COMMUNICATION FROM THE COMMISSION Enhanced Surveillance - Greece, April 2019
Date: 2019-04-03
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Euro Group (euro area), Greece, economic recovery, gross domestic product, macroeconomics, multilateral surveillance, public debt, stability programme, structural adjustment, sustainable development

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 3.4.2019  COM(2019) 170 final  COMMUNICATION FROM THE COMMISSION Enhanced Surveillance - Greece, April 2019  
 
 
Background 

The  Commission  adopted  its  second  enhanced  surveillance  report  for  Greece  on  27  February 
2019.1  Alongside  the  integration  of  Greece  into  the  European  Semester,  enhanced  surveillance 
provides  a  comprehensive  framework  for  monitoring  economic  developments  and  the  pursuit  of 
policies  needed  to  ensure  a  sustainable  economic  recovery.2  It  also  provides  the  framework  for  the 
Commission to assess the commitment given by Greece to the Eurogroup of 22 June 2018 to continue 
and complete reforms adopted under the European Stability Mechanism stability support programme 
and  to  safeguard  the  objectives  of  the  reforms  adopted  under  that  programme  and  its  predecessors, 
pursuant to Article 3.1 of Regulation 472/2013. This includes the implementation of specific reform 
commitments annexed to the Eurogroup statement of 22 June 2018 in the areas of (i) fiscal and fiscal-
structural  policies,  (ii)  social  welfare,  (iii)  financial  stability,  (iv)  labour  and  product  markets,  (v) 
privatisation and (vi) public administration.3 

The  enhanced  surveillance  report  of  27  February  2019  concluded  that  Greece  had  made 
considerable progress in completing the implementation of its specific reform commitments due 
by  end-2018.  More  specifically  it  concluded  that  the  following  specific  commitments  for  end-2018 
could be considered as having been achieved: (i) the adoption of a budget for 2019 which should reach 
a primary surplus target of 3.5% of GDP; (ii) the non-accumulation of net arrears, although additional 
efforts are still needed to clear the backlog and avoid the build-up of new arrears; (iii) the opening of a 
critical mass of primary health care centres (TOMYs); (iv) the completion of important steps to ensure 
centralised  health  care  procurement;  (v)  the  relaxation  of  capital  controls  in  line  with  the  agreed 
roadmap; (vi) the definition and adoption of the divestment strategy of the Hellenic Financial Stability 
Fund  (HFSF),  with  the  potential involvement  of the  authorities  in  the  final  stage  of  the  divestments 
still under consideration; (vii) the adoption of enabling legislation for investment licensing; (viii) the 
revision of the minimum wage formally in line with the legislated procedure, although the magnitude 
of the increase raises risks for employment and competitiveness; (ix) the completion of phase I of the 
e-justice project; (x) the implementation of the strategic plan of the Hellenic Corporation for Assets 
and Participations (HCAP); (xi) the restructuring of the real-estate subsidiary ETAD and launch of the 
implementation  of  the  coordination  mechanism  for  State-owned  enterprises  falling  under  HCAP  in 
light  of  delays  in  the  transfer  of  the  Olympic  Centre  (OAKA);  (xii),  the  updating  of  the  Asset 
Development Plan of the privatisation agency (TAIPED), the completion of key privatisation tenders 
including  the  gas  transmission  network  (DESFA)  and  the  extension  of  the  concession  for  Athens 
International Airport, as well as the completion of key steps related to the Hellinikon project; and (xiii) 
the  authorities  have  agreed  with  the  Commission  on  the  modalities  to  carry  out  an  independent 
assessment  of  the  appointment  process  for  the  Administrative  Secretaries  and  Director  Generals  by 
mid-2019, and have adopted key legislation to improve recruitment planning in the public sector and 
linking the multi-annual hiring plan with the Medium-Term Fiscal Strategy (MTFS). 

The enhanced surveillance report of 27 February 2019, however, also concluded that a number 
of  specific  reform  commitments  due  by  end-2018  remained  open  and  would  need  to  be 

1
 Communication from the Commission COM(2019)201 and accompanying Staff Working Document SWD(2019)201 of 27 February 2019. 
2
 The European Central Bank (ECB) participates in enhanced surveillance in liaison and in accordance with the ECB’s competences and thus 
provides expertise on financial sector policies and macro-critical issues, such as headline fiscal targets and sustainability and financing 
needs. The European Stability Mechanism (ESM) participates in the context of the ESM's Early Warning System and in accordance with 
the Memorandum of Understanding of 27 April 2018 on working relations between the European Commission and ESM. 

  https://www.consilium.europa.eu/media/35749/z-councils-council-configurations-ecofin-eurogroup-2018-180621-specific-commitments-
to-ensure-the-continuity-and-completion-of-reforms-adopted-under-the-esm-programme_2.pdf  

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completed.  The  open  issues  at  the  time  related  to  measures  in  the  areas  of  revenue  administration, 
financial  stability,  energy,  privatisation  and  public  administration.  On  some  commitments,  technical 
steps  were  to  be  completed  (restructuring  of  the  gas  company  DEPA;  Egnatia  motorway;  HFSF 
appointments),  while  on  others,  substantive  discussions  were  still  ongoing  (revenue  and  public 
administration; lignite divestiture; financial sector including primary residence protection).  

The  enhanced  surveillance  report  of  27 February 2019  also flagged  that  developments in  some 
areas raise  concerns  about  the  orientation  and  delivery  of  reforms  over  the  the medium-term. 
These concerns warrant the full attention of the authorities and relate to (a) the level of ambition in 
tackling  remaining  structural  fiscal  challenges  and  avoiding  the  creation  of  new  fiscal  risks  which 
could  emerge  from  Court  rulings,  recruitments  in  the  public  sector  and  potential  changes  to 
installement schemes for tax and social-security debts; (b) the pace of progress and degree of priority 
attached to measures needed to restore the strength and resilience of the banking sector, in particular 
regarding asset quality; and (c) the commitment to safeguard wage competitiveness over the medium 
term and to establish an environment which is genuinely business and investment-friendly. 

This  update  assesses  developments  in  the  implementation  of  the  specific  reform  commitments 
due by end-2018 since the adoption of the enhanced surveillance report on 27 February 2019. In 
particular,  Greece  has  (i)  adopted  primary  and  secondary  legislation  to  strengthen  the  Independent 
Authority for Public Revenue; (ii) provided relevant updates on measures to support non-performing 
loans (NPL) resolution and banking sector stability (e-auctions, state guarantees, household insolvency 
action plan); (iii) adopted primary, and have committed to adopting shortly secondary, legislation on a 
new scheme for primary residence protection; (iv) taken the necessary steps to fill the vacant positions 
at the HFSF;  (v) relaunched the tender for the divestiture of part of the Public Power Corporation’s 
lignite-based  generation  capacity;  (vi)  adopted  the  legislation  for  the  restructuring  of  DEPA,  (vii) 
taken  forward  actions  to  remove  obstacles  to  the  Egnatia  transation;  and  (viii)  adopted  a  range  of 
measures to advance public administration reform. 

Greece has taken the necessary actions to achieve all specific reform commitments for end-2018.  

The  Eurogroup  of  22  June  2018  agreed  that  the  package  of  debt  relief  measures  for  Greece 
should  include  incentives  to  ensure  a  strong  and  continuous  implementation  of  the  reform 
measures agreed in the programme. To that end, certain policy-contingent debt measures are made 
available  to  Greece  on  a  semi-annual  basis  up  to  mid-2022,  subject  to  compliance  with  its 
commitments  on  reform  continuity  and  completion,  based  on  positive  reports  under  enhanced 
surveillance. Those debt measures include: (i) the return of income equivalent amounts stemming from 
central banks' holdings of Greek government bonds under the Securities Markets Programme and the 
Agreement on Net Financial Assets and (ii) a reduction to zero of the step-up interest rate margin for 
certain  loan  instalments  provided  by  the  European  Financial  Stability  Facility.  The  contents  of  the 
enhanced  surveillance  report  of  27  February  2019  and  this  subsequent  update  could  be  used  by  the 
Eurogroup to agree on the release of a first tranche of policy-contingent debt measures. 

An update on progress with the implementation of specific reform commitments 

Public revenue administration 

While the end-2018 specific commitment to reach a staffing level of 12,000 permanent employees 
at the Independent Authority for Public Revenue (IAPR) has not yet been reached (the end-2018 
staffing  level  was  at  11,487),  the  authorities  have  now  adopted  a  full  set  of  complementary 
measures.  These  will  support  compliance  with  the  staffing  commitment,  strengthen  the  broader 

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reform of revenue collection and enhance the overall operational capacity and efficiency of the IAPR 
across a number of dimensions. By the time of the enhanced surveillance report on 27 February 2019, 
the  authorities  had  already  taken  a  number  of  these  actions  (adoption  of  the  reform  action  plan 
("Blueprint")  for  2019-2021;  agreement  with  the  General  Secretariat  for  Information  Services  on an 
annual IT envelope).  Since the adoption of the enhanced surveillance report on 27 February 2019, the 
authorities have completed the remaining agreed complementary measures to strengthen the IAPR: 

  The introduction of grading, remuneration and performance assessment tailored to the IAPR is 
seen as essential in order to enhance IAPR's prospects to attract highly-qualified staff and to 
allow  for  their  development  and  progression.  A  legislative  amendment  to  IAPR's  enabling 
legislation  was  adopted  in  early  March  2019.  Subsequently,  that  amendment  will  allow  the 
adoption of secondary legislation to introduce a new grading scheme directly  linked with the 
job  descriptions.  This  reform  is  closely  connected  to  the  public  administration  reform  area, 
and in particular the appointment of senior managers in the public sectors. 

  Legislative  amendments  on  liability  protection  and  facilitating  mobility  were  agreed  and 

adopted in early March 2019. 

  A Joint Ministerial Decision on the procurement of fuel markers was adopted in early March, 

which will provide an important tool in the fight against smuggling. 

The NPL resolution framework 

The  enhanced  surveillance  report  had  concluded  that  shortcomings  in  the  legal  frameworks 
relevant to  NPL  resolution  should  be  addressed.  Since the  adoption  of  the  enhanced  surveillance 
report on 27 February 2019, the authorities have taken further actions in several areas. These actions 
are  considered  as  sufficient  for  the  purposes  of  meeting  the  specific  commitment  to  support  NPL 
resolution: however, close monitoring and follow-up will be required going forward, and the European 
institutions will report back in the context of enhanced surveillance. Specifically:  

  The  authorities  have  adopted  a  legislative  amendment  and  have  provided  an  updated  action 
plan on the processing of State-guaranteed loans. Its effectiveness in practice towards a full 
clearance of the pending stock of called guarantees will be assessed in the coming months. 

  Regarding e-auctions, a way forward has been outlined to address the issue of court-ordered 
auction postponements which result from the filing of debtors’ petitions for a revision of the 
reserve price in the context of the upcoming evaluation of the implementation of the Code of 
Civil Procedure. The authorities are expected to present and adopt as needed in the context of 
the third enhanced surveillance cycle proposals for implementing measures to deter procedural 
abuse by strategic defaulters via last-minute petitions for postponements in the context of the 
implementation  of  the  new  system  of  primary  residence  protection  and  of  the  existing 
household  insolvency  (Katseli)  law.  The  authorities  will  also  undertake  further  analysis 
regarding  the  reasons  for  failed  auctions  and  address  them  including  through  legislative 
means, where necessary.  

  Data on pending cases in the context of the  household insolvency framework, as well as a 
target trajectory for the elimination of the backlog until 2021 as envisaged in the action plan, 
were delivered  by  the  authorities, based  on  the assumption  of  an  improved  infrastructure.  A 
revised action plan is expected to be delivered by the authorities by mid-2019, also taking into 
account the impact of the new scheme on primary residence protection. 

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  On the NPL sales and securitisation laws, required clarifications were communicated to the 
Hellenic Banking Association and uploaded it on the website of the Ministry of Finance. Their 
effectiveness will be assessed in the coming months. 

Non-performing loans: primary residence protection 

Greece  has  adopted  legislation  to  establish  a  new  system  for  the  protection  of  some  primary 
residences  which  aims  to  support  the  restructuring  of  non-performing  loans.  This  follows  the 
expiry of provisions on the protection of primary residences under the Household Insolvency (Katseli) 
law,  which  was  intended  to  be  temporary  and  expired  at  the  end  of  February  2019  following  an 
exceptional two-month extension. The primary legislation for the scheme was adopted on 29 March 
and  secondary  legislative  acts  on  the  specifications  of  the  designated  electronic  platform,  the  State 
subsidy and the manner of valuation of certain assets included in the wealth criteria are to be adopted 
shortly thereafter. 

The new scheme is unique to Greece. In brief, borrowers who are natural persons and whose loans 
are  secured  with  collateral  on  the  primary  residence  and  were  in  arrears  on  31  December  2018  can 
apply to the scheme through an electronic platform. Provided they meet certain eligibility criteria, they 
can apply to benefit from  a restructuring and write-off of their mortgage debts (housing or business 
loans), either following agreement on standardised restructuring proposals to be extended by creditors 
through an online platform or, absent that agreement, by taking recourse to the courts; debtors would 
also  benefit  from  the  protection  of  foreclosure  on  their  primary  residence  as  long  as  they  make 
instalment payments on the restructured debts. For part of the instalments the borrowers would receive 
a  State  subsidy.  Discussions  over  the  past  few  weeks  served  to  clarify  key  issues,  with  a  view  to 
ensuring that the scheme is genuinely temporary, properly targeted, and contains adequate safeguards 
to  prevent  abuses  by  strategic  defaulters  and  the  creation  of  new  backlogs  at  the  courts  as  well  as 
supporting incentives for payment discipline.  

The main parameters of the new scheme are as follows: 

  The  scheme  covers  both  household  and  business  loans  collateralised  by  primary 
residences. The extension of the perimeter to business loans raises particular concerns which 
have been communicated to the Greek authorities. It involves the expansion of the scope of the 
protection  on  primary  residences  to  a  new  category  of  borrowers  not  covered  by  the  earlier 
Katseli  legislation  (business  loans  recipients)  and  without  assessing  the  viability  of  the 
businesses: it is therefore less clear how many applications there will be and thus how well the 
capacity of the system (including courts and the state  subsidy mechanism) will cope. It also 
warrants  particular  attention  from  a  financial  stability  perspective,  as  the  available  impact 
assessments  indicate  that  larger  debt  write-offs  will  be  required  compared  to  residential 
mortgage  loans,  and  thus  the  estimated  impact  on  banks’  capital  is  comparatively  high. 
Moreover, if the scheme does not function well, there is a risk that banks in the future would 
be  less  willing  to  provide  loans  to  small  business  where  the  primary  residence  is  used  as 
collateral and thus secured lending activity might be adversely affected. Finally, there are risks 
that the availability of the new scheme for business loans will reduce the incentives of eligible 
debtors to use the out-of-court framework which allows for the restructuring potential arrears 
also  with  respect  to  taxes  and  social  security  contributions.  The  most  binding  criterion  for 
eligibility  is  the  size  of  the  outstanding  loans,  which  is  set  at  EUR 130,000  per  creditor  for 
residential mortgage loans and EUR 100,000 for business loans, thereby mitigating the risks 
associated to this loan category to some extent. According to available estimates, the perimeter 

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of  eligible  debtors  with  obligations  to  more  than  one  creditor  would  be  narrow  and  the 
adoption of a threshold per creditor would simplify the automatic processing of applications 
under  the  platform.  The  institutions  expressed  concerns  about  allowing  the  threshold  for  a 
multiple  of  creditors  and  have  requested  additional  information  from  the  authorities  on 
coverage and impact. 

  The  scheme  establishes  eligibility  criteria  for  household  income  and  wealth  other  than 
the  primary  residence,  as  well  as  a  threshold  for  the  value  of  the  property.  The  wealth 
threshold is  set  at  EUR 15,000  for  the  liquid assets  of  the  borrower,  spouse  and  dependents 
and EUR 80,000 for immovable assets and transportation vehicles at the time of application. 
The  European  institutions  have  drawn  the  attention  of  the  authorities  to  the  implications  of 
their policy choice on incentives for payment discipline and on the distributional implications 
of providing a State subsidy for 20 years to borrowers who may have reasonably large wealth 
in addition to their primary residence. The income threshold is based on the conditions set out 
in the Katseli law, i.e. depending on the household size with a cap of EUR 36,000 annually.4 
The  threshold  for  the  value  of  the  protected  residence  is  set  at  a  uniform  value  of  EUR 
250,000  for  household  loans,  hence  having  a  wider  scope  than  the  Katseli  law  (whose 
threshold  is  EUR  180,000  plus  additions  for  family  size).  In  the  case  of  business  loans  the 
threshold is set at a uniform value of EUR 175,000. 

  The scheme is open to debtors who as public employees received a mortgage not from a 
bank,  but  from  a  public  fund  under  preferential  conditions.  The  European  institutions 
have  drawn  the  attention  of  the  authorities  to  the  fact  that  this  does  not  target  the  country's 
NPL  challenge  which  refers  to  bank  credits,  and  may  have  repercussions  for  incentives  to 
maintain payment discipline.  

  The  scheme  is  designed to  be  temporary.  Applications  can  be  submitted  by  31  December 
2019, for loans that have been overdue for 90 days or more by 31 December 2018. This will 
allow to report back on the expiry of the scheme in the context of monitoring the end-2019 
specific commitments under enhanced surveillance. 

  Based  on  restructuring offers from the  banks, instalments will  be  supported  by  a state 
subsidy  in  a  progressive  manner  dependent  on  income  (on  average  estimated  at  around 
30%).  The  scheme  applies  a  mandatory  haircut  for  the  principal  exceeding  a  loan-to-value 
ratio of 120%. Moreover, the instalments will have a standard duration of 20 years capped at 
the 80th year of the debtor’s age. The approach has the potential to help overcome delays in 
NPL  reduction  by  offering  a  standardised  solution.  However,  contrary  to  standard  banking 
practice, it does not give full regard to the debtor’s overall payment capacity, and it gives no 
regard to the viability of borrowers of business loans, as it applies the same restructuring and 
write-off  horizontally.  This  was  designed  to  facilitate  a  large  number  of  restructurings  in  a 
limited period of time.   

  The electronic platform should be operational by end-April 2019. It is intended to operate 
in a fully automated manner in assessing compliance with eligibility criteria and will have the 
capability of accessing information pertinent to the applicants from other public sector and/or 
banking sector databases. The platform will notify creditors of pending applications and will 
provide them with the relevant data collection to enable them to formulate their proposal to the 

4
 The equivalised median income for a household of the size eligible for the highest threshold (two adults and three dependents) is around 

EUR 18-20,000, depending on the age of the children. 

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debtors. The platform is also intended to be used to filter pending Katseli cases with reference 
to their quantitative elements; if implemented properly, this aspect will help courts to discover 
abusive  applications  made  under  the  household  insolvency  law  and  allow  the  speedier 
resolution of these cases. 

  An efficient operation of the platform could in principle result in a satisfactory number 
of  restructurings  and with  limited  yet  non-negligible  risks  of subsequent  litigation  that 
could add to existing backlogs. Should the platform procedure fail to result in a restructuring 
agreement,  the  debtor  is  entitled  to  file  a  request  for  restructuring  with  the  competent 
magistrate’s court. The appointment of the hearing date and the issuance of the court decision 
must ensue within strict time periods (six months from the filing of the application and three 
months  from  the  hearing  of  the  case  respectively).  Temporary  stays  of  enforcement  may  be 
granted  under  specific  conditions  and  requiring,  in  the  case  of  debtors  who  were  deemed 
eligible  but  failed  to  attain  a  restructuring  under  the  platform,  the  payment  of  monthly 
instalments  or  the  payment  of  a  portion  of  the  outstanding  amount,  depending  on 
circumstances. The legislation provides some safeguards againts frivolous or mala fide filings 
as  these  can  be  sanctioned  by  the  court  through  the  imposition  of  a  penalty.  However,  it  is 
warranted  to  closely  monitor  potential  new  litigation  generated  under  the  scheme  and  the 
impact  on  enforcement  in  both  the  short  and  the  long  term,  as  both  of  these  elements  are 
relevant for future lending activity and the NPL reduction process. 

  Available  estimates  confirm  that  the  fiscal  cost  of  the  subsidy  will  be  within  the 
ensivaged  budgetary  envelope  of  EUR  150  million  for  2019  and  EUR  200  million 
annually  thereafter.  The  calibration  of  the  subsidy  should  be  set  out  in  the  secondary 
legislation  and  will  require  careful  monitoring,  as  the  available  estimates  are  subject  to 
uncertainties in view of incomplete data availability. 

Overall, the new legislative scheme has the potential to support NPL restructuring, though some 
risks to financial stability and payment discipline remain. Considerable progress was made during 
the  preparatory  phase  of  drafting  the  legislation  to  mitigate  implementation  and  litigation  risks 
identified  in  an  opinion  of  the  ECB5  on  an  earlier  draft  of  the  law,  concerns  which  related  to  the 
potential  impact  of  the  scheme  on  financial  stability  and  payment  discipline,  as  well  as  to  risks  of 
abuses by strategic defaulters. It should be underlined, however, that these risks have been mitigated to 
some extent, but not eliminated, in the legislation which was adopted: the uniqueness of the scheme 
means there is uncertainty on how it it will work in practice and thus on the scale and possibility to 
quantify these risks. 

Going  forward,  remaining  technical  details,  particularly  relating  to  the  operationality  and 
functionality  of  the  platform,  should  be  worked  out  swiftly,  and  the  technical  implementation 
should be set up as quickly as possible. Implementation will need to be closely monitored, in terms 
of  operational  aspects  (functioning  of  the  platform,  speed  of  resolution),  the  impact  on  the  banks’ 
capital,  the  impact  on  enforcement  and  litigation,  and  the  fiscal  cost  of  the  subsidy.  The  European 
institutions  will  provide  updates  on  the  implementation  of  the  scheme  and  possible  concerns  in  the 
context of enhanced surveillance. The Greek authorities are invited to commit to not extend further the 
duration  or  scope  of  the  new  scheme  and  to  take  corrective  actions,  including  legislation,  if 
implementation or legal problems arise with the scheme and to. Finally, it should be recalled that the 
new scheme will require state aid approval by the Commission. 

5
 https://www.bankingsupervision.europa.eu/ecb/legal/pdf/en_con_2019_09_f_sign_.pdf 

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In line with the explanatory report attached to the legislation on the new scheme, the European 
institutions welcome the commitment of the Greek authorities to take action to unify the set of 
laws  that  are  relevant  for  insolvency/bankruptcy  and  debt  restructuring.  This  will  start  with  a 
reform  of  the  Katseli  law,  which  should  be  completed  by  mid-2019,  with  a  view  to  ensuring  legal 
clarity  and  consistency,  removing  loopholes  which  can  be  abused  in  order  to  suspend  or  block 
enforcement, adding safeguards that are considered sufficient to deter strategic defaulting behaviour, 
and enhance the culture of bilateral or multilateral restructurings out of courts.  

The Hellenic Financial Stability Fund (HFSF)  

All  commitments  regarding  the  governance  of  the  HFSF  have  been  completed.  Regarding  the 
operation  of the  HFSF, the  Minister  of  Finance  submitted  a letter to  the  Eurogroup  Working  Group 
(EWG) with the nominees for the open positions in the Executive Board and in the General Council of 
the HFSF, and the nominees were endorsed by the EWG. The Ministry of Finance also obtained and 
approved an opinion of the Legal Counsel of the State on the status of the HFSF Selection Panel and 
regarding its continuation for the duration of the HFSF. 

Energy 

The divestiture of parts of the lignite-based generation capacity of the Public Power Corporation 
(PPC),  consisting  of  the  lignite-fired  power  plants  Meliti  and  Megalopoli  3  and  4,  remains  a 
cornerstone of Greece’s energy reforms. Following the failure of the first tender in February 2019, 
the  authorities  reaffirmed  their  intention  to  finalise  the  divestiture  and  comply  with  the  existing 
commitment  under  enhanced  surveillance,  the  antitrust  remedies  and  the  related  and  the  related 
Commission decision. For this purpose they launched a new tender with the end of June as a deadline 
for  closure  of  the  deal,  marked  by  approval  by  PPC’s  General  Assembly.  The  divestiture  was  also 
included  in  a  recent  national  energy  law  amendment,  which  extended  to  PPC  shareholders  the 
obligation to complete the divestiture. PPC may request a new valuation of the plants, this time taking 
into account other lignite sales in the EU as stipulated in the antitrust remedies, as well as the offers 
received in the recent failed tender. Furthermore, PPC shall appoint another valuator, which will give a 
fairness  opinion  of  the  offers  received.  Regarding  clarity  about  the  sale  terms,  it  was  agreed  not  to 
include  a  risk-sharing  mechanism  in  the  Sale  and  Purchase  Agreements  (SPA),  though  other  terms 
may  be  discussed  with  investors  during  the  process.  All  these  steps  will  be  taken  to  successfully 
complete the divestiture process in accordance with the commitments given in the antitrust case and 
within the deadline for the new tender. 

The new divestiture process is already underway in accordance with the envisaged timelines. Six 
companies responded to the invitation to submit expressions of interest. A Virtual Data Room is now 
in place which contains the SPAs that will be the basis for negotiations. The coming months should 
see  the  release  of  the  first  SPAs,  the  agreement  on  the  final  version  of  the  SPAs  and  then  the 
submission of binding offers. These offers need to be approved by both PPC’s Board of Directors and 
PPC’s General Assembly before the end of the Divestiture Period, set for end–June 2019. Following 
the approval by PPC’s General Assembly the Hellenic Parliament will ratify the sale. Building on the 
timely implementation of the envisaged steps so far, it will be key to keep up the regained momentum 
for the divestiture transaction going forward. 

7 

 
 
Privatisation  

Legislation related to the corporate restructuring of the gas company DEPA was adopted on 7 
March  2019.  The  legislation  paves  the  way  for  the  agreed  privatisation  transaction.  It  will  be 
important to ensure that the transitional provisions on employment included in the legislation remain 
targeted towards existing employees at their current levels. 

In January 2019, the authorities had agreed to a number of actions to be swiftly implemented in 
order  to  deal  with  the  recurrent  obstacles  to  the  concession  of  the  Egnatia  motorway.  The 
objectives was to enable the transaction to proceed with a view to having binding offers within 2019 in 
line with the updated Asset Development Plan of the privatisation fund TAIPED. The agreed actions 
due so far have been implemented in line with technical feasibility. This includes notably the adoption 
of Egnatia’s budget, the completion of the parliamentary procedure for the appointment of the CEO of 
Egnatia,  the  submission  by  Egnatia  of  all  pending  files  to  the  Tunnel  Licencing  Authority  and  the 
submission  of  necessary  information  on  the  toll  pricing  policy  to  the  Commission.  The  accelerated 
process  regarding  tunnel  licencing  should  continue  in  order  to  resolve  tunnel  licencing  issues  as 
quickly  as  practictable.  More  generally,  it  will  be  critical  to  ensure  that  the  transaction  proceeds 
unhindered  going  forward,  so  as  to  avoid  clouding  the  overall  positive  picture  on  the  privatisation 
agenda.  

Public administration 

Against the background of uneven progress with the appointment of senior managers, a series of 
complementary  actions  have  been  completed  relevant  to  the  modernisation  of  the  public 
administration, including adoption of a law that will allow for a long-term hiring plan to be closely 
linked to the medium-term fiscal strategy (MTFS) and setting up a road map on how to streamline the 
job  classification  system  ('klados').  Since  the  adoption  of  the  enhanced  surveillance  report  on  27 
Ferbuary 2019 the authorities have delivered on key actions relating to the legal codification reform, 
including issuing the approval decision for the 'digital portal' tender and submission of legal provisions 
for the 'Central Codification Committee', which is expected to have a key role in overseeing the legal 
codification. In addition, the authorities have confirmed that the number of planned hirings in 2019 is 
in accordance with the figures included in the hiring plan allowing for a one-to-one replacement rule 
for 2019 to be met. This will include rebalancing from 2018 the number of permanent hirings (about 
1,000)  that  exceeded  the  1:3  attrition  rule  for  2018  as  well  as  reducing  the  temporary  staff  (around 
14%) in order for the wage bill target in the MTFS to be met. 

8 

 
 
 
Progress with the implementation of end-2018 specific commitments to the Eurogroup (Eurogroup annex 22 June 2018) 

25 March 2019 

Commitment 

State of play  

1 

Fiscal  target:  the  annual  budget  achieves  a 
medium-term primary surplus of 3.5% of GDP. 

The 2019 budget was adopted and it is consistent with the primary surplus target.  

Public 
revenue  administration:  Permanent 
staffing  positions  at  the  Independent  Authority  of 
Public  Revenue  (IAPR)  to  reach  12,000  by  end-
2018. 

Permanent  staff  stood  at  11,487  at  end-2018,  thus  below  target.  The  authorities  have  adopted  the  following 
complementary measures:  

  Blueprint (2019-2021): IAPR has adopted its 'Blueprint'  

 

IT: agreement reached between GSIS and IAPR on an annual envelope for IAPR services part of GSIS' budget. 

  HR Reform: An amendment to the enabling legislation allowing the establishment of a grading system based on 
job descriptions has been adopted on 6 March 2019 (FEK A 48/2019, Article 64). This measure is connected to 
the public administration reform area (#16).  

  Liability  for  tax/customs  officials:  agreement  on  content.  Law  amendment  adopted  on  6  March  2019  (FEK  A 

48/2019, Article 64).  

 

ransfers  to  IAPR  from  the  mobility  scheme:  legal  provisions  to  be  adopted  to  facilitate  the  transfer  of  staff  to 
IAPR  from  the  mobility  scheme.  agreement  on  content.  Law  amendment  adopted  on  6  March  2019  (FEK  A 
48/2019, Article 64). 

 

Joint Ministerial Decision on 'fuel markers': has been adopted (FEK B 803/2019, 7 March 2019). 

  Appraisal decision by IAPR has been published in the Government Gazette (FEK B 6225/2018). 

Public 
accumulation of new arrears. 

financial  management:  Avoid 

the 

December  2018  data  show  that  the  stock  of  net  arrears  has  been  reduced  since  the  end  of  the  ESM  programme. 
January data demonstrate a continuing albeit slow reduction. Going forward, additional efforts are still needed to clear 
the backlog and avoid the build-up of new arrears.  

Health  care:  Open  at  least  120  primary  health 
care centres (TOMYs) by end-2018. 

Health care: Establish the main body responsible 
for central procurement (EKAPY) by end-2018. 

Based on the latest reports, 120 primary health care units (TOMYs) were opened across the territory.  

The main body responsible for central procurement, EKAPY, is operational and centralised procurement has resumed.  

9 

2 

3 

4 

5 

 
 
 
Commitment 

State of play  

Non-Performing  Loans  (NPL):  continue 
to 
implement reforms aimed at restoring the health of 
the  banking  system,  including  NPL  resolution 
efforts  by  ensuring  the  continued  effectiveness  of 
the relevant legal framework. 

State-guaranteed  loans:  an  updated  action  plan  has  been  submitted  to  the  European  institutions;  Agreed  legal 
amendment has been adopted. E-auctions: Agreement has been reached to address the issue of court-ordered auction 
postponements which result from the filing of debtors’ petitions for a revision of the reserve price in the context of the 
evaluation of the implementation of the Code of Civil Procedure, due for completion by end-March 2019. Backlog of 
household  insolvency  cases:  The  authorities  have  presented  updated  data  covering  the  evolution  of  the  backlog 
throughout 2018. NPL sales and securitisations laws: required clarifications on the implementation of law 4354/2015 
were communicated to the Hellenic Banking Association and uploaded on the MoF’s website. 
Household insolvency law: the authorities have legislated a scheme for the protection of primary residences. While 
the  scheme  has  the  potential  to  support  NPL  restructuring,  risks  to  financial  stability  and  payment  discipline  have 
been mitigated to some extent but not eliminated. Close monitoring will therefore be required, and the institutions will 
report  back  in  the  context  of  enhanced  surveillance.  E-auctions  impediments  and  an  updated  action  plan  on  the 
backlog  of  household  insolvency  cases  related  to  the  Katseli  law  are  expected  to  be  addressed/submitted  in  the 
context of the the third enhanced surveillance cycle, also taking into account revised framework for the protection of 
primary residences.  

Capital controls: relaxation  of capital controls  in 
line with the roadmap of May 2017. 

The authorities have continued to lift capital controls in line with the agreed roadmap. 

Justice:  complete  phase  I  of  the  establishment  of 
the e-justice system (OSDDY-PP) by end 2018. 

Phase  I  of  the  OSDDY-PP  has  been  completed  with  all  deliverables  formally  handed  over  by  the  contractor  by 
January 2019.  

The  HFSF  will  by  end-2018  develop  an  exit 
strategy  for  the  sale  of  its  stakes  in  the  systemic 
banks  and  the  mandate  of  the  Selection  Panel  of 
the HFSF shall be aligned with the mandate of the 
HFSF. 

Exit Strategy: The HFSF General Council has approved the divestment framework for the sale of its shares in the four 
systemic  banks.  Selection  Panel  mandate  extension:  The  authorities  clarified  that  in  their  view  the  mandate  of  the 
HFSF Selection Panel as a body is in alignment with the recently extended mandate of the HFSF; this was confirmed 
by  the  Legal  Counsel  of  the  State  whose  opinion  was  approved  by  the  Minister  of  Finance.  Appointments: 
Concerning  the  nominees  for  the  open  positions  in  the  Executive  Board  and  the  General  Council,  the  EWG,  in  its 
letter  to  the  Minister  on  14  March  endorsed  all  the  nominees  referred  to  above.  The  Ministerial  Decisions  on  the 
appointment of these persons are pending.  

Labour  market:  Safeguard  competitiveness 
through an annual update of the minimum wage in 
line with the provisions of Law 4172/2013. 

The authorities have updated the minimum wage following the procedure laid down in Article 103 of Law 4172/2013. 
As a result, the minimum wage has been raised by 10.9% and the sub-minimum wage for persons aged under 25 was 
eliminated (implying an increase  of some 27%). The magnitude of the increase raises concerns for  the employment 
prospects (especially for the young and old-age low-skilled workers), and for competitiveness in the medium term.  

Investment  Licensing: 
licensing legislation  

adopt 

all 

enabling 

All enabling legislation had been adopted by the issuance of a joint ministerial decision (FEK/B/436 - 14.02.2019). 

Energy:  Complete  the  agreed  divestment  of  a 
share  of  Public  Power  Corporation's  lignite-fired 

Following  the  failure  of  the  tender  process,  the  authorities  have  submitted  a  revised  proposal  which  has  been 
discussed in detail, with clarity emerging about the main elements. Amendments to an energy law were passed on 7 

10 

6 

7 

8 

9 

10 

11 

12 

 
 
 
Commitment 

capacity by end-2018. 

State of play  

March  containing  provisions  to  allow  for  the  divestiture.  An  updated  proposal  for  the  tender  process  based  on  the 
terms discussed, has been submitted to the Commission on 8 March. The proposal foresees the relaunch of a fast-track 
tender process to be finalised by May 2019. The key elements of the proposal are: 

  A new valuation of the plants, taking into account similar transactions 
  That there should be no reference to a risk sharing agreement in the Sale and Purchase Agreement (SPA) 
  The SPA will be approved by Parliament 
  PPC’s BoD and shareholders have a legal obligation to complete the transaction 

On 8 March 2019, the invitation for expressions of interest and the request for binding offers has been launched.  
Intermediate  actions  have  been  implemented  in  line  with  the  envisaged  timelines.  The  VDR  has  been  opened, 
containing the initial SPA, to which access has been given for the 6 companies that submitted Expressions of Interest 
and signed the confidentiality agreement. This will be the basis for discussions between those investors and PPC.  

Hellenic  Corporation 
and 
Participations  (HCAP):  The  Strategic  Plan  of 
HCAP will be implemented on a continuous basis. 

of  Assets 

HCAP prepared the Strategic Plan which was approved by the General Assembly in January 2018. On the basis of the 
Strategic Plan, the non-listed subsidiaries submitted updated Business Plans to HCAP. Furthermore, HCAP prepared 
the  Business  Plan  of  the  Corporation  for  the  period  2019-2021  implementing  the  Strategic  Plan  and  setting  key 
performance indicators for the non-listed subsidiaries. 

13 

14 

HCAP  The  transfer  of  OAKA  to  HCAP  and  the 
restructuring of ETAD  will be completed by end-
2018. 

15 

Tenders The Asset Development Plan of TAIPED 
will  be  implemented  on  a  continuous  basis.  The 
transactions  on  the  AIA  concession,  Hellinikon 
and DESFA will be completed by end-2018 

The  restructuring  of  ETAD  has  been  completed.  The  transfer  of  OAKA  is  taking  longer  to  complete  than  initially 
planned. The authorities have developed a roadmap for specific actions to be taken during 2019 to address the open 
technical issues, which appears appropriate in light of the complexity of the project. In addition, on 21 February 2019, 
the Cabinet Committee and HCAP have launched the implementation of the coordination mechanism for State-owned 
enterprises. 

Asset Development Plan (ADP): The updated ADP of TAIPED was endorsed by KYSOIP on 15 February (FEK 461, 
15 February 2019). DESFA: The financial closing of the transaction was completed on 20 December 2018. AIA: The 
AIA extension agreement was ratified by the Greek Parliament on 14 February 2019 and the payment of the financial 
transaction of EUR 1.1 billion plus an annual rate  of 10.3% paid proportionally by AIA from 1 January 2019 until 
closing date, was done on 22 February 2019, thereby closing the transaction. Hellinikon: the project has encountered 
some delays mainly concerning the award of the casino licence and the urban planning and environmental approvals. 
As  key  intermediate  steps:  (i)  the  request  for  proposal  for  the  award  of  the  casino  licence  was  uploaded  on  22 
February;  (ii)  the  studies  on  the  urban  planning  zone,  the  development  zone,  and  the  park  were  submitted  by  the 
investors to the Greek authorities, on 6 February 2019, and the Integrated Environmental Impact  Assessment  study 
followed  on  18  February.  The  Integrated  Environmental  Impact  Assessment  study  was  uploaded  in  the  electronic 
environmental  register,  after  the  needed  corrections,  on  25  February  2019.  The  Public  consultation  started  on 
21.3.2019.  DEPA:  Legislation  related  to  the  corporate  restructuring  of  DEPA  was  adopted  on  7  March  2019.  The 
legislation paves the  way for the agreed privatisation transaction. It will be important to ensure that the transitional 
provisions  on  employment  included  in  the  legislation  remain  targeted  towards  existing  employees,  at  their  current 
levels. Egnatia:  All actions included in the list agreed between the Greek authorities and the institutions to put the 

11 

 
 
 
Commitment 

State of play  

16 

Public  Administration  -  Appointments.  The 
implementation of reforms to modernise the public 
administration  will  be  sustained.  As  part  of  this 
effort, Greece will complete reforms to modernise 
human  resource  management  in  the  public  sector, 
of 
and 
Administrative  Secretary  Generals 
all 
Directors  General  according  to  law  4369/2016  by 
end-2018. 

appointment 
and 

particular 

the 

in 

Egnatia concession back on track have been done. Only technical issues remain to be completed to enable Egnatia to 
proceed to the launching of the construction of all remaining toll stations, whereas there should be a continuation  of 
the enhanced efforts for conclusive feedback with regard to tunnel licencing. 

Director-Generals:  all  appointments  (90  posts)  have  been  completed.  Administrative  Secretaries:  to  date  no 
appointment  (of  69)  has  been  made  and  as  complementary  actions,  the  authorities  have  adopted  a  law  on  strategic 
recruitment (also linking the hiring plan with the Medium-Term Fiscal Strategy) and strengthening the capacity of the 
Ministry  of  Administrative  Reconstruction  and:  (i)  provided  an  updated  timeline  for  the  completion  of  the 
recruitments  of  Administrative  Secretaries  by  end  2019;  (ii)  agreed  with  the  Commission  the  modalities  of  the 
independent  assessment  of  the  appointment  cycles  of  Administrative  Secretaries  and  Director-Generals  to  be 
completed by June 2019 with follow-up measures adopted by September 2019; (iii) committed to a specific road map 
on  the  streamlining  job  qualifications  ('klados'),  (iv)  committed  to  update  the  census  ('apografi')  database  to  also 
report on - flows of permanent staff of legal entities of private law and insert a category of temporary staff of legal 
entities of private law being paid by NSRF/other sources; (v) committed to launch the first calls for Heads of Division 
appointments  by  end-March  2019.  As  a  complementary  measure,  the  authorities  have  completed  the  following 
actions: related to legal codification, the approval decision for the 'digital portal' tender has been adopted (5 March 
2019). The legal provisions for the 'Central Committee on Codification' have been issued for public consultation and 
have been submitted to the Parliament (26 March 2019). In addition, related to the important HR reform of the public 
revenue administration, the authorities, on 6 March 2019 have adopted an amendment that allows the implementation 
of the first-stage linking of grading to job descriptions for IAPR (FEK A 48/2019, Article 64). 
Ongoing  discussions  with  the  authorities  concerning  salary  provisions  included  in  a  draft  law  of  the  Ministry  of 
Economy  and  Development.  Institutions  have  expressed  concerns  that  the  suggested  amendment  to  extend  the  so 
called 'personal difference' could result in undermining the overall principles of the unified wage grid reform. 

12