets for the primary deficit are expected to be met in both 2013 and 2014, 
while the headline primary deficit is likely to be higher in 2013 as it includes the effect of the further 
bank recapitalisation and resolutions operations which will take place in 2013. Their recording in the 
fiscal accounts depends on the exact timing and nature of these transactions. 

Fiscal consolidation  

The  adjustment  path  towards  the  correction  of  the  excessive  deficit  shall  aim  to  achieve  general 
government primary surpluses in programme terms of at least EUR 0 million (0.0% of GDP) in 2013, 
EUR  2,750  million  (1.5%  of  GDP)  in  2014,  EUR  5,700  million  (3.0%  of  GDP)  in  2015  and  EUR 
8,975  million  (4.5%  of  GDP)  in  2016.  These  targets  for  the  primary  surpluses  imply  an  overall 
government deficit of 4.1% of GDP in 2013, 3.3% of GDP in 2014, 2.1% of GDP in 2015 and 0.8% of 
GDP in 2016.  

These numbers could be estimated to translate into an improvement in the cyclically-adjusted primary 
balance to GDP ratio from  4.5% in 2012 to 6.2% in 2013 and an average of about 5½% of GDP in 
2014-16 and into a cyclically-adjusted government deficit to GDP ratio at -½% in 2012, 2.1% in 2013, 
1.5% in 2014, 0.5% in 2015 and -0.4% in 2016, reflecting the profile of interest payments. 

104 

 
 
 
  
 
 
 
 
Proceeds  from  the  privatisation  of  financial  and  non-financial  assets,  transactions  related  to  bank 
recapitalisation  and  other  bank  support  measures,  as  well  as  all  transfers  related  to  the  Eurogroup 
decision of 21 February 2012 in regard to income of euro zone national central banks, including the 
Bank  of  Greece  (BoG),  stemming  from  their  investment  portfolio  holdings  of  Greek  government 
bonds  shall  not  reduce  the  required  fiscal  consolidation  effort  and  shall  not  be  counted  in  the 
assessment of these targets. 

The adjustment path referred to in the previous paragraphs, taking into account the impact of the debt-
reducing  measures  to  be  implemented  in  December  2012,  would  be  consistent  with  a  general 
government consolidated debt ratio to GDP of below 160% in 2016. 

The Government has put in place a number of measures to strengthen the underlying policies with the 
aim of catching any possible slippages. Specifically, regarding the solidarity contribution for the self-
employed,  the  Government  confirmed  its  commitment  in  implementing  this  measure  in  2014, 
especially given the expected recovery of the economy which will mitigate its any negative impact of 
this measure on Greece’s adjustment process.  

Prior to the disbursement the Government will: 

a.  adopt  legislation  to  extend  collection  of  the  real  estate  tax  through  2013  via  PPC.  The 
legislation  will  introduce  four  changes:  (i)  a  reduction  of  15  percent  in  the  rate;  (ii) 
imposition  of  the  tax  on  buildings  not  legally  exempted  from  municipal  duties;  (iii) 
calculation of tax on buildings outside urban planning zones on a different basis (based on 
average legal value for the relevant municipality); and (iv) implementation of the tax on all 
buildings which are leased to the state by non-exempted private owners. Separately, a new 
law on taxation of real estate will be adopted by end-June for 2014 onwards. The new real 
estate  taxation  regime,  which  will  consolidate  a  number  of  now  separate  taxes,  will  be 
designed to be budget neutral ensuring a annual revenue of at least EUR 2.7 billion. 

b.  fully implement all other agreed fiscal measures for 2013 not yet in place. 

Additional Measures: 

1.  Following  a  decision  on  the  final  details  of  the  planned  direct  income  tax  reforms,  the 
authorities  will  review  the  fiscal  outlook  for  2014  and  agree  with  the  EC/ECB/IMF  on 
measures needed to close any residual gap for 2014, in the context of the next review of 
the programme. 

2.  To  the  extent  that  a  fiscal  gap  in  2015-16  remains,  the  authorities  could  pursue  several 
strategies  to  close  this,  including  improving  revenue  by  broadening  the  tax  base  through 
further reduction in exemptions and deductions; extending measures that are expiring; and 
targeted cuts in current expenditure. There are also opportunities to refocus the investment 
programme for more effective support to growth. The authorities will specify concrete plans 
for  2015  no  later  than  end-August  2013,  when  they  will  formulate  a  detailed  fiscal 
programme for 2014-2015 consistent with a primary surplus of 3% by 2015. 

105 

 
 
 
 
 
  
 
 
 
2  Structural reforms with budgetary relevance 

2.1  Privatising to boost efficiency in the economy and reduce public debt 

The  privatisation  of  public  companies  contributes  to  the  reduction  of  public  debt,  as  well  as  to  the 
reduction  of  subsidies,  other  transfers  or  state  guarantees  to  state-owned  enterprises.  It  also  aims  at 
increasing  the  efficiency  of  companies  and,  by  extension,  the  competitiveness  of  the  economy  as  a 
whole, while attracting foreign direct investment. This is why the Greek authorities have committed to 
proceed swiftly and efficiently with the Privatisation Plan even if the sale of assets goes beyond the 
duration of the Economic Adjustment Programme. Within this context, the Government is committed 
to continue to insulate the privatisation process from political pressures.  

The provision of basic public goods and services by privatized industries will be fully safeguarded, in 
line with the national policy goals and in compliance with the EU Treaty and appropriate secondary 
legislation rules. 

Actions to be taken by the Government include the following: 

1.  Rapid  adoption  of  necessary  primary  and  secondary  legislation  and  implementation 
decisions, in consistency with the required actions for implementing the Privatisation Plan.  
The Authorities must proceed swiftly to establish the regulatory framework in those areas 
which are necessary for the privatisation process (airports, ports, water, lotteries), consistent 
with EU legislation, taking into account international best practises.  Transferring of assets 
to  the  HRADF  quickly  will  facilitate  the  privatisation  process  and  will  signal  the  clear 
intention of the authorities to bring the privatisation process forward. The authorities should 
take  immediate  actions  to  address  the  state-aid  related  issues  pending,  which  is  a  pre-
condition  for  proceeding  with  the  privatisation  of  these  assets.  All  government  actions 
pending in these three areas are listed in Annex 9.1.  

2.  Privatisation  of  real  estate  assets  is  of  outmost  importance  in  this  process.  High  priority 
should  be given in the preparation  of  assets (title clearance, licencing  etc.) given the time 
lags involved in such a process and the need to secure a sufficient number of assets in the 
privatisation pipeline. Hence, the authorities should proceed with: 

i. 

ii. 

The  transfer  of  full  and  direct  ownership  of  1000  commercially  viable  real  estate 
assets to the HRADF (by end-2013).  

The transfer will be done in four phases, based on concrete interim targets of 250 
real estate assets per quarter (counting from January 2013). 

3.  Currently  some  80,000  public  properties  are  under  the  management  of  ETAD.  Additional 
properties are under management by different ministries.  The status of these properties in 
many instances is unknown, or unverifiable. This implies waste and limits possibilities for 
developing  public  property  and  deriving  income  from  it.    In  order  to  enhance  of  asset 
management capacity of Hellenic Republic, the Authorities:  

i. 

propose a plan to prepare the remaining (not in the privatisation pipeline) real estate 
assets owned by the Hellenic Republic, and managed  by ETAD, for securitisation 
or  direct  privatisation.  Other  properties  under  the  management  of  other  ministries 
(Agriculture,  Defence  etc.)  should  be  brought  under  the  scope  of  this  work.  This 
plan  should  contain  analysis  of  the  status  of  properties  and  the  steps  needed  to 
quickly prepare properties for exploitation by the State. (November 2013).  

106 

 
 
 
ii. 

In  view  of  this  plan,  ETAD  will  present  proposals  to  improve  its  governance, 
effectiveness  and  ability  to  carry  out  these  tasks  to  be  completed  in  stages  and 
according to plan by November 2013. 

4.  The Authorities will bring all remaining (non-operational) properties (e.g., those under the 
Ministry  of  Defence,  Agriculture)  under  the  management  of  ETAD  in  steps,  to  be 
completed by December 2013; a first progress report to be prepared by June 2013 on the 
numbers  of  properties  by  Ministry/Public  Entity,  the  nature,  state  and  of  these  properties 
and providing detailed information, where applicable, to its current use; a second progress 
report  with  the  number  already  transferred  to  ETAD  by  August  2013;  a  third  progress 
report with the number already transferred to ETAD by October 2013; and a final report by 
December 2013. 

5.  The Authorities will ensure that there will be no transfer or withholding of any real estate 
assets, without prior consultation and agreement with the HRADF and the EC/IMF/ECB, to 
entities  other  than  the  HRADF,  including  to  municipalities  and  the  recently  established 
pension fund SPV or other dedicated legal entities, or until such time as the assets necessary 
to supply the privatisation plan have been secured (Continuous).  

6.  The HRADF, drawing in particular from a report to be prepared by the ESM, will assess the 
possibility  of  raising  additional  revenues  from  the  private  sector,  with  a  focus  on 
international  investors,  by  means  of  securitisation  of  assets,  through  the  exploitation  of 
assets  not  yet  included  in  its  privatisation  plan  and  specified  in  paragraph  2.1.9 
(continuous) 

7.  The  HRADF  will  continue  to  be  tasked  with  selling  assets  as  quickly  and  effectively  as 
possible.  In  particular,  there  will  be  no  further  political  review  once  an  asset  has  been 
transferred to the HRADF (Continuous).  

8.  The HRADF will publish quarterly reports on its steps to facilitate privatisations, financial 
accounts, including a profit and loss statement, a cash flow statement, and a balance sheet, 
no later than 60 days after the conclusion of every calendar quarter (Continuous).  

9.  Securing privatisation receipts which, cumulatively since June 2011, should be at least EUR 
1.6 billion by end-2012, EUR 4.2 billion by end-2013, EUR 6.5 billion by end-2014, EUR 
7.7 billion by end-2015, EUR 11.1 billion by end-2016. 

2.2  Tax policy reform 

1.  By June 2013, the Government makes fully operational a standard procedure for revision of 
legal values of real estate to better align them with market prices that will be in place for the 
purposes of capital taxation for the fiscal year 2014. 

2.  The Authorities will adopt a unified and simplified income tax code (June 2013). 

3.  The  Authorities  will  develop  the  tax  policy  capacity  in  the  policy  unit  of  the  Ministry  of 
Finance with appropriate  and adequate legal and economic expertise for the development, 
economic impact, and revenue assessment of new tax policy initiatives (September 2013).  

2.3  Revenue administration reforms 

A strong and focused reform programme undertaken in the coming months must  continue to address 
all the weaknesses in the existing system and support the fight against tax evasion and corruption. The 
Government will continue to reform the current institutional framework in line with that in many other 

107 

 
 
EU and OECD economies to ensure more autonomy for the tax administration department, especially 
for day-to-day operations, while leaving policy matters in the hands of the Government. The reform 
must be undertaken in a gradual way after assessing carefully the impact of each step undertaken:  

  The  re-organisation  of  tax  offices  must  continue  to  take  place  to  increase  the  efficiency  of 

audits and tax collection.    

  Methods must continue to be improved, using risk assessment techniques, to increase focused 
audits  on  high  yield  targets,  and  on  substantial  issues  in  order  to  detect  tax  evasion.  This 
requires a second phase of improvement of the Code of Books and Records, and the creation 
of a new single tax procedure code. 

  Collection of taxes  should  continue to  be reinforced. The debt collection  function  should be 
consolidated  into  a  small  number  of  offices  and  conducted  by  a  full  time  work  force  of 
specialized collection staff, and where possible integrated with the collection of debt related to 
social security contribution and local government.  

  The  management  will  be  improved,  under  the  leadership  of  a  Secretary  General  for  Public 
Revenue  (SGPR)  with  increased  powers.  Managers  and  auditors  should  be  subject  to 
performance targets and regular assessment. The SGPR must have the capacity to replace non-
performing managers and auditors. Besides, managers must rotate regularly. 

  The structure of the Secretariat General for Public  Revenue has to be reorganized to include 
other functions related to the implementation of the tax and customs legislation and which are 
not  at  the  moment  integrated  in  the  Revenue  Administration,  including  audit,  controls, 
information systems and internal audits. 

  Fighting tax evasion and corruption is a priority in this effort. 
  The current administrative review process has to be replaced by a cost effective compulsory 
pre-settlement  administrative  procedure,  in  order  to  significantly  reduce  the  number  of 
unnecessary tax litigation, so as to lighten the burden of courts and ensure a timely settlement 
of the cases.  

To  deal  with  all  these  challenges,  full  use  should  be  made  of  technical  assistance  provided  in  this 
sector. This implies a structured process involving technical assistance advice working on an on-going 
basis  with  the  administration  on  new  legislation  and  implementing  decision,  with  enough  time  to 
guarantee proper consultation and with a constant effort to keep rules simple and in line with current 
administrative capacity. 

With  the  aim  of  strengthening  the  Revenue  Administration,  as  part  of  the  reform  programme,  the 
Government, prior to the disbursement: 

a.  Enacts the legal framework necessary to transfer to the revenue administration the Ministry 
of  Finance  internal  affairs  department,  and  all  tax  and  customs  administration  related 
functions  within  the  General  Secretariat  for  Information  Systems  (GSIS)  and  within  the 
Corps for the Prosecution of Financial Crimes (SDOE); 

b.  Simplify the procedure to classify debt as uncollectable, and suspend collection activities 
on uncollectable debt (subject to a joint decision with the Court of Audit for amounts more 
than €1.5 million); 

c.  Abolish the requirement that all tax declarations for the previous 10 years must be audited 
while  retaining  the  right  to  continue  to  audit  earlier  years  and  the  discretion  to  audit  any 
amount of declarations from these earlier years. 

108 

 
 
 
The Government undertakes the following reforms: 

2.3.1  Organization 

1.  Increase autonomy of the revenue administration by the following actions: 

i. 

ii. 

iii. 

iv. 

v. 

vi. 

Transfer  all  personnel  functions  and  budget  allocations  of  the  Internal  affairs 
department  and 
the  revenue 
the  revenue-related  departments  of  GSIS 
administration,  and  draft  and  implement  the  service-level  agreement  between  the 
SGPR and the GSIS (July 2013) 

to 

Transfer  of  the  revenue-related  functions,  personnel,  and  budget  allocation  of 
SDOE under the revenue administration is completed (October 2013) 

Provide that any advice of MAREG to the revenue administration on organizational 
matters has to be given within a 14 day time frame (May 2013);  

Enable  the  Secretary  General  for  Public  Revenue  Administration  (SGPR)  to 
determine the conditions for hiring under the control of ASEP (May 2013);  

Create  a  budget  code  that  encompasses  all  organizational  units  of  the  revenue 
administration  (to  enable  a  separate  and  unified  budget  allocation  for  approval  by 
parliament starting with the 2014 budget) (May 2013);  

Establish  a  small  financial  management  unit  in  the  revenue  administration  to 
coordinate  the  preparation  and  implementation  of  the  revenue  administration’s 
budget (while maintaining the role of the General Directorate for Financial Services 
(GDFS)  as  overall  budget  coordinator  and  financial  controller  for  the  Ministry  of 
Finance’s aggregate budget appropriation) (May 2013);  

vii. 

Review the delegation of competencies to the SGPR and GDFS in the Ministry of 
Finance,  and  if  necessary  assign  the  authority  to  the  SGPR  to  reallocate 
expenditures  across  budget  lines  in  accordance  with  the  general  rules  set  out  in 
Organic Budget Law 2362/1995 (July 2013); 

viii.  Authorize the SGPR to determine a grading and promotion system for the revenue 
administration, subject to the approval of the Minister of Finance (May 2013); 

2.  Continues to centralise and merge local tax offices leaving:  

i. 

about 140 functioning offices (June 2013); 

ii. 

120  when payment  through  banks is operational all over the territory (September 
2013). 

2.3.2  Fight against tax evasion, money laundering and corruption 

1.  The Authorities submit proposals for further simplification and improvement of the Code of 
Tax  Recording  of  Transactions  (formerly  code  of  books  and  records)  and  corresponding 
amendments required in the commercial and accounting legislation (October 2013); 

2.  The revised Code of Tax Recording of Transactions will come into effect by 1/1/2014. 

3.  Reduce payment requirement to file a VAT return to a minimum (May 2013). 

109 

 
4.  Take  all  appropriate  measures  to  complete  the  certification  of  2000  tax  auditors  by  July 

2013. 

5.  The  SGPR  provides  a  plan,  including  training,  for  the  integration  of  new  staff  in  the 

administration (May 2013). 

6.  Complete the external hiring of the additional 200 auditors (July 2013). 

7.  Ensure that all staff are assessed for their performance on a bi-annual basis under the new 

assessment system (Continuous). 

8.  Ensure an adequate number of supervisors in the High Wealth Individual and High Income 
Self  Employed  (HWI-HISE)  and  Large  Tax  Payers  Unit  (LTU),  including  through 
reallocation from other activities (Continuous, starting June 2013). 

9.  The  SGPR  issues  a  decision  to  enhance  targeted  auditing  based  on  risk  assessment 

techniques (May 2013). 

10.  The Authorities implement indirect audit methods and allow their application to any open 
tax  audit  (which  will  bring  wealth  and  expenditures  into  the  determination  of  taxable 
income) (May 2013); 

11.  The SGPR issues a circular introducing the modern code of conduct concerning conflicts of 
interests and declaration of interests and a system for protecting whistle-blowers who report 
corruption (May 2013). 

12.  Appoint  the  national  coordinator  for  anti-corruption,  the  coordination  committee  and  its 
chairman, and the advisory committee, and second the eight staff provided for by the law.  
(May 2013). 

13.  The Authorities revise legislation to enable prosecution for major tax evasion regardless of 

the tax payer paying the tax assessment in cases of settlement (May 2013). 

14.  The  authorities  complete  the  development  of  an  IT  system  allowing  immediate  access  to 
information  about  existence  of  bank  accounts  held  by  taxpayers,  and  about  the  current 
balance on the account, which will be implemented on a pilot basis. (July 2013)  

15.  A full implementation of the action specified in (2.3.3.16) (September 2013).  

16.  Ministries  and  State  Owned  Enterprises  (SOEs)  which  have  a  fiscal  relationship  with 
taxpayers and beneficiaries utilize their tax identification number for financial transactions 
with them (June 2013).  

17.  The  Authorities  make  compulsory  the  use  of  tax  identification  numbers  for  all  official 

transaction with the whole public administration (December 2013) 

18.  The Authorities introduce a system to consolidate and link all of the different identification 

numbers now used across various government agencies (June 2014). 

2.3.3  Tax and revenue collection 

1.  The SGPR completes the consolidation of debt collection in the largest tax offices (DOYs) 

by (September 2013) 

110 

 
2.  The  Authorities  will  present  a  plan  for  providing  a  compulsory  professional  training 

programme for debt management staff (May 2013).  

3.  The  SGPR  completes  a  review  of  the  policy  and  procedures  to  write  off  tax  debts  (June 

2013).  

4.  The Authorities introduces the possibility of direct debiting of bank accounts for taxpayers 

in arrears (September 2013). 

5.  The Authorities take necessary steps to replace payments in cash and cheque in tax offices 

with bank transfers (June 2013). 

6.  The Authorities  Commit not to adopt new tax  amnesties, or extend existing  amnesties for 
the  collection  of  taxes  and  social  contributions  during  the  years  covered  by  the  economic 
adjustment programme (Continuous). 

7.  The Authorities will establish a special working group to examine the arrears stock across 
the  four  largest  Social  Security  Funds  (SSFs),  to  assess  collectability,  and  identify 
collectible arrears for transferring them to the new single collection entity by (June 2013).  

8.  The  working  group  will  develop  a  framework  for  coordination  and  integration  of  tax  and 

social security contributions (SSC) arrears collection (September 2013).  

9.  The Authorities will introduce a revised surcharge regime for late payment of SSC by June 

2013 that combines a penalty and an above market interest rate.  

10.  The  Authorities  repeal  the  application  of  the  Code  for  Collection  of  Public  Revenue  for 
collection  of  social  security  contributions,  and  enact  a  new  legal  framework  for  public 
revenue collections in line with international best practice (February 2014). 

11.  The Authorities  enact the  new legal framework for instalment  schemes for debt related to 

tax and for social security contributions (June 2013): 

i. 

ii. 

The legislation will set the date of opening application into the new scheme no later 
than July 1, 2013. Entry into existing tax and SSC debt instalment schemes that do 
not extend past June 30, 2017 and do not offer more generous terms and conditions 
than the fresh start scheme (concerning the effective interest rate and the surcharge 
reduction),  will  be  allowed  up  until  June  30,  2013.  The  law  will  specify  which 
schemes  remain  open  until  June  30,  2013.  Entry  into  all  other  schemes  will  be 
discontinued upon submission of this legislation to parliament. Entry into these two 
installment  schemes  will  be  disallowed  for  debtors  who  are  in  default  on  another 
scheme after the submission of the law to parliament.     

The  key  features  of  the  basic  permanent  instalment  scheme  will  include:  (i) 
tightened  eligibility  (proof  of  viability  and  tax  compliance  will  be  required);  (ii) 
payment  of  market  interest  rates  plus  a  premium  on  outstanding  balances;  (iii) 
enforced collection upon default on a payment; and (iv) a maximum of 12 monthly 
instalments  (except  for  a  specific  list  of  taxes  of  a  non-current  or  extraordinary 
nature for which instalments of up to 24 months would be allowed. 

iii.  However,  on  a  one-time  basis,  in  parallel  to  the  normalization  of  the  economic 
situation, the framework for granting tax debt and SSC payment arrangements will 
be temporarily made more flexible through the adoption of a "Fresh start scheme" 
open to settle debt existing at end 2013 for debtors current in 2013 payments. Two 
key changes will be made. First, taxpayers will be allowed to pay pre-existing tax 

111 

 
and  SSC  debts  (not  already  subject  to  an  instalment  arrangement),  and  to 
consolidate  debt  from  other  schemes.  Payments  will  be  in  equal  monthly 
instalments  not  extending  beyond  June  2017.  There  will  be  a  reduction  in  the 
surcharge  by  at  most  50  percent  upon  full  payment  of  the  debt.  This  will 
accommodate viable taxpayers whose capacity to pay is temporarily affected by the 
current business cycle. Second, reduced documentation requirements will apply for 
tax and SSC debts below €75,000. Under this scheme, compliance with current tax 
and  SSC  obligations  is  mandatory,  full  collateral  will  be  required  for  large 
rescheduled  amounts  (over  €300,000),  and  enforced  collection  upon  default  will 
apply. 

2.3.4  Tax dispute 

1.  The Internal Review Unit will be operational by (August 2013)  

2.3.5  Management of the State Revenue Service 

1.  The SGPR replaces managers who do not meet performance targets (Continuous);  

2.  The Authorities launch an easily accessible website to enforce accountability to the public 
through publication of summary statistics on key performance indicators, the number of tax 
evasion cases sent to the FIU and to prosecution by the tax administration (May 2013). 

2.3.6  Tools 

1.  The  Authorities  adopt  a  new  Single  Tax  Procedures  Code  (June  2013).  This  code  should 
aim  to  reduce  the  costs  of  administration  and  compliance  and  will  incorporate  procedural 
reforms  in  all  major  administrative  areas  that  are  necessary  to  support  modern  tax 
administration (e.g., tax filing, audit and penalties, enforcement powers and debt collection.) 

2.  The SGPR ensure the use of a number of functions in ELENXIS (tax payer profile) for all 
tax  units that perform audits and full use in certain key offices (LTU, HWI-HISE). (June 
2013).  

3.  The  new  ELENXIS  system  will  be  operational  in  major  tax  offices  and  audit  centres  by 
(December  2013).  The  National  Centre  for  Public  Administration  and  Local  Government 
(EKDAA) will provide the necessary support. 

4.  The new TAXIS system is operational in tax offices as follows: 

i. 

In 50 tax offices covering 70% of revenues by June 2013; 

ii. 

in all tax offices by October 2013.  

2.4  Public Financial Management Reforms 

Developing  a  solid  public  financial  management  framework  is  key  in  controlling  expenditures  and 
thus being able to achieve fiscal targets. The Government is committed to enacting targeted reforms 
for  strengthening  the  framework  both  within  the  General  Accounting  Office  (GAO)  and  line 
ministries.  

112 

 
 
 
 
In  this  area,  the  Authorities  undertake  to  implement  important  reforms  which  include  monitoring 
expenditure  across  different  public  entities,  as  well  as  in  local  governments  and  state-owned 
enterprises, and putting in place triggers for ensuring that the budget is executed in an orderly manner 
and expenditure is kept under control. 

One important area where significant progress must be made is in preventing the build-up of arrears, 
both on the tax and expenditure sides. The significance of a timely transposition and implementation 
of  the  Late  Payment  Directive  has  been  highlighted  in  the  Communication  on  Action  for  Stability, 
Growth  and  Jobs  that  reflects  the  role  of  the  Directive  in  restoring  normal  lending  to  the  economy: 
96%  of  bankruptcies  are  due  to  late  payments  or  other  objective  problems.  In  the  current  economic 
situation it is ever more relevant that the problem of late payment is addressed; implementation of the 
Directive requires payment of invoices within 30 days in principle, or 60 days in exceptional cases. In 
Greece  the  transposition  and  implementation  of  the  Directive  is  particularly  challenging  as  late 
payment,  both  in  business-to-business  (B2B)  transactions  and  in  transactions  between  public 
authorities  and  businesses  (PA2B),  ranks  amongst  the  highest  in  Europe,  according  to  the  European 
Late  Payment  Index  of  Intrum  Justitia.  A  timely  and  precise  transposition  and  implementation  of 
Directive  2011/7/EU  will  correct  also  some  current  discrepancies  between  European  and  Greek 
legislation closing two pending cases of infringements if article 1 of Law 3068/2004, as amended by 
Article  20  of  Law  3301/2004  (which  implies  that  a  title  which  in  Greek  law  is  formally  called 
"enforceable title" is not enforceable against Greek "State bodies and bodies governed by public law") 
and Article 27 of Law 2867/2010 (which obliges suppliers to public hospital to surrender any claims 
for statutory interest due to late payment in order to be paid ) are amended and/or repealed as part of 
the Greek transposing measures for Directive 2011/7/EU. 

Given  the  economic  sanctions  included  in  the  Directive  for  late  payment,  this  requires  a  further 
strengthening  of  the  public  finance  management  to  cope  with  the  implementation  of  the  payment 
delays envisioned by the late payment directive (30 days in principle, 60 days in exceptional cases). 

Prior to the next disbursement the Government will:  

a.  Transpose  the  Directive  2011/7/EU  on  combating  late  payment  in 

commercial transactions. 

Other actions to be taken by the Government include the following: 

1.  In  order  to  fully  comply  with  the  late  payment  directive,  notably  compliance  with  the 
deadlines set in this Directive, the Government will propose by June 2013 a realistic action 
plan  and  a  timetable  for  progressing  with  reforms  in  Public  Finance  Management  with  a 
view  to  streamline  payment  processes  and  shorten  payment  periods.  The  action  plan  shall 
contain: 

i. 

ii. 

iii. 

the different steps that need to be accomplished by the Greek government in order 
to simplify the processes related to payments in the public sector.  

It  shall  provide  for  specific  deliverables  within  set  deadlines  in order  to  allow  for 
monitoring of progress made in its completion.  

It  shall  contain  proposals  in  order  to  reduce  significantly  the  number  of  parties 
involved  at  each  step  of  the  process,  and  provide  for  the  concrete  deadlines  that 
need to be respected for each step to be completed.  

In  producing  the  action  plan  the  Greek  government  shall  take  into  account  the  technical 
assistance  already  received  and  further  assistance  made  available  by  TFGR  and  other 

113 

 
 
 
 
 
 
experts  and  the  timetable  already  outlined  for  the  completion  of  the  Enterprise  Resource 
Planning (ERP) project.  

2.  In parallel with the ERP project GAO will engage in discussions with the Hellenic Court of 
Audit (HCA) on further streamlining the pre-audit process by the HCA. GAO will propose 
to the HCA an increase in the ceilings for mandatory pre-audits, and below the ceiling the 
introduction of risk-based pre-audits rather than 100% pre-audit. GAO will ask the HCA to 
develop an action plan for inclusion in the economic adjustment program (June 2013) 

3.  To address problems still lying in the extra-budgetary funds and in the social security sector, 
especially  in  relation  to  the  transfer  of  competencies  from  SSFs  to  EOPPY,  despite  the 
progress in the setting-up of the commitment/co-payment registries, the Government will:  
i. 
ensure  that  commitment  registers  are  in  operation  in  80  per  cent  of  general 
government entities based on 2013 entity coverage (June 2013).  

iii. 

ii.  monitor  the  effectiveness  of  the  commitment  registers  by  conducting  regular 
targeted inspections in the public entities covered by the system (Continuous).  
enforce  the  obligation  of  accounting  officers  to  report  commitments  by 
enacting  sanctions  to  entities  not  submitting  needed  data,  though  disciplinary 
action  for  accounting  officers,  and  by  strengthening  the  role  of  GAO  in 
providing support and guidance to Accounting Officers (Continuous) 
take  actions  as  soon  as  significant  deviations  from  yearly  targets  of  EOPYY 
become evident (Continuous).  
Ensure that all the 41 SSFs report on the e-portal (June 2013). 

v. 

iv. 

4.  To  address  other  problems  still  lying  in  the  central  government  sector  the 

Government will: 
i.  will  adopt    a  Ministerial  Decision  to  ensure  that  any  change  to  the  projects 
decided by the Regional authorities is timely recorded in the MIS database (May 
2013).    This  Decision  provides  for  a  fully-fledged  monitoring  system  for 
implementation of the PIB. Until then, the modifications of the financial data of 
the  projects  will  continue  to  be  entered  to  the  existing  monitoring  information 
system  under  the  responsibility  of  the  Directorate  of  Public  Investments  (May 
2013).  
The  Government  ensures  that  the  responsibility  of  the  functioning  of  PIB 
commitment  registers  is  always  linked  to  the  responsibilities  of  allocating  the 
available resources among projects (continuous) 
completes  the  reorganization  of  the  GDFS  through  the  adoption  of  a  Joint 
Ministerial Decision  (June 2013).  
establishes  procedures  for  identifying  fully  qualified  senior  financial  managers 
for the Accounting Office positions (June 2013).  

ii. 

iii. 

iv. 

v.  Appoints  the  Accounting  Officers  based  on  these  new  procedures.  (September 

vi. 

2013).  
The  MoF/GAO  and  MAREG,  in  consultation  with  the  Accounting  Officers  of 
the  Ministries,  ensure  adequate  staffing  for  the  financial  functions  in  line 
ministries  and  develop  training  material  and  a  training  scheme  for  GDFS  staff 
(continuous). 

5.  To clear expenditure arrears and tax refunds, the conditions for a government unit to meet to 
allow  funds  for  arrears  clearance  to  be  disbursed  will  include,  for  expenditure  arrears:  (i) 
establishment by the unit of a fully functioning commitment register and (ii) reporting of at 
least three months of consistent data on commitments, payments, and arrears (2 months for 
EOPYY);  and,  for  both  expenditure  arrears  and  tax  refunds:  (iii)  verification  of  claims. 

114 

 
Subvented agencies which meet these conditions can clear their arrears even if their parent 
agency  does  not  meet  the  conditions.  Arrears  should  not  delay  the  execution  of  the 
pharmaceutical spending clawback or any related measure. The Government will: 
i. 

Ensure the administrative capacity to make the clearance of arrears effective by 
staffing the necessary units (June 2013) 

6.  Once the clearance of all verified arrears is achieved, the Government ensures that no new 

arrears are accumulated (Continuous). 

7.  Start  reporting  (on  accrual  basis)  of  all  existing  tax  refund  claims  in  fiscal  accounts 
according  to  the  year  in  which  they  were  incurred.  Furthermore,  the  monthly  General 
Government budget execution bulletin starting in April will report the amount of disbursed 
tax refunds and payments on expenditure arrears as cash spending (Continuous). 

2.5  Safeguards for the delivery of fiscal commitments 

Enhancing credibility is essential to the success of the Adjustment Programme for Greece. One way is 
through the early implementation of the EU's Fiscal Compact. Greece has already signed and ratified 
the intergovernmental Treaty on Stability, Coordination  and Governance in the EMU. A key  part  of 
the  Treaty  is  the  fiscal  compact  that  introduces  national  budgetary  rules  as  well  as  enhanced 
enforcement mechanisms at European level. Within a comprehensive approach, key steps to safeguard 
the  delivery  of  fiscal  commitments  are  necessary  in  the  areas  of:  Budget  preparation  and 
implementation,  monitoring  and  reporting,  corrective  and  sanctioning  mechanisms,  transparency, 
accountability and oversight, debt servicing. 

2.5.1  Enhancing national budgetary rules in line with the EU's Fiscal Compact   

1.  The  Government  will  adopt  the  necessary  legislation  to  transpose  the  Fiscal  Compact 
provisions  with  a  view  to  introducing  a  structural  budget  balance  rule  with  an  automatic 
correction mechanism (August 2013) 

2.5.2  Budget preparation and implementation 

The Government will: 

1.  Adopt  an  administrative  calendar  for  the  preparation  of  the  medium-term  fiscal  strategy 

(MTFS) (May  2013). 

2.  Modify the organic budget law by August 2013 to introduce: 

i. 

ii. 

iii. 

iv. 

The  MTFS  will  set  fixed  expenditure  ceilings for  line  ministries  and  the  health  care 
sector and every year a ceiling for an additional year will be added while the already 
set ceilings (i.e. for the first two years of the rolling three-year period covered by the 
ceilings) would remain as previously fixed. ; 

Establish binding annual budget balance targets for local governments; 

identify performance targets for SOEs; 

Provisions  to  freeze  ex-ante  10%  of  discretionary  appropriations  per  budget  line  as 
part of the MTFS. The frozen appropriations would be released in the second half of 
the  year  conditional  upon  meeting  the  fiscal  targets.  The  first  application  should 
concern the 2014 budget.  

v.  A  revenue  rule  for  the  general  government,  according  to  which  at  least  30%  of 
windfall revenues in excess of the target will be devoted to debt repayment while up 
to  70%  could  be  used  the  following  year  by  the  Government  to  support  temporary 
policies aiming to boost growth and social cohesion automatically, conditional to the 
achievement of the fiscal targets.  

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2.5.3  Monitoring and reporting 

The Government will: 

1.  Identify other areas of operational expenditure where real time monitoring mechanisms could 

be introduced or strengthened (June 2013). 

2.5.4  Corrective and sanctioning mechanisms 

The Government will: 

1.  Ensure a continuous balance between pension contributions and benefits, by bringing forward 
to  June  2014  the  entry  in  force  of  the  binding  mechanism  (for  auxiliary  pensions)  already 
legislated to enter in force as of 2015. (September 2013)  

2.  Strengthen  HRADF's  governance  and  independence  and  implement  an  automatic  correction 
mechanism,  should  there  be  any  difficulties  in  the  privatisation  process  or  slippages  in  the  
targets, by (quarterly): 

i. 

ii. 

iii. 

Reviewing the functioning of the recently amended privatisation law, through specific 
QPCs to be enforced the moment the privatisation plan derails.   

Taking,  in  cooperation  with  EC/ECB/IMF,  appropriate  steps,  including  changes  in 
existing  legislation  and/or  in  the  composition  of  the  Board,  to  safeguard  and 
strengthen the independence and the functioning of the HRADF, if targets for the sale 
of assets to be privatised were missed substantially for two consecutive quarters. In all 
circumstances,  the  HRADF  remains  fully  accountable  to  parliament  on  an  ex-post 
basis for the integrity of every privatisation sale.  

Increasing  automatically  the  primary  surplus  target,  should  there  be  a  shortfall  of 
privatisation  proceeds  due  to  the  delay  in  sales  of  specific  assets  compared  to 
programme  targets  for  two  consecutive  quarters.  Any  shortfall  in  privatisation 
proceeds ceteris paribus increases the financing need and the debt ratio. To mitigate 
this undesirable outcome, unless other adjustments are agreed with the EC/ECB/IMF, 
the primary surplus target would be raised with immediate effect by 50 percent of the 
shortfall in proceeds, and should be achieved by means of current expenditure cuts in 
the  general  government.  The  adjustment  within  any  year  would  be  capped  at  €1 
billion. 

3.  Enhance the corrective mechanism for local governments by: 

i. 

ii. 

Issuing  Joint  Ministerial  Decision  providing  guidelines  for  the  Observatory's 
assessment of the local government's budgets (May 2013); 
Establishing a review process of LG’s budgets by the Observatory of local authorities, 
in order to ensure consistency with the overall MTFS targets for LGS to be completed. 
(June 2013) 

2.5.5  Transparency, accountability and oversight 

The Government will: 

1.  Increase  transparency  and  accountability  to  the  public/parliament,  by  e.g.  releasing  status 
reports on the implementation of the legislated fiscal measures, publication of hiring numbers, 
proper  fiscal  impact  assessment  of  legislation,  statement  of  the  main  sources  of  fiscal  risks 
related to changes in key economic assumptions in the forecast, as well as an assessment of 
the fiscal impact of the main sources of fiscal risk including government guarantees and other 
contingent liabilities, etc. (June 2013)  

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2.  Take  steps  to  strengthen  the  reputation  of  the  existing  Parliamentary  Budget  Office, 
independence  and  technical  competence  towards  a  fully-fledged  fiscal  council  (e.g. 
provision/endorsement of forecasts for the budget preparation, monitoring of compliance with 
budgetary 
independent  assessments  of  fiscal 
developments and challenges, etc.), building on best international practices. (December 2013)  

targets  and  fiscal  rules,  provision  of 

2.5.6  Debt servicing account 

1.  The  Government  will  ensure  an  effective  implementation  of  the  debt  servicing  account  to 
monitor cash flows, avoid diversion of official financing and secure a timely debt servicing. 
Law  4063/2012  established  a  segregated  account  in  the  Bank  of  Greece.  By  law, 
disbursements to this account cannot be used for any other purposes than debt servicing. Via 
this account the amortization and interest payment costs of all HR’s loans, debt management 
transactions and derivatives, as well as any parallel cost (fees and other expenses) related to 
debt  servicing  and  in  general  to  Public  Debt  Management  are  paid.  The  proceeds  of  this 
account are the disbursement of EFSF’s loans, subject to an EFSF acceptance notice, as well 
as  the  Hellenic  Republic’s  contributions  to  debt  servicing,  including  all  revenues  from  the 
privatisation  of  State  assets  and  at  least  30%  of  windfall  revenues.  All  payments  from  this 
account will be subject to prior detailed reporting to the EFSF/ESM and ex-post confirmation 
by the account holder.  (Continuous) 

2.6  Other institutional requirements 

1.  Central State Aid Unit (CSAU): 

i. 

ii. 

iii. 

The Government adopts the law creating a Central State Aid Unit CSAU and setting 
the general principles concerning State aid (May 2013).  

The Government launches the call for interest in order to appoint the Director, and 
relevant  officials  of  the  CSAU.  The  Central  State  Aid  Unit  is  responsible  for 
screening  all  measures,  from  across  the  Government,  for  their  compliance  with 
State aid rules, before they are implemented. The Central State Aid Unit will be the 
only  contact  point  for  the  Commission  on  all  State  aid  matters,  including  for 
notifications.  The  aim  is  to  ensure  a  timely  and  effective  clearance  of  state  aid 
issues. (June 2013) 

The  Government  amends  the  law  concerning  recovery  of  illegal  State  aid  with  a 
view to clearly excluding any possibility of recovery in instalments. Indeed, Article 
22.1.b  of  the  law  4002/2011  currently  states  that  recovery  may  take  place  in 
instalments  and  refers  to  the  Code  of  Collection  of  Public  Revenues,  which  also 
foresees this possibility. The updated law should exclude the possibility of recovery 
in instalments while, possibly, maintaining reference to the above-mentioned Code 
for other procedural aspects (May 2013). 

2.  All actions attributable to public authorities should be in compliance with the rules on free 

movement of capital (TFEU, Article 63) (Continuous).  

2.7  Making the public administration more efficient and effective 

Reforming the public sector constitutes an essential step for the reduction in waste, the containment of 
public  wages  and  the  increase  in  efficiency  and  productivity  levels.  As  a  prerequisite,  the  following 
actions will be taken in the next months. 

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2.7.1  Reforming the public administration 

In order to achieve a leaner and more efficient state, the Government initiates a rigorous evaluation of 
administrative  structures  and  personnel,  in  order  to  maintain  the  right  skill  mix  of  employees  over 
time.  Entity  closures  are  pursued  and  employees  are  either  transferred  to  the  mobility  scheme  or 
dismissed.  This  reform  process  is  extended  to  extra  budgetary  funds  and  regional  and  local 
administrations in 2013.  

Rational reallocation of personnel, through evaluation, mobility and qualitative renewal through exits 
are the tools in the Government’s efforts to improve the effectiveness of the public sector, since exits 
are an important channel for hiring new, fresh, highly qualified employees through fair, objective and 
transparent procedures managed by the recruitment agency (ASEP).   

Prior to disbursement the Authorities: 

a.  adopt consistent staffing plans for government entities covering at least 206,000 employees;  
b.  approve  quarterly  plans  for  15,000  exits  cumulative  through  end-2014,  including  4,000  by 

end-2013 (with a significant fraction frontloaded);  

c.  approve  annual  overall  employment  targets  for  the  general  government  through  2016 

(consistent with the already approved MTFS);  

d.  vote  the  necessary  legislative  changes  in  order  to  streamline  and  accelerate  the  disciplinary 

e. 

procedure to show the commitment of the government;  
implement a permanent monitoring mechanism for the disciplinary procedure and provide data 
regarding the pending cases and the pace of dealing with the stock of cases; and  

f.  eliminate  any  existing  legal  provision  forcing  the  state  to  put  personnel  of  legal  entities  of 

private law, whose positions are abolished, in the mobility scheme.  

1.  To further advance the reform agenda during 2013, the Authorities will: 

i. 

ensure that cumulatively 12,500 employees have been placed in the labor mobility 
scheme by end-June 2013 and 25,000 employees by December 2013; 

ii. 

complete staffing plans for 450,000 employees (cumulative) by June 2013;  

iii. 

complete staffing plans for all general government entities by December 2013; 

iv. 

involve  the  Commission  services  with  respect  to  the  assessment  of  structures  and 
staffing  linked  with  the  implementation  of  the  Cohesion  Policy  (NSRF  Operation 
Programmes)  and  will  seek 
taking  related  decisions 
(continuous); 

its  agreement  when 

v. 

complete assessment of individual employees by December 2013.  

vi. 

the  quarterly  targets  exits  and  entries  into  the  mobility  scheme  will  become 
indicative  targets  under  the  program.  Overall,  this  should  help  reduce  the  public 
sector workforce by 150,000 by 2015, relative to the end-2010 level.  
2.  The  consolidation  program  will  make  room  to  hire  new  staff,  and  this  room  will  be  used  to 

address areas where we face deficits of skilled staff.  

i. 

The  Government  will  hire  one  new  employee  for  each  exit  as  a  result  of  (i) 
disciplinary  cases;  (ii)  due  diligence  evaluation  of  legal  entities  of  public  and 
private  law  leading  to  mergers  and  abolishment;  (iii)  evaluation  of  the  personnel 
using the mobility scheme, including before any reallocation to a new position; (iv) 
voluntary  exits  from  the  mobility  scheme  (excluding  personnel  within  3  years  of 

118 

 
 
retirement);  and  (v)  the  elapse  of  a  12-month  period  in  the  mobility  scheme. 
(continuous).  

If the assessment (to be provided to EC/IMF/ECB monthly) at any point shows that 
the  plans  are  no  longer  on  track  to  achieve  our  aggregate  targets,  the  authorities 
commit  to  reduce  the  1:1  hiring  ratio  for  exits  mentioned  under  (i.)  (continuous, 
monthly).  

For all other exits than those mentioned under (i.), the hiring ratio will remain 1:5, 
as envisioned in the program (continuous).  

By  June 2013, we will define detailed hiring plans for 2013, in consultation with 
the EC/ECB/IMF. 

ii. 

iii. 

iv. 

3.  The Authorities will define a human resources strategy in order to: (i) identify the weaknesses 
of  the  public  service  management  of  human  resources;  (ii)  identify  the  best  possible  way  to 
modify recruitment procedures, appointments, trainings, as well as mobility. This strategy is 
reflected  in  legislation  (June  2013).  This  legal  act  will  provide  a  basis  for  evaluating  the 
competences of the senior management.  

4.  The  Authorities  will  assesses  the  mandate,  roles  and  responsibilities  of  all  senior  managers, 
including  the  politically  appointed  and  the  senior  public  service  management  (June 
2013). This assessment will lead to an amendment of the current legislation, by clarifying and 
framing  the  relationship  between  the  political  level,  the  management  positions  and  the 
services. Within this framework, the number of advisors will be reduced and constrained, and 
each advisor will have a specific job description. The aim is to ensure institutional continuity 
and higher levels of efficiency in the public administration (June 2013). 

2.7.2  Fighting corruption 

1.  The Government will by June 2013: 

i. 

present  draft  legislation  to  bring  the  anti-corruption  legal  framework  in  line  with 
relevant international standards; 

ii. 

initiate the implementation of the relevant actions contained in the action plan 

2.8 

 Avoiding waste and increasing quality through sound public 
procurement 

Important  fiscal  savings  and  higher  quality  purchases  can  be  realised  by  sound  public  procurement 
processes. The reforms aim at i) making the Single Public Procurement Authority, the newly created 
procurement  watchdog,  fully  operational;  ii)  establishing  an  e-procurement  platform  and  mandating 
gradually  its  use  by  the  public  administration;  iii)  increasing  the  share  of  supplies  and  services 
tendered through Central Purchasing Bodies, including by the use of framework contracts and iv) at 
codifying and simplifying all public procurement legislation.  

2.8.1.1  To make the Single Public Procurement Authority (SPPA) operational 

The Government:  

1.  The SPPA ensures coordination and coherence of the functioning of the Central Purchasing 
Bodies, of the reform of the Greek public procurement regulations and of the e-procurement 
framework with the overall public procurement system and strategy. (Continuous)  

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2.8.1.2  To increase the efficiency of procurement processes:  

The  Government  moves  towards  more  centralised  procurement,  especially  in  the  field  of  health 
procurement, services and supplies (including civil supplies and services for defence not falling under 
the  scope  of  Directive  2009/81  on  procurement  in  the  fields  of  defence  and  security).  It  also  starts 
building a system of statistics in the field of procurement, uses framework contracts and reviews the 
public procurement legislation including works, supplies and services.  In particular, the Government: 

Agora portal 

1.  Following the adoption of the JMD on the Agora Portal for contract transparency: 

i. 

ii. 

publishes data on contract notices on supplies, services and works and on 
the  number  of  contracting  authorities  uploading  information  on  the 
AGORA portal starting with contracts above €30,000. (June 2013) 
facilitates  compliance,  by  reviewing  standard  documents  and 
providing support to contracting authorities. (Continuous) 

Central Purchasing Bodies (CPB):  

i. 

ii. 

2.  Adopts  decisions  leading  to  the  creation  of  a  Central  Purchasing  Body  at  the  General 
Directorate for the procurement of goods and services. In particular, the Government:  
draws  a  list  of  supplies  and  services  where  the  requirements  of  multiple 
contracting  authorities  can  be  standardised  into  a  limited  number  of 
alternatives.  The  list  includes  items,  such  as,  office  equipment,  furniture, 
supplies  and  stationery,  IT  equipment,  telecommunications,  transport 
vehicles, travel services, etc. (May 2013) 
draws  framework  contracts  for  the  procurement  of  the  abovementioned 
standardised supplies and services through the CPB. (Continuous)  
issues  legislation  mandating  the  purchase  of  the  identified  standard 
supplies and services through the CPB for all central government entities, 
with  no  monetary  thresholds  and  with  transitory  periods  agreed  with  the 
Commission services. Military purchases of standardised civil supplies and 
services (not falling under the scope of Directive 2009/81 on procurement 
in the fields of defence and security) are also carried out through the CPB. 
(June 2013) 
tenders  at  least  three  framework  contracts  used  in  frequently  purchased 
supplies  or  services  at  central  government  level  through  the  CPB. 
(December 2013)  

iii. 

iv. 

Framework contracts:  

v.  Mandates  the  relevant  administrations  to  source  via  the  framework  contracts 

submitted to the Commission services (June 2013) 

Reform of public procurement legislation: 

3.  Undertakes  to  adopt  by  December  2013  a  reform  of  the  public  procurement  system 

including works, supplies and services under the coordination of the SPPA with a view to:  

i. 

ii. 

simplifying,  streamlining  and  consolidating 
procurement legislation;  
rationalising 
in  public 
the  administrative  structures  and  processes 
procurement  to  desired  procurement  results  in  terms  of  efficiency  and 
efficacy;  

the  body  of  public 

120 

 
 
 
 
 
iii. 

improving  national  review  procedures,  including  the  reduction  of  delays 
triggered  by  the  redress  system  and  assessing  the  role  to  confer  to  the 
SPPA in the area of redress (remedies and judicial protection). 

4.  Proceeds  with  the  reform  of  the  public  procurement  legislation,  in  accordance  with  the 
action  plan  submitted  to  the  Commission  services  in  February  2013.  The  drafts  of  all 
legislative and organisational measures implementing the above-mentioned Action Plan are 
presented to the European Commission by September 2013.   

2.8.1.3  To run public procurement procedures by electronic means (i.e., E-procurement):    

The Government: 

1.  Refines,  in  consultation  with  the  European  Commission,  the  existing  plan  for  the 
development  of  the  e-procurement  platform  by  (May  2013)  including,  among  others, 
measures and deadlines for: 

i. 

ii. 
iii. 

iv. 
v. 

vi. 

vii. 

the operation of supplies, services and public works procurement contracts 
through the e-procurement platform; 
the availably of functionalities such as e-notification and e-tendering; 
the  mandatory  use  of  the  platform  by  the  central  government,  regional 
government and other public sector entities; 
the communication and training programmes for users of the platform; 
the  periodic  monitoring  mechanisms  for  the  take-up  of  e-procurement 
platform by its users and the specification of target usage levels;  
the  interaction  of  the  platform  with  the  planned  simplification  of 
procurement legislation; 
the means to facilitate access and use to the platform by users, including 
easy to use e-signature and e-ID solutions.  

2.  In the development of the e-procurement platform, commits to:  

i. 

ii. 

run supplies and services contracts for the Central Government on a pilot 
basis through the e-procurement platform throughout the 1st half of 2013. 
ensure  that  the  e-procurement  platform  is  fully  operational  and  ready  for 
use  by  the  Central  Public  Administration  for  supplies  and  services 
contracts in July 2013. 

3.  Ensures the use of the platform as follows:  

i. 

ii. 

the Central Purchasing Bodies (CPBs) manage the e-procurement platform 
for all their tendering procedures. (June 2014) 
the  whole  public  sector  in  Greece  uses  the  e-procurement  platform  for 
commonly bought supplies and services by December 2015.  

4.  Submits to the Commission services the data of the monitoring activities covering 
year 2013 against the target user levels. (1st half of January 2014) In addition, it 
presents data on: 

i. 

ii. 
iii. 

iv. 
v. 

the  number  of  calls  for  tender  published  electronically  (in  absolute 
terms and as a percentage of total number of published calls for tender);  
the number of tenders with specifications published online; 
the  number  of  contracts  carried  out  electronically  relative  to  the  total 
number of contracts. 
the types of purchases carried out with the e-procurement platform. 
the number of contracting authorities using e-procurement.   

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2.9  Completing the pension reform to secure sustainability 

The Government: 

1.  Esnures  that  all  social  security  contributions  to  ETEA  will  be  recorded  electronically  by 

(June 2013).  

2.  Ensures  that  the  new  single  fund  ETEA  sets  up,  in  a  cost  effective  way,  a  computerised 
system  of  individual  pension  accounts;  starting  in  March  2013  and  to  be  finalised  by 
December 2013.  

3.  Produces  a  regular  quarterly  report  of  the  activities  of  the  Health  Committee,  aimed  at 
monitoring and revising the disability status and ensure that disability pensions correspond 
to not more than 10 percent of the overall number of pensions.  (Continuous, next report, 
June 2013) 

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2.10 Modernising the health care system 

The Government continues to implement the comprehensive health sector reform with the objective of 
stabilising  public  health  expenditure  at,  or  below,  6  percent  of  GDP,  while  maintaining  universal 
access  and improving  the quality of care delivery. Policy measures include reducing the fragmented 
governance  structure,  reinforcing  and  integrating  the  primary  healthcare  network,  streamlining  the 
hospital  network,  strengthening  central  procurement  and  developing  a  strong  monitoring  and 
assessment capability and e-health capacity. 

The  programme  measures  aim  at  achieving  savings  in  the  purchasing  (accrual  basis)  of  outpatient 
medicines to reach spending of about EUR 2.440 billion and inpatient to reach spending of about EUR 
0.66 billion in 2013 (accrual basis). The goal is to bring public spending on outpatient pharmaceuticals 
to about 1 percent of GDP i.e. around EUR 2 billion euro (in line with the EU average) in 2014. Total 
(outpatient plus inpatient) public expenditure on pharmaceuticals should be no more than 1.5 per cent 
in 2013 and 1.3 per cent in 2014.  

2.10.1 Governance 

To strengthen health system governance, improve health policy coherence, reduce fragmentation in the 
purchasing of health services and reduce administrative costs, the Government (i) ensures the effective 
concentration of all health insurance funds, without exception, into EOPYY, monitoring the transfer of 
staff and assets; (ii) ensures the effective transfer of all health-related decision making procedures and 
responsibilities (including payroll expenditures) under the Ministry of Health. 

1.  From  January  2014,  hospital  services  will  be  purchased  directly  by  EOPYY  through 
prospective budgets based on KEN-DRGs costing procedure (and payroll costs, should be at 
least reported).  

2.  EOPYY  ensures  that  the  number  of  doctors  is  reduced  in  headcount  by  a  further  10%  in 

2013. 

2.10.2 Controlling pharmaceutical spending 

In order to reach the 1 percent of GDP target in 2014, the Government steps up its efforts, and further 
develops  the  set  of  incentives  and  obligations  for  all  participants  along  the  medicines  supply  chain 
(including  producers,  wholesalers,  pharmacies,  doctors  and  patients)  to  promote  the  use  of  generic 
medicines and the cost-effective use of medicines more generally.  

2.10.2.1  Contingency measures to deliver the overall targets 

1.  The  government  applies  an  automatic  claw-back  mechanism  (every  six  months)  to 
pharmaceutical producers which guarantees that the outpatient pharmaceutical expenditure 
(EOPYY budget) does not exceed the above targets (Continuous). A note on the collection 
of claw back for 2013 for the first half of 2013 is submitted by September 2013. 

2.  Activates  contingency  measures  (including  e.g.  across-the-board  cut  in  prices  or  entry  fee 
for the positive list), if, for any reason, the claw-back is not able to achieve the target. Such 
measures produce an equivalent amount of savings. (October 2013).  

3.  In  addition  and  if  necessary,  EOPYY  introduces  additional  incentives  and  mechanisms, 
including  a  prescription  quota  system  for  physicians,  to  ensure  generic  substitution 
(September 2013). 

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2.10.2.2  Pricing of medicines  

The Government: 

1.  Revises downward the price of medicines, based on the three EU countries with the lowest 
prices  (quarterly  update  of  price  list  in  line  with  the  provisions  of  Council  Directive 
89/105/EEC, next list to be published by June 2013). 

2.  On the basis of the report on the impact of the new profit margins of pharmacies, reduce  the 

profit margins down to 15% by June 2013. 

3.  Ensures  that  EOPYY  negotiates  a  5%  discount  through  price-volume  agreements  on 
expensive  medicines  (200  medicines)  sold  in  EOPYY  pharmacies  (Continuous  for  2013 
and 2014). 

2.10.2.3  Prescribing and monitoring 

The Government will,  

1.  Update the positive list of reimbursed medicines and the list of OTC medicines. These lists 

must be updated at least twice a year (next update June 2013). 

2.  Ensures  full  coverage  of  e-prescription  to  doctors,  outpatient  facilities  and  providers 
contracted by EOPYY and to all NHS facilities (health centres and hospitals) by June 2013. 
E-prescribing  is  made  compulsory  and  must  include  at  least  90  percent  of  all  outpatient 
medical acts covered by public funds (medicines, referrals, diagnostics). 

3.  Finalise the implementation of the system (API) whereby pharmacies electronically register 
any  residual  manual  prescriptions  from  doctors  into  the  e-prescription  application 
established by IDIKA. (December 2012, New Deadline May 2013). 

4.  Continue  publishing  prescription  guidelines/protocols  for  physicians,  with  priority  for  the 

most expensive and/or mostly used medicines, and makes them compulsory (Continuous). 

5.  Enforce the application of prescription guidelines through the e-prescription system starting 

with at least 5 therapeutic groups by June 2013. 

6.  Further develop the e-prescription system by introducing compulsory ICD-10 by May 2013 

and SPC filters in the e-prescription system (October 2013). 

7.  Enhance monitoring and assessment through: 

i. 

ii. 

iii. 

iv. 

detailed monthly auditing reports on the use of e-prescription in NHS facilities and by 
providers  contracted  by  EOPYY.  These  reports  are  shared  with  the  European 
Commission, ECB and IMF staff teams. (Continuous); 
regular  assessment  of  the  information  obtained  through  the  e-prescribing  system. 
(Continuous); 
detailed  quarterly  reports  on  pharmaceutical  prescription  and  expenditure  which 
include information on the volume and value of medicines, on the use of generics and 
the use of off-patent medicines, and on the rebate received from pharmacies and from 
pharmaceutical companies. These reports are shared with the European Commission, 
ECB and IMF staff teams. (Continuous, Quarterly, new report July 2013); 
detailed  reporting  on  individual  prescription  behaviour  to  each  physician  relative  to 
the  average  of  comparable  (specialty,  patient  workload)  physicians  (both  in  NHS 
facilities and contracted by EOPYY and other social security funds until they merge) 
and  signals  when  they  breach  prescription  guidelines.  This  feedback  is  provided  at 
least every month and a yearly report is published covering: 1) the volume and value 
of  the  doctor's  prescription  in  comparison  to  their  peers  and  in  comparison  to 
prescription  guidelines;  2)  the  doctor's  prescription  of  generic  medicines  vis-à-vis 
branded and patent medicines and 3) the prescription of antibiotics. (Continuous); 

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8.  Enforce  sanctions  and  penalties  as  a  follow-up  to  the  assessment  and  reporting  of 
misconduct and conflict of interest in prescription behaviour and non-compliance with the 
EOF prescription guidelines (Continuous); 

9.  Electronic  monitoring  and  the  introduction  of  cancelation  mechanisms  to  barcodes  of 
pharmaceutical  products  should  be  finalized  by  collaboration  of  EOF  and  IDIKA 
(September 2013). 

2.10.2.4  Increasing use of generic medicines  

Prior to the disbursement, the Government: 

a.  Ensures the application of compulsory prescription by international non- proprietary name 
(INN)  for  an  active  substance  notably  by  putting  in  place  an  automatic  blockage 
mechanism  once  prescription  by  branded  name  reaches  15%  of  the  overall  prescription 
value of each doctor in real time. 

b.  Prices the large backlog of generic medicines waiting for a price in compliance with EU 
Transparency  Directive  at  a  pace  of  400  per  month,  with  400  medicines  priced  prior  to 
disbursement. 

The Government also: 
1.  Increases the share of the generic medicines in total outpatient and reimbursed medicines to 

reach 60 percent (in volume) by December 2013. This will be achieved by: 
i. 

automatically  reducing  the  maximum  price  of  originator  medicines  when  their 
patent  (exclusivity  period)  expires  (off-patent  branded  medicines)  to  50  percent 
of its price at the time of the patent expiry. Further reduction will be achieved by 
linking off-patent products to the average of the three lowest prices in the EU, to 
be  revised  periodically  with  price  list.  Producers  can  offer  lower  prices,  thus 
allowing an increased competition in the market. (September 2013);  
setting  the  maximum  price  of  the  generic  to  40  percent  of  the  price  of  the 
originator  patented  medicine  with  same  active  substance  at  the  time  its  patent 
(exclusivity  period)  expired.  After  this  first  reduction,  the  price  of  the  generic 
medicine is set to 80% of the downward revised price of the off-patient products 
(when  the  exclusivity  period  expires)  which  is  to  be  set  on  the  basis  of    the 
average of the three lowest prices in the EU as defined in point i. Producers are 
allowed  to  offer  lower  prices,  thus  allowing  an  increased  competition  in  the 
market. (September 2013); 
ensuring  dynamic  competition  in  the  market  for  generic  medicines  through  a) 
speeding  up  administrative  and  legal  procedures,  in  line  with  EU  legal 
frameworks; b) applying price reductions of at least 10 percent of the maximum 
price  of  each  three  new  generic  producer  entering  the  market,  according  to 
existing regulation (May 2013)  

ii. 

iii. 

iv.  deciding  about  the  reimbursement  of  newly  patented  medicines  (i.e.  new 
molecules) on the basis of objective and strict medical and cost-effective criteria 
and,  until  internal  capacity  is  in  place,  by  relying  on  best  practice  health 
technology  assessment  of  their  cost-effectiveness  carried  out  in  other  member 
states, while complying with Council Directive 89/105/EEC. (Continuous); 
excluding from the list of reimbursed medicines those which are not effective or 
cost-effective on the basis of objective criteria. (Continuous);  
in  the  frame  of  the  Administrative  Reform  process  of  EOF,  set  up  scientific 
capacity in order to include cost effectiveness criteria in the reimbursement and 
licensing process.  

vi. 

v. 

125 

 
 
2.  Takes further measures to ensure that at least 50 percent of the volume of medicines used by 
public  hospitals  for  inpatients  is  made  up  of  generics  with  a  price  below  that  of  similar 
branded products and off-patent medicines. (Continuous) 

3.  Ensures that all public hospitals to procure at least 2/3 of pharmaceutical products by active 
substance,  using  the  centralised  tenders  procedures  developed  by  EPY  and  by  enforcing 
compliance with therapeutic protocols and prescription guidelines. (Continuous) 

2.10.3 Reviewing the provision of medical services contracted by EOPYY  

1.  The government monitors the implementation of the various policies introduced in late 2012 
to  improve  the  current  financial  situation  of  EOPYY  and  ensure  that  the  budgetary 
execution is closer to a balanced budget in 2013. Measures to monitor include: changes in 
OGA contributions, in the benefit package, in cost-sharing for private care and in the fees 
for  diagnostic  and  physiotherapy  services,  as  well  as  the  use  of  price-volume  agreements 
and case-mix agreements with private providers and the use of a reference price system for 
reimbursement of medical devices. (Continuous) 

2.  The  government  publishes  a  quarterly  report  on  the  prescription  and  expenditure  of 

diagnostic tests. (Continuous, quarterly, next report July 2013)  

2.10.4 National Health System (NHS) service provision 

2.10.4.1  Reorganisation and management of the health care sector 

The Government:  

1.  Implements  the  plan  for  the  reorganisation  and  restructuring,  as  set  in  Law  4052  /  March 
2012,  with  a  view  to  reducing  existing  inefficiencies,  utilising  economies  of  scale  and 
scope,  and  improving  quality  of  care  for  patients,  thus  contributing  to  better  aligning 
working organisation with Directive 2003/88/EC. This implies reducing hospital operating 
costs  by  an  additional  5%  in  2013  and  reducing  beds  substantially,  as  legislated  by  MD 
OG1681/B (28-7-2011). This is to be achieved through: 
i. 

increasing the mobility of healthcare staff (including doctors) within and across 
health facilities and health regions;  
adjusting  public  hospital  provision  within  and  between  hospitals  within  the 
same district and health region;  
revising  the  activity  of  small  hospitals  towards  specialisation  in  areas  such  as 
rehabilitation, cancer treatment or terminal care where relevant;  
revising emergency and on-call; 
optimising  and  balancing  the  resource  allocation  of  heavy  medical  equipment 
(e.g. scanners, radiotherapy facilities, etc.) on the basis of need. 
reducing administrative costs notably by removing deputy managers posts;  
reducing cost with outsourcing services such as IT services, laboratory services 
and hospital servicing costs (e.g. cleaning services). 

ii. 

iii. 

iv. 
v. 

vi. 
vii. 

2.  Produces an annual report comparing hospitals performance on the basis of the defined set 

of benchmarking indicators (Continuous; next report 1st June 2013)  

3.  Updates a report on human resources for the whole health care sector annually and uses it as 

a human resource planning instrument. (Continuous; next report 1st June 2013) 

2.10.4.2  Accounting, costing, control, IT and monitoring systems 

 The Government ensures that: 

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1.  The allocation of internal controllers to all hospitals is finalised and that all hospitals adopt 

commitment registers. (December 2012, New deadline May 2013)  

2.  EOPYY  publishes  a  monthly  report  with  analysis  and  description  of  detailed  data  on 
healthcare expenditure with a lag of three weeks after the end of the respective month. This 
report  will  make  possible  the  more  detailed  monitoring  of  budget  execution,  by  including 
both expenditure commitments/purchases (accrual basis) and actual payments (cash basis). 
The report will also (1) describe performance on the execution of budget and accumulation 
of arrears, and (2) recommend remedial actions to be taken. (Continuous) 

3.  Further  measures  are  taken  to  improve  the  accounting,  book-keeping  of  medical  supplies 

and billing systems, through:  
i. 

the  procurement  and  use  of 

the introduction of analytical cost accounting systems, with the implementation 
of  the  respective  action  plan,  due  to  be  finalised,  with  complete  hospital 
coverage, by November 2013; 
the regular annual publication of balance sheets in all hospitals. (June 2013); 
the introduction of the uniform coding system for medical supplies developed 
by  the  Health  Procurement  Commission  (EPY)  and  the  National  Centre  for 
Medical  Technology  (EKEVYL)  and  the  use  of  the  observe.net  system  to 
monitor 
tenders  for  medical  supplies. 
(Continuous); 
the  introduction  of  inbound  hospital  logistics  and  warehouse  management 
systems  using  barcode  scanning  systems  for  pharmaceuticals  and  medical 
consumables. (December 2013); 
implement  necessary  action  to  ensure  timely  invoicing  of  full  treatment  costs 
(including staff payroll costs) - i.e. no later than 2 months to other EU countries 
and  private  health  insurers  for  the  treatment  of  non-nationals/non-residents. 
(Continuous); 
enforcing  the  collection  of  co-payments  and  implementing  mechanisms  that 
fight corruption and eliminate informal payments in hospitals. (Continuous). 

ii. 
iii. 

iv. 

v. 

vi. 

4.  ELSTAT  starts  providing  expenditure  data  in  line  with  Eurostat,  OECD  and  WHO 
databases  i.e.  in  line  with  the  System  of  Health  Accounts  (joint  questionnaire  collection 
exercise). (May 2013)  

5.  The  programme  of  hospital  computerisation  allows  for  a  measurement  of  financial  and 
activity data in hospital and health centres. Moreover, the Minister of Health defines a core 
set of non-expenditure data (e.g. activity indicators) in line with Eurostat, OECD and WHO 
health  databases,  which  takes  account  of  the  future  roll-out  of  DRG  (diagnostic-related 
groups) schemes in hospitals. (Continuous)  

6.  The  government  starts  to  develop  a  system  of  patient  electronic  medical  records.  (May 

2013) 

7.  The  Government,  with  technical  assistance  from  experts  across  EU,  continues  to  improve 
the existing KEN/DRG system, with a view to developing a modern hospital costing system 
for contracting (on the basis of prospective block contracts between EOPYY and NHS). The 
existing set of KEN/DRGs is used in all hospitals The KEN/DRG Management Institute is 
established  by  June  2013.  DRGs  will  include  a  detailed  item  on  costs  of  personnel. 
(Continuous) 

8.  A follow up analysis of how hospital accounting schemes integrate DRGs at hospital level 
in  view  of  future  activity-based  cost  reporting  and  prospective  budgets  payment  for 
hospitals will be submitted by September 2013  

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2.10.5 Centralised procurement 

1.  The Government increases substantially the number of expenditure items and therefore the 
share of expenditure covered by centralised tender procedures through EPY up to 45% of all 
the  expenditure  in  medicines  and  medical  devices  by  2014.  This  share  goes  up  to  60%  in 
2015. The Government ensures the use of such tender procedures. (Continuous) 

2.  EPY  will  undertake  tender  procedures  for  framework  contracts  for  the  most  expensive 

medicines sold in EOPYY pharmacies. (Continuous) 

In  compliance  with  EU  procurement  rules,  the  Government  conducts  the  necessary  tendering 
procedures  to  implement  a  comprehensive  and  uniform  health  care  information  system  (e-health 
system) including the full and integrated system of hospitals' IT systems. (Continuous)  

2.11 Upgrading the education system 

1.  The  Government  implements  the  Action  Plan  for  the  improvement  of  the  effectiveness 
and  efficiency  of  the  education  system  and  regularly  reports  on  the  progress  of  its 
implementation  including  on  the  results  of  the  external  evaluation  of  high  education 
institutions (Continuous, June and December of each year).  

2.  On  higher  education:  the provisions of  the  laws  4009/2011  and 4076/2012  are  fully  and 

promptly implemented including:  

i. 

ii. 

The  external  evaluation  of  the  higher  education  institutions  by  the  Quality 
Assurance Authority is completed. (December 2013);  
The  organisation  charts  and  internal  regulations  of  the  Higher  Education 
Institutions are completed (March 2014);  

iii.  Update on the progress of the on-going consolidation/merging  of departments 
of  universities  and  technological  institutes  (ATHINA  Project)  (September 
2013).  

3.  On primary and secondary education, the new policy of  evaluation of schools (including 
the schools' self-assessment) and educational staff starts being implemented. (September 
2013). The first cycle of evaluation of the educational staff according to the new policy is 
completed (December 2013).   

3  Stabilising the financial system 
The government ensures that:  

1.  By  end-June  2013,  the  banks  will  also  complete  a  new  round  of  liability  management 

exercises conducted in respect of the remaining subordinated instruments. 

2.  No state aid will be granted to banks before it is approved by the EC under state aid rules.  

3.  Except  for  the  HFSF,  no  entity  belonging  to  the  general  government  purchases  bank 
shares during the capital increase exercise of Greek banks or directly or indirectly supports 
third parties by providing loans/guarantees/subsidies to purchase bank shares. 

The MoF and the BoG commit to: 

128 

 
 
 
4.  Develop a comprehensive banking sector strategy in cooperation with the HFSF and the 
EC/ECB/IMF staff by July 15 2013. In the meantime, all four pillar banks will be able to 
continue to act as integrators of smaller domestic banks as appropriate. The strategy will 
include options and operational steps for the HFSF to promptly proceed with the disposal 
of the shares to the private sector of the core banks that will not have been able to remain 
under private control.  

5.  Only  upon  finalisation  of  this  banking  sector  strategy  any  consolidation  in  the  form  of 

merger among the four pillar bank can be considered.  

3.1  Framework for restructuring and strengthening of the banking 

system 

The  resolution  of  undercapitalised  non-core  financial  institutions  is  proceeding  as  envisaged  in  the 
programme:   

1.  Regarding  the  New  Hellenic  PostBank,  the  HFSF  is  currently  taking  actions  to  make 
major  reductions  in  the  operational  costs  of  the  bank,  including  through  a  significant 
reduction  in  the  number  of  employees,  and  to  restructure  its  loan  portfolio,  with  the 
objective of making the bank attractive to potential purchasers and concluding its sale by 
July 15 2013.  

2.  Concerning the sale of Nea Proton bank, the sale deadline is being shifted from May 2013 
to  July  15  2013  in  order  to  increase  chances  that  it  is  acquired  through  an  open  bid 
process.   

3.  The BoG will apply appropriate measures to those non-core banks that have not met the 
capital requirements set by the supervisor, or earlier if there is evidence that the bank will 
not be able to raise the needed capital (June 2013).  

4.  The BoG, in coordination with the HFSF, will assess the alternatives aimed at minimising 
the cost to taxpayers, including a Purchase and Assumption transactions (P&A) with any 
of the four core banks, while guaranteeing the security of depositors (June 2013).  

5.  The BoG will revise the legal and regulatory frameworks for cooperative banks by  end-

September 2013 in order to align it with international best practices. 

3.2  Funding 

The BoG commits to: 

1.  Request  banks  to  provide  standardised  quarterly  balance  sheet  forecasts  (funding  plans) 
(continuous). The banks’ funding plans will be based on the programme macroeconomic 
forecasts.  Banks  shall  set  out  a  path  towards  achieving  a  sustainable  funding  model  by 
means  of  broadening  their  funding  base  and  reducing  over  time  their  reliance  on 
extraordinary  central  bank  liquidity  support.  Funding  plans  will  serve  as  a  tool  for  the 
BoG  to  monitor  this  process  and  assess  whether  the  banking  system’s  plans  at  the 
aggregate level are consistent with the programme’s macroeconomic framework. 

2.  Stand ready, following the procedures and rules of the Eurosystem, to continue disbursing 
adequate  and  appropriate  emergency  liquidity  support  in  a  timely  manner  if  needed 
(continuous).  

129 

 
3.3  State-owned preference shares of the banks 

The Government commits to: 

1.  Not  take  any  fiscal  policy  actions  that  would  undermine  the  solvency  of  banks 

(continuous). 

  The Law 3723/2008 has been amended to ensure that the banks will not be required to pay 
any  dividends  on  the  preference  shares,  or  fees  in  lieu  of  this,  unless  the  banks  are 
profitable. 

3.4  Adaptation of banking supervision  

The BoG commits to: 

1.  Continue with enhanced supervision of resolved banks and of those that have been placed 
under  public  control,  including  any  core  banks  that  fail  to  show  their  ability  to  receive 
sufficient private investment to remain under private control (continuous).  

The Government will: 

2.  Ensure  that  banks  will  not  take  any  discretionary  corporate  action  that  would  increase 

their capital needs (continuous).  

3.5  Follow up stress testing 

The BoG will: 

1.  Make the necessary preparations for stress testing to be completed by end-2013. 

2.  Finalize by end-July 2013 a new stress testing methodology, determined in consultation 

with the EC/ECB/IMF staff.  

3.6  Management of assets under liquidation 

The BoG commits to: 

1.  Revise  by  May  2013,  in  consultation  with  the  HFSF,  the  regulatory  framework  and 
remove the operational restrictions identified in the end-February 2013 assessment report 
of Bain&Company published by the BoG. 

2.  Adopt  by  June  2013  amendments  to  the  existing  special  liquidation  laws,  following 

consultation with the EC/ECB/IMF staff.  

3.  Adopt a reporting framework with quarterly updates on progress  made starting in June 

2013.  

3.7  Review of legal insolvency frameworks 

The Government commits to: 

1.  Enhance  the  legal  regime  for  household  insolvency  to  provide  for  more  effective 
resolution  of  bad  debts  while  protecting  the  payment  culture  and  avoids  unnecessary 
losses.  

130 

 
2.  Establish, by end-June 2013 and in consultation with EC/ECB/IMF staff, a framework to 
assist  distressed  borrowers.  It  will  take  effect  as  soon  as  the  necessary  regulations  to 
implement it can be put in place (at the latest by end-August 2013).  

3.  Introduce, in consultation with the EC/ECB/IMF staff and as soon as possible, measures 
aimed at deterring applications for court cases under Law 3869/2010, and borrowers who 
are subject to the provisions of laws 3869/2010 and 4128/2013 will be subject to the new 
framework for distressed borrowers, once it has been implemented. 

Specifically, to establish the legal framework, the Government will:  

4.  Pass legislation by end-June 2013 to introduce a new “Facilitation Program”  

In respect of this new "Facilitation Program" the BoG will: 

  Assess the implementation of this framework within six months of its adoption. 

5.  Revise  law  3869/2010  by  end-June  2013,  to  address  the  implementation  shortfalls 

identified during its first three years of enactment.  

6.  Adopt  legislation  to  establish  by  end-June  2013,  a  framework  consistent  with  the 
recapitalization  framework  for  banks  that  will  provide  long-term  solutions  for  over-
indebted  borrowers  (including  for  those  viable  borrowers  who  are  not  eligible  to 
participate in the facilitation program).  

7.  It will include initiatives (to be specified further in regulations by end-August 2013) to:  

(i) 

address  shortfalls  in  existing  laws  that  limit  the  effectiveness  of  debt 
resolution activities;  

(ii) 

standardize the assessment procedure for borrower cases;  

(iii) 

introduce a standard list of loan restructuring tools to be used by banks;  

(iv) 

enhance access to free budgeting and legal advice services for citizens; and  

(v) 

encourage  borrowers  and  lenders  to  participate  in  debt  resolutions  through 
non-judicial means.  

8.  Introduce steps to reduce excessive court waiting times, and to ensure that eligible debtors 

will choose to participate in the facilitation program. 

3.8  Minimisation of significant risks associated with the deterioration of 

banks loan portfolios 

The  BoG  will  in  cooperation  with  the  HFSF  and  in  accordance  with  their  Memorandum  of 
Understanding: 

1.  Assess by end-September 2013, with the assistance of an independent third party and in 
consultation  with  the  EC/ECB/IMF  ,  the  effectiveness  of  established  frameworks  and 
policies to deal with troubled assets.  

131 

 
2.  Establish key performance indicators (KPIs) covering the troubled assets portfolio status, 
the operational response by banks and follow-up resolution actions. KPI definitions will 
be set no later than August 2013 and bank reporting will start by October 2013 and on a 
quarterly-basis.  

3.  Closely  monitor  banks’  NPL  resolution  strategy,  policy  and  operational  targets,  and 
intervening where necessary, in order to ensure that distressed borrowers receive prompt 
and sustainable long-term solutions.  

3.9  Governance of financial institutions 

The authorities will: 

1.  Ensure banks' continued viability and protection of taxpayer interest by strengthening the 

governance framework of financial institutions. 

2.  Support the HFSF in its efforts for an ambitious and swift operational restructuring of all 
banks  in  which  it  has  a  significant  stake,  with  the  aim  to  reduce  operational  costs  and 
increase  profitability,  thereby  fulfilling  its  mandate  to  minimize  costs  for  the  taxpayer 
(continuous). 

To this extent and prior to disbursement, the Government will:  

a)  Adopt a package of HFSF governance reforms that would among other things, add to two 
independent members to the HFSF General Council increasing the number of its members 
from 5 to 7. 

The Government will also: 

3.  Invite the HFSF to amend their internal regulations in order to rationalise the division of 
tasks  and  responsibilities  between  the  General  Council  and  the  Executive  Board  (June 
2013).  

4.  Amend the legislation in order to clarify the non-public nature of the fund (June 2013).  

The BoG will: 

5.  Develop, in coordination with the HFSF, and publish by end-April 2013 a memorandum 
of understanding governing the relationship of the HFSF as a shareholder and the BoG’s 
role regarding the oversight of banks that have received state aid. 

6.  Adopt measures to address the governance weaknesses identified in the due diligence of 
core banks. Banks will submit to the BoG by  end-May 2013 plans to address identified 
operational governance weaknesses—including safeguards on loans to related parties and 
risk  concentration.  These  plans  will  include  clear  timetables  for  full  implementation  by 
end-December 2013. 

The MoF will: 

7.  Invite the HFSF to publish on their website the relationship frameworks with each bank as 
soon  as the  amount of the injection will  be known,  upon completion  of the subscription 

132 

 
period,  and  in  any  case  by  end-May  2013.  The  relationship  frameworks  with  all  banks 
define the role of the HFSF as a shareholder on the basis of best international practices.  

3.10 Loan and Consignment Fund 

The Government commits to: 

1.  Ensuring  that  the  Loan  and  Consignment  Fund  is  not  crowding  out  competition  in  the 
financial sector. The commercial activities will continue to be in a gradual run-off and no 
more new business will be conducted (continuous).  

2.  Agree with the EC by end-May 2013 on the remit of activities of the reserved sector to 

ensure that they act only in case of market failure.  

4  Strengthening labour market institutions and promoting 

employment  

The  Government  will  build  upon  the  recent  labour  market  reforms.  To  help  restore  cost-
competitiveness and boost employment in the medium to long term, these reforms should support the 
on-going reduction in nominal unit labour costs in the economy by 15 per cent over the period 2012-
14.  Structural  product  market  reforms  will  help  improve  the  transmission  of  labour  cost  reductions 
into lower prices and improved competitiveness. 

The Government will continue promoting an efficient wage-setting system, reducing non-wage labour 
costs,  fighting  undeclared  work  and  informality,  also  by  streamlining  administrative  burdens  and 
increasing the transparency and enforceability of the labour law. Last but not least, the Government 
will enhance policies in order to help the unemployed remaining attached to the labour market and to 
improve  affordable  social  safety  nets.  Reforms  in  labour  legislation  will  be  implemented  in 
consultation with social partners, and in respect of EU Directives and Core Labour Standards.  

4.1  Reforms in the wage-setting system 

The  reform  of  the  statutory  minimum  wage  framework  at  national  level  continues  in  order  to  help 
ensure  that  wage  dynamics  support  employment  while  setting  a  floor  for  labour  income.  Thus,  the 
Government: 

1.  presents a proposal for the decision making mechanism on the annual update of the statutory 
minimum wage rates that will prevail after the end of the Programme period once the current 
freezes cease. It will define how the economic and labour market situation and prospects will 
be  factored  into  the  decision  process  in  order  to  ensure  that  the  objectives  of  supporting 
employment  and  safeguarding  labour  income  are  achieved  in  a  balanced  way.  It  will  also 
establish  the  role  of  consultation  with  social  partners,  other  stakeholders  and  independent 
experts by May 2013.  

2.  Reviews the structure of the minimum wage system, taking stock of the present reform, with a 
view to possibly improve its simplicity and effectiveness to promote employability and fight 
unemployment and help the competitiveness of the economy by March 2014.  

4.2  Reducing non-wage labour costs  

With  a  view  to  dampen  non-wage  labour  costs  and  thereby  foster  employment  creation,  the 
Government: 

133 

 
 
 
1.  adopts  legislation  by  November  2013  reforming  the  system  of  social  contributions  in  a 
revenue-neutral  way,  inter  alia  by  broadening  the  base  for  contribution,  simplifying  the 
schedule  across  the  various  funds,  shifting  funds  away  from  nuisance  taxes  and  onto 
contributions,  and  reducing  average  contributions  rates  by  3.9  percentage  points  from  their 
current levels, which will be phased in over 2014, 2015 and 2016.  

2.  As intermediate steps, studies of possible changes in the system of social contributions will be 

carried out and action plans proposed by September 2013. 

3.  Carries  out  studies  of  first-pillar  pension  schemes  in  companies  where  the  contributions  for 
such  schemes  exceed  social  contribution  rates  for  private  sector  employees  in  comparable 
firms/industries covered in IKA and presents options for the reduction of social contribution 
rates by September 2013.  

4.  Based  on  these  studies  of  first-pillar  pension  schemes,  and  together  with  the  reform  of  the 
system of social contributions, reduces the rates mentioned in the previous entry that are found 
to be too high and adjusts benefits in a fiscally-neutral manner by December 2013. 

4.3  Lowering compliance costs, fighting undeclared work and 

informality  

To help formality in labour arrangements by reforming the Labour Inspectorate and streamlining the 
administrative burden to foster compliance, the Government:  

1.  starts implementing a detailed action plan aimed at strengthening the fight against undeclared 
work and raising the effectiveness of the Labour Inspectorate. Prioritising the activities of the 
Inspectorate and fostering the detection of the most severe cases of labour law violations are 
expected to be at the core of those changes (Continuous).  

2.  Streamlines the reporting by employers and employees by September 2013.  
3.  Revises the sanctions for violations of the labour law by July 2013 at the latest in order to be 

incorporated in the Labour Code that is being compiled. 

4.4  More transparent and enforceable labour law  

To ease interpretation, reduce compliance costs with and increase the enforceability of labour law, the 
Government: 

1.  compiles by December 2013 all existing legislation relevant for labour and industrial relations 

into a single Labour Code.  

2.  The Government shall prepare a report on the structure of the Labour Code (May 2013). 

4.5 

Support to the unemployed  

The Government steps up efforts to prevent unemployment becoming permanent and to mitigate the 
hardship of unemployment, by focusing on:  promoting the integration of the long-term unemployed, 
young people and disabled to the labour market; easing labour market mismatches and facilitating the 
transition  of  workers  across  occupations  and  sectors;  improving  the  quality  of  training  policies; 
promoting the employability of the disadvantaged groups; targeting segments of the population at risk 
of poverty and with the strongest need of income support. In these efforts, the government will aim at 
involving the private sector to the maximum extent possible. The government will improve its ability 
to  assess  labour  market  needs  and  measure  social  impacts  in  order  to  strengthen  the  monitoring, 
evaluation, and co-ordination of labour market and social policies. 

134 

 
 
  
1.  To  this  end,  and  in  order  to  provide  continuing  support  to  the  labour  market  policies,  the 

Government adopts an Action Plan by May 2013 focusing on: 

i. 

ii. 

iii. 

Expanding  short-term  public  work  programmes  for  the  long-term  unemployed 
and  young  people  not  in  education,  employment  or  training  as  a  measure  of 
emergency  and  temporary  nature  while  labour  demand  remains  sluggish 
(development  by  June  2013).  Municipalities  and  other  public  authorities  may 
participate  directly  in  such  public  works  programmes  only  under  the  full 
adequate  and  transparent  control  of  such  programmes  (open  calls,  internet 
publication of projects with full details, and reporting helpline); 
Preventing  the  erosion  of  the  human  capital  of  the  unemployed  and  enhancing 
the  effectiveness  and  adequacy  of  measures  for  training  and  re-skilling  the 
unemployed  and  young  people,  including  by  promoting  the  training  of  the 
unemployed by potential future employers in the private sector through  a youth 
voucher scheme; 
Supporting job matching between the unemployed and potential employers and 
activation  of  the  unemployed  through  the  reform  of  the  Public  Employment 
Service, including by developing a wide range of partnerships to deliver quality 
training, mentoring and employment services; 

iv.  Options  on  how  to  significantly  improve  and  expand  the  current  range  and 
quality of apprenticeships and vocational training services and their linkage with 
employers. To be further developed in a position paper to be presented by June 
2013; 
Strengthening  social  economy,  e.g.  in  relation  to  childcare  and  care  of  the 
elderly. 

v. 

The Action Plan should provide a description of the programmes currently in force and plans 
for their rationalisation as well as inform on the financing of the forthcoming initiatives.  

2.  The Government will produce a position paper on social protection and policy by June 2013. 
It  will  enhance  unemployment  benefits  to  support  the  long-term  unemployed  and  specific 
categories of workers without entitlement to unemployment  insurance, notably by putting in 
place an unemployment assistance scheme for the long-term unemployed targeted to the poor 
by  January  2014.  A  specific  position  paper  on  this  scheme  shall  be  prepared  also  by  June 
2013. That paper should also  elaborate on the articulation of this scheme with the minimum 
income scheme that is also to be created on a pilot basis by January 2014 and with other active 
and passive policies labour market policies and social transfers. Such an integrated approach is 
necessary  to  foster  fairness  as  well  as  effectiveness  in  supporting  the  needed.  The  early 
preparation will facilitate a front-loaded implementation of these scheme shall the fiscal space 
be found within the existing overall budget envelopes 

3.  To  provide  health  insurance  access  to  uninsured  citizens,  the  Authorities  prepare  an  action 
plan  in  cooperation  with  foreign  experts  (to  be  finalized  in  the  second  half  of  2013),  and 
work  with  the  European  Social  Fund  with  the  aim  of  extending  the  program’s  coverage  to 
more beneficiaries and include more healthcare services (continuous). 

5  Creating favourable conditions for economic activity  
The  program  places  strong  emphasis  on  implementing  structural  reforms  that  aim  at  improving  the 
in  enhancing  competition  and 
business  and  overall  economic  environment  and  contribute 
competitiveness. These include horizontal measures to reduce time and costs to i) create a company, ii) 
to  get  establishment  and  operating  licenses  for  manufacturing  activities,  iii)  to  get  permits  for 
environmental  projects  and  activities,  iv)  to  export  and  import,  combined  with  measures  to  improve 
the functioning of the judicial system.  

135 

 
5.1  Promoting an efficient and competitive business environment  

5.1.1  Rationalising / eliminating quasi-fiscal charges  

1.  The Government eliminates in the 2014 budget the vast majority of the quasi fiscal 
charges identified in the list presented to the Commission services in November 2011 
in a budget neutral way. (October 2013) 

5.1.2  Reducing procedural and other administrative burden 

1.  To  further  reduce  the  time  for  and  the  cost  of  company  creation,  the  Government, 

among others: 
i. 

Takes  additional  measures  by  June  2013  at  the  latest,  to  reduce  by  50%  the 
cost  of  starting  a  business,  as  measured  by  the  World  Bank's  Starting  a 
Business sub-indicator. The results will be monitored in the World Bank's 2014 
edition of Doing Business.   

2.  To  implement  law  3982/2011  on  the  fast  track  licensing  procedure  for  technical 
professions,  manufacturing  activities  and  business  parks  and  other  provisions,  the 
Government issues the Presidential Decrees provided for in:   
i.  Art. 4.4, on preconditions for obtaining a licence for electricians, to reduce the 
number  of  specialisms,  increase  the  mobility  of  electricians  within  the  same 
level  category  and  provide  for  the  institution  of  private  certification  bodies. 
(May 2013) 

ii.  Art. 24.5, laying down the requirements for Citizens Service Centres' (KEP) for 
integrated  electronic  application  among  licensing  bodies  and  for  modalities  of 
processing demands through it. (May 2013) 

3.  To  implement  Law  4014/2011  on  environmental  licensing  of  projects  and  activities,  the 

Government issues: 
i. 

the Ministerial Decision provided for in Art. 8.3, on environmental licensing of 
projects and activities (other than industrial activities), laying down the standard 
environmental  commitments  of  projects  and  activities  in  category  B.  (May 
2013) 
a  detailed  timetable,  including  all  intermediate  steps  and  milestones  for  the 
remaining  implementation  legislation,  including  on  Art  11.4  on  the  content  of 
the Environmental Impact Assessment (EIA) reports, in consultation with the EC 
(May 2013). 

ii. 

4.  To  tackle  the  investment  barriers  caused  by  multiple  and  fragmented  establishment  and 
operating  permits,  the  Government  presents  a  strategic  vision  and  an  evaluation  of 
investment licensing procedures in June 2013, followed by a roadmap in September 2013, 
with  the  objective  of  introducing  more  efficiency,  transparency  and  clarity  in  investment 
licensing. The implementation of the strategy should lead to a large reduction in the number 
of licenses required by the public administration, with a view to replacing them, if needed, 
by less demanding instruments such as declarations or notifications, and to a rationalisation 
of the processes and responsibilities for issuing permits. 

5.  To simplify export and import procedures, the Government:  

136 

 
i. 

ii. 

Launches  a  pilot  enabling  24/7  customs  operations  for  exports  in  the  Athens 
airport and Piraeus Port (May 2013) and for imports by July 2013; 
The  results  of  the  pilot  will  be  assessed  in  November  2013  with  a  view  of 
applying it permanently in the Athens airport and Piraeus Port and to all other 
customs offices by December 2013. 

iii.  Having 

for 

the 

risk 

system 

reviewed 

exports,  with 
assessment 
recommendations for improvement in order to align it with best practices in EU 
Member States the level of controls converges to the average level of controls 
in the EU by September 2013.   
Reviews and streamlines pre-customs and customs procedures for selected pilot 
products  (fresh  vegetables  fruits,  white  cheese)  according  to  EU  regulations 
and  best  practices  and  presents  an  approach  for  extending  the  simplification 
process to a wider set of frequently exported / imported products. (May 2013)  
Ensures that the e-customs system supports the electronic submission of export 
declarations  (DONE)  and  the  submission  of  documents  and  electronic 
payments  (June  2013).  Ensures  that  the  e-customs  system  supports  the 
electronic  submission  of  import  declarations,  including  the  submission  of 
documents  and  electronic  payments,  at  the  pilot  customs  office  by  July  2013 
and in all custom offices by November 2013.  
Implements  automatic  clearance  for  low  risk  declarations,  based  on  EU  best 
practices. (December 2013) 

iv. 

v. 

vi. 

6.  To identify and eliminate unnecessary reporting requirements for businesses:   

i. 

ii. 

The  Government  presents  the  results  of  the  application  of  the  Standard  Cost 
Model (SCM) in 13 key sectors to identify administrative burdens for businesses 
(June 2013). 
Following 
completes the amendments to sector specific legislation (September 2013).  

identification  of  administrative  burdens 

the  Government 

the 

7.  To  facilitate  spatial  planning  including  through  an  effective  land  registry,  the 

Government: 

i. 

adopts legislation to:  

a. 

simplify  and  reduce  the  time  needed  for  town  planning  processes 
(June 2013);  

b.  update (June 2013) and;  
c. 

codify  legislation  on  forests,  forest  lands  and  parks  (September 
2014);  
It also licenses at least two disposal sites for hazardous waste (June 
2013, and September 2013). 

d. 

ii. 

iii. 

completes  the  revision  of  the  spatial  plan  for  South  Aegean  to  make  it 
compatible  with  the  sectoral  plans  on  industry,  tourism,  aquaculture  and 
renewable  energy.  The  first  phase  of  this  revision  is  completed  (September 
2013) 
Second wave of reforms. These will be followed by: 

a.  a second phase for modifications (May 2013),  
b.  a third phase for the formulation of proposals (September 2013) and  
c.  a fourth phase for the legislation of the final proposal (December 2013). 

137 

 
 
8.  In view to establish a modern complete cadastre by 2020 the Government should:  

i. 

ii. 

iv. 

iii. 

Put  in  place  a  clear  and  streamlined  single  political  authority  to  oversee  and 
coordinate  the  completion  and  operation  of  a  modern,  efficient  and  fully 
accessible nationwide Cadastre by 2020 (June 2013).   
Shorten  the  time  of  judicial  referrals  concerning  the  legal  validation  of  the 
property  rights  in  the  cadastral  projects  to  come  from  ten  to  maximum  five 
years. (June 2013). 
transfer  to  Ktimatologio  SA  the  exclusive  competence  for  all  issues  related  to 
development,  establishment  and  operation  of  the  cadastre  and  cadastre  offices 
(June 2013) 
transform  the  temporary  cadastre  offices  into  final  ones  in  the  capital  of  the 
regions where cadastre is operational  
ensure that cadastre offices and notaries send electronically to  the data base of 
Ktimatologio SA  and the ministry of Finance all real estate acts they process on 
the basis of an IT platform provided by Ktimatologio SA (June 2013). Legally 
validate the forest maps and the coastal zone of the entire country on the basis of 
the  respective  maps  of  the  Ktimatologion  SA  delivered  in  2009  (December 
2015).  
Proceed  with  the  awarding  of  the  seven  (7)  million  active  property  rights 
tendered  since  December  2011  (March  2014);  tender  out  all  remaining  rights 
(ca. 15 million). (June 2013) and complete the unfinished cadastral projects in 
the 106 areas for which rights were tendered in 2008 (December 2015). 
vii.  Make it compulsory to include the single Cadastre code number of each parcel in 

vi. 

v. 

viii. 

tax declarations (all E9) of real estate. (March 2014) 
Establish a business plan to ensure the financial viability of the operation of the 
Cadastre. (March 2014) 

5.1.3  Enhancing competition and promoting better regulation 

1.  The  Government,  assisted  by  the  OECD,  completes  a  preliminary  assessment  through  the 
application of the Competition Assessment Toolkit in sectors such as food processing, retail 
trade,  building  materials  and  tourism  to  identify  unnecessary  restraints  on  these  market 
activities  and  to  develop  alternative,  less  restrictive  measures  that  still  achieve  the 
government policy objectives. (June 2013)  

2.  Following the completion  of the analysis referred above, the Government will prepare the 
legislative amendments to remove disproportionate regulatory restrictions identified by the 
Competition Assessment Toolkit (September 2013). 

3.  The new legislation will be enacted in November 2013. 

4.  To implement law 4048/ 2012 on regulatory governance: principles, procedures and tools of 
good law making, the Government issues the Presidential Decrees provided for in Art. 21 of 
that  law,  providing  for  the  setting  up  of  the  better  regulation  structures  (i.e.,  the  Better 
Regulation  Offices,  the  Legislative  Initiative  Offices  of  the  Ministries  and  the  Inter-
ministerial Sector for Better Regulation). (September 2013) 

5.  The Government presents an annual better regulation plan (as provided for in Art. 15 of law 
through 

4048/2012)  with  measurable  objectives 
codification) and to eliminate superfluous regulations. (December 2013)  

legislation  (including 

to  simplify 

138 

 
 
 
5.1.4  Growth Strategy 

1.  Τhe  government  will  commission  two  reports  analyzing  the  framework  of  a  new  growth 
model  for  Greece.  One  report  should  follow  a  microeconomic  approach,  providing  for 
sectoral  actions  and  legislation,  based  on  the  given  funding  possibilities  and  their  optimal 
use.  The  second  report  should  analyze  the  macroeconomic  environment  and  identify  any 
horizontal policies needed (May 2013). 

5.2  Reforming the judicial system to support economic activity  

To  improve  the  functioning  of  the  judicial  system,  which  is  essential  for  the  proper  and  fair 
functioning  of  the  economy,  and  without  prejudice  to  the  constitutional  principles  and  the 
independence  of  justice,  the  Government:  (i)  ensures  effective  and  timely  enforcement  of  contracts, 
competition rules and judicial decisions; (ii) increases efficiency by adopting organisational changes to 
courts;  (iii)  speeds  up  the  administration  of  justice  by  eliminating  backlog  of  court  cases  and  by 
facilitating out-of-court settlement mechanisms.  

In designing and implementing the measures below, the Government consults the EC/IMF/ECB.  

5.2.1  Review of the code of civil procedure 

The  Government  commits  to  review  the  Code  of  Civil  Procedure  in  accordance  with  the  roadmap 
defined in section 9.3 of this Memorandum, which defines intermediate steps towards its completion 
by March 2014.  

5.2.2  Judicial statistics 

In order to facilitate the implementation of a performance and accountability framework for courts, the 
Government will compile and publish on its website the information indicated in Section  9.4 of this 
Memorandum. (Quarterly)  

5.2.3  Tax case backlog reduction  

Building on the 2012 Administrative Courts data reports and reports by the General Commission for 
the Administrative Courts, the Government by June 2013: 

1.  Prepares an assessment of the impact of all the past measures aimed at the reduction of the 

backlog in the administrative courts. 

2.  Prepares a study leading to the reallocation of the positions of administrative court judges, 

as from September 2013, to those administrative courts where the backlog is higher. 

3.  Presents an action plan with structural measures aiming at reducing the backlog of tax cases 

pending in courts.  

5.2.4  Non-tax case backlog reduction 

1.  Based on the study on the backlog of non-tax cases in courts conducted by an external body 
of experts, the Government  prepares by  July 2013 an Action Plan with specific  measures 
aiming  at  continuously  reducing  the  number  of  civil  and  commercial  cases  pending  in 
Courts. This should include short term and longer term actions. 

2.  The  Authorities  prepare  draft  legislation  providing  for  compulsory  mediation  for  small 
claims  (under  5.000,00  €)  in  civil  cases;  and  Draft  legislation  providing  for  compulsory 
mediation  in  household  insolvency  cases  (Law  3869/2010).  The  compulsory  mediation  to 

139 

 
 
be introduced, ensures that this measure is in accordance  with the  right of to an effective 
remedy  and  to  a  fair  trial  as  provided  for  in  the  Charter  of  Fundamental  Rights  of  the 
European Union. The new legislation is enacted by June 2013. 

5.2.5  Development of e-justice applications in courts  

1.  The  Government  updates,  further  refines  and  operationalizes  the  e-justice  Action  Plan 
(Continuous,  on  a  quarterly  basis).  Updated  versions  are  to  be  submitted  within  15 
calendar days from the expiration of the relevant quarter. 

2.  The action plan will include additional actions as follows: 

i.  An evaluation of the use of IT systems in courts (March 2014);  

ii.  a  timetable,  including  proposed  deadlines,  for  the  extension  of  case  e-

registration and e-tracking to all courts (March 2014).  

3.  Short term actions within the framework of the E-Justice Action Plan: 

b.  Βy June 2013, the Government: 

i.  announces  a  call  for  tenders  for  the  creation  of  the  E-docket  at  the  Athens 

Court of First Instance. 

ii.  presents  draft  legislation  on  the  e-filing  of  judicial  documents  before  the 

Council of State and the Administrative Courts. 

iii.  presents  draft  legislation  on  the  e-filing  of  the  pleadings  as  well  as  of  the 
evidence and the rest of the relevant file documents before the Civil Courts. 

iv.  presents  draft  legislation  on  the  use  of  videoconference  before  the  Civil 

Courts. 

c.  By September 2013, the Government ensures the full operation (for all types of civil 
feasible  due 
to 
for  which 
interim  measures, 

procedures,  except  of 
jurisdictional/procedural  rules/reasons 
provisional orders) of the e-filing project at the Athens Court of First Instance  

is  not 
this 
i.e.  payment  orders, 

those 

d.  By December 2013, the Government completes the pilot implementation of e-filing in 
the Piraeus and Thessaloniki Courts of First Instance (provided that the respective Bar 
Associations co-operate with the MoJ to meet the above deadline). 

4.  Implementation  of  integrated  e-justice  systems  within  the  Framework  of  the  E-justice 

Action Plan: 

e.  By December 2015, the Government completes the implementation of integrated e-
justice applications, enabling e-filing, e-registration and e-tracking for courts that 
cover the majority of the total in flow of cases in the country: 

i.  the Magistrate Courts, Civil and Criminal Courts of First Instance & the 

Courts of Appeal of Athens, Piraeus, Thessaloniki & Chalkida, including the 
respective Prosecutors Offices 

ii.  All the Administrative Courts  

140 

 
f.  The Government completes the extension of the above applications to the other courts 

(December 2017). 

5.  The  Government  ensures  consistency  of  the  e-Justice  action  plan  with  the  national  e-

government strategy. (Continuous) 

5.2.6  Promotion of pre-trial conciliation and mediation 

1.  By September 2013, the Government conducts an assessment of whether the enactment of 
Law  3898/2010  on  mediation  in  civil  and  commercial  matters  has  delivered  the  results 
which the legislation intended to achieve, and presents data and analyses concerning costs, 
time and success rates arising from alternative dispute resolution.  

2.  By  December  2013,  the  Government  presents  a  legislative  proposal  for  the  effective 

opening of the mediator’s profession to non-lawyers. 

3.  The Ministry of Justice updates on a monthly basis the list of the Accredited Mediators and 

the Mediators’ Training Centres on its website (Continuous). 

5.2.7  Other measures on judicial reform 

1.  Assessment  of  the  Law  on  fair  trial  and  conciliation  (4055/2012):  The  Government 
conducts  an  assessment  whether  the  enactment  of  Law  4055/12  has  delivered  the  results 
which the legislation intended to achieve, in particular as regards civil courts, improved case 
processing in multi-member first instance courts, the speeding-up of the issue of provisional 
measures, the strengthening of the institution of ‘voluntary jurisdiction’ in certain matters at 
the level of the magistrates’ courts and efficiency gains in enforcement proceedings, and as 
regards administrative courts, the strengthening and general application of pilot proceedings 
in the Council of State and the speeding-up of the issue of provisional measures. An interim 
assessment is presented by July 2013, in order to assess the Law after a six-month regular 
operation of the courts1, and the final assessment is presented by January 2014, that is after 
a twelve month of regular operation of the courts. 

2.  Administrative  review  of  cases:  The  Government  prepares,  in  accordance  with  Law 
4048/2012  on  better  regulation,  draft  legislation  providing  for,  where  appropriate,  a 
compulsory  administrative  review  before  an  independent  committee  before  a  case  may be 
brought  before  the  administrative  courts  and  submits  it  to  the  Greek  Parliament. 
(September 2013) 

3.  Study on the costs of civil litigation: the Government completes a study on the costs of civil 
litigation,  its  recent  increase  and  its  effects  on  workload  of  civil  courts,  together  with 
recommendations. (June 2013) 

1 Three months for the Magistrate Courts. 

141 

 
 
 
 
 
                                                            
6   Efficient Network Industries and Services 

6.1  Energy policy 

Designing  an  appropriate  energy  policy,  given  the  country's  needs  and  potential,  is  fundamental  for 
economic growth. For this reason the Government must follow a holistic approach which  maximises 
the  benefits  for  market  participants,  protects  consumers  and  vulnerable  parts  of  the  society  and  the 
rights  of  tax  payers.  The  reforms  below  aim  at  bolstering  competitiveness  and  efficiency  in  the 
electricity and gas market, to avert a repetition of the 2012 liquidity crisis and to position the energy 
sector as a potential contributor for prosperity. 

Prior to the disbursement, the Government  

a.  Adopts  and  publishes  a  fully-fledged  plan  for  the  restructuring  of  PPC  with  a  view  to 
preparing  the  company  for  privatisation  and  thus  create  the  conditions  for  a  liberalised 
electricity market. The plan shall: 

i. 

ii. 

provide a timeline for PPC to initiate the ownership unbundling of ADMIE through 
a  sale  of  shares  and/or  a  right  issue  subscribed  by  an  investor  and  provide  a 
timeline for its full exit. This timeline should include the steps for completing the 
process, with a view to complete ownership unbundling within 2013. 
specify  details  of  a  new  vertically  integrated  company  to  be  created  in  terms  of 
assets,  human  resources  and  customer  base  subject  to  regulatory  and  competition 
provisions in force. In particular, for the assets: 

1. 

2. 

to establish a viable competitor in the market, the new company shall 
be endowed with around 30% of PPC generation capacity, taking into 
account PPC’s decommissioning and investment plans; it will also be 
endowed  with  a  pro-rata  amount  of  the  supply  business.  Both  the 
generation mix and the customer mix shall be similar to that of PPC; 
the  plan  shall  include  provisions  for  the  divestment  of  lignite-fired, 
gas  and  hydro  electricity  generation  capacity  currently  managed  by 
PPC.  It  will  also  include  provisions  for  the  new  company  to  access 
and control lignite resources on an equal basis as PPC. The proposed 
list of assets to be transferred to the new company will be assessed in 
the context of next review. 

iii. 

iv. 

provide  a  timeline  for  the  new  company  to  be  privatised  through  PPC  with  the 
assistance  of  the  HRADF,  with  a  view  to  begin  operations  in  2015.  The  timeline 
should include the steps for completing the process; 
provide  a  plan  and  timeline  for  the  privatisation  of  PPC.  This  timeline  should 
include the  steps for completing the process at the latest by 1st January 2016; 

The execution of the plan will be made in strict adherence to the announced timetable, and in 
full agreement with the European Commission services so as to ensure consistency with the 
relevant  EU  legislation  and  best  practice  and  with  the  current  fiscal  programme  and 
financing targets. 

6.1.1  Unbundling effectively network activities from supply activities 

1.  The unbundled gas TSO is certified by the Greek energy regulator. (May 2013) 
2.  The  government  commits  to  follow  all  steps  outlined  in  the  proposed  plan  for  the 
unbundling  of  ADMIE,  including  all  intermediate  steps,  with  a  target  to  complete  the 
unbundling by December 2013. 

142 

 
 
 
 
 
6.1.2  Provisions regarding the privatisation of PPC and DESFA: 

1.  The Government undertakes that whichever the outcome of the privatisation process the gas 
industry and electricity industry structure will be fully compliant with Directive 2009/73/EC 
and 2009/72/EC. (Continuous)  

6.1.3  Ensuring that electricity prices reflect costs 

2.  The Government takes measures for the gradual phasing out of regulated electricity prices 

for all but vulnerable customers by June 2013.  

3.  In addition, the Government assesses best practices with a view to charging royalties for the 

use of hydro and lignite and publishes its report. (June 2013) 

6.1.4  Providing for a financially sustainable development of renewable energy 

sources 

The  Authorities  commit  to  design  and  implement  a  comprehensive  reform  of  renewable  energy 
policies,  also  taking  into  account  proposals  in  Ministry's  "Plan  to  Reform  the  Sector  of  Renewable 
Energy Sources (RES)" and the view of industry, to provide long-term sustainability at zero average 
deficits.  

New  installations  will  receive  a  fixed,  comprehensive,  feed-in  tariff  based  on  the  current  status  of 
technology, and taking into account the size of the plant. The feed-in tariff will be revised at least on a 
bi-annual basis to take into account the evolution of technology in order to reflect the declining costs 
and ensure a sustainable rate of return consistent with EU average, taking into account Greek country 
specific factors, with a view to grid parity. In this process the government will take into account the 
opinion of RAE. 

Prior  to  disbursement,  and  to  achieve  sustainability  of  the  incentives  mechanism,  the 
Government:  

a. 

initiates  negotiations  with  the  industry  to  introduce  permanent  adjustments  to  existing 
power purchasing contracts, in particular for PV installations, with a view to align rates of 
return to sustainable EU average levels, considering Greek-specific conditions. The results 
of the negotiations will have to provide the financial sustainability of the RES account after 
the current provisions on a solidarity contribution on incentives will have expired; 

b.  publishes  a  detailed  report  on  incentives  to  PV  rooftops  installations,  stating  inter  alia 
average incentives per installation, average capacity, and average energy produced, and on 
this  basis  assesses  the  possibility  to  introduce  permanent  adjustments  to  existing  power 
purchasing  contracts,  and  align  their  rates  of  return  to    sustainable  EU  average  levels, 
considering Greek-specific conditions;     

c.  assesses and reports on the effects on the revenues of the RES account of a possible increase 
in the levy imposed on electricity produced with lignite and of the introduction of a levy on 
electricity produced with large hydro; 

d.  corrects  distortions  in  the  current  mechanism  of  contribution  of  suppliers  to  the  RES 
account, that provides for a contribution based only on the system marginal price and not on 
the entire cost of energy paid by consumers, therefore ensuring the elimination of windfall 
profits; 

143 

 
 
e.  passes new legislation to reduce the number of outstanding production permits, inter alia by 

introducing financial measures, in full compliance with EU legislation.  

Other Actions 
The Government: 

1.  Completes by September 2013 the negotiations with the industry for introducing permanent 

adjustments to existing power purchasing contracts, in particular for PV installations 

2.  Completes  an  action  plan  for  introducing  possible  adjustment  to  rooftop  PV  installations 
incentives  in  order  to  align  their  rates  of  return  to  sustainable,  EU  average  levels, 
considering Greek-specific conditions (July 2013). 

3.  To  ensure  the  financial  sustainability  of  the  RES  account,  and  ensure  that  no  excessive 
burdens  are put on  consumers,  introduces  constraints  that  will  cap  the newly-installed  PV 
capacity receiving incentives, effective 1st of January 2014.  Until then new sales contracts 
and connection contracts are suspended. 

4.  Ensures  that  LAGIE,  RAE,  and  the  Ministry  of  Energy,  publish  monthly  data  on  the 
evolution of the RES account with projections over the following 24 months from the date 
of publication. (Monthly) These projections will have to provide a baseline and a normative 
scenario to bring the debt down to zero by end-2014. 

5.  Shall  complete  and  make  operational  a  comprehensive  electronic  registry  of  all  RES 

installations (June 2013). 

6.  Adjusts the RES levy every six months (July 2013, January and July 2014) to eliminate the 

projected RES account debt by end-December 2014 (continuous).  

7.  Assesses  and  reports  on  the  legal  possibility  to  impose  a  validity  period  on  outstanding 
production permits without an allocated  capacity; and proceeds if possible to impose such 
validity period (May 2013).  

8.  With a view to a complete clearing of existing arrears in the energy markets, the Ministry of 
Energy, in close cooperation with ADMIE and LAGIE,  will publish  the  (aggregate)  gross 
debt and credit positions of all participants in such market on a monthly basis, starting from 
May 2013 (continuous). 

9.  The Ministry of Energy, in close cooperation with RAE, will promote, and facilitate through 
intermediation, the clearing of existing obligations among energy market participants, while 
encouraging them for a fair sharing of the outstanding debt (continuous). 

10.  Effective  May  1st,  RAE  will  implement  and  monitor  adequate  regulatory  provisions  for 
netting of credit and debt positions by all actors in the energy markets, including, inter alia, 
terms  for  clearance  of  debts  and  payment  of  interest  and  penalties  in  line  with  Directive 
2011/7/EU on late payments, and Regulatory provisions will have to ensure equal treatment 
for  all  participants,  avoiding  any  distortion  or  unjustified  advantage  coming  from  the 
belonging to vertically integrated companies (continuous). 

6.1.5  Planning the development of the electricity market in the medium to long 

term 

144 

 
 
1.  Building upon the report of RAE published in December 2012 and RAE recommendations, 
the authorities will present to the EU Commission Services by May 2013 for consultation a 
detailed  action  plan  with  identified  time  bound  steps  and  a  date  for  its  substantial 
completion,  for  the  transition  of  the  electricity  market  to  the  EU  Target  Model.  This  plan 
will establish competition, stimulate entry, reflect the reforms of PPC, and remove market 
distortions; and it will not entail State Aid. (May 2013). This plan will entail inter alia,   

i. 

fostering competition by stimulating entry through: 

  The  auctioning  of  a  significant  amount  of  PPC  produced  electricity  (at  least  1600 

MW) with characteristics reflecting PPCs generation portfolio; 

  Pricing  of  auctioned  products  will  take  into  account  the  need  to  avoid  a  price 

squeeze at retail level;  

  To foster entry, eligible bidders in the auction will be electricity suppliers only; 

  The plan is to remain in place for a set duration. The plan will however include a 
mechanism for RAE to revise and/or extent it with a view to (i) ensure it remains in 
place  until  competitive  conditions  are  satisfactory  (ii)  improve  its  continuing 
effectiveness  in  creating  competitive  conditions  (iii)  ensure  that  investment 
incentives are not unduly affected (iii) ensure it converges to the EU target model. 

ii. 

Removing market distortions through: 

  A  review  to  modify/phase  out  the  variable  cost  recovery  mechanism  (30%  rule) 

ensuring that the most efficient power plants are dispatched at all times; 

  A  review  of  the  capacity  reserve  system  with  a  view  to  create  incentives  to  retire 

inefficient power plants and/or incentivise investments herein; 

  The development of a balancing  market.  Industrial users should  participate to this 
system. Rewards must be based on their objective contribution to system stability. 

2.  The  plan  is  adopted  in  June  2013,  after  incorporating  any  comments  by  the  European 

Commission. 

6.1.6  Fuel distribution 

1.  To  remove  regulatory  restrictions  that  hinder  competition  in  the  wholesale  fuel  sector, 
the  Government,  as  per  Opinion  no.  29/VII/2012  of  the  Hellenic  Competition 
Commission: 

145 

 
 
i. 

assesses  minimum  capital  requirements  and  adjusts  them  downwards  in 
accordance with best practices and taking into account the relevant Opinion of 
the Hellenic Competition Commission (June 2013); 

ii.  mandates  the  conclusion  of  written  contracts  between  fuel  wholesalers  and 
retailers, including the obligation to state the duration of the discounts offered 
on the payment documents (June 2013); 

iii. 

iv. 

v. 

provides in legislation for the installation of inflow-outflow systems throughout 
the refining and wholesale trading supply chain; new legislation to be put into 
force (June 2013); 

removes  the  restriction  that  a  wholesaler’s  storage  facility  needs  to  be 
accessible by either the sea, railway network, or through a refinery(June 2013); 

abolishes the mandatory storage of at least two categories of fuel products, as a 
condition to wholesale licensing issued by them. (June 2013) 

2.  To enhance competition in the retail fuel sector, the Government, as per the same opinion of 

the Hellenic Competition Commission: 
i. 

mandates  gas  stations  to  state  the  price  and  quantity  of  liquid  fuel  on  all 
receipts issued by March 2014 (Athens-Thessaloniki August 2013, other urban 
areas by September, remaining March 2014) ; 

ii. 

iii. 

completes the installation of inflow-outflow systems by March 2014 (Athens-
Thessaloniki  August  2013,  other  urban areas  by  September,  remaining  March 
2014) 

abolishes  the  possibility  to  impose  a  minimum  price  on  the  sale  of  fuels  to 
consumers. (June 2013) 

6.2  Electronic communications 

The  switch-over  from  analogue  to  digital  TV  technology  will  release  a  significant  amount  of  high 
quality radio spectrum which will be free for the deployment of new services and new technologies. 
This  ‘digital  dividend’  can  boost  both  the  broadcasting  sector  and  the  wireless  communication 
industry,  make  a  major  impact  on  competitiveness  and  growth,  and  provide  a  wide  range  of  social 
benefits. The items below provide a roadmap for the release of the digital dividend in Greece. 

1.  Regarding the release of Digital Dividend, the Government (and/or EETT) undertakes to:  

i.  Adopt  necessary  secondary  legislation  for  the  assignment  of  licenses  for 
broadcasting and for the establishment of licensing procedures. (June 2013)  

ii. 

iii. 

launch the public consultation on the tender procedure for the assignment of the 
digital  dividend  (800  MHz  band)  allocating  and  authorising  the  use  of  the 
digital  dividend  to  Electronic  Communication  Services,  in  line  with  EC 
Decision  2010/267/EU  and  in  respect  of  the  deadlines  and  procedures  of  the 
RSPP.  (March 2014) (*)  

resolve cross-border coordination issues with neighbouring countries, if any. If 
difficulties  on  international  coordination  make  this  date  unfeasible,  the 
frequency  and  broadcasting  plans  might  indicate  alternative  channels  for  re-
location  of  broadcasters,  while  continuing  negotiations  with  third  countries  in 
view  of  the  final  assignment  of  frequencies  to  broadcasters  and  mobile 
operators. (Continuous) 

iv.  Adopt secondary legislation that defines a mandatory date for the switch-off of 
analogue broadcasting and a technologically neutral utilisation of the 800MHz 

146 

 
 
v. 

vi. 

band  after  the  switch  off,  taking  also  into  account  the  provisions  of  the  draft 
Radio Spectrum Policy Programme (RSPP). (June 2013) 

launch  the  tender  for  the  assignment  of  rights  of  use  for  broadcasting 
transmission. (June 2013) 

proceed to the tender procedure for the assignment of frequencies of the digital 
dividend, allocating  and authorising the use of the digital dividend (800 MHz 
band)  to  Electronic  Communications  Services  in  line  with  EC  Decision 
2010/267/EU  and  in  respect  of  the  deadlines  and  procedures  of  the  RSPP. 
(October  2014).  The  obligation  to  ensure  the  800  MHz  band  can  actually  be 
used for electronic communications other than broadcasting from 1 November 
2014 (*) 

(*) The deadlines for steps (ii) and (vi) might be amended according to the Decision of the European 
Commission  on  the  request  for  derogation  from  the  deadline  provided  by  Art.  6.4  of  the  Radio 
Spectrum Policy Programme submitted by the Greek Government on 15 May 2012.  

6.3  Transport 

The opening of the road haulage and occasional passenger transport is completed. Therefore, priorities 
now shift to measures that will help promote tourism and investment, particularly with respect to road 
(limousines and shuttle services), maritime and port activities (domestic ferry and port services) and 
aviation. Specific actions are expected to lead to the reduction of operating costs of service providers, 
while  increasing  consumers'  choice.  The  gradual  restructuring  of  railways  should  also  lead  to  its 
effective privatisation.   

6.3.1  Road 

1.  Having  completed  the  report  on  the  functioning  of  the  regular  passenger  services  and  the 
follow  up  strategy  for  the  effective  opening  of  the  sector,  the  Government  approves  the 
required law (and necessary acts) that ensures equal conditions and access equity to all road 
passenger service operators (May 2013). 

6.3.3  Aviation 

1.  Having  submitted  the  National  Airport  Policy  strategy,  the  Privatisation  Fund  (HRADF) 
carries  out  the  appropriate  process  leading  to  the  privatisation  of  regional  airports.  Any 
State  Aid  issues  must  be  clarified.  The  concession  agreements  must  take  into  account  the 
current  best  practices,  including  capping  levels  for  airport  charges  and  imposed  taxes, 
facilitating  investment  approval,  and  allowing  for  transparent  and  swift  dispute  resolution 
mechanisms (Continuous). 

2.  The Government ensures full implementation of EU Regulation (EU 691/2010) referring to 

the performance of air traffic management (Continuous).  

3.  The  Government  takes  decisive  measures  to  ensure  that  the  Hellenic  Slot  Coordinator 
Authority (HSCA) is functionally and financially independent, sufficiently staffed, and able 
to  carry  out  its  functions  (December  2013).  To  this  end  the  government  submits  all 
necessary  draft  legislation  (June  2013),  adopts  legislation  (September  2013)  and  fully 
implements the relative legislation by December 2013.  

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6.3.4  Railways 

1.  The Government implements the spin-off of ROSCO (Maintenance Unit), GAIAOSE (Real 
Estate), and the transfer of the leasing of the rolling stock activities from the OSE Group to 
the State, and provides an updated TRAINOSE Business Plan (June 2013). 

2.  The  function  of  award  authority  for  public  service  contracts  for  rail  passenger  transport 
according to Regulation 1370/2007/EU, is integrated into the new authority for contracting 
land passenger (both intercity bus and rail) services. The new legislation: 

i.  adopted by May 2013 and,  

ii.  for full implementation by December  2013.  

3.  The  renewal  of  the  current  public  service  contract  for  rail  passenger  transport  is  to  be 
completed by direct award by end April 2014 and should have a maximum duration of five 
years.  Public  service  contracts  concluded  in  2014  or  later  will  be  awarded  by  means  of 
competitive  tender.  The  rent  contracts  concerning  all  rolling  stock,  employed  in  every 
public service contract are synchronized both in terms of their duration and to allow for any 
reallocation  of  rolling  stock  as  it  may  become  necessary  when  amending  these  public 
service  contracts.  (continuous).  The  rent  contract  between  TRAINOSE  and  the  State  will 
be  initially  synchronized  with  the  5  year  PSO  contract  including  one  additional  renewal 
option of five year maximum duration. Contracts will be awarded at market prices.  

4.  OSE publishes its network statement for 2013 and 2014 in at least two official languages of 
the  EU.  It  shall  include  full  information  on  infrastructure  as  it  is  available  and  will  be 
available,  notably  the  rail  link  to  Piraeus  port.  OSE  concludes  track  access  contracts  with 
the railway undertakings using its network (June 2013). 

5.  The State adopts legislation to allow the rail regulatory authority RAS to exert its right of 
imposing  fines,  notably  (1)  amending  law  L3891/2010  granting  RAS  the  right  to  perform 
hearings, (2) granting RAS the right of adopting a hearing regulation and (3) granting RAS 
the  right  to  adopt  and  publish  in  the  Official  Gazette  regulatory  acts  and  decisions  on  all 
matters of its competence. To this end, the government; 
iii.  submits draft legislation by May 2013 and 

iv.  adopts it by July 2013. 

6.  The  National  Safety  Authority  establishes  the  examination  of  at  least  five  examiners  for 
train drivers according to the EU Regulation and publication of register of examiners on the 
web.  The  safety  authority publishes  the  conditions  and  procedures  to  recognize  drivers  as 
well  as  all  other  accredited  persons  as  required  under  Article  20.3  of  the  train  driver 
Directive 2007/59/EC (May 2013). 

7.  The function of safety authority is transferred to an independent authority.  (May 2013).  

8.  The HRADF launches tender procedure for Trainose (June 2013). 

6.3.2  Maritime Activities and Ports 

The Government: 

1.  An  assessment  of  the  impact  of  recent  reforms  will  be  completed  by  October  2013  and 
additional measures will be agreed with the aim to further improve the competitiveness of 
the sector, including by increasing flexibility of labour arrangements. 

148 

 
2.  On the basis of the new ports strategy and organisational model for ports, the Privatisation 
Fund (HRADF) defines a concrete privatisation strategy mainly through concessions (which 
also  includes  the  sale  of  the  master  concessionaire  port  companies)  with  the  objective  of 
making the best use of the ports (May 2013) and launches the appropriate call(s) for tender 
(June 2013).  

3.  The government revises the legal framework governing port labour relations (see Annex 9.5 
for  a  non-exhaustive  list  of  labour  regulations  for  ports).This  revision  provides,  among 
others,  for  the  training  and  certification  of  cargo-handling  employees.  The  draft  law 
proposal also foresees the integration into the scheme of the cargo-handling employees of 
Piraeus  and  Thessaloniki.  To  this  end  the  government  submits  draft  legislation  by  May 
2013 and adopts the new legal framework by June 2013.  

6.4  The Retail Sector 

On  retail,  the  selected  measures  aim  at  allowing  a  wider  class  of  goods  to  be  sold  by  more 
efficient retailers, and reduce their operating  costs. Measures not only  look into retail specific 
regulations  (such  as  rules  on  pricing,  sales  and  labelling)  but  also,  into  the  rules  on  licensing 
applicable to retail outlets. Combined, the measures should help contribute to lower prices and 
more choice for consumers. 

The Government: 

1.  adopts a Ministerial Decision repealing Market Regulation 7/2009, following the results of 
the  notification  procedure  provided  for  in  Directive  98/34  one  month  after  the  end  of  the 
standstill period. (June 2013) 

2.  reviews and amends the Market Policing Code (Law 136 /1946) providing for various forms 
of  public  sector  intervention  in  the  production,  distribution  and  consumption  of  goods  in 
line  with  the  simplifying  recommendations  of  the  Hellenic  Competition  Commission's 
opinion no. 24/VII/2012. In addition, this should include (i) removal of restrictions in order 
to  permit  more  freely  discounts,  promotions,  and  offers  outside  and  during  sale  periods, 
more sales periods combined with more flexibility in the duration of the sales, (ii) increased 
flexibility 
to 
remain open at least seven Sundays per year, especially during holiday seasons. Trading on 
Sundays  is  likely  to increase retail activity  and  competition  and  boost  growth  and 
employment, especially in small and medium enterprises. (June 2013)  

inter  alia, giving all shops the  option 

in  retailers'  opening  hours by, 

3.  reviews and simplifies the licensing procedure for the establishment and operation of retail 
outlets. This exercise should lead to a significant reduction in the number of authorisations 
requested by the public administration for the opening and operation of shops, which should 
be replaced, if needed, by less demanding instruments such as declarations or notifications. 
The  results  and  recommendations  of  the  review  are  presented  in  June  2013,  and  adopted 
before December 2013.  

4. 

to enhance competition in the market for over-the-counter (OTC) products: 

i.  replaces  the  current  system  of  fixed  margins  with  maximum  ones  (June 

2013), and  

ii.  allows  the  sales  of  selected  products  (e.g.,  vitamins)  in  other  points  than 

pharmacies (September 2013).  

149 

 
6.5  Regulated professions, professional qualifications and provision of 

services 

6.5.1  Removing restrictions to the access to and exercise of regulated professions   

1.  For professions and economic activities included in Section 9.2, the Government prepares 
draft  provisions  amending  sector  specific  legislation  as  per  the  opinions  of  the  Hellenic 
Competition Commission and other specifications listed thereof. The legislation is adopted 
by May 2013, with the exception of 9.2.16 where the legislation will be set in force after 
period of four months and in accordance with the relevant HCC opinion. 

2.  A  report  on  the  implementation  of  Law  3919/2011  is  published  on  the  Government's 

website (June 2013). The report:   

i. 

ii. 

iii. 

iv. 

summarises  the  list  of  all  professions/economic  activities  falling  under  the 
scope of that law and the restrictions and formalities eliminated as per Arts. 
2 and 3 of the same law;  
specifies  whether  the  access  to  and  exercise  of  a  regulated  profession  or 
economic activity is subject to an authorisation procedure, to a declaration or 
to the holding of a professional identity card; 
specifies  whether  access  to  a  profession  or  economic  activity  requires  the 
registration in a professional association and or to a professional registry; 
specifies whether the exercise of the profession is conditional on the periodic 
renewal of authorisations.   

3.  To reinforce transparency in the functioning of professional bodies: Legislation is adopted 
mandating  the  publication  on  the  webpage  of  each  professional  association  the  following 
information (May 2013):  

i. 

the rules regarding incompatibility and any situation characterised by a conflict 
of interests involving the members of the Governing Boards.  

4.  To  assess  the  proportionality  and  justification  of  activities  reserved  to  specific  regulated 

professions, the Government: 

i. 

ii. 

iii. 

iv. 

draws  an  exhaustive  list  of  activities  reserved  (in  exclusivity  or  not)  to  the 
different types of engineer, architect, geologist and  land surveyor professions. 
(June 2013) 
organises  a  mutual  evaluation  exercise,  whereby  representatives  of  the 
abovementioned  professions  assess  the  justification  and  the  proportionality  of 
the  requirements  reserving  certain  activities  to  providers  with  specific 
professional  qualifications.  The  assessment  excludes 
requirements 
applicable to their own profession. (June 2013) 
Presents  a  proposal  of  which  activities  could  be  reserved  (in  exclusivity)  to 
specific professions. (June 2013) 
Sends  draft  legislation  to  Parliament  amending  unjustified  or  disproportionate 
requirements  reserving  certain  activities  to  specific  professions.  (December 
2013) 

the 

6.5.2  Additional measures 

1.  A draft code revising Legislative Decree 3026/1954 is adopted by June 2013. The 

new code should, among others:  

i. 

ease the re-entry into the legal profession; 

150 

 
  
 
ii. 
iii. 
iv. 
v. 

vi. 

vii. 

repeal age limits to take the Bar examinations 
abolish total bans on commercial communications;  
provide for licenses of unlimited duration; 
remove  the  reference  to  "exclusivity"  for  lawyers  for  the  research  of  books  of 
mortgage and land registry; 
clarify  the  nature  of  lawyers'  fees  provided  for  in  current  legislation.  Fees  are 
freely  determined  through  a  written  agreement  between  lawyers  and  clients.  In 
case  there  is  no  written  agreement  for  court  appearances,  the  fees  shall  be 
determined through reference fees; 
eliminate any kind of minimum wages for salaried lawyers working in the private 
sector. 

2.  The  Government  issues  a  Presidential  Decree,  which  sets  a  system  of  prepaid 
fixed/contract sums for each procedural act or court appearance by a lawyer, which is not 
linked to a specific ‘reference amount’. (May 2013)  

3.  It  also  de-links  contributions  paid  by  lawyers  from  lawyer's  reference  amounts  for 

contracts and eliminates those reference amounts. (June 2013)  

4.  The Government takes additional measures by June 2013 at the latest, to reduce by 50% 
the  cost  of  registering  property,  as  measured  by  the  World  Bank's  Registering  Property 
sub-indicator.  The  results  will  be  monitored  in  the  World  Bank's  2014  edition  of  Doing 
Business. (November 2013) 

5.  To  confirm  progress  in  the  area  of  regulated  professions,  the  Government  completes  a 
study  of  the  20  largest  professions  examining  the  degree  to  which  they  have  been 
liberalized, including results with respect to new entrants and price changes. (July 2013) 

6.5.3  Easing the recognition of professional qualifications  

Measures are taken to ensure the effective implementation of EU rules on the recognition of 
professional  qualifications;  including  compliance  with  ECJ  rulings.  In  particular,  the 
Government: 

1.  continues  to  update  the  information  on  the  number  of  pending  applications  for  the 
recognition  of  professional  qualifications,  and  sends  it  to  the  European  Commission. 
(Quarterly) 

2.  ensures  the  implementation  of  PD  38/2010  (as  amended  by  law  4093/2012)  and  the 
recognition of qualifications derived from franchised degrees from other Member States to 
access  to  or  exercise  of  an  economic  activity  and  to  ensure  that  holders  of  franchised 
degrees  from  other  Member  States  have  the  right  to  work  in  Greece  under  the  same 
conditions as holders of Greek diplomas. (Continuous)  

6.5.4  Services Directive: exploiting the information benefits of the Point of 

Single Contact 

The Government ensures: 

1. 

that  there  is  adequate  connection  between  the  PSC  and  other  relevant  authorities 
(including  one-stop  shops,  professional  associations  and  the  recognition  of  professional 
qualifications) and that the submission of on-line applications as regards the recognition of 
professional  qualifications  is  fully  operational,  through    removal  the  obligation  from 
legislation to present paper originals. (June 2013)  

151 

 
 
 
 
 
7  Increasing the impact of structural and cohesion funds 

1.  The Government meets targets for payment claims in the absorption of EU structural and 
cohesion  funds  set  down  in  the  table  below.  Compliance  with  the  targets  shall  be 
measured by certified data.  

Targets for payment claims in the absorption of Structural and Cohesion Funds 
(programming period 2007-2013) to be submitted in 2013  
(EUR million) 

European Regional 
Development Fund (ERDF) and 
Cohesion Fund 

European Social Fund (ESF) 

Target of first half of the year 

Target of second half of the 
year 

Total annual target 

2013 

3,000 

890 

1,284 

2,606 

3,890 

2.  The Government submits complete applications for all remaining major projects for which 
a  Commission  decision  under  Article  41  of  Regulation  (EC)  No  1083/2006  has  to  be 
adopted. (December 2013). Out of these applications, 6 applications are submitted by June 
2013 and 6 applications by September 2013 and the remaining by December 2013.  

3.  In  deciding  the  "Public  Investment  Budget"  allocation,  the  Government  ensures  that  the 
necessary  national  contribution  remains  available  in  order  to  complete  the  unfinished 
ERDF,  ESF  and  Cohesion  Fund  projects  of  the  2000-2006  programming  period  and  to 
cover  the  required  national  contribution  including  non-eligible  expenditure  under  the 
Structural  Funds  and  Cohesion  Fund  rules  in  the  framework  of  the  2007-2013 
programming period. 

4.  The Government takes measures in order to accelerate the implementation of the projects 
which  should  be  completed  by  December  2015,  especially  in  particular  those  which  are 
critical  for  the  development  of  the  country  —  as  the  functional  review  of  the  public 
administration, the "Elenxis" project for the tax control services, the land register, the solid 
waste  management  infrastructures,  the  railway  projects,  the  e-prescription,  the  e 
procurement, the development of a social economy sector and the national registry. On top 
of  the  24  priority  projects,  already  finished  and  the  3  priority  projects  cancelled,  the 
Government takes measures in order to ensure completion of 27 priority projects by end 
2013,  of  20  priority  projects  by  end  2014  and  of  70  priority  projects  by  end  2015.  The 
Greek authorities take necessary measures to limit the number of the priority projects that 
will be phased. 

5.  Within  the  review  of  the  public  procurement  regulations  (cfr.  section  2.7.2.2.3), 
standardised  tendering  documents  per  category  of  works  are  set  up  in  view  to  simplify 
procedures on contract awarding. (September 2013) 

152 

 
 
 
 
 
 
 
6.  The monitoring tool for expropriations is completed and operational and the data are made 

accessible to the public. (July 2013)  

7.  The  Government  consolidates 

the 

reviewing 

simplification 

initiative  by 

the 
"implementation  trail" and the mapping  of competences of the involved entities,  permits 
and deadlines needed for the implementation of the main categories of projects supported 
by the Structural Funds and the Cohesion fund (e.g. transport, waste management, social 
infrastructure,  entrepreneurship,  ICT).  It  lifts  the  unnecessary  steps,  simplifies  the 
implementation  processes  and  sets  reasonable  deadlines.  In  particular,  the  Government 
establishes  an  alternative  to  the  function  of  "ypologos"  procedure  for  the  EU  co-funded 
projects  and  establishes  the  electronic  payment  (June  2013).  The  ypologos  should  be 
abolished  by  December  2013.  Periodically  and  until  the  end  of  the  programming  period 
2007-2013,  it  reviews  the  "sleeping"  projects,  un-activated  delegations  and  "sleeping" 
contracts and informs the Commission on those eliminated.  

8.  The  Government  adopts  measures  and  starts  implementing  an  anti-fraud  strategy  in  the 

field of the Structural Funds and the Cohesion Fund (June 2013).  

9.  The  Government  reports  the  Commission  monthly  on  the  progress  of  the  Financial 
Engineering Instruments. If necessary and where appropriate, it proposes a rationalisation 
of the current allocations and instruments. (September 2013) 

10.  The  Government  establishes  an  efficient  inter-service  consultation  procedure  for  the  EU 
co-financed projects supported by an electronic system. An integrated project will be fully 
operational for the EU co-financed projects by end of 2013 (December 2013). 

153 

 
8  Monitoring  

8.1  Statistics 

1.  Government  will  fully  honour  the  Commitment  on  Confidence  in  Statistics  signed  in 
February  2012  by  implementing  all  envisaged  actions,  including  respecting  international 
statistical  standards;  guaranteeing,  defending  and  publicly  promoting  the  professional 
independence  of  ELSTAT;  and  supporting  ELSTAT  in  upholding  confidence  in  Greek 
statistics  and  defending  them  against  any  efforts  to  undermine  their  credibility. 
(continuous)   

law,  associations  of 

2.  Legal  amendment  will  be  introduced  to  ensure  that  ELSTAT  will  have  access  to  the  tax 
information (including tax  registration  number),  at individual level,  of legal  entities under 
private 
tax 
confidentiality,  so  that  it  can  carry  out  its  statistical  work  for  the  production  of  official 
statistics, as it is provided for in Law 3832/2010 as in force, and is specifically set out in the 
Regulation  on  Statistical  Obligations,  while  at  the  same  time  ELSTAT  safeguards  the 
confidentially of personal records. (May 2013)  

individuals  and  natural  persons,  notwithstanding 

3.  Government respects the independence of ELSTAT in carrying its tasks and providing high 
quality statistics. In this regard it fully respects the financial independence of ELSTAT, and 
provides all the necessary resources in a timely manner, as approved in the annual budget of 
ELSTAT,  for  the  agency  to  complete  uninterrupted  its  tasks.  In  this  respect,  Government 
cannot  invoke  art.  1  of  Legal  Act  of  18/11/2012  and  the  Ministerial  Decree  2/91674  of 
201/12/2012,  while,  at  the  same  time,  ELSTAT  provides  to  the  Hellenic  Parliament 
information for monitoring the execution of its budget as provided for in the Regulation of 
the Parliament (Article 31A) and the Statistical Law of Greece (Article 16). (continuous) 

4.  Government  will  facilitate  ELSTAT  to  complete,  as  soon  as  possible,  the  acquisition  of 
qualified  staff  under  way  for  staffing  essential  positions  in  its  central  office,  as  well  as 
receive  additional  qualified  staff  through  transfers  from  other  government  entities  for 
addressing urgent staffing needs in prefecture offices and the central office, as reflected in 
the Medium term plan of ELSTAT submitted in the context of the preparation of the MTFS 
preparation and incorporated in the latter. (September 2013) 

154 

 
 
9  Annexes  

9.1  Privatisation plan and intermediate steps  

155 

Binding offersProjectIntermediate Steps(Launch of Tender)(submission)I. State-owned enterprise/share salen/an/a2 Airplanes2012Q1Q2/13Public Gas (DEPA)Modification of statutory provision at time of privatization.Q1Q2/13Public Gas (DESFA)State aid clearance (DG Comp).Q4Q2/13Football Prognostics Organization (OPAP)Proceed with the phase B of the tendering process and finalize selection (April 2013 - DONE ).2013Q1Q3/13Horserace Betting Organization (ODIE)Launch of tender (March 2013- DONE). Law for clarifying responsibilities between Jockey Club and the New Concessionaire (May 2013). Law for clarifying the taxation regime of the Concession (May 2013)Q1Q3/13Thessaloniki Water (EYATH)Establish regulatory framework (March 2013 - DONE). Establish pricing policy (May 2013) and amend the license (November 2013). Q2Q2/14Hellenic Vehicle Industry (ELVO)Transaction structure to be determined and agreed (May 2013). EC (DG Comp) consent (May 2013).Q2Q4/13Hellenic Petroleum (HELPE)Following divestment of DEPA.Q2Q1/14Mining and Metallurgical Company (LARCO)Agreement on privatisation structure (DG Comp) is a key prerequisite. Law for establishing a new company (June 2013).Q2Q2/14Railways (Trainose)Trainose will be transferred to HRADF (March 2013 - DONE). - Comfort letter from EC (DG Comp) for TRAINOSE State Aid investigation clearance (May 2013).Q2Q2/14Athens Airport (AIA)Agree on extension and sale process with Hochtief  (June 2013).Q3Q4/13Hellenic Post (ELTA)Ministerial decisions for (i) the determination of the content of universal service (DONE) and (ii) the compensation mechanism for USP drafted and prenotified to DGComp  (further clarifications/ amendments asked by EC are being processed by HR & ELTA).Q3Q2/14Athens Water (EYDAP)Establish regulatory framework (March 2013 - DONE). Establish pricing policy (September 2013) and amend license (February 2014). Settlement of receivables from the State (February 2014).Q3Q3/14Hellenic Defense Systems (EAS)Identify assets for privatization (May 2013). State Aid formal investigation clearance (pending discussions with DGComp) Q3Q3/14Public Power Corporation (PPC)Government approves and announces PPC restructuring and privatisation plan (April 2013). n/an/aCasino Mont ParnesPending European Court decisionII. Concessionsn/an/aHellenic MotorwaysNegotiations for the restart of projects currently in progress. Agreement with CJVʼs regarding claims reached. Recommencement of construction expected in May 2013. Ratification of reset agreement by Parliament, after consent by Lenders and EU granted (expected in July 2013).2011Q4Q4/12State LotteryCourt of auditors approval - DONE2013Q1Q3/13Small ports and marinasResolve issues related to urban zoning  (May 2013).Q1Q4/13Regional airports Clarify state aid related issues (before launch of the 2nd phase - estimated May/June 2013). Establish regulatory framework (April 2013).Q2Q4/13Egnatia OdosLaunching of tender process dependent on: a) agreement/finalisation with Ministry of Development on key characteristics of the concession and conclusion of business plan (DONE) b)decision on tolling policy/toll collection system (DONE) c) treatment of Piraeus loan granted to Egnatia Odos SA and legislative settlement of such arrangement (April 2013)Q2Q1/14Thessaloniki Port (OLTH),Piraeus Port (OLP) & Large regional portsState aid clearance (DG Comp). Submit privatization strategy (April 2013). Establish regulatory framework (April 2013 - DONE). Q3n/aSouth Kavala Gas StorageDecision on the best exploitation option (December 2012 - DONE).2014Q2Q4/2014Digital DividendEntire process led by Ministry of Development. Adopt secondary legislation for: a. TV stations (June 2013 - tbc with Min Dev) and b. analogue switch-off date (June 2013 - tbc with Min Dev). Launch tender for TV network providers (June 2013).n/an/aMining rightsIII. Real Estate2011Q4Q4/13Hellenikon 1Transfer of Hellinikon SA ownership to HRADF (Pending decision: December 2012- DONE). Launch Phase B of tender process (December 2012 - DONE). Bids will be submitted end of December 20132012Q1Q3/12IBCESCHADA submission (DONE). Have approval from Court of Audit (December 2012- DONE).Q1Q1/13CassiopiRight of surface establishment and creation of the SPV (June 2013). ESCHADA submission (October 2012 - DONE).Q1Q2/13AfantouAll intermediate steps have been fulfilled. Binding offers submission (May 2013 ), subject to timely issuance of decision by the Council of State.  ESCHADA submission (June 2013)Q4/12Q1/13Buildings abroadLaunch tender process (December 2012- DONE). Tender concluded for 4/6 buildings. Court of Audit approval.  Launch of tender for the remaining 2 buildings (May 2013).2013Q1Q2/13Sale/repo 28 buildingsAll intermediate steps have been fulfilled. Launch the first phase of tender (March 2013 - DONE). Launch second phase (May 2013). Q1Q4/13Astir VouliagmenisFinalize the negotiations  with NBG - DONE. Transfer EOT property to HRADF (March 2013 - DONE). Launch the request for EoI (April 2013 - DONE). ESCHADA submission (September 2013).Q1Q2/13PaliouriLaunch tender process (December 2012 - DONE). Transfer of asset to HRADF (March 2012-DONE). Launch second phase (April 2013). Q1Q3/13HEYLaunch tender process (February 2013-DONE). Transfer of asset to HRADF (March 2013-DONE). Launch second phase (April 2013). Q1Q4/13Agios IoannisAll intermediate steps have been fulfilled. Launch the first phase of tender (March 2013 - DONE). ESCHADA submission (January 2014).Q1n/aReal Estate lot 2The 40 properties already identified are transferred to HRADF (March 2013 - DONE). Q4n/aReal Estate lot 3At least 1,000 real estate properties to be transferred to HRADF (December 2013). The first 250 real estate assets are transferred to HRADF (April 2013).Source: HRADF update on projects under development.1/ ESCHADA = zoning and land planning permit.Timing of Privatization 
 
 
9.2  Regulated professions: regulated professions / economic activities 

whose regulatory framework needs to be adjusted to applicable 
opinions of the Hellenic Competition Commission and other 
requirements 

1.  Professions  under  the  Greek  Ministry  of  Citizen  Protection:  i)  sale  of  revolvers,  pistols  and  target-
shooting weapons; ii) preparation of explosives; manufacture, conversion, assembly, finishing and repair of 
firearms,  and  charging/recharging  of  firearm  cartridges;  iii)  charging  cartridges  for  hunting  weapons  for 
sale; iv) sale of fireworks and flare launchers; v) manufacture of fireworks and flare launchers; vi) operation 
of  private  security  firms;  vii)  work  by  security  staff  of  private  security  firms;  viii)  operation  of  private 
investigation offices; ix) work by staff of private investigation office: Cfr. HCC Opinion no. 13/VI/2012. 
2.  Dealers  in  antiques  and  more  recent  artifacts  and  restorers  of  fine  art  and  antiquities:  Cfr.  HCC 
Opinion  no.  18/VI/2012.  The  revision  eliminates  the  geographical  restrictions  on  antique  dealers  and 
provides  for  other  ways  of  acquiring  professional  experience  other  than  in  a  Greek  antique  shop  (e.g., 
experience in other antique shops abroad or in museums).      

3.  Professions / economic activities under the Greek Ministry of Citizen Protection – harbour guard: i) 
Organisations certifying divers; ii) Suppliers of recreational diving services; iii) Rental of means of marine 
recreation; iv) Service boat operations; v) Towing operations; vi) Licensing for outdoor trading (stands or 
itinerant)  on  board  ships;  vi)  Operation  of  casinos  on  board  passenger  vessels  flying  the  Greek  flag  on 
international voyages; vii) Lifeguards: (i) Operation of public health establishments on anchored or floating 
craft  and  (ii)  Operation  of  public  health  establishments  on  seafaring  vessels:  Cfr.  HCC  Opinion  no. 
22/VII/2012. 

4.  Professions  /  economic  activities  under  the  Ministry  of  Labour,  Directorate-General  for  Welfare:  i) 
Creative activity centres for children; ii) Creative activity centres for children with disabilities; iii) Nurseries 
and  kindergartens;  iv)  Private  childrens’  camps;  v)  Child  welfare  institutes:  Cfr.  HCC  Opinion  no. 
25/VII/2012. 

5.  Petrol sellers, shotfirers, blasters and natural gas sales. Cfr. HCC Opinion no 26/VII/2012  
6.  Actuaries: review the regulatory framework governing the examination process so as to prevent the 

Hellenic Actuarial Society (HAS) from determining indirectly the number of successful candidates in the 
examinations in the interest of the incumbents (cfr. HCC opinion no. 14/VI/2012).  

7.  Selling and production of reproductive material for agricultural plant species and selling of fertilisers 

(cfr. HCC opinion no. 19/VI/2012). 

8.  Oenologists: abolish minimum fees   
9.  Oenology labs: remove geographical restrictions for establishing multiple labs and administrative license 
10.  Veterinarians:  remove  the  legal  form  requirement  and  allow  any  legal  person,  irrespective  of  the 
shareholders, to open a veterinary clinic long as the activity is being performed by veterinarians. Subject the 
licensing of such veterinary clinics to Art. 3 of Law 3919.   

11.  Accountants:  abolish the four different classes of accountants and the activities reserved to each class. 
12.  Private education establishments. Adopt secondary legislation provided for in paragraph I.3.15 and 16 of 
law 4093/2012, spelling out the details of the licensing procedure of private schools and providing for the 
approval procedure for programs of study.  

13.  Tourist guides: Amend legislation to allow educational entities other than universities to offer accelerated 

training courses for candidate tourist guides. 

14.  Stevedores at ports and for land operations. Adopt secondary legislation referred to in section K7 of law 
4093/2012  providing  for  the  creation  of  the  National  Stevedores  Registry,  for  the  accreditation  of 
stevedores, on special issues related to the organization and operation of control procedures on matters of 
health and safety at work of stevedores, providing for a new regulation on fees and remunerations for Port 
Funds and shipping agents, and providing for the terms and procedures for dock workers to enter the area of 
the port.  

15.  Sworn in valuers: Adopt law and necessary secondary legislation (3 MDs on the examination committee, 
code of ethics and on disciplinary committee) to reflect abolished restrictions in November 2012 (i.e. fixed 
fees,  numerus  clausus,  nationality  requirement  etc)  and  include  (i)  replacement  of  the  current  system  of 
certification  with  a  system  of  prior  declaration  that  allows  professionals  to  exercise  activities  unless  the 

156 

 
  
administration notifies against it; and (ii) reduction to 2 years in required professional experience to become 
a sworn-in valuer. .  

16.  Geo-technician: subject the regulations on geo-technicians to chapter A of law 3919/2011.  

157 

 
 
9.3  Agreed roadmap between the Greek Ministry of Justice and the 
EC/IMF/ECB for the review of the code of Civil Procedure  

9.3.1  Code of civil procedure 

1.  By end May 2013, the Task Force for the review of the Code of Civil Procedure presents 
to  the  Government  an  initial  draft  of  the  Code.  Within  15  days,  the  Code  of  Civil 
Procedure is presented to the EC/IMF/ECB for comments. 

2.  On the basis of the above cooperation, the Task Force presents to the Government, by end 
October  2013,  a  revised  version  of  the  draft  Code  of  Civil  Procedure.  The  Government 
carries out a broad public consultation, including EC/IMF/ECB, on the draft law bringing 
the Code of Civil Procedure in line with international best practice.  

3.  The Government submits the final draft Code to the Hellenic Parliament by March 2014. 

9.3.2  Study on cost of litigation 

The Government finalises the study on the costs of civil litigation, its recent increase and its effects on 
workload of civil courts, and publishes the study by June 2013. 

158 

 
 
 
9.4  Statistics to be published by the Ministry of Justice  

1.  Every quarter, for civil and administrative first instance court, court of appeal as well as the 

Supreme Court and the Council of State) tables published will provide for:  
the number of judges and administrative staff2, 
the stock of cases at the beginning of the period, 
the inflow of cases registered during the period,  

 
 
 
  The outflow of cases closed during the period3 
 
the stock of cases at the end of the period. 

i. 

ii. 

iii. 

The tables will also include the following data: 
For  the  tax  and  customs  cases,  the  data  will  also  include  the  inflow  of  the  new 
cases with a breakdown above and under 150 000 euros. 
For  civil  and  commercial  courts,  the  data  for  stock  and  flows  of  cases  will  also 
show the corporate insolvency cases. 

For administrative Justice, specific data, provided in another table, will include a 
breakdown by year of registration of the stock of cases for which no hearing date 
has been  fixed yet. This will be  provided  for beginning and for end period. The 
table will also show the total number of cases with a hearing date. 

2.  For  some  of  the  most  relevant  courts,  defined  in  agreement  with  EC,  IMF  and  ECB,  the 
Ministry of Justice will also publish by quarter, or by semester or year if so agreed by EC-
IMF/ECB: 

i. 

ii. 

The  stock  of  cases  (both  at  beginning  and  at  end  period),  with  a  breakdown  by 
year of registration. 
for  civil  and  commercial  Justice,  more  detailed  information  on  corporate 
insolvency cases including: 
 

a more detailed breakdown by value4, defined in agreement with EC, IMF and 
ECB, 
a  more  detailed  breakdown  by  sector  (e.g.,  agriculture,  construction, 
manufacturing, and services), defined in agreement with EC, IMF and ECB, 

 

3.  Ministry of Justice and General Secretariat for public revenue: 

2 At the end of the period. 

3 A case is considered closed, and registered in the outflow, at the moment the full decision is published (and 
its content is available to the parties). 

4 "Value" of the case could correspond to the value of the liabilities of bankruptcy, as this appears after the 3-
months period of the submission of announcements by the debtors has expired. 

159 

 
 
 
 
 
 
 
                                                            
i. 

ii. 

The General Secretariat for public revenue will conduct and publish by September 
2013 one study based on small but random sample, in order to gather information 
on recovery rate for tax and customs cases. 
The Ministry of Justice will try and propose a method to get relevant information  
on recovery rates for corporate insolvency cases. 

4.  When the IT system will be fully in place, the Ministry of Justice will publish: 

i. 

Tables showing: 

 
the number of judges and administrative staff5, 
 
the stock of cases at the beginning of the period, 
 
the inflow of cases registered during the period,  
  The outflow of cases closed during the period6, 
 
the stock of cases at the end of the period. 

ii. 

iii. 

iv. 

The stock of cases at beginning and at end period will be broken down by year of 
registration, 
The stock of  cases  at beginning  and at end period  and the flow  of cases  will  be 
broken down by categories of litigations, 
The average duration of the outflow cases during the period. 

5 At the end of the period. 

6 A case is considered closed, and registered in the outflow, at the moment the full decision is published (and 
its content is available to the parties). 

160 

 
 
 
 
 
 
                                                            
9.5  Non-exhaustive list of regulations on port work for review under the 

new port strategy  

  Port  of  Piraeus  –  law  1559/1950  (Gov.  Gazette  A  252/1950),  law  2688/1999  (Gov. 
Gazette A 40/1.3.1999), Joint Ministerial Decision 5115.01/02/2004 on the approval of 
the General Regulation for Personnel (Gov. Gazette B 390/26.2.2004). 

  Port of Thessaloniki - legislative decree 449/1970 (Gov. Gazette A 51/27.2.1970), law 
2688/1999 (Gov. Gazette A 40/1.3.1999), Joint Ministerial Decision 5115.01/05/2003 
on  the  approval  of  the  General  Regulation  for  Personnel  (Gov.  Gazette  B 
1203/26.8.2003). 

  Work Regulation of the Dockworkers of the Piraeus Port approved by Joint Ministerial 

Decision 45058/7/1971-Gov. Gazette B 579/22.7.1971)  

  Joint Ministerial Decision 44885/8919/1956, as modified by Joint Ministerial Decision 

117756/8295/1967-Gov. Gazette B 9/11.1.1967) 

  Law 3239/1955  

  Law 5167/1932 

  Ministerial Decision F 10221/26816/929- Gov. Gazette B 2778/2.12.2011 

161 

 
  
 
 
9.6  Provision of Data 

During the programme, the following data shall be made available to the European 
Commission, the ECB and the IMF staff on a regular basis. 

These data should be sent to the following e-mail address: 

ecfin-greece-data@ec.europa.eu 

This address should also be used for the transmission of other data and reports 
related to the monitoring of the programme. 

To be provided by the Ministry of Finance 

Preliminary monthly data on the state budget execution 
(including breakdown by main categories of revenue and 
expenditure and by line ministry). 

(Data compiled by the Ministry of Finance) 

Updated monthly plans for the state budget execution for 
the remainder of the year, including breakdown by main 
categories of revenue and expenditure and by line 
ministry. 

(Data compiled by the Ministry of Finance) 

Monthly data on the public wage bill (of general 
government, including a breakdown in nominal wage and 
allowances paid to government employees per line 
ministry and public entity), number of employees 
(including a breakdown per ministry and public entities 
outside the central government) and average wage 
(including the relative shares of the base wage, 
allowances and bonuses).  

(Data compiled by the Ministries of Interior and 
Finance) 

Preliminary monthly cash data on general government 
entities other than the state. 

(Data compiled by the Ministry of Finance) 

Monthly, 15 days 
after the end of each 
month; these data 
should also be 
included in 
subsequent 
transmissions in case 
of revision. 

Monthly, 30 days 
after the end of each 
month. 

Monthly, 30 days 
after the end of each 
month. 

Monthly, 30 days 
after the end of each 
month, these data 
should also be 
included in 
subsequent 
transmissions in case 
of revision. 

Monthly data on staff: number of employees, entries, 
exits, transfers among government entities; and from 
and into the mobility and exit scheme, per entity. 

(Data compiled by the Ministries of Administrative 
Reform and E-Governance and of Finance) 

Monthly, 30 days after 
the end of each month. 

Weekly information on the Government's cash position 

Weekly on Friday, 

162 

 
 
 
 
with indication of sources and uses as well of number of 
days covered. 

reporting on the 
previous Thursday. 

(Data compiled by the Ministry of Finance) 

Data on below-the-line financing for the general 
government. 

(Data compiled by the Ministry of Finance)  

Data on expenditure pending payment (including 
arrears) of the general government, including the State, 
local government, social security, hospitals and legal 
entities. 

(Data compiled by the Ministry of Finance on the basis 
of basic data from the several line ministries) 

Data on use of international assistance loans split 
among following categories: Financial stability fund, 
segregated account, debt redemption, interest payments, 
other fiscal needs, building of cash buffer; per quarter 
and cumulative 

Data on public debt and new guarantees issued by the 
general government to public enterprises and the private 
sector. 

Data on maturing debt (planned redemptions per month, 
split between short-term (Treasury bills and other short-
term debt) and long-term (bonds and other long-term) 
debt). 

Data on planned monthly interest outflows. 

(Data compiled by the Ministry of Finance) 

Monthly, no later than 
15 days after the end of 
each month; these data 
should also be included 
in subsequent 
transmissions in case of 
revision. 

Quarterly, within 55 
days after the end of 
each quarter.  

Quarterly, by the end of 
each quarter.   

Monthly, within one 
month. 

163 

 
 
 
 
Data on assets privatised and proceeds collected. 

(Data compiled by the Ministry of Finance) 

 Monthly. 

Data on state-owned enterprises: revenue, costs, 
payroll, number of employees and liabilities 
(including maturities of public enterprises' debts)  

(Data compiled by the Ministry of Finance) 

Monthly statement of the transactions through off-
budget accounts. 

(Data compiled by the Ministries of Finance and 
Education, Religious Affairs, Culture and Sport) 

Monthly statement of the operations on the special 
accounts. 

(Data compiled by the Ministry of Finance) 

Report on progress with fulfilment of policy 
conditionality. 

(Report prepared by the Ministry of Finance) 

Monthly data on health care expenditure by the 
social security funds with a lag of three weeks 
after the end of the respective quarter. 

(Data compiled by the Ministries of Labour and 
Health) 

Monthly, within three weeks 
of the end of each month for 
the ten largest enterprises. 
Quarterly within three weeks 
of the end of each quarter for 
the other enterprises. 
Quarterly for the maturities 
of state-owned enterprises' 
liabilities. 

Monthly, at the end of each 
month. 

Monthly, at the end of each 
month. 

Quarterly before the 
respective review starts. 

Monthly, within three weeks 
of the end of each month.  

164 

 
 
 
 
To be provided by the Bank of Greece 

Assets and liabilities of the Bank of 
Greece.  

Assets and liabilities of the Greek banking 
system - aggregate monetary balance 
sheet of credit institutions. 

Evolution of the external funding 
provided by Greek banks to their 
subsidiaries abroad. 

Report on banking sector liquidity 
situation. 

Report on the evolution of financial 
stability indicators. 

Report on results from the regular 
quarterly solvency assessment exercise. 

Weekly, next working day. 

Monthly, 30 days after the 
end of each month. 

Monthly, 15 days after the 
end of each month. 

Weekly, next working day. 

Quarterly, 30 days after the 
publication data of each 
quarter. 

Quarterly, 15 days after the 
end of each quarter 
depending on data 
availability. 

Weighted average of Loan-to-value (LTV) 
ratio for new loans with real estate 
collateral 

Yearly. 

To be provided by the Hellenic Financial Stability Fund 

Detailed report on the balance sheet of the 
Hellenic Financial Stability Fund with 
indication and explanation of changes in 
the accounts. 

Monthly. 

165 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Abbreviations 

ASEP 
ADMIE 
CPB 
DEPA 
DOY  
DRG 
DSO 
EBFs 
EC 
ECB 
EEA 
EETT 
EFSF 
EKDAA 
EKEVYL 
ELENXIS 
ELSTAT 
EOF 
EOPYY 
EPY 
ERDF 
ERP  
ESA 
ESF 
ESY 
ETEA 
EU 
GAIA OSE 
GAO 
GDFS 
GDP 
GEMI 
GSIS  
HCA 
HCAA  
HFSF 
HRADF 
HSCA 
HWI-HISE 
ICD – 10 
IDIKA 
IMF 
JMD 
KEN-DRGs 
KPI  
KTEL 

166 

Supreme Council for Staff Selection 
Independent Power transmission operator 
Central Purchasing Bodies 
Public Gas Corporation 

Diagnostic-Related Group 
Distribution System Operator 
Extra budgetary Funds 
European Commission 
European Central Bank 
European Economic Area 
Hellenic Telecommunications and Post Commission 
European Financial Stability Facility 
National Centre for Public Administration and Local Government 
National Centre for Medical Technology 

Hellenic Statistical Authority 
National Organisation for Medicines 
National Organisation for the provision of Health services 
Health Procurement Commission  
European Regional Development Fund 
Enterprise Resource Planning 
European System of Accounts 
European Social Fund 
National Health System 

European Union 
Real estate agency 
General Accounting office 

Gross Domestic Product 
General Commercial Registry 
General Secretariat for Information Systems 

Hellenic Civil Aviation Authority 
Hellenic Financial Stability Fund 
Hellenic Republic Asset Development Fund 
Hellenic Slot Coordinator Authority 
High Wealth Individual and High Income Self Employed 
 International Classifications of Diseases 
E-governance of social insurance 
International Monetary Fund 
Joint Ministerial Decision 
Diagnosis Related Groups 
Key performance indicators 
Joint Fund for Bus Receipts 

 
 
  
 
 
 
LAGIE 
LG 
LNG 
LTU  
LTV 
MAREG  
MD 
MEFP 
MIS 
MTFS 
NHS 
NPL 
OASA 
OECD 
OGA 
OSE 
OTC 
OTE 
PIB  
PPC 
PSC 
QV 
RAE 
RAS 
ROSCO 
RSPP 
SDOE  
SOE  
SPA 
SPC 
SPPA 
SSC  
SSF 
TAP 
TAXIS 
TEN-T 
TSO 
WHO 

Operator of electricity market 
Local Government  
Liquefied Natural Gas 
Large Tax Payers Unit 
Loan-to-value 
Ministry of Administrative reform and Electronic governance 
Ministerial Decision 
Memorandum of Economic and Financial Policies 

Medium-Term Fiscal Strategy 
National Health System 
Non-performing loans 
Athens Urban Transport Organisation 
Organisation for Economic Cooperation and Development 
Agricultural Insurance Organisation 
Railway Organisation of Greece 
Over - the – counter 
Hellenic Telecommunication Company 
Public investment budget 
Public Power Corporation 
Point of Single Contact 

Regulatory Authority for Energy 
Regulatory Authority for Railways 
Rolling Stock & Railroad Maintenance business unit 
Radio Spectrum Policy Programme 
Corps for the Prosecution of Financial Crimes 
State Owned Enterprises 
Single Payment Authority 

Single Public Procurement Authority 
Social security contributions 
Social Security Funds 
trans-Adriatic pipeline 

Trans European Transport network 
Transmission System Operator 
World Health Organisation 

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GREECE: TECHNICAL MEMORANDUM OF 
UNDERSTANDING 

May 17, 2013 

This Technical Memorandum of Understanding (TMU) sets out the understandings 

1.      
regarding the definitions of the indicators subject to quantitative targets (performance 
criteria and indicative targets), specified in the tables annexed to the Memorandum of 
Economic and Financial Policies. It also describes the methods to be used in assessing the 
program performance and the information requirements to ensure adequate monitoring of 
the targets. We will provide the European Commission, ECB and the International Monetary 
Fund with the necessary information for program monitoring.  

2.       For program purposes, all foreign currency-related assets, liabilities, and flows will be 
evaluated at “program exchange rates” as defined below, with the exception of the items 
affecting government fiscal balances, which will be measured at current exchange rates. The 
program exchange rates are those that prevailed on January 31, 2012. In particular, the 
exchange rates for the purposes of the program are set: €1 = 1.3176 U.S. dollar, €1 = 100.63 
Japanese yen, and €1.1772= 1 SDR. 

General Government 

3.       Definition: For the purposes of the program, the general government includes: 

 

The central government. This includes: 

  The entities covered under the State Budget as defined in Chapter 2 of the 
Law 2362/1995 as being modified by Law 3871/2010 regarding “Public 
Accounting, Auditing of Government Expenditures and Other Regulations,” 
and other entities belonging to the budgetary central government. 

  Other entities or extra-budgetary funds (EBFs) not part of the State budget, 
but which are, under European System of Accounts (ESA95) rules (“ESA95 
Manual on Government Deficit and Debt”), classified under central 
government. This includes the Green Fund and the HRADF. 

  The following state enterprises and organizations included by the National 
Statistical Service (ELSTAT) under the definition of central government 
(ATTIKO METRO, OSY, ELGA, HELLENIC DEFENCE SYSTEMS S.A., OSE, 
TRAINOSE, ERT, ELECTROMECHANICA KYMI LTD, OPEKEPE, KEELPNO, EOT, 
GAIAOSE, ERGOSE, INFORMATION SOCIETY IN GREECE, Unit for the 
Organization and Management of Development Projects S.A.).  

 

Local  government  comprising  municipalities,  prefectures,  and  regional  governments 
including  their  basic  and  special  budgets,  including  all  agencies  and  institutions 
attached thereto, which are classified as local governments according to ESA 95. 

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 

 

 

 

Social security funds comprising all funds that are established as social security funds 
in the registry of ELSTAT. 

Other extra budgetary entities included by ELSTAT under general government, which 
are not yet counted under central government.  

This definition of general (central) government also includes any new funds, or other 
special budgetary and extra budgetary programs that may be created during the 
program period to carry out operations of a fiscal nature. The government will inform 
IMF, European Commission and ECB staff of the creation of any such new funds, 
programs, or entities immediately.  

Supporting material: The Ministry of Finance (MoF) will provide to the European 
Commission, ECB and IMF detailed information on monthly revenues and 
expenditures, domestic and foreign debt redemptions, new domestic and foreign 
debt issuance, change in the domestic and foreign cash balances of the central 
government at the central bank of Greece, all other sources of financing including 
capital transactions, and arrears of the general government. The Ministry of Finance, 
in collaboration with the Ministry of Interior, will provide monthly data on revenues 
and expenditures for local governments, as collected in the Ministry databank. The 
Minister of Finance, in collaboration with the Ministry of Labor and Ministry of Health, 
will provide monthly data on revenues and expenditures in main social security funds 
(including IKA, OGA, OAEE, OAED) and the central healthcare fund (EOPYY). The Bank 
of Greece will provide detailed monthly data on assets and liabilities of local 
authorities, social security funds, the Green Fund (and other extra-budgetary funds), 
and state enterprises included in the definition of general government in line with 
monetary survey data. Data will be provided within four weeks after the closing of 
each month. 

QUANTITATIVE AND CONTINUOUS PERFORMANCE CRITERIA, 
INDICATIVE TARGETS, AND CONTINUOUS PERFORMANCE CRITERIA: 
DEFINITIONS AND REPORTING STANDARDS 
A.   Floor on the Modified General Government Primary Cash Balance 
(Performance Criterion) 

4.       Definition: The modified general government primary cash balance (MGGPCB) is 
defined as the modified general government cash balance (MGGCB) minus interest payments 
by the state budget. The MGGCB is defined as the sum of the cash balances of the ordinary 
state budget, the cash balance of the public investment budget, the change in net financial 
assets of local government, the change in net financial assets of social security, the change in 
net financial assets of the Green Fund, the change in net financial assets of reclassified public 
enterprises (RPEs) minus guarantees called to entities within the general government. 
Privatization receipts, as defined below and the proceeds from the sale of land and buildings 
will be excluded from cash receipts. Net lending operations by the state budget will be 
recorded as cash expenditures.  

170 

  The cash balance of the ordinary state budget. The cash balance of the ordinary 
state budget will be measured from above the line, based on: (i) gross ordinary 
budget revenues (recurrent revenue plus non-recurrent revenue, minus tax refunds 
(excluding any payments for the clearance of tax refunds in arrears); minus (ii) 
ordinary budget expenditures as published monthly on the official website of the 
General Accounting Office of the Ministry of Finance, and in line with the 
corresponding line items established in the ordinary state budget. Ordinary budget 
expenditures will exclude amortization payments, but include: salaries and pensions; 
grants to social security funds, medical care and social protection; operational and 
other expenditure; returned resources; payments in exchange of claims of insurance 
fund for the personnel working in the Public Electricity Company; the reserve, interest 
payments; transfers for the settlement of past debt, payments for military equipment 
procurement on a cash basis; NATO expenses, capital transfers to social security 
funds or other entities by bonds; and called guarantees where the state or central 
government assumes payments on behalf of entities outside of the general 
government.  

  The cash balance of the public investment budget. The cash balance of the public 
investment budget will be measured from above the line, based on investment 
budget revenues minus investment budget expenditures of the investment state 
budget as published monthly on the official website of the General Accounting Office 
of the Ministry of Finance, and in line with the corresponding line items established in 
the investment state budget. 

  The change in net financial assets of local governments is defined on a 

transactions basis, as the change in the total of financial assets minus financial 
liabilities of local authorities adjusted for valuation changes by the Bank of Greece.  

  Financial assets include (but are not limited to) deposits of local governments 
in the Bank of Greece and deposits of local governments in domestic credit 
institutions. Deposits will be measured at face value excluding accrued 
interest in line with recording for monetary survey data.  

  Financial liabilities include (but are not limited to) short- and long-term loans 
from domestic credit institutions to local governments, measured at face 
value, consistent with recording for monetary survey data.  

  The change in net financial assets of social security funds is defined on a 

transactions basis, as the change in the total of financial assets minus financial 
liabilities of social security funds, adjusted for valuation changes by the Bank of 
Greece. 

  Financial assets include  

o  Deposits of social security funds in the Bank of Greece and deposits of 
social security funds in the domestic credit institutions and deposits 
held either directly or indirectly through the IKA mutual fund. 

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Deposits are measured at face value excluding accrued interest, 
consistent with reporting requirements for monetary survey data. 

o  Holdings of shares quoted on the Athens Stock Exchange held by 
social security funds either directly or indirectly through the IKA 
mutual fund.  

o  Direct or indirect holdings of Mutual Fund units issued by Greek 
management companies (other than the IKA mutual fund).  

o  Holdings of central government bonds, including short and long-term 
securities issued domestically, long-term securities issued abroad 
operated from Bank of Greece accounts, and indirect holdings 
through the IKA mutual fund. Holdings will be measured at nominal 
value. 

o  Holdings of bonds issued abroad and other foreign assets. 

  Financial liabilities include the short and long term loans from domestic credit 
institutions to the social security funds, measured consistently with monetary 
survey data. 

  The change in net financial assets of the Green Fund is defined on a transactions 
basis, as the change in the total of financial assets minus financial liabilities of the 
Green Fund, adjusted for valuation changes by the Bank of Greece.  

  Financial assets include  

o  Deposits of the Green Fund in the Bank of Greece and  in domestic 

credit institutions. Deposits will be measured at face value excluding 
accrued interest in line with recording for monetary survey data. 

o  Holdings of shares, held by the Green Fund, quoted on the Athens 

stock exchange. 

o  Holdings of Mutual Fund units issued by Greek management 

companies. 

o  Holdings of central government bonds.  

o  Holdings of other bonds issued abroad. 

  Financial liabilities include the short and long term loans from the domestic 
credit institutions to the Green Fund, measured consistently with monetary 
survey data, or other lending from the Bank of Greece. 

  The change in net financial assets of reclassified public enterprises (RPEs) is 

defined on a transactions basis, as the change in the total of financial assets minus 

172 

financial liabilities of RPEs, adjusted for valuation, minus the amount of guarantees 
called from entities which are consolidated within the general government. RPEs will 
include the following organizations: ELGA, KEELPNO, OPEKEPE (excluding the account 
ELEGEP), EOT, ATTIKO METRO, HELLENIC DEFENCE SYSTEMS S.A., ERT, TRAINOSE, 
ERGOSE, GAIAOSE,  OSY, ELECTROMECHANICA KYMI LTD, INFORMATION SOCIETY 
IN GREECE, MANAGEMENT ORGANISATION UNIT, TAIPED (HRADF) and OSE. 

  Financial assets include  

o  Deposits of RPEs in the Bank of Greece and deposits of RPEs in the 

credit institutions (domestic and foreign). Deposits will be measured 
at face value excluding accrued interest. 

o  Holdings of shares, held by RPEs quoted on the Athens Stock 

Exchange.  

o  Holdings of Mutual Fund units issued by Greek management 

companies.  

o  Holdings of central government bonds.  

o  Holdings of other bonds issued abroad.  

  Financial liabilities include the short and long term loans from the domestic 

credit institutions to RPEs, measured consistently with monetary survey data. 
They also include short and long term loans from the foreign banking system, 
as well as loans from the EIB or other official lenders, as measured by the 
difference between new loans granted to these entities (as approved by the 
GAO in line with the Fiscal Responsibility Act) and amortization of these loans 
through called guarantees of the government or amortization of these loans 
made by actual payments by the companies themselves, upon monitoring 
and information provided by the General Accounting Office (D25).  

5.       Other provisions for the purposes of the program.  

  The MGGPCB will also exclude all transfers related to the Eurogroup decisions of 
February 21, 2012 and November 26, 2012 in regards to income of euro area 
national central banks, including the BoG, stemming from their investment 
portfolio holdings of Greek government bonds. 

  Receipts from privatization are excluded from cash general government revenue 
receipts. However, for the entire program period where this is applicable, sales of 
those gaming licenses, telecom licenses, sales of aircrafts, and extension of the airport 
concession that were established in the context of the May 2010 SBA program or 
the 2011 budget (Second Review) discussions will be recorded as cash revenue 
receipts and taken into account for the MGGPCB criterion, irrespective of whether the 
realized proceeds accrue to the privatization agency or not.  

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  The primary expenditure of the central government excludes payments related to 

bank support. Transactions that may be excluded from the balance include loans to 
financial institutions and investments in equity of financial institutions (requited 
recapitalization); unrequited recapitalization; purchases of troubled assets, and 
operations related to the FSF. Any financial operation by central government to 
support banks, including the issuance of guarantees or provision of liquidity, will be 
immediately reported to IMF, European Commission, and ECB staff.  

  The primary revenue of the central government will exclude any cash payments from 
loss-making banks beyond those which would accrue from the ELA guarantee fee 
structure existing on November 30, 2012 (25 basis points).  

  Capital transfers to social security funds or other entities by bonds shall exclude bond 
issuance for settlement of end-2009 health related arrears, and the settlement related 
to the judiciary liabilities. 

Supporting material. 

  Data on cash balances of the ordinary and state budgets will be provided to the 

European Commission, ECB and IMF by the General Accounting Office in the Ministry 
of Finance within three weeks after the end of each month. Data will include detailed 
information on revenue and expenditure items, in line with monthly reports published 
on the official website of the Ministry of Finance. Data will also include data on capital 
transfers to social security funds or other entities in bonds and called guarantees. 

  Data on net financial assets of local authorities and social security funds, extra-

budgetary funds including the Green Fund, AKAGE, and reclassified public enterprises 
will be provided to the IMF, European Commission and ECB by the GAO in 
cooperation with the Statistics Department of the Bank of Greece within four weeks 
after the end of each month.  

B.   Ceiling of State Budget Primary Spending (Performance Criterion) 

6.       Definition. The state budget primary spending consists of state budget spending 
(spending of the ordinary state budget plus spending of the public investment budget) minus 
interest expenditures paid by the state budget, minus any arrears payments made. Ordinary 
state budget spending includes called guarantees to entities inside the general government 
(as opposed to the definition of the modified general government primary cash balance 
criterion above that excludes this spending item). Primary expenditure of the central 
government that is monitored for the Performance Criterion excludes any cash payments 
related to bank restructuring, when carried out under the program’s banking sector 
restructuring strategy. Costs that may be excluded from the balance include loans to financial 
institutions and investments in equity of listed and non-listed financial institutions (requited 
recapitalization); unrequited recapitalization; and purchase of troubled assets. However, any 
financial operation by central or general government to support banks, including the issuance 
of guarantees or provision of liquidity, will be immediately reported to European 
Commission, ECB and IMF staff.  

174 

  
7.       Supporting material. The General Accounting Office of the Ministry of Finance will 
provide monthly expenditure data of the ordinary and investment state budget, as defined 
above. 

C.   Ceiling on the Stock of Domestic Arrears (narrow definition) 
(Performance Criterion) 

8.       Definition. For the purpose of the program, domestic arrears (narrow definition) are 
defined as: (i) unpaid invoices of line ministries and hospitals that are 90 days past their due 
date; plus (ii) tax refunds for which a refund document “AFEK” has been issued and cleared 
but have not been repaid to the taxpayer.  In case no due date is specified on the supplier 
contract, an unpaid commitment is considered to be in arrears 90 days after the initiation of 
the invoice. The stock of arrears excludes hospital arrears to pharmaceutical companies which 
were incurred by end-2009 (€113 million as of November 30, 2012). Beginning July 1, 2013, 
the definition will include the change in the stock of tax refund claims that have not been 
assessed within 90 days (cumulative from July 1); and beginning January 1, 2014, it will 
include all tax refund claims that have not been assessed within 90 days. In both cases refund 
claims that are under legal dispute will be excluded. 

9.       Supporting material. Monthly data on arrears of public hospitals (NHS hospitals) will 
be provided by the Ministry of Health, and arrears of line ministries by the Ministry of Finance 
within four weeks after the end of each month. The Ministry of Finance will publish this 
information on the Ministry of Finance website. The expenditure arrears data will be based on 
survey data, until data from commitment registers are assessed by the IMF, European 
Commission, and ECB staff to provide comprehensive and reliable information. These reports 
will also include data on accounts payable overdue by 0–30, 31–60, and 61–90 days for the 
central government (line ministries and Decentralized Prefectures) based on the commitment 
registers. Tax refund arrears data will be based on information provided by General 
Secretariat for Information Systems and General Secretariat for Tax and Customs. The 
Ministry of Finance will also provide a monthly table on tax refund arrears as defined above 
(with AFEK issued) as well as on full tax refund accounts payable that include any refund 
claims for which AFEK has not been issued (and showing those that have not been assessed 
after 90 days). 

D.   Ceiling on the Stock of Domestic Arrears of the General 
Government (Indicative Target) 

10.       Definition. For the purpose of the program, domestic arrears of the general 
government are defined as: (i) unpaid invoices of general government entities that are 90 
days past their due date; plus (ii) tax refunds for which a refund document “AFEK” has been 
issued and cleared but have not been repaid to the taxpayer. In case no due date is specified 
on the supplier contract, an unpaid commitment is considered to be in arrears 90 days after 
the initiation of the invoice. The stock of all general government arrears excludes: (i) the 
arrears accumulated by the Civil Servants’ Welfare Fund; and (ii) hospital arrears to 
pharmaceutical companies which were incurred by end-2009 (€113 million as of November 
30, 2012). Beginning July 1, 2013, the definition will include the change in the stock of tax 

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refund claims that have not been assessed within 90 days (cumulative from July 1); and 
beginning January 1, 2014, it will include all tax refund claims that have not been assessed 
within 90 days. In both cases refund claims that are under legal dispute will be excluded. 

11.       Supporting material. The Ministry of Finance will provide consistent data on 
monthly expenditure and tax refund arrears of the general government, as defined above 
within four weeks after the end of each month, and publish this information on the Ministry 
of Finance website. The expenditure arrears data will be based on survey data, until data from 
commitment registers are assessed by the IMF, European Commission, and ECB staff to 
provide comprehensive and reliable information. These reports will also include data on 
accounts payable overdue by 0–30, 31–60, and 61–90 days for the central government (line 
ministries and Decentralized Prefectures), based on the commitment registers. Tax refund 
arrears data will be based on information provided by General Secretariat for Information 
Systems and General Secretariat for Tax and Customs.  

E.   Ceiling on the Overall Stock of Central Government Debt 
(Performance Criterion) 

12.       Definition. The overall stock of central government debt will refer to ESA95 central 
government debt, which includes the state debt, debts of extra budgetary funds and public 
enterprises that are consolidated into the central government, and other ESA 95 adjustments. 
Holdings of intra-government debt will be netted out.  It will be defined for the purposes of 
the program as total outstanding gross debt liabilities. It will include, but not be limited to, 
liabilities in the form of securities and loans. It will exclude accounts payable. Debt will be 
measured at nominal value. The program exchange rates will apply to all non euro-
denominated debt. Inflation indexation will apply to inflation indexed debt, using the relevant 
index as specified in the debt instrument. For the purposes of the program, the ceiling on the 
stock of central government debt will exclude debt arising from payments for bank 
restructuring, when carried out under the program’s banking sector restructuring strategy 
(this does not cover the debt related to the Financial Stability Fund). This includes loans to 
financial institutions and investments in equity of financial institutions (requited 
recapitalization); unrequited recapitalization; and purchase of troubled assets. However, any 
financial operation by the central government to support banks, including the issuance of 
guarantees or provision of liquidity, with the exception of Hellenic Republic intermediation in 
repos between foreign and domestic financial institutions will be immediately reported to 
IMF, European Commission and ECB staff. 

13.       Adjusters. The ceiling on the overall stock of ESA95 central government debt will be 
adjusted upward (downward) by the amount of any upward (downward) revision to the stock 
of end-December 2012 ESA95 central government debt of €311.4 billion.  

14.       Supporting material. Data on the total stock of central government debt will be 
provided to the European Commission, ECB and IMF staff by the General Accounting Office 
consistent with the ESA95 definition no later than 30 days after the end of each month. 

176 

F.   Ceiling on New Central Government Guarantees (Performance 
Criterion) 

15.       Definition. The ceiling on the new central government guarantees shall include new 
guarantees granted by the state, as well as new guarantees granted by any other entity that is 
classified under ESA95 under central government, but exclude guarantees to entities whose 
debt is covered under the ceiling on the stock of central government debt as defined in 
paragraph 15. The ceiling shall exclude: (i) guarantees to support banks; (ii) guarantees 
related to EIB financed loans; (iii) guarantees granted by ETEAN (up to a total amount of 
€50 million provided these are fully backed by an equivalent amount of bank deposits); and 
(iv) guarantees granted under a risk sharing instrument of the EU structural funds (see COM 
(2011) 655 final) that do not create contingent liabilities for the Greek State. New guarantees 
are guarantees extended during the current fiscal year, but for those for which the maturity is 
being extended beyond the initial contractual provisions, only 50 percent of the full value will 
be counted. Modification of existing guarantees (without changing the maturity, amount of 
guarantees, and beneficiaries of the loan) will not be treated as new guarantees. 

16.       Supporting material. All new central government guarantees will be reported in 
detail, identifying amounts and beneficiaries. The General Accounting Office will provide the 
data on a monthly basis within three weeks after the end of each month. Non-state entities 
classified under the central government shall report the new guarantees they extended to the 
General Accounting Office on a monthly basis within three weeks after the end of each 
month. 

G.   Non-Accumulation of External Debt Payment Arrears by the 
General Government (Continuous Performance Criterion) 

17.       Definition. For the purposes of the program, an external debt payment arrear will be 
defined as a payment on debt to non-residents contracted or guaranteed by the general 
government, which has not been made within seven days after falling due. For purposes of 
this program, the term “falling due” means the date in which external debt payments are due 
according to the relevant contractual agreement, including any contractual grace periods. 
The performance criterion will apply on a continuous basis throughout the program period.  

18.       Supporting material. The stock of external arrears of the general government will be 
provided by the General Accounting Office with a lag of not more than seven days.  

H.   Floor on Privatization Proceeds (Indicative Target and 
Performance Criterion) 

19.       Definition. Privatization proceeds will be defined as the cash receipts from the asset 
sales to be carried out by the privatization agency (HRADF), cash receipts from direct 
government sales, and cash receipts from the eventual sale of any bank participations 
through the HFSF, the HRADF, or from the government directly. These will include, but not be 
limited to, the sale of equity of listed or non-listed companies and banks, shareholdings in 
public infrastructure, shareholdings in SPVs, leasehold in commercial real estate and publicly 
held land, sale-lease back operations, securitization of asset-related cash streams, or other 

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assets incorporated in the authorities’ privatization program, as well as sale of rights and 
concessions (including securitization of the proceeds of concessions). Proceeds will be valued 
in euro and reported on a gross basis, excluding any associated capital expenditure or other 
restructuring costs as well as the operating costs of the HRADF including the fees of advisors 
related to the specific privatization. Proceeds will be measured as the inflows of cash received 
by the HRADF as deposited in the Segregated Account at the Bank of Greece within 10  days 
after the settlement of the transaction. 

20.       Supporting material. Quarterly information on the cash receipts from asset sales, 
quarterly balances of the privatization account, inflows to the account (by project), and 
outflows to the state budget, will be made available by the Minister of Finance, in 
collaboration with the HRADF, no later than  60 days after the end of each quarter.  

21.       Other. The privatization agency will provide GAO, analytical data on the gross 
receipts and expenditures of the above mentioned sources, on a monthly basis–by the end of 
the 20th of every next month. 

I.   ESA “Program” Deficit and Overall Monitoring and Reporting 
Requirements 

22.       ESA program deficit. For the purposes of the program, the ESA deficit (EDP B.9) will 
have the following adjustments (i) the sale of non-financial assets such as land, buildings, and 
other concessions or licenses will be excluded, unless these have been agreed in the context 
of the program; (ii) costs related to banking support as defined in MGGPCB above will be 
excluded; (iii) all payments relating to tax refund claims made before September 2012 will be 
excluded; (iv)  the accrual revenue from the PPC levy of a given year will include cash receipts 
within the year plus amounts pertaining to the given year received through March of the 
following year; and (v) all transfers related to the Eurogroup decisions of February 21, 2012 
and November 26, 2012 in regard to income of euro zone national central banks will be 
excluded, including the BoG, stemming from their investment portfolio holdings of Greek 
government bonds (schedule B provides the latest estimates). 

23.       ESA primary balance. For the purpose of the program, the ESA primary balance is 
defined as general government ESA95 balance (EDP B.9) minus ESA 95 general government 
consolidated interest payable (EDP D.41). 

24.       Overall monitoring and reporting requirements. Performance under the program 
will be monitored from data supplied to the EC, ECB, and IMF by ELSTAT, the Ministry of 

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Finance, the General Accounting Office, and Bank of Greece. The authorities will transmit to 
the IMF, EC, and ECB staff any data revisions in a timely manner.  

J.   Floor on Mandatory Exits (Indicative target) 

25.       Definition: Employees counted as mandatory exits to the private sector will originate 
from those that: (i) are employed by the general government (ESA95 definition) on a 
permanent employment contract or on a contract of indefinite duration; and (ii) have no 
entitlement to early retirement within the next 3 years. Mandatory exit means that the 
employee leaves the public sector on an involuntary basis, but includes exits from the 
mobility scheme to the private sector. Mandatory exits are not entitled to severance pay or 
any other form of compensation (if not provided for under current legislation). The count of 
mandatory exits will exclude those employees that leave the public sector because the entity 
they belong to is being privatized or that leave as part of a restructuring ahead of a 
privatization. Further, employees that are separated from the public sector for outsourcing 
will not qualify to be replaced under the 1:1 re-hiring rule. Mandatory exits cannot be rehired 
into the public sector except via a merit-based selection procedure by ASEP, open to external 
candidates.  

179 

20122013201420152016General Government727,458691,493664,950643,367624,000Ordinary staff628,412608,383588,174569,502552,854Other staff71,50356,08950,39848,12246,074Chapter A entities24,91424,39223,74923,11422,443Chapter A fixed term contracts2,6292,6292,6292,6292,629Source: MAREG.Note 1. The number of employees in Chapter A entities will be adjusted for any privatizations.(persons)Annual Overall Employment Ceilings for the General GovernmentNote 2. The number of employees in Chapter A entities will be adjusted for the inclusion of employees of municipal private law legal entities. These employees are already in the wage bill but not yet counted in the Census Data Base.Note 3. Some small private law legal entities are being verified whether they belong in the general government. If so and their employees are already in the wage bill, the above ceilings will be adjusted accordingly.Note 4. The above ceilings are based on GAO projections and reflect the measures of the MTFS 2013-2016 as well as other assumptions that may be updated in cooperation with the EC/ECB/IMF.  
 
 
 
 
K.   Floor on Entrants to the Mobility Scheme (Indicative target) 

26.       Definition: Employees counted as transferred to the mobility scheme will originate 
from those that are employed by the general government (ESA95 definition) on a permanent 
employment contract or on a contract of indefinite duration. Entrance into the labor mobility 
scheme is defined when the employee’s payment is reduced to 75 percent of the 
remuneration in the case of “availability,” or to one-third of the remuneration in the case of 
“disciplinary suspension.” It does not include employees that belong to entities that are in the 
process of being privatized or that are part of a restructuring ahead of a privatization.  

27.       Supporting material The Ministry of Public Administration Reform (MAREG) will 
report on a monthly basis (15 days after the closing of each month) for the mobility scheme 
on entrants (number, entity they previously belonged to, reason for entry) and departures 
(number, reasons for departure, new entity transferred to/exits), and the stock of employees 
currently in the scheme. Further, MAREG will report monthly (15 days after the closing of the 
month) on exits, the number, the general government entity they came from, the reason for 
the exit, if any. GAO will report monthly (15 days after the closing of the month) on any 
severance payments that derive from the exit scheme, where such payments are foreseen in 
law. MAREG will report on a monthly basis (15 days after the closing of the month) the stock 
of general government employees defined as in the Census Data Base. 

180 

Staffing  Plans   total personnel coveredInto           Mobility SchemeExits from government  2013Q1Q2455,89512,500Q3109,1052,000Q485,78712,5002,000Total650,78725,0004,0002014Q11,000Q24,000Q32,000Q44,000Total11,000Sum total650,78725,00015,000Source: MAREG.Mobility and Exit Scheme (Quarterly Targets) 
 
 
 
L.   Prior Actions 

28.       Adopt legislation to achieve a semi-autonomous revenue administration 
(defined as the entire remit of the General Secretariat of Public Revenue), including the 
following steps: 

  Transfer to the revenue administration the following units: 

  Ministry of Finance internal affairs department;  

  All functions, personnel, and budgets allocations associated with the 

following departments of GSIS: Directorate 30, including (i) the department 
for taxation, income, capital and vehicles, including transfers taxation, 
inheritances, donations and property taxation (Department A); (ii) the 
department for VAT and special taxes (Department B); (iii) the customs 
department (Department C); (iv) all revenue-related functions of the 
department for general application (Department F); and all departments of 
the directorate for inputs and control of computer data (Directorate 32).   

  All the tax and customs administrative functions, personnel, and budget 

allocations necessary to exert the competences specified in case β' par. 2 and 
cases α' and δ' of par. 5, article 30 of L. 3296/2004, including: (i) preemptive 
checks and temporary tax audits, especially for withholding and imposed 
taxes, focusing on Value Added Tax (VAT); (ii) checks of transit, imports and 
exports, trading, supply and distribution of products subject to Special 
Consumption Tax (Excise Duty); (iii) checks in customs warehouses; (iv) checks 
the goods under special duty-suspension procedures and implementation of 
customs legislation in general; (v) checks in means of transportation, shops, 
warehouses, etc; and (vi) Confiscation of books, documents, goods, means of 
transportation and other evidence. 

  Create a five member advisory board comprised of high level experts to be appointed 

by the Minister of Finance (two of which will be selected among persons with 
significant international work experience in revenue administration). The SGPR will be 
an ex-officio member of the board. The advisory board will report to the Minister of 
Finance, give advice on major matters of revenue administration strategy including 
human resource issues, monitor performance of the revenue administration against 
plans and targets, support the revenue administration in managing external 
stakeholders, and provide assurance that the SGPR is exercising powers appropriately. 
The Board will have no role in taxpayer specific issues, and will not have access to any 
specific taxpayer information. A ministerial decision will determine the qualifications, 
duration of appointment and compensation for the board members and will specify 
the rules for dealing with conflict of interest, reporting to the Minister, and 
administrative support for the board. The Board members term will be a maximum of 
three years.  

181 

 
 
 
  Provide that any advice of MAREG to the revenue administration on organizational 

matters has to be given within a 14 day time frame.  

  Enable the SGPR to determine the conditions for hiring under the control of ASEP.  

  Create a budget code for budget approval by parliament that encompasses all 

organizational units of the revenue administration (to enable a separate and unified 
budget allocation starting in.   

  Establish a small financial management unit in the revenue administration that 
manages its budget (while maintaining the role of the GDFS as overall budget 
coordinator and financial controller for the Ministry of Finance’s aggregate budget 
appropriation) and has the following functions: (i) coordinates the preparation of the 
revenue administration’s budget; (ii) follows up its implementation; and (iii) proposes 
reallocations of non-wage recurrent spending in line the organic budget law.  

  Authorize the SGPR to determine a grading and promotion system for the revenue 

administration subject to approval by the Minister of Finance.  

  The MoF will restart the institutional reform working group (IRWG), which will be 

chaired by the SGPR, and whose reports will be shared with the Minister and Troika. 
The IRWG will analyze and map the constraints to the operational and administrative 
autonomy of the SGPR and propose immediate solutions. Though not limited to the 
following matters the IRWG examination will incorporate any limits to autonomy 
within: 

  Revenue laws (income tax, VAT, property tax, customs and excise and other 

taxes administered by the SGPR),  

  Other general laws related to human resources and financial management 

within the civil service 

  Powers delegated to the SGPR.  

The IRWG will also determine whether additional changes to law are required to 
authorize SGPR competence for tax administration beyond singular decisions 
affecting taxpayers. 

Monitoring of Structural Benchmarks 

29.       Benchmark on progress in revenue administration, 2012–13. Progress in revenue 
administration in 2012 and 2013 will be defined as reaching or exceeding the targets set in 
Table 1. 

30.       Definitions: 

182 

 
 

 

 

 

 

 

 

A completed audit is defined as an audit reported as formally finalized in the 
ELENXIS audit case management system, including signed off by the audit supervisor, 
and the taxpayer assessment has been issued, or the audit report states that no 
underpayment has occurred.  

  Audit reports which are brought to the Tax Dispute Administration Resolution 
Committee (Article 70A Committee) for settlement after 1 January 2013 are 
defined as a completed audit when the case is submitted to the committee.   

  High Wealth Individual (HWI) audits carried out on a legal person owned or 

controlled by the high wealth individual will also be regarded as an HWI audit 
case if the audit is carried out by the auditor(s) who carry out the audit of the 
relevant high wealth individual.  

The assessment amounts from the audit reports submitted to the Article 70A 
committee are included when reporting on the assessment performance for HWI and 
Large Taxpayer Unit (LTU) audits. The assessment amount is only included for 
reporting on the LTU and HWI audit case collection performance when the final 
assessment is issued following the decision of the committee. These amounts shall be 
adjusted for any difference between the audit report assessment amount and the 
final assessment amount.  

Risk-based audits for large taxpayers are defined as audits selected on a risk basis 
using the ELENXIS audit management system.  

Collection on HWI and LTU full scope audits and temporary audits are amounts 
collected in the year from such LTU and HWI audits completed during the year or 
previous years. 

Collection of tax debt does not include debts such as calls on loan guarantees, fines, 
etc., of non-tax nature for which the tax authority is responsible for collecting on 
behalf of other public sector entities.  

In 2013, new tax debt collection includes collection of debt accrued in the month of 
December, 2012.  

An audit of assets of a manager, director or auditor includes an audit of all assets, 
both movable and immovable, including those of his/her spouse. This will include but 
will not be limited to an examination of all his/her financial accounts for a period of 
up to 10 years from a current date, all immovable assets compared against 
information from State registries and of the acquisition of all moveable assets. The 
purpose of this audit will be to trace and justify the legal acquisition of these assets. 
These audits will be conducted annually by the Internal Affairs Directorate of the MoF. 

31.       Supporting material. Monthly information on risk-based full-scope audits and 
temporary audits of large taxpayers, self employed and high wealth individuals, and VAT non-
filers, collection of assessed taxes and penalties, collection of tax debt, and audits of asset 

183 

 
 
declarations from auditors and managers of local tax offices will be made available by the 
Minister of Finance no later than two weeks after the end of each month. The monthly 
submission will also include, for each local tax office and special unit, the number of audits, 
hours spent on audits, assessed tax specified for income tax and VAT, assessed penalties and 
surcharges, collected tax amount from assessments, collected penalties and surcharges from 
assessments, specified for temporary and full scope audits. 

32.       Benchmark on progress in public financial management, 2012. Progress in 
implementing public financial management reforms in 2012 will be defined as reaching or 
exceeding the targets set in MEFP Table 2. 

33.       Definition. For the purpose of the 2012 target, the reporting institutional units (State 
and general government entities) include any unit under the general government as defined 
in paragraph 32 of the March 2012 TMU. For the purpose of subsequent target, the reporting 
institutional units (state and general government entities) include any unit under the general 
government as defined by ELSTAT as of end-September 2012 whose overall annual spending 
exceeded €1 million in 2011. From March 2013, entries under the e-portal will include all 
fields with financial information as prescribed in the GAO circular of Dec 29, 2010 (protocol 
number 2/91118/0026); this includes inter alia cumulative appropriations released, 
commitments made, the sum of invoices received, and payments made. 

34.       Supporting material. Monthly summary information from the e-portal, surveys, and 
other sources on performance against the above indicators will be published by the General 
Accounting Office of the Ministry of Finance on their website no later than four weeks after 
the end of each month. Data submission will include data back to end-2011. Survey 
information will continue to be provided after June 2013 unless discrepancies between survey 
and e-portal data are fully eliminated. An authoritative list of entities included under general 
government as defined by ELSTAT (including their share of overall annual spending in 2011) 
will be made available by ELSTAT by June 30, 2013.  

G

R

E

E

C

E

G

R

E

E

C

E

184 

 
 
 
  
 
 
  
Occasional Papers 

The following papers have been issued. Copies may be obtained by applying to the address: 
European Commission 
Directorate-General for Economic and Financial Affairs 
Unit Communication  
N105 
B - 1049 Brussels, Belgium 
E-mail: H

Umailto:Ecfin-Info@ec.europa.euU 

Occasional Papers can be accessed and downloaded free of charge at the following address: 

Uhttp://ec.europa.eu/economy_finance/publications/U 

No. 1 

No. 2 

No. 3 

No. 4 

No. 5 

No. 6 

No. 7 

No. 8 

No. 9 

No. 10 

No. 11 

The Western Balkans in transition (January 2003) 

Economic Review of EU Mediterranean Partners (January 2003) 

Annual  Report  on  structural  reforms  2003,  by  Economic  Policy  Committee  (EPC) 
(April 2003) 

Key  structural  challenges  in  the  acceding  countries:  the  integration  of  the  acceding 
countries  into  the  Community’s  economic  policy  co-ordination  processes;  by  EPC 
(July 2003) 

The Western Balkans in transition (January 2004) 

Economic Review of EU Mediterranean Partners (March 2004) 

Annual  report  on  structural  reforms  2004  “reinforcing  implementation”,  by  Economic 
Policy Committee (EPC) (March 2004) 

The Portuguese economy after the boom (April 2004) 

Country  Study:  Denmark  –  Making  work  pay,  getting  more  people  into  work  (October 
2004) 

Rapid  loan  growth  in  Russia:  A  lending  boom  or  a  permanent  financial  deepening? 
(November 2004) 

The structural challenges facing the candidate countries (Bulgaria, Romania, Turkey) – A 
comparative perspective (EPC) (December 2004)  

No. 12 

Annual  report  on  structural  reforms  2005  “Increasing  growth  and  employment”  (EPC) 
(January 2005) 

No. 13 

Towards  economic  and  monetary  union  (EMU)  –  A  chronology  of  major  decisions, 
recommendations or declarations in this field (February 2005) 

No. 14 

Country Study: Spain in EMU: a virtuous long-lasting cycle? (February 2005) 

No. 15 

Improving  the  Stability  and  Growth  Pact:  the  Commission’s  three  pillar  approach 
(March 2005) 

No. 16 

The economic costs of non-Lisbon. A survey of the literature on the economic impact of 
Lisbon-type reforms (March 2005) 

No. 17 

Economic  Review  of  EU  Mediterranean  Partners:  10  years  of  Barcelona  Process:  taking 
stock of economic progress (April 2005) 

H
 
No. 18 

European Neighbourhood Policy: Economic Review of ENP Countries (April 2005) 

No. 19 

The  2005  EPC  projection  of  age-related  expenditure:  agreed  underlying  assumptions  and 
projection methodologies (EPC) (November 2005) 

No. 20 

Consumption, investment and saving in the EU: an assessment (November 2005) 

No. 21 

Responding to the challenges of globalisation (EPC) (December 2005) 

No. 22 

Report on the Lisbon National Reform Programmes 2005 (EPC) (January 2006) 

No. 23 

The Legal Framework for the Enlargement of the Euro Area (April 2006) 

No. 24 

Enlargement, two years after: an economic evaluation (May 2006) 

No. 25 

European Neighbourhood Policy: Economic Review of ENP Countries (June 2006) 

No. 26  What do the sources and uses of funds tell us about credit growth in Central and Eastern 

Europe? (October 2006) 

No. 27 

Growth  and  competitiveness  in  the  Polish  economy:  the  road  to  real  convergence 
(November 2006) 

No. 28 

Country Study: Raising Germany’s Growth Potential (January 2007) 

No. 29 

Growth,  risks  and  governance:  the  role  of  the  financial  sector  in  south  eastern  Europe 
(April 2007) 

No. 30 

European  Neighbourhood  Policy:  Economic  Review  of  EU  Neighbour  Countries 
(June 2007) 

No. 31 

2006 Pre-accession Economic Programmes of candidate countries (June 2007) 

No. 32 

2006 Economic and Fiscal Programmes of potential candidate countries (June 2007) 

No. 33  Main  results  of  the  2007  fiscal  notifications  presented  by  the  candidates  countries  

(June 2007) 

No. 34 

Guiding Principles for Product Market and Sector Monitoring (June 2007) 

No. 35 

Pensions schemes and projection models in EU-25 Member States (EPC) 
(November 2007) 

No. 36 

Progress towards meeting the economic criteria for accession: the assessments of the 2007 
Progress Reports (December 2007) 

No. 37 

The  quality  of  public  finances  -  Findings  of  the  Economic  Policy  Committee-Working 
Group  (2004-2007)  edited  by  Servaas  Deroose  (Directorate-General  Economic  and 
Financial Affairs) and Dr. Christian Kastrop (President of the Economic Policy Committee 
of  the  EU.  Chairman  of  the  EPC-Working  Group  "Quality  of  Public  Finances"  (2004-
2008). Deputy Director General "Public Finance and Economic Affairs", Federal Ministry 
of Finance, Germany) (March 2008) 

No. 38 

2007 Economic and Fiscal Programmes of potential candidate countries: EU Commission's 
assessments (July 2008) 

 
No. 39 

2007  Pre-accession  Economic  Programmes  of  candidate  countries:  EU  Commission 
assessments (July 2008) 

No. 40 

No. 41 

European neighbourhood policy: Economic review of EU neighbour countries  
(August 2008)  

The LIME assessment framework (LAF): a methodological tool to compare, in the context 
of  the  Lisbon  Strategy,  the  performance  of  EU  Member  States  in  terms  of  GDP  and  in 
terms of twenty policy areas affecting growth (October 2008) 

No. 42  

2008  Fiscal  notifications  of 
(November 2008) 

candidate 

countries:  overview 

and 

assessment 

No. 43 

No. 44 

No. 45 

Recent reforms of the tax and benefit systems in the framework of flexicurity   by 
Giuseppe  Carone,  Klara  Stovicek,  Fabiana  Pierini  and 
Commission, Directorate-General for Economic and Financial Affairs) (Febrauary 2009) 

  Etienne  Sail  (European 

Progress towards meeting the economic criteria for accession: the assessments of the 2008 
Progress Reports (European Commission, Directorate-General for Economic and Financial 
Affairs) (March 2009) 

The quality of public finances and economic growth: Proceedings to the annual Workshop 
on  public  finances  (28  November  2008)  edited  by  Salvador  Barrios,  Lucio  Pench  and 
Andrea  Schaechter  (European  Commission,  Directorate-General  for  Economic  and 
Financial Affairs) (March 2009) 

No. 46 

The  Western  Balkans  in  transition  (European  Commission,  Directorate-General  for 
Economic and Financial Affairs) (May 2009) 

No. 47 

The  functioning  of  the  food  supply  chain  and  its  effect  on  food  prices  in  the  European 
Union by Lina Bukeviciute, Adriaan Dierx and Fabienne Ilzkovitz (European Commission, 
Directorate-General for Economic and Financial Affairs) (May 2009) 

No. 48 

Impact of the global crisis on neighbouring countries of the EU by European Commission, 
Directorate-General for Economic and Financial Affairs (June 2009) 

No. 49 

Impact of the current economic and financial crisis on potential output 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(June 2009) 

No. 50  What drives inflation in the New EU Member States? : Proceedings to the workshop held 

on 22 October 2008 (European Commission, Directorate-General for Economic and 
Financial Affairs) (July 2009) 

No. 51 

The EU's response to support the real economy during the economic crisis: an overview of 
Member States' recovery measures by Giuseppe Carone, Nicola Curci, Fabiana Pierini, 
Luis García Lombardero, Anita Halasz, Ariane Labat, Mercedes de Miguel Cabeza, 
Dominique Simonis, Emmanuelle Maincent and Markus Schulte (European Commission, 
Directorate-General for Economic and Financial Affairs) (July 2009) 

No. 52 

2009 Economic and Fiscal Programmes of potential candidate countries: EU Commission's 
assessments (European Commission, Directorate-General for Economic and Financial 
Affairs) (July 2009) 

No. 53 

No. 54 

No. 55 

No. 56 

No. 57 

Economic performance and competition in services in the euro area: Policy lessons in times 
of crisis by Josefa Monteagudo and Adriaan Dierx (European Commission, Directorate-
General for Economic and Financial Affairs) (September 2009) 

An analysis of the efficiency of public spending and national policies in the area of R&D 
by A. Conte, P. Schweizer, A. Dierx and F. Ilzkovitz (European Commission, Directorate-
General for Economic and Financial Affairs) (September 2009) 

2009 Pre-Accession Economic Programmes of candidate countries: EU Commission's 
assessments (European Commission, Directorate-General for Economic and Financial 
Affairs) (October 2009) 

Pension schemes and pension projections in the EU-27 Member States (cid:31) 2008-2060 by the 
Economic Policy Committee (AWG) and Directorate-General Economic and Financial 
Affairs (October 2009) 

Progress towards meeting the economic criteria for accession: the assessments of the 2009 
Progress Reports (European Commission, Directorate-General for Economic and Financial 
Affairs) (November 2009) 

No. 58 

Cross-country study: Economic policy challenges in the Baltics (European Commission, 
Directorate-General for Economic and Financial Affairs) (February 2010) 

No. 59 

No. 60 

No. 61 

No. 62 

No. 63 

No. 64 

The EU's neighbouring economies: emerging from the global crisis 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(April 2010) 

Labour Markets Performance and Migration Flows in Arab Mediterranean Countries: 
Determinants and Effects — Volume 1: Final Report & Thematic Background Papers; 
Volume 2: National Background Papers Maghreb (Morocco, Algeria, Tunisia); Volume 3: 
National Background Papers Mashreq (Egypt, Palestine, Jordan, Lebanon, Syria) by 
Philippe Fargues & Iván Martín (European Commission, Directorate-General for Economic 
and Financial Affairs) (April 2010) 

The Economic Adjustment Programme for Greece                                       
(European Commission, Directorate-General for Economic and Financial Affairs) 
(May 2010) 

The pre-accession economies in the global crisis: from exogenous to endogenous growth?
(European Commission, Directorate-General for Economic and Financial Affairs) 
(June 2010) 

2010 Economic and Fiscal Programmes of potential candidate countries: EU Commission's 
assessments (European Commission, Directorate-General for Economic and Financial 
Affairs) (June 2010) 

Short time working arrangements as response to cyclical fluctuations, a joint paper 
prepared in collaboration by Directorate-General for Economic and Financial Affairs and 
Directorate General for Employment, Social Affairs and Equal Opportunities (June 2010) 

No. 65  Macro structural bottlenecks to growth in EU Member States (European Commission, 

Directorate-General for Economic and Financial Affairs) (July 2010) 

 
No. 66 

No. 67 

No. 68 

No. 69 

No. 70 

No. 71 

No. 72 

No. 73 

External Imbalances and Public Finances in the EU edited by Salvador Barrios, 
Servaas Deroose, Sven Langedijk and Lucio Pench  
(European Commission, Directorate-General for Economic and Financial Affairs) 
(August 2010) 

National fiscal governance reforms across EU Member States. Analysis of the information 
contained in the 2009-2010 Stability and Convergence Programmes by 
Joaquim Ayuso-i-Casals (European Commission, Directorate-General for Economic and 
Financial Affairs) (August 2010) 

The Economic Adjustment Programme for Greece: First review – summer 2010 
(European Commission, Directorate-General for Economic and Financial Affairs (August 
2010) 

2010 Pre-accession Economic Programmes of candidate countries: EU Commission 
assessments (European Commission, Directorate-General for Economic and Financial 
Affairs (September 2010) 

Efficiency and effectiveness of public expenditure on tertiary education in the EU 
(European Commission, Directorate-General for Economic and Financial Affairs and 
Economic Policy Committee (Quality of Public Finances) (November 2010) 

Progress and key challenges in the delivery of adequate and sustainable pensions in Europe 
(Joint Report by the Economic Policy Committee (Ageing Working Group), the Social 
Protection Committee (Indicators Sub-Group) and the Commission services (DG for 
Economic and Financial Affairs and DG Employment, Social Affairs and Equal 
Opportunities), (November 2010)  

The Economic Adjustment Programme for Greece – Second review – autumn 2010 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(December 2010) 

Progress towards meeting the economic criteria for accession: the assessments of the 2010 
Progress Reports and the Opinions (European Commission, Directorate-General for 
Economic and Financial Affairs) (December 2010) 

No. 74 

Joint Report on Health Systems prepared by the European Commission and the Economic 
Policy Committee (AWG) (December 2010) 

No. 75 

Capital flows to converging European economies – from boom to drought and beyond 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(February 2011) 

No. 76 

The Economic Adjustment Programme for Ireland (European Commission, Directorate-
General for Economic and Financial Affairs) (February 2011) 

No. 77 

No. 78 

The Economic Adjustment Programme for Greece Third review – winter 2011 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(February 2011) 

The Economic Adjustment Programme for Ireland—Spring 2011 Review 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(May 2011) 

 
 
No. 79 

No. 80 

No. 81 

The Economic Adjustment Programme for Portugal 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(June 2011) 

2011 Pre-accession Economic Programmes of candidate countries: EU Commission 
assessments 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(June 2011) 

2011 Economic and Fiscal Programmes of potential candidate countries: EU Commission's 
assessments 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(June 2011) 

No. 82 

The Economic Adjustment Programme for Greece – Fourth review – spring 2011 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(July 2011) 

No. 83 

No. 84 

No. 85 

No. 86 

No. 87 

No. 88 

No. 89 

No. 90 

No. 91 

The Economic Adjustment Programme for Portugal - First Review - Summer 2011 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(September 2011) 

Economic Adjustment Programme for Ireland—Summer 2011 Review 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(September 2011) 

Progress towards meeting the economic criteria for accession: the assessments of the 2011 
Progress Reports and the Opinion (Serbia)  
(European Commission, Directorate-General for Economic and Financial Affairs) 
(December 2011) 

The EU's neighbouring economies: coping with new challenges 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(November 2011) 

The Economic Adjustment Programme for Greece: Fifth review – October 2011 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(November 2011) 

Economic Adjustment Programme for Ireland — autumn 2011 Review  
(European Commission, Directorate-General for Economic and Financial Affairs) 
(December 2011) 

The Economic Adjustment Programme for Portugal - Second review - autumn 2011 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(December 2011) 

The Balance of Payments Programme for Romania. First Review - autumn 2011 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(December 2011) 

Fiscal frameworks across Member States: Commission services’ country fiches from the 
2011 EPC peer review (European Commission, Directorate-General for Economic and 
Financial Affairs) (February 2012) 

 
 
 
 
 
No. 92 

Scoreboard for the Surveillance of Macroeconomic Imbalances (European Commission, 
Directorate-General for Economic and Financial Affairs) (February 2012) 

No. 93 

No.94 

No. 95 

No. 96 

No. 97 

No. 98 

Economic Adjustment Programme for Ireland — Winter 2011 Review 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(March 2012) 

The Second Economic Adjustment Programme for Greece — March 2012 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(March 2012) 

The Economic Adjustment Programme for Portugal — Third review. Winter 2011/2012 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(April 2012) 

Economic Adjustment Programme for Ireland — Spring 2012 Review  
(European Commission, Directorate-General for Economic and Financial Affairs) 
(June 2012) 

2012 Economic and Fiscal Programmes of Albania, Bosnia and Herzegovina: EU 
Commission's overview and country assessments (European Commission, Directorate-
General for Economic and Financial Affairs) (June 2012) 

2012 Pre-accession Economic Programmes of Croatia, Iceland, the Former Yugoslav 
Republic of Macedonia, Montenegro, Serbia and Turkey: EU Commission's overview and 
assessments (European Commission, Directorate-General for Economic and Financial 
Affairs) (June 2012) 

No. 99  Macroeconomic imbalances – Belgium (European Commission, Directorate-General for 

Economic and Financial Affairs) (July 2012) 

No. 100  Macroeconomic imbalances – Bulgaria (European Commission, Directorate-General for 

Economic and Financial Affairs) (July 2012) 

No. 101  Macroeconomic imbalances – Cyprus (European Commission, Directorate-General for 

Economic and Financial Affairs) (July 2012) 

No. 102  Macroeconomic imbalances – Denmark (European Commission, Directorate-General for 

Economic and Financial Affairs) (July 2012) 

No. 103  Macroeconomic imbalances – Spain (European Commission, Directorate-General for 

Economic and Financial Affairs) (July 2012) 

No. 104  Macroeconomic imbalances – Finland (European Commission, Directorate-General for 

Economic and Financial Affairs) (July 2012) 

No. 105  Macroeconomic imbalances – France (European Commission, Directorate-General for 

Economic and Financial Affairs) (July 2012) 

No. 106  Macroeconomic imbalances – Hungary (European Commission, Directorate-General for 

Economic and Financial Affairs) (July 2012) 

No. 107  Macroeconomic imbalances – Italy (European Commission, Directorate-General for 

Economic and Financial Affairs) (July 2012) 

No. 108  Macroeconomic imbalances – Sweden (European Commission, Directorate-General for 

Economic and Financial Affairs) (July 2012) 

No. 109  Macroeconomic imbalances – Slovenia (European Commission, Directorate-General for 

Economic and Financial Affairs) (July 2012) 

No. 110  Macroeconomic imbalances – United Kingdom (European Commission, 

Directorate-General for Economic and Financial Affairs) (July 2012) 

No. 111  The Economic Adjustment Programme for Portugal. Fourth review – Spring 2012 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(July 2012) 

No. 112     Measuring the macroeconomic resilience of industrial sectors in the EU and assessing the 

role of product market regulations (Fabio Canova, Leonor Coutinho,    
Zenon Kontolemis, Universitat Pompeu Fabra and Europrism Research 
(European Commission, Directorate-General for Economic and Financial 
Affairs) (July 2012) 

No. 113     Fiscal Frameworks in the European Union: May 2012 update on priority countries 

(Addendum to Occasional Papers No.91) (European Commission, Directorate-General for 
Economic and Financial Affairs) (July 2012) 

No. 114     Improving tax governance in EU Member States: Criteria for successful policies by 

Jonas Jensen and Florian Wöhlbier (European Commission, Directorate-General        
for Economic and Financial Affairs) (August 2012) 

No. 115   

 Economic Adjustment Programme for Ireland — Summer 2012 Review 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(September 2012) 

No. 116    The Balance of Payments Programme for Romania. First Review - Spring 2012 

(European Commission, Directorate-General for Economic and Financial Affairs) (October 
2012) 

No. 117     The Economic Adjustment Programme for Portugal. Fifth review – Summer 2012 

(European Commission, Directorate-General for Economic and Financial Affairs) (October 
2012) 

No. 118     The Financial Sector Adjustment Programme for Spain (European Commission, 

Directorate-General for Economic and Financial Affairs) (October 2012) 

No. 119  Possible reforms of real estate taxation: Criteria for successful policies 

(European Commission, Directorate-General for Economic and Financial Affairs)  
(October 2012) 

No. 120  EU Balance-of-Payments assistance for Latvia: Foundations of success  

(European Commission, Directorate-General for Economic and Financial Affairs)  
(November 2012) 

No. 121  Financial Assistance Programme for the Recapitalisation of Financial Institutions in Spain. 

First review - Autumn 2012 (European Commission, Directorate-General for Economic 
and Financial Affairs) (November 2012) 

 
   
 
    
    
    
 
No. 122  Progress towards meeting the economic criteria for EU accession: the EU Commission's 

2012 assessments (European Commission, Directorate-General for Economic and Financial 
Affairs) (December 2012) 

No. 123  The Second Economic Adjustment Programme for Greece. First Review - December 2012 

(European Commission, Directorate-General for Economic and Financial Affairs) 
(December 2012) 

No. 124  The Economic Adjustment Programme for Portugal. Sixth Review – Autumn 2012 
(European Commission, Directorate-General for Economic and Financial Affairs) 
(December 2012) 

No. 125  The Quality of Public Expenditures in the EU (European Commission, Directorate-General 

for Economic and Financial Affairs) (December 2012) 

No. 126  Financial Assistance Programme for the Recapitalisation of Financial Institutions in Spain. 
Update on Spain's compliance with the Programme - Winter 2013 (European Commission, 
Directorate-General for Economic and Financial Affairs) (January 2013) 

No. 127  Economic Adjustment Programme for Ireland — Autumn 2012 Review  

(European Commission, Directorate-General for Economic and Financial Affairs) (January 
2013) 

No. 128 

Interim Progress Report on the implementation of Council Directive 2011/85/EU on 
requirements for budgetary frameworks of the Member States. (European Commission, 
Directorate-General for Economic and Financial Affairs) (February 2013) 

No. 129  Market Functioning in Network Industries - Electronic Communications, Energy and 
Transport. (European Commission, Directorate General for Economic and Financial 
Affairs) (February 2013) 

No. 130  Financial Assistance Programme for the Recapitalisation of Financial Institutions in Spain. 

Second Review of the Programme - Spring 2013 (European Commission, Directorate 
General for Economic and Financial Affairs) (March 2013) 

No. 131  Economic Adjustment Programme for Ireland – Winter 2012 Review (European 

Commission, Directorate General for Economic and Financial Affairs) (April 2013) 

No. 132  Macroeconomic Imbalances – Bulgaria 2013 (European Commission, Directorate General 

for Economic and Financial Affairs) (April 2013) 

No. 133  Macroeconomic Imbalances – Denmark 2013 (European Commission, Directorate General 

for Economic and Financial Affairs) (April 2013) 

No. 134  Macroeconomic Imbalances – Spain 2013 (European Commission, Directorate General for 

Economic and Financial Affairs) (April 2013) 

No. 135  Macroeconomic Imbalances – Finland 2013 (European Commission, Directorate General 

for Economic and Financial Affairs) (April 2013) 

No. 136  Macroeconomic Imbalances – France 2013 (European Commission, Directorate General 

for Economic and Financial Affairs) (April 2013) 

No. 137  Macroeconomic Imbalances – Hungary 2013 (European Commission, Directorate General 

for Economic and Financial Affairs) (April 2013) 

No. 138  Macroeconomic Imbalances – Italy 2013 (European Commission, Directorate General for 

Economic and Financial Affairs) (April 2013) 

No. 139  Macroeconomic Imbalances – Malta 2013 (European Commission, Directorate General for 

Economic and Financial Affairs) (April 2013) 

No. 140  Macroeconomic Imbalances – Netherlands 2013 (European Commission, Directorate 

General for Economic and Financial Affairs) (April 2013) 

No. 141  Macroeconomic Imbalances – Sweden 2013 (European Commission, Directorate General 

for Economic and Financial Affairs) (April 2013) 

No. 142  Macroeconomic Imbalances – Slovenia 2013 (European Commission, Directorate General 

for Economic and Financial Affairs) (April 2013) 

No. 143  Macroeconomic Imbalances – United Kingdom 2013 (European Commission, Directorate 

General for Economic and Financial Affairs) (April 2013) 

No. 144  Macroeconomic Imbalances – Belgium 2013 (European Commission, Directorate General 

for Economic and Financial Affairs) (April 2013) 

No. 145  Member States' Energy Dependence: An Indicator-Based Assessment (European 

Commission, Directorate General for Economic and Financial Affairs) (April 2013) 

No. 146  Benchmarks for the assessment of wage developments (European Commission, Directorate 

General for Economic and Financial Affairs) (May 2013) 

No. 147  The Two-Pack on economic governance: Establishing an EU framework for dealing with 

threats to financial stability in euro area member states (European Commission, Directorate 
General for Economic and Financial Affairs) (May 2013) 

No. 148  The Second Economic Adjustment Programme for Greece – Second Review   – May 2013 
(European Commission, Directorate General for Economic and Financial Affairs) 
(May 2013) 

 
 
 
 
 
 
 
European Commission 

European Economy — Occasional Papers No. 148 — The Second Economic 
Adjustment Programme for Greece – Second Review – May 2013 

Luxembourg: Publications Office of the European Union 

2013 — 192 pp. — 21 x 29.7 cm 

ISBN 978-92-79-29346-7 
doi: 10.2765/49914