COMMUNICATION FROM THE COMMISSION Enhanced Surveillance update – Greece, February 2020
Date: 2020-02-26
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

BACKGROUND 

Economic  developments  and  policies  in  Greece  are  monitored  under  the  European 
Semester  for  economic  policy  co-ordination  and  under  the  enhanced  surveillance 
framework  according  to  Regulation  (EU)  No  472/2013 (1).  The  implementation  of 
enhanced  surveillance  for  Greece (2)  acknowledges  the  fact  that  over  the  medium  term, 
Greece  needs  to  continue  adopting  measures  aimed  at  addressing  the  sources  or  potential 
sources  of  its  economic  and  financial  difficulties,  while  implementing  structural  reforms  to 
support robust and sustainable economic growth.  

Enhanced surveillance provides a comprehensive framework for  monitoring economic 
developments  and  the  pursuit  of  policies  needed  to  ensure  a  sustainable  economic 
recovery. It allows for a regular assessment of recent economic and financial developments 
in Greece, as well as for monitoring sovereign financing conditions and updates of the debt 
sustainability analysis. Enhanced surveillance also provides the framework for assessing the 
general  commitment  given  by  Greece  to  the  Eurogroup  of  22  June  2018  to  continue  and 
complete reforms adopted under the European Stability Mechanism programme and to ensure 
that  the  objectives  of  the  important  reforms  adopted  under  the  financial  assistance 

(1)  Regulation  (EU)  No 472/2013  of  the  European  Parliament  and  of  the  Council  of  21 May  2013  on  the 
strengthening  of  economic  and  budgetary  surveillance  of  Member  States  in  the  euro  area  experiencing  or 
threatened with serious difficulties with respect to their financial stability, OJ L 140, 27.5.2013, p. 1. 

(2)  Commission  Implementing  Decision  (EU)  2018/1192  of  11  July  2018  on  the  activation  of  enhanced 
surveillance for Greece (OJ L 211, 22.8.2018, p. 1), Commission Implementing Decision (EU) 2019/338 of 
20  February  2019  on  the  prolongation  of  enhanced  surveillance  for  Greece  (OJ  L  60,  20.2.2019,  p.  17), 
Commission  Implementing  Decision  (EU)  2019/1287  of  26  July  2019  on  the  prolongation  of  enhanced 
surveillance  for  Greece  (OJ  L  202,  31.7.2019,  p.  110),  Commission  Implementing  Decision  2020, 
C(2020)901 of 19 February 2020. 

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 26.2.2020  COM(2020) 100 final  COMMUNICATION FROM THE COMMISSION Enhanced Surveillance update – Greece, February 2020 {SWD(2020) 45 final}  
 
 
                                                 
that  context,  enhanced  surveillance  monitors 

the 
programmes  are  safeguarded.  In 
implementation of specific commitments to complete key structural reforms started under the 
programme in six key areas by agreed deadlines up to mid-2022, namely: (i) fiscal and fiscal-
structural policies, (ii) social welfare, (iii) financial stability, (iv) labour and product markets, 
(v)  privatisation,  and  (vi)  the  modernisation  of  public  administration (3).  Ten  specific 
commitments have a deadline of end-2019, progress on which is assessed in this report, while 
follow-up actions to previous commitments are also monitored.  

This is the fifth enhanced surveillance report for Greece. It is issued alongside the 2020 
Country Report for Greece under the European Semester. This report is based on the findings 
of  a  mission  to  Athens  between  22  and  24  January  2020  conducted  by  the  Commission  in 
liaison with the European Central Bank (4). The International Monetary Fund participated in 
the context  of its  Post  Program  Monitoring  cycle, while the European Stability Mechanism 
participated in the context of its Early Warning System and in line with the Memorandum of 
Understanding of 27 April 2018 on working relations between the European Commission and 
European Stability Mechanism.  

OVERALL ASSESSMENT OF PROGRESS WITH REFORM COMMITMENTS 

This  report  concludes  that  Greece  has  progressed  well  in  implementing  its  specific 
reform  commitments  for  end-2019.  The  supplementary  measures  that  are  being 
implemented or announced by the government should allow for their completion in time 
for  the  sixth  enhanced  surveillance  report  scheduled  for  May  2020.  This  requires 
continuous  engagement  of  the  Greek  authorities  in  particular  in  the  financial  sector, 
where significant further action is needed.  

  The ten specific commitments due by  end-2019  include important  reforms  aimed to 
increase  the  efficiency  of  the  Greek  public  sector,  strengthen  the  effectiveness  of 
social policy, advance the privatisation agenda and further improve the quality of the 
business  environment.  The  authorities  have  completed  or  are  about  to  complete 
shortly  some  of  the  key  commitments,  including  the  capacity-enhancing  reforms  to 
the  Independent  Authority  for  Public  Revenue,  or  the  digital  organigrams  for  the 
public  sector,  which  are  part  of  the  Human  Resources  Management  Strategy.  The 
timelines  for  the  delivery  on  other  key  specific  commitments  have  been  adjusted  in 
view  of  the  complexities  of  the  projects  or  inherited  delays.  This  was  the  case,  for 
instance,  for  the  roll-out  of  the  labour-market  pillar  of  the  Social  Solidarity  Income 
scheme, which aims to promote long-term and sustainable employment growth, or the 
privatisation  agenda,  despite  the  momentum  maintained  from  the  last  report.  A  full 
overview  is  provided  in  the  Annex.  The  authorities  are  encouraged  to  present 
complementary  measures  with  a  view  to  ensuring  adequate  reform  progress  on  the 
reforms  where  timelines  were  adjusted,  such  as  in  the  areas  of  public  finance 
management or the regulatory burden on businesses.  

(3)  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. 

(4)  ECB staff participated in the review mission in accordance with the  ECB’s competences and thus provided 
expertise  on  financial  sector  policies  and  macro-critical  issues,  such  as  headline  fiscal  targets  and 
sustainability and financing needs. The review mission was preceded by a technical mission from 13 to 21 
January 2020. 

2 

 
                                                 
  Regarding their continuous commitments, the implementation of the Strategic Plan of 
the Hellenic Corporation of Assets and Participations is ongoing and there is progress 
on a number of transactions of the Asset Development Plan, while the implementation 
of the arrears clearance plan and collection of health care clawback need to accelerate. 
Regarding  the  financial  sector  commitments,  some  progress  continues  on  reforms 
needed to clean up the stock of non-performing loans. However, there is still a need to 
significantly  prioritise  and  speed  up  certain  important  actions.  In  particular,  the 
clearance  of  the  backlog  of  household  insolvency  cases  is  behind  schedule  and 
progress in addressing impediments to successful e-auctions remains limited.  

  The  authorities  are  simultaneously  progressing  on  their  mid-2020  commitments, 
which  will  be  assessed  in  the  second  half  of  the  year.  They  are  undertaking  their 
efforts  in  close  cooperation  with  the  institutions, and  are  pursuing  measures  beyond 
the  Eurogroup  commitments  in  the  context  of  their  broader  reform  agenda,  for 
instance in the area of good law-making, digital governance and education. 

ECONOMIC AND FISCAL OUTLOOK 

The economic recovery continued in 2019 and is expected to strengthen going forward. 
Economic  growth  is  expected  to  reach  2.2%  for  2019,  well  above  the  euro  area  average  of 
1.2%,  mainly  on  account  of  strong  export  performance.  A  strong  tourism  season  boosted 
service exports but also goods exports remained resilient despite the lower growth in the euro 
area.  Economic  growth  is  expected  to  increase  to  2.4%  in  2020,  with  domestic  demand 
gaining  momentum,  supported  by  positive  expectations  and  the  growth-friendly  tax  shift 
incorporated in the 2020 budget. The recovery of the labour market is expected to continue, 
and unemployment to fall to 15.2% in 2020, whereas inflation is forecast to remain muted in 
the near term. 

The  outlook  remains  subject  to  both  upside  and  downside  risks.  Recent  statistical 
revisions and indicators capturing business  and consumer expectations point to upside risks 
for 2019 and 2020. The projection remains cautious regarding the contribution of the external 
sector to growth in 2020, also in view of the slowly increasing unit labour cost in Greece, but 
the gains in Greece’s export market shares seen in 2019 and before could prove more durable, 
especially  if  coupled  with  productivity  increases.  Downside  risks  are  mostly  related  to  the 
uncertain  geopolitical  situation and lasting political  tensions  in  the wider  region,  as  well as 
the  under  execution  of  planned  public  investment  projects  and  their  effects  on  domestic 
demand.  The  projection  is  contingent  upon  maintaining  the  reform  path  agreed  under 
enhanced  surveillance.  In  particular,  provision  of  investment  financing  though  the  banking 
sector will depend on a swift implementation of financial sector reforms, devised to support 
banks’ intermediation capacity. 

Based  on  the  preliminary  data  for  2019,  Greece  is  set  to  overachieve  the  primary 
surplus  target  of  3.5%  of  GDP,  outperforming  its  fiscal  targets  for  the  fifth  year  in  a 
row. The primary surplus is expected to reach around 4% in 2019, after taking into account 
the EUR 186 million ‘social dividend’ distributed to vulnerable households and the clearance 
of  EUR 200 million  of  pending  public  service  obligation  at  the  end  of  the  year.  This 
corresponds to a headline surplus of about 1.6% of GDP, compared with a deficit of 0.8% of 
GDP projected for the euro area. Before the end-year payments, the over-performance vis-à-
vis the 3.8% of GDP balance projected in the previous report would have reached about 4.2% 
of GDP. The difference can be attributed mainly to better-than-expected revenues from social 

3 

 
contributions and taxes, and to the under-execution of the consumption expenditure. Part of 
the higher revenue outturn was due to one-off factors.  

While having a broadly neutral impact on the balance, general government investment 
was by 1.1% of GDP lower than initially planned. To address the recurrent underspending 
in the Public Investment Budget, the authorities have started to implement an action plan to 
improve  its  monitoring.  The  action  plan  is  currently  on  track  with  a  delivery  by  end-2021. 
Plans to create a project preparation facility are at an early stage but are expected to help to a 
more targeted and increased execution of the Public Investment Budget. Under-execution of 
the Public Investment Budget is a growing concern also in the context of the technical work 
on  the  possible  use  of  the  SMP-ANFA  income  equivalent  amounts  for  agreed  investments 
(see also below).  

The  authorities  have  started  to  implement  the  2020  budget,  which  was  assessed  as 
compliant with the fiscal target of 3.5% of GDP in the previous report, and they expect 
that fiscal space would emerge in spring to finance additional measures. The government 
is  aiming  to  further  reduce  the  ENFIA  property  tax  while  increasing  its  tax  base,  and  to 
reduce the special solidarity levy and social  security contributions. To that aim, the gradual 
reduction  of  the  corporate  income  tax  to  20%,  announced  in  July  2019,  risks  being 
postponed.  An  assessment  of  these  measures  will  be  carried  out  in  the  context  of  the 
preparation  of  the  Medium-term  Fiscal  Strategy,  due  in  May  2020,  together  with  a  re-
assessment of some of the minor fiscal measures included in the 2020 budget. The Medium-
term  Fiscal  Strategy  is  also  expected  to  reflect  the  upcoming  pension  reform,  which  is 
currently being designed with a view to responding to the 2019 Council of State ruling in a 
fiscally neutral manner, and the cost of clearing the stock of called state guarantees for bank 
loans, worth 1.1% of GDP within five years.  

Given  the  accelerating  migration  flows,  the  authorities  pointed  out  that  the  current 
migration adjustor does not capture fully the total costs of the migration crisis (5). The 
agreed  migration  adjuster  allows  to  remove  up  to  0.2%  of  GDP  of  migration-related 
expenditure  (net  of  EU  funds)  from  the  primary  balance  but  based  on  the  current 
methodology  the  actual  amounts  deducted  from  the  primary  balance  are  consistently  well 
below  this  level.  The  authorities  and  the  European  institutions  have  started  to  assess  the 
obstacles  that  prevent  the  authorities  to  account  for  the  total  costs  in  the  adjustor  and  will 
report on the findings in the next report. 

Overall,  Greece’s  fiscal  and  economic  outlook  has  improved.  The  continued  solid  fiscal 
performance and the growth-friendly policy agenda have made their impact on the economic 
climate as sentiment indicators approach pre-crisis levels. Greece has been successful at re-
entering  the  sovereign  bond  markets  achieving  historically  low  yields.  Yield  spreads  have 
considerably narrowed in the past year and the improved outlook for the Greek economy has 
led to gradual a upgrading of Greece's credit rating. Upholding reform commitments will be 
key to sustaining medium and long-term growth prospects. 

Despite the positive outlook, Greece’s public finances continue to face fiscal risks, which 
are  difficult  to  quantify  at  this  stage.  First,  notwithstanding  the  recent  Council  of  State 

(5) The definition of the migration adjustor currently in place can be found in the Commission Opinion on the 

Draft Budgetary Plan of Greece, SWD(2018) 516, footnote 5.  
https://ec.europa.eu/info/sites/info/files/economy-finance/c_2018_8016_el_en.pdf  

4 

 
                                                 
 
ruling  regarding  the  past  pension  reforms,  a  large  number  of  cases  claiming  retroactive 
payments  to  pensioners  are  still  pending  and  will  be  addressed  by  the  Council  of  State 
through a ‘pilot trial’ to ensure a harmonised approach in all courts. An additional fiscal risk 
stems  from  the  litigation  cases  of  Attikos  Helios,  a  company  operating  in  the  tourism  and 
hospitality industry, against the Public Real Estate Company. The case is  currently pending 
before  the  Athens  Court  of  Appeal.  Additional  fiscal  pressures  might  be  caused  by  the 
planned  arrangements  concerning  the  private  supplementary  pension  fund  of  the  National 
Bank of Greece (a private commercial bank). The fiscal impact will depend on the timing of 
statistical recording of the transfer of the pension liabilities to the general government as well 
as  on  the  rulings  of  two  pending  court  cases  involving  all  parties  concerned  (the  state,  the 
bank and pensioners). 

Technical  discussions  on  the  possible  use  of  SMP-ANFA  income  equivalents  for 
reducing gross financing needs or other agreed investments have started.  Following up 
on  the  respective  mandate  given  by  the  Eurogroup  in  December  2019 (6),  the  authorities 
shared their initial  considerations regarding the  use of SMP-ANFA income equivalents  and 
related  impact  on  the  structural  balance  during  the  enhanced  surveillance  mission.  The 
European  institutions  are  engaging  with  the  authorities  at  technical  level,  with  a  view  to 
reporting  back  to  the  Eurogroup  in  June  2020.  There  is  a  general  understanding  that 
investments  shall  be  growth-enhancing.  The  authorities  also  proposed 
to  consider 
establishing  a  fiscal  smoothing  mechanism  allowing  to  take  into  account  the  past  over-
performance of primary surplus targets in the following year, as well as reducing the primary 
surplus target  up to  2022. Any proposal  which alters the agreement reached with  European 
partners  in  June  2018,  would  need  to  be  discussed  at  the  Eurogroup  and  take  into  account 
compliance with the EU fiscal framework and debt sustainability. 

SOVEREIGN FINANCING AND DEBT SUSTAINABILITY 

Greece strengthened its presence on the sovereign bond market, by issuing new bonds 
in  January  2020.  In  particular,  a  15-year  bond  was  issued  at  the  end  of  January  with  an 
amount of EUR 2.5 billion. Amidst strong investor interest, the final order book was close to 
EUR 19 billion, and the achieved yield of 1.9% came below the expectations. Some 84% of 
the auctioned bond was sold to foreign investors, mainly real money investors. It was the first 
time that Greece issued a bond with such a long maturity on an open auction since the crisis, 
and also the first time it issued a bond that matures after the end of the current deferral period 
of  the  European  Financial  Stability  Facility  loans,  i.e.  after  2032.  This  indicates  that  the 
investors see limited roll-over risk also on this horizon. Based on the funding strategy, further 
bond  issuances  can  be  expected  this  year,  which  might  finance  further  early  repayments  of 
official and private sector debts. Sovereign yield spreads have further decreased, with 10-year 
spreads  vis-à-vis  Germany  reaching  levels  of  140  basis  points  in  mid-February,  while 
Greece’s  credit  rating  improved  further.  Greece  continues  to  maintain  its  significant  cash 
buffer, with state cash reserves estimated at some EUR 23.5 billion at end-2019, sufficient to 
cover financing needs for more than two years if the primary balance targets are met. 

(6)  The Eurogroup gave a mandate to the European institutions to initiate technical work on the possible use of 
ANFA  and  SMP  income  equivalents  to  reduce  gross  financing  needs  or  to  finance  mutually  agreed 
investments,  in  line  with  the  agreed  fiscal  targets  and  the  June  2018  Eurogroup  statement.  Eurogroup 
statement 
https://www.consilium.europa.eu/en/press/press-
2019: 
releases/2019/12/04/eurogroup-statement-on-greece-of-4-december-2019/. 

4  December 

on  Greece 

of 

5 

 
                                                 
A sequential update of the debt sustainability analysis has been carried out. The update 
of  the  macroeconomic  assumptions  and  recent  bond  issuance  data  suggest  that  debt  would 
remain on a downward trend (except for a level-shift due to the capitalisation of the deferred 
interest in 2033), but above 100% of GDP until 2040. A second scenario with an additional 
update of the interest rates as modelled under the current framework suggests that debt would 
remain above 100% of GDP until 2039. Greece’s gross financing needs reach around 13.5% 
of GDP in the first scenario and 12% of GDP in the second scenario at the end of the forecast 
horizon.  A  comprehensive  revision  of  the  framework  of  assumptions  underlying  the  Debt 
Sustainability Analysis used by the European institutions is  ongoing and  will be completed 
by the time of 6th enhanced surveillance report. 

TAXATION AND PUBLIC FINANCIAL MANAGEMENT  

Important progress has been made towards the broadening of the tax base for the 2020 
ENFIA  property  tax  exercise,  widening  the  share  of  population  covered  by  the  zonal 
system from 85% to 98%. A new nationwide revaluation  exercise is  expected to  finish  in 
spring 2020, with  a view to aligning the property tax values to market  prices by mid-2020, 
which is a specific commitment. The 2020 budget implies an almost fiscally-neutral property 
tax exercise based on the new values, with  a small increase of EUR 140 million  in  ENFIA 
revenues compared to 2019. The base widening might give scope to restructure property tax 
rates and thresholds.  

The number of staff at the Independent Authority for Public Revenue increased during 
2019 but fell short of the end-2019 target (an end-2019 specific commitment,  replaced 
by  equivalent  measures).  The  number  of  staff  increased  in  2019  to  11,902,  up  by  264 
compared to the beginning of the year. However, given the accumulation of previous delays, 
the actual staffing level remained lower than the initial target of 12,500. The renewal of the 
mandate  of  the  Governor  of  the  Independent  Authority  provides  for  continuity  and  will 
facilitate  its  transformation  into  an  efficient  and  effective  tax  authority  in  line  with  best 
practices.  

The complementary measures agreed in view of the undershooting of the staffing target 
have seen overall good progress, in particular as concerns human resources reform and 
housing  issues,  and  are  expected  to  advance  further  until  end-April  2020.  The 
supplementary grading legislation, which is a pre-requisite for human resources reform, has 
been adopted, and the follow-up legislation defining the remuneration framework in relation 
to the grading system is due to be adopted by the end of April. Regarding the IT framework, 
the key areas have been identified where competencies and resources between the Authority 
and the relevant services of the Ministry of Digital Governance will need to be clarified by 
April  2020,  which  should  allow  for  a  Service  Level  Agreement  to  be  agreed  by  mid-2020. 
Finally,  a  detailed  roadmap  for  the  relocation  of  the  Authority  into  one  location  has  been 
defined with the decision for the public entity currently occupying the premises to move out 
as well the offer for the Authority to secure its lease expected by March 2020. According to 
the roadmap the Authority is expected to move into its new premises by April 2021.  

The  authorities  are  making  progress  on  a  number  of  key  projects  enhancing  the 
capacity  of  the  Authority  and  are  preparing  a  more  ambitious  plan  to  combat 
smuggling.  Work  is  ongoing  on  an  IT  system  for  an  end-to-end  collection  system  (a  mid-
2021  specific  commitment)  and  the  ‘model  collection  office’,  while  plans  for  introducing 
electronic invoicing in 2020 are advancing. The authorities are also planning to strengthen the 
Operational  Coordination Centre, which was  established as  a programme commitment with 

6 

 
the  mission  to  fight  smuggling  and  to  coordinate  the  relevant  services.  The  Centre  has 
recently  seen  its  capacity  reduced  as  the  staff  secondments  have  not  been  renewed  and 
primary  legislation  to  address  this  issue  is  expected  to  be  adopted  shortly.  The  authorities 
plan  to  raise  the  membership  of  the  Centre’s  steering  committee  to  the  level  of  deputy 
ministers  and  the  Governor  of  the  Authority,  which  would  result  in  a  more  efficient 
coordination.  The  Centre  will  operationally  remain  integrated  into  the  structure  of  the 
Authority and will see its overall capacity being enhanced.  

The  authorities  re-opened  the  120  instalment  scheme  for  social  security  contributions 
for those who dropped from the scheme, which has raised some concerns as regards the 
credibility of the authorities’ commitment to terminate the practice of providing lengthy 
ad  hoc  instalment  schemes.  The  authorities  argued  that  many  debtors  had  involuntarily 
dropped  out  from  the  scheme  due  to  errors  in  the  IT  system.  However,  the  adopted  legal 
provision that made re-entry possible by end-May 2020 appears disproportionately generous, 
both as regards the length of the period for re-entry and eligibility, as it allowed to re-enter 
also debtors who genuinely failed to comply with the rules. It is therefore welcomed that the 
authorities  submitted  an  amendment  to  this  law  that  will  shorten  the  period  to  the  end  of 
March 2020 and will also limit the eligibility to re-enter.  

The  stock  of  net  arrears  reached  EUR 1.2  billion  at  end-2019,  which  was 
EUR 220 million  above  the  target  of  the  October  2019  clearance  plan  (a  continuous 
commitment).  Compared  to  August  2019,  the  stock  of  net  arrears  decreased  by  EUR 50 
million.  Inefficiencies  in  the  clearance  of  pension  claims  and  mistakes  in  computing 
accurately  the  net  stock  of  pension  claims  arrears  account  for  most  of  the  slippages.  Some 
gaps  compared  to  the  target  have  been  observed  also  in  arrears  of  the  state  and  local 
governments.  Additional  measures,  focusing  in  particular  on  pension  arrears,  are  being 
prepared and some have already started to be implemented. The measures include a number 
of  legislative  amendments  to  regulate  payments  of  certain  arrears,  closer  monitoring, 
additional training and  exchange of best  practices.  The authorities remain  committed to  the 
October 2019 clearance plan and expect the target of clearing the pending pension claims by 
mid-2021 to be achieved.  

While  the  net  stock  decreases,  new  arrears  continue  to  be  created,  which  points  to 
weaknesses  in  the  payment  chain  and  internal  control  functions.  In  the  context  of 
establishing timely payment chains, the lack of effective internal control mechanisms is still a 
cause of concern and a factor slowing down the processing of payments, especially in entities 
where the ex-ante audits performed by the Court of Audit have recently been phased out. The 
Court is conducting a broad survey on the matter across the public administration with a view 
to  accelerating  the  establishment  of  effective  internal  control  systems  by  the  end  of  the 
current  year,  and  providing  further  guidance  if  necessary.  The  General  Accounting  Office 
committed  to  examine  the  recommendations  on  streamlining  the  payment  chain  through  a 
recent  technical  support  project  provided  by  the  International  Monetary  Fund  and  to  adopt 
mitigation actions when necessary.  

The  framework  for  the  cash  monitoring  of  the  general  government  Treasury  account 
system  has  been  put  in  place,  while  a  pilot  project  on  cash  forecasting  is  being 
implemented  (both  are  end-2019  specific  commitments).  All  significant  general 
government entities have opened accounts at the Bank of Greece and use it to receive state 
grants  or  subsidies.  Some  small  entities  have  not  joined  the  scheme  yet  but  the  General 
Accounting Office  foresees to  take steps shortly to  ensure  full coverage. A pilot  project  on 

7 

 
cash forecasting started at the end of 2019 and will result in the development of a strategy for 
its roll-out to the rest of the entities by October 2020. In view of its complexity, the project 
will be assessed based on an interim report due by end-March and a draft roll-out strategy by 
end-April.  

The  overall  implementation  of  the  Unified  Chart  of  Accounts,  a  mid-2021  specific 
commitment for central administration, is progressing but its implementation across the 
entire  central  government,  including  in  the  Public  Investment  Budget,  remains  a 
challenge. The governance structure of the Chart of Accounts project has been considerably 
reinforced and it is now regarded as a broad public finance management tool, encompassing 
procurement  and  e-invoicing.  However, the full implementation of the Chart of  Account  in 
the  Public  Investment  Budget  is  not  showing  sufficient  progress.  The  revised  plan  of  the 
authorities’ will require further work, in particular regarding the implementation of the Chart 
of  Accounts  in  the  budget  planning  phase,  while  fully  respecting  the  accrual  accounting 
principle. 

SOCIAL WELFARE 

Although  the  social  situation  is  still  difficult,  it  is  expected  to  continue  improving, 
thanks to the combined effect of the economic recovery and the social welfare reforms 
that  have  taken  place  in  the  last  years.  Major  steps  have  been  taken  to  improve  the 
efficiency,  effectiveness  and  adequacy  of  the  social  welfare  system:  the  introduction  of  a 
guaranteed  minimum  income  scheme  and  the  housing  benefit.  According  to  the  latest 
available  data,  between  2017  and  2018,  the  share  of  people  at  risk  of  poverty  or  social 
exclusion declined from 34.8% to 31.8%, while the percentage of severe material deprivation 
decreased from 21.1% to 16.7%.  While the housing benefit provides support towards rental 
costs for vulnerable households, there is no similar, permanent support for vulnerable home-
owners with a mortgage (7). The completion of the reform of the disability benefit system and 
the  review  of  the  system  of  subsidies  for  local  public  transport  could  further  improve  the 
efficiency of the welfare system. 

The  authorities  are  preparing  adjustments  to  pension  legislation  to  comply  with  the 
2019 Council of State decision. The adjustments will include higher accrual rates for careers 
above 30  years, a new system of social contributions for the self-employed, and a return to 
the pre-2014 levels of supplementary pensions, the cut of which was judged unconstitutional. 
The increase in the accrual rates will further increase the generosity of the system for persons 
with  longer  careers  leading  to  high  average  replacement  rates  by  European  standards. 
Regarding  social  contributions,  the  authorities  plan  to  de-link  the  contributions  paid  by  the 
self-employed from their declared income, while increasing the minimum amount paid. The 
projected impact of the new measures is below 0.5% of GDP, which the authorities plan to 
finance by redirecting (part of) the resources from the 13th pension re-introduced in 2019. The 
remaining part of the budget previously allocated to the 13th pension will be used to cover the 
costs of health policies and social welfare, where it could for instance support an increase in 
the  guaranteed  minimum  income  under  the  Social  Solidarity  Income  scheme  or  an 
introduction of a permanent benefit for vulnerable home-owners with a mortgage.  

(7) There is currently a system of protection of primary residences under the Household Insolvency (Katseli) law 
and therefore covering only non-performing mortgages, which however will expire at the end of April 2020. 

8 

 
                                                 
The  authorities  have  developed  an  action  plan  to  remedy  the  delays  in  setting  up  the 
Single Social Security Fund, a mid-2020 specific commitment. An ambitious action plan 
for the digitalisation of the Single Social  Security  Fund will start  to  be implemented in  the 
coming  months,  aiming  at  unifying  the  IT  systems  of  all  the  previous  funds  and  the 
digitalisation of services with timelines by end-2020 and mid-2021. The authorities have also 
announced  the  decision  to  merge  the  Supplementary  Pension  Fund  into  the  Single  Social 
Security Fund in order to improve efficiency.  

Administrative procedures for the clawback collection (a continuous commitment) have 
resumed, and  measures are being prepared  to limit the size of the  clawback amounts. 
The  collection  of  the  clawback  for  pharmaceuticals  is  in  progress  (through  the  120 
instalments scheme introduced in 2019) and for private clinics and other providers will start 
shortly. The ever-increasing clawback amounts, especially for pharmaceuticals, are a source 
of  concern.  The  authorities  are  planning  to  strengthen  the  efforts  on  the  implementation  of 
compulsory  prescription/treatment  protocols,  which  aim  to  curb  inappropriate  prescribing 
behaviours,  and  to  strengthen  their  capacity  in  pharmaceuticals  price  negotiation  especially 
for  high-cost  drugs.  The  European  institutions  have  encouraged  the  authorities  to  consider 
including an element of risk sharing in the clawback system and to ensure the adequacy of the 
hospital budgets in relation to the healthcare needs of the population. 

Progress  in  setting  up  a  comprehensive  network  of  primary  health  care  units,  a  mid-
2020 specific commitment, has resumed following the announced redesign of the system. 
According to  a revised strategy, the remaining 120  Local  Health Units (the ‘TOMYs’) will 
become  operational  within  the  premises  of  existing  Health  Centres.  Nonetheless,  the  full 
rollout  of  the  primary  care  network  continues  to  face  important  bottlenecks,  including  in 
hiring  the  required  number  of  family  doctors,  and  incomplete  compulsory  registration  and 
gatekeeping. The completion of the network with full population coverage by mid-2020 will 
not be possible, but the new strategy addresses some of the key sources of delay thus far and 
the authorities are confident to be able to finalise the full roll-out including gatekeeping and 
referral functions by end-2020.  

Reaching  the  target  of  a  30%  share  of  centralised  procurement,  a  mid-2020  specific 
commitment, will be challenging but the planned launch of decentralised procurement 
at regional level has the potential to speed up the process. The authorities have submitted 
a revised strategy for centralised procurement, while in parallel transforming the new central 
body  for  health  procurement  to  a  private-law  legal  entity.  The  new  strategy  envisages 
decentralised procurement at regional level, which should make procedures administratively 
less cumbersome, speed up the tendering process and offer more opportunities to apply. The 
authorities  plan  to  make  better  use  of  the  Price  Observatory  to  ensure  that  all  avoidable 
inefficient spending is rectified as swiftly as possible. 

The  reform  of  the  disability  benefits  framework,  a  mid-2019  specific  commitment,  is 
advancing  but  with  significant  delays  outside  the  control  of  the  authorities.  The  new 
methodology should have been developed on the basis of the evaluation of a pilot project, the 
final version of which is still pending. The authorities have agreed to provide a new revised 
timeline for its national rollout by April 2020, which will take into account issues identified 
from the draft evaluation report. The authorities have announced their intention to review the 
whole set of benefits and services for the disabled, with a view to strengthening the provision 
of in-kind benefits and services.  

9 

 
The evaluation of the system of subsidies for local public transport, an end-2019 specific 
commitment, is expected to be completed by end April 2020. The delay is due to the many 
distinct beneficiaries (ten different population groups receive these types of subsidies) and the 
involvement of a number of different ministries.  

FINANCIAL POLICY 

Following  the  abolition  of  capital  controls  in  September  2019,  the  banking  sector 
continued to strengthen, but legacy risks and challenges remain high. Domestic deposits 
continued  their  upward  trend,  further  reinforcing  the  liquidity  situation  of  Greek  banks. 
Banks’ profitability is showing signs of recovery, but remains low. The banks are compliant 
with their capital requirements but the capital structure is largely dependent on state-related 
assets, specifically due to the high amount of deferred tax credits. In 2019, net bank lending 
to  non-financial  corporations  has  further  improved,  while  credit  growth  to  households 
remained negative, against the background of a further decrease in lending rates. 

The pace of reduction of non-performing loans accelerated in 2019 but non-performing 
loan ratios remain very high. The stock of non-performing loans fell to EUR 71.2 billion at 
end-September 2019, down by EUR 36 billion from its peak in March 2016, representing a 
ratio  of  42.1%  of  total  customer  loans.  Sales  and  write-offs  have  been  the  main  drivers 
behind the reduction of non-performing loans so far, while the internal capacity of banks to 
work out non-performing loans continues to be very low.  

The  successful  and  speedy  implementation  of  the  Hercules  asset  protection  scheme 
could accelerate the reduction of non-performing loans of the four systemic banks. The 
scheme  will  run  over  an  18-month  period  with  a  planned  envelope  of  maximum  EUR 12 
billion of state guarantees. All four systemic banks have expressed interest to participate in 
the  scheme  and  are  in  the  process  of  updating  their  strategies  for  the  reduction  of  non-
performing  loans  accordingly.  The  focus  now  falls  on  the  successful  and  timely 
implementation of the scheme. 

The  authorities  are  working  on  reforming  the  fragmented  insolvency  framework 
currently in place, in a way that contributes to a viable reduction in private and public 
debt in the near term, while accelerating the pace of implementation of the existing tools 
for the resolution of non-performing loans and improving their effectiveness. The actions 
outlined  below  are  monitored  and  assessed  under  enhanced  surveillance  as  part  of  the 
continuous commitment to “continue to implement reforms aimed at restoring the health of 
the banking system, including resolution efforts for the non-performing loans”:  

  Harmonisation  of 

the 

insolvency 

framework:  Preparatory  work  on 

the 
harmonisation  and  integration  of  the  corporate  and  personal  insolvency  regimes  is 
proceeding,  and  the  new  framework  is  expected  to  be  adopted  by  the  end  of  April 
2020.  Independently  of  the  implementation  of  the  new  framework,  the  Primary 
Residence  Protection  scheme  will  also  expire  by  end  April.  The  new  system  is 
expected, among others, to tackle current statutory obstacles to dealing with excessive 
indebtedness,  procedural  complexity  of 
the  existing  frameworks,  and  foster 
cooperation  among  creditors.  The  authorities  are  contemplating  the  design  of  a 
framework,  which  would  initially  rely  on  pre-judicial  settlement,  supported  by 
electronic  means,  in  an  attempt  to  reach  an  amicable  debt  restructuring.  The 
successful  implementation  of  the  new  framework  will  crucially  hinge  on  effective 
acceleration and optimization of judicial insolvency processes. A preliminary outline 

10 

 
of the draft law has been prepared by the authorities. It is currently under assessment 
and consultation with the institutions, pending further elaboration. 

  Clearing  of  the  household  insolvency  backlog:  The  number  of  pending  household 
insolvency  cases  exceeded  86,000  at  end-December  2019,  which  is  by  about  50% 
above  the  end-year  target,  which  will  therefore  be  very  likely  missed.  A 
comprehensive action plan for accelerating the clearance of the household insolvency 
backlog was expected by end-December 2019. The authorities have now committed to 
present  it  by  end-March  2020.  It  is  expected  to  make  use  of  different  techniques  in 
order to realistically cut the period between the filing of a case and its hearing by the 
court, and facilitate the eligibility control of presented evidence. In this context, it is 
relevant to note that the authorities also submitted a draft legislative proposal for the 
provision  of  training  to  magistrate  court  judges,  who  are  the  ones  dealing  with 
household insolvency cases. 

  Clearing  the  backlog  of  called  state  guarantees:  The  authorities  have  increased 
their efforts and committed to accelerate the implementation of the action plan for the 
clearance  of  the  backlog  of  called  guarantees,  which  remains  considerable.  The 
updated plan foresees the processing of all  currently called  guarantees  for corporate 
loans by end 2022 and loans for natural persons by end-2023. The payment of claims 
is  expected  to  follow  immediately  after  the  examination  of  each  claim  has  been 
finalised, except for (i) claims that are subject to litigation and cannot be paid before 
the court cases are completed and (ii) cases where additional documentation needs to 
be provided by the creditors. For such cases, the payments are expected to  be made 
within one additional year after the processing of the claim, and to be fully concluded 
by  end-2025.  The  fiscal  cost  of  the  envisaged  clearance  path  is  expected  to  be 
incorporated  in  the  2020  update  of  the  Medium-term  Fiscal  Strategy.  Ensuring 
considerable payments already in 2020, with visible results by mid-year, and further 
exploring  ways  to  process  the  guarantees  scheduled  for  2024  still  in  2023,  would 
enhance the effectiveness of the action plan and send the right signal vis-à-vis future 
payments from the state towards the financial system. 

  Primary residence protection: The primary residence protection scheme with a state 
subsidy put in place to help debtors start repaying their mortgages remains little used 
and  the  authorities  reiterated  their  commitment  that  the  protection  would  expire  at 
end-April 2020.  

  E-auctions: A comprehensive analysis of the reasons, which currently impede a high 
success  ratio  of  e-auctions,  including  a  proposal  with  possible  legislative  remedies, 
has  not  been  conducted  so  far.  The  authorities  are  aware  of  the  existence  of 
impediments  leading  to  the  frequent  failures  of  e-auctions  conducted  by  banks  to 
liquidate  their  collateral,  and  commit  to  implement  actions  to  prevent  cases  of 
procedural  abuse,  notably  through  designing  an  effective  procedural  mechanism  for 
dealing with price adjustment requests.  

  Other  initiatives:  The  European  institutions  welcome  that  the  favourable  tax 
treatment of loan write-offs that had expired at the end of 2018 has been reinstated, as 
it  will  increase  the  incentives  to  undertake  debt  restructurings.  The  authorities 
completed  their  assessment  of  the  implementation  of  the  reformed  Code  of  Civil 
Procedure,  which  aims  to  increase  the  effectiveness  of  court  proceedings  and 

11 

 
accelerate the processing of cases by civil instances, and are expected to finalise the 
formulation  and  eventual  proposals  for  the  adoption  of  legislation  for  future 
improvements by mid-July 2020.   

The Hellenic Financial Stability Fund continued exercising its shareholding rights in the 
four  systemic  banks.  In  the  last  reporting  period,  it  focused  on  improving  the  banks’ 
governance, assessing their business models, and progressing with the implementation of its 
Exit Strategy. The discussions between the Fund and the Ministry of Finance on the potential 
involvement of the authorities in the final stage of the divestment and the legal protection for 
the  Fund’s  governing  bodies  and  staff  have  not  yet  been  finalised.  Preserving  the  Fund’s 
independence remains a cornerstone in the process toward restoring the health of the banking 
sector. 

LABOUR AND PRODUCT MARKETS AND COMPETITIVENESS 

The  authorities  are  preparing  a  new  National  Growth  Strategy.  The  new  strategy  will 
benefit  from  the  input  of  a  high-level  expert  group (8)  and  is  due  to  be  completed  by  mid-
2020. It is expected to set out comprehensive and actionable medium-term reform priorities, 
with a view to boosting exports and investment. Following the adoption of the Development 
Law in October 2019, the authorities are also preparing secondary legislation, which is a pre-
condition to making the new framework fully operational. 

The  authorities  committed  to  safeguard  competitiveness  when  carrying  out  an  annual 
update  of  the  minimum  wage,  mindful  of  the  requirement  of  the  Greek  legislation  to 
also  safeguard  purchasing  power.  An  ex  post  assessment  of  the  last  minimum  wage 
increase  and  the  abolition  of  the  youth  sub-minimum  wage,  which  took  place  in  February 
2019, is under preparation with the help of a European Commission technical support project 
implemented by the World Bank. Following this ex post assessment, consultations with social 
partners  and  recommendations  by  an  independent  expert  committee,  the  government  is 
expected to determine the new level of the minimum wage in June 2020. In line with the legal 
framework,  this  should  be  based  on  an  analysis  of  economic  fundamentals  and  a  genuine 
dialogue with social partners.  

The authorities have completed the implementation of the 2017-2019 action plan to fight 
undeclared  work,  an  end-2019  specific  commitment,  and  are  now  in  the  process  of 
preparing  a  follow  up.  The  previous  action  plan  promoted  an  integrated  approach  to 
undeclared  work,  including  measures  to  reinforce  the  cooperation  among  different 
institutions  and  improve  the  capacity  to  detect  undeclared  work.  The  authorities  are  now 
designing a follow-up to this action plan.  

The  authorities  have  prepared  an  action  plan  for  the  nationwide  expansion  of  a  new 
delivery model for active labour market policies, thus progressing towards completing 
the  rollout  of  the  Social  Solidarity  Income  scheme,  which  is  an  end-2019  specific 
commitment.  The  updated  action  plan  aims  to  gives  a  strategic  focus  on  promoting  long-
term  and  sustainable  employment  growth  by  pursuing  an  integrated  and  targeted  approach. 
Following an initial pilot project, the new delivery model is set to be expanded to three other 
regions in view of an eventual national rollout. 

(8) This is composed of renowned experts and is chaired by Nobel Prize economist Christopher Pissarides. 

12 

 
                                                 
The authorities have embarked on an ambitious agenda for a comprehensive education 
reform. This goes beyond Eurogroup commitments, and is macro and social policy relevant 
as it addresses skill mismatches, enhances growth and helps to reduce poverty and improve 
the social situation. The reforms focus on challenges such as enhancing the quality of public 
schools,  upgrading  vocational  education  and  training  and  improving  the  quality  of  higher 
education  institutions  to  address  the  skills  gap (9).  A  new  law  on  higher  education  aims  at 
upgrading  the  evaluation  and  accreditation  of  higher  education  institutions  and  linking 
university funding with performance, while a number of changes to compulsory education are 
in  the  pipeline,  including  the  implementation  of  a  mandatory  two-year  pre-school 
programme.  

institutional  arrangements.  Legislation  enlarging 

Progress on areas of economic diplomacy and trade facilitation, which are expected to 
contribute  to  strengthening  Greece’s  export  performance,  has  been  hampered  due  to 
incomplete 
the  mandate  and 
responsibilities of the Ministry of Foreign Affairs on economic diplomacy has been delayed, 
and is expected to be completed in March 2020, while the strategy itself is due by April 2020. 
The establishment of a solid legal footing for the single authority and the adjustment of inter-
institutional  structures  are  pre-requisites  for  the  authorities  to  achieve  synergies  and  policy 
cohesiveness in this area.  

Despite some delays mostly caused by factors outside the authorities’ control, work on 
investment  licensing  is  largely  on  track  and  the  authorities  remain  committed  to 
completing  the  reform  within  the  agreed  deadlines.  The  authorities  enhanced  the 
administrative  capacity  of  the  relevant  service  coordinating  the  reform  and  have  secured 
further  technical  support  through  the  European  Commission  on  the  remaining  work.  The 
signature of the contract for the procurement of the IT system, which is the first step towards 
the full deployment of the IT system (an end-2019 specific commitment), has been delayed 
given  a  complication  that  arose  within  the  tendering  procedure  outside  the  control  of  the 
authorities.  Work  on  the  implementation  of  the  inspections  framework  law  (a  mid-2020 
specific  commitment)  is  progressing,  save  for  few  delays.  The  authorities  also  remain 
committed to  meeting the mid-2020 specific  commitment  deadline for the simplification of 
licencing procedures in the remaining sectors of the economy, despite some delays.  

The  authorities  aim  at  concluding  the  revision  of  the  nuisance  classification  by  mid-
2020, well ahead of the mid-2021 specific commitment, and are also working on further 
measures  to  improve  the  environmental  licensing  and  inspection  frameworks.  The 
authorities  signed  a  contract  with  a  technical  advisor  to  support  them  in  the  alignment  of 
nuisance  classification  with  the  environmental  classification  system,  with  a  view  to  issuing 
relevant  secondary legislation by mid-2020. Additional  steps in  the pipeline to  improve the 
licensing  framework  include  the  simplification  of  the  process  for  renewing  and  amending 
environmental  permits,  the  certification  of  external  environmental  assessors,  the  re-
organisation of the administrative framework for inspections, and the certification of external 
inspectors. The latter would be an important step towards addressing current weaknesses of 

(9) Greece ranks as one of the bottom of EU countries on the skills matching dimension of the European Skills 
Index,  with  one  of  the  highest  over-qualification  rates  of  tertiary  graduates  (31.6%)  and  qualification 
mismatches among the EU countries. This is also corroborated by the latest PISA results, according to which 
Greece ranks significantly below the OECD average in literacy, mathematics and science. With regards to 
digital education, only 46% of people aged 16-74 appear to have at least basic digital skills, while 31% have 
no digital skills at all (EU average: 17%). These challenges are also highlighted in the Commission’s 2020 
Country Report on Greece, adopted on 26 February 2020 in parallel to this report (COM(2020) 507). 

13 

 
                                                 
the enforcement framework. The authorities are also reviewing certain provisions legislated 
by the previous administration to identify any potential deviations with the principles of the 
investment  licensing  reform,  with  a  view  to  legislating  any  necessary  amendments  by 
September  2020.  The  ongoing  engagement  and  enhanced  role  of  the  relevant  service 
coordinating this reform in the scrutiny of future legislation would safeguard the continuity of 
this reform. 

The  cadastre  project  is  progressing  well  overall,  but  deadlines  had  to  be  adjusted  in 
view  of  previously  accumulated  delays.  The  problem  of  delayed  property  declarations, 
which  had  slowed  down  the  cadastral  mapping  process,  has  largely  been  overcome,  and  in 
most areas the next phase of the mapping can be launched. That said, in view of previously 
accumulated delays it has been warranted to revise the road map for the cadastral project in 
order to update the timelines and intermediate steps in a credible manner. In this respect, the 
deadline  for  completion  of  the  cadastral  mapping  has  been  moved  from  mid-2021  to  May 
2022,  with  intermediate  milestones.  There  is  overall  momentum  in  the  project  and  the 
authorities  are  showing  strong  ownership,  providing  a  sound  basis  for  the  eventual 
completion of the project. On the institutional side, in order to accelerate progress towards the 
full establishment of the cadastral agency (a mid-2020 specific commitment) the authorities 
plan to immediately open regional offices across Greece and give them the authority to open 
the envisaged local sub-offices.   

Progress  towards  the  completion  of  Greece’s  energy  market  commitments  continued 
with  the  initial  submission  of  revised  proposals  to  attempt  to  remedy  the  anti-trust 
concerns  until  the  full  phase  out  of  lignite,  along  with  the  formulation  of  an  overall 
strategy  for  energy  and  climate.  This  is  a  step  towards  addressing  the  outstanding 
competition concerns related to the privileged access to lignite-fired generation by the Public 
Power  Company  and  to  finally  complying  with  the  Commission’s  decision  and  Court’s 
judgements.  Addressing  the  longstanding  distortions  on  the  wholesale  market  (including 
remedies  to  the  anti-trust  commitment,  which  will  now  cover  the  end-2019  specific 
commitment by including additional measures in the energy sector) will increase the degree 
of competition  in  the Greek electricity market,  setting the basis for further investments  and 
helping  Greece  reform  its  energy  sector.  In  this  context,  it  is  relevant  to  note  that  Greece 
adopted  its  National  Energy  and  Climate  Plan  in  December  2019  in  accordance  with 
Regulation  (EU)  2018/1999  on  the  Governance  of  the  Energy  Union  and  Climate  Action, 
ahead of some other Member States. The plan outlines Greece’s  2030 energy strategy, based 
on  the  early  decommissioning  of  lignite  plants,  and  signals  ambition  with  an  increase  in 
renewable energy generation, energy efficiency and a decrease in CO2 emissions. In order to 
manage  the  social  challenges  of  the  transition,  close  cooperation  with  the  Commission, 
including  under  the  Green  Deal  Investment  Plan  and  Just  Transition  Mechanism,  is 
encouraged.  

The  implementation  of  the  target  model  for  the  electricity  market,  a  specific 
commitment rescheduled for mid-2020, is progressing largely according to the schedule. 
Since the last report, Greece has made steps forward, such as the approval of the spot markets 
clearing  rulebook.  Almost  all  of  the  remaining  technical  rules  have  been  submitted  to  the 
regulatory authority for approval. Further work has taken place to ensure that the local market 
will  be  coupled  with  the  Bulgarian  and  Italian  markets  without  undue  delays  after  the  spot 
market go-live.  

14 

 
HELLENIC CORPORATION OF ASSETS AND PARTICIPATIONS 

The  work  of  the  Hellenic  Corporation  of  Assets  and  Participations  on  the  key  areas 
covered by the commitments to the Eurogroup is continuing. Since the publication of the 
fourth enhanced surveillance report in November 2019, progress has been made in improving 
corporate governance in state-owned enterprises (including board reviews and remuneration 
policies). In addition, the Corporation is increasing its focus on operational improvements in 
state-owned  enterprises.  A  key  challenge  in  this  respect  will  be  to  effectively  address  the 
significant  operational  and  financial  issues  in  the  Hellenic  Post  and  co-operate  with  the 
authorities for the funding of the restructuring plan, in line with the EU state aid framework. 
The authorities have exhibited strong engagement and support to the important work of the 
Corporation.  The  coordination  mechanism  between  the  authorities  and  the  Corporation  has 
meanwhile been launched for all enterprises, the mandates for eight enterprises were finalised 
and submitted to  the Cabinet Committee, and work is  underway in  updating the ministerial 
guidance.  The  Corporation  is  continuing  with  the  implementation  of  its  strategic  plan  (a 
continuous commitment), and is monitoring the key performance indicators it has set for its 
subsidiaries.  Achieving  the  full  potential  of  the  real  estate  portfolio  under  the  Public 
Properties  Company  remains  a  key  challenge,  while  the  screening  for  the  transfer  of 
additional real estate assets should be completed soon. The transfer of the Olympic Athletic 
Centre  (OAKA),  which  was  an  end-2018  specific  commitment,  will  be  delayed  due  to 
practical complexities, which are unavoidable due to the status of the asset. 

The  authorities  maintained  momentum  in  the  privatisation  process  as  reflected  in  the 
good  progress  on  several  transactions.  It  will  be  key  to  keep  up  the  efforts  to  bring  the 
projects  to  fruition.  As  mentioned  in  previous  reports,  the  timeline  of  the  flagship  projects 
below  has  been  affected  by  delays  or  factors  largely  outside  the  control  of  the  authorities. 
Overall,  the  authorities  are  making  continued  progress  in  the  implementation  of  the  Asset 
Development Plan (a continuous commitment). In particular: 

  Hellinikon  (an  end-2018  specific  commitment):  While  the  tender  process  for  the 
award of the casino licence may be delayed due to factors outside the control of the 
government, the authorities are working to finalise the other conditions precedent for 
the transaction. They have adopted secondary legislation on the metropolitan park and 
on  development  and  urbanization  zoning  areas,  and  an  agreement  has  been  reached 
between  all  involved  parties  on  the  partition  of  the  Hellinikon  site,  whereas  the 
authorities  are  in  the  process  of  taking  steps  to  complete  the  few  pending  issues 
regarding the relocation of remaining public and private users and the legalisation and 
demolition process of buildings.  

  Marina of Alimos (a mid-2019 specific commitment): the Court of Audit approved 
the  tender  procedure  on  26  June  2019.  The  delay  in  the  financial  closing  of  the 
transaction is primarily due to the time taken for the due diligence process by banks 
required in financing the transaction. 

  Hellenic Petroleum (a mid-2019 specific commitment): Following the failure of the 
planned  sale  of  a  majority  stake,  the  financial  closure  is  inevitably  subject  to 
significant delays. The revised structure and timing should be determined on the basis 
of what provides the best commercial and strategic value for Greece. The authorities 
are yet to decide on the approach and a tentative timetable is now expected by March 
2020. 

15 

 
 
  Sale of 30% of Athens International Airport (an end-2019 specific commitment): 
The tendering process is proceeding well. On 31 January 2020, the Board of Directors 
of  the  Hellenic  Republic  Asset  Development  Fund  (TAIPED)  decided  that  nine 
investment  parties  are  qualified  to  proceed  to  the  Binding  Offers  Phase,  thus 
effectively launching this phase. The financial  closing of the transaction  is  expected 
before the end of the year.  

  Public  Gas  Corporation  (an  end-2019  specific  commitment):  The  necessary 
legislation for the partial demerger of the company and the sale of the full stake of the 
Asset Development Fund in the company (i.e. 65%) was adopted in November 2019. 
The  international  tender  process  for  DEPA  Infrastructure  was  launched  on  9 
December  2019,  whereby  the  Fund  and  Hellenic  Petroleum  are  acting  as  co-sellers 
(offering 100% of the share capital of DEPA Infrastructure). The international tender 
process for the sale of 65% of the share capital of DEPA Commercial was launched 
on 23 January 2020.  

  Egnatia  (an  end-2019  specific  commitment):  The  long-term  concession  for  the 
Egnatia  motorway  has  been  characterised  by  systematic  delays  and  problems, 
showing a lack of ownership. The authorities have stressed their strong commitment 
to  proceed  with  the  transaction.  Since  the  last  enhanced  surveillance  report,  three 
frontal toll stations were put into operation, while a detailed roadmap was provided to 
the  institutions,  with  a  specific  timetable  for  the  implementation  of  all  required 
pending actions by May 2020. The implementation of the roadmap has started, and it 
will be key to build on the progress and take all necessary steps well in time before 
the revised deadline for the submission of binding offers on 26 June 2020.  

  Regional  Ports  (an  end-2019  specific  commitment):  The  authorities  are  positive 
with respect to providing flexibility of choice on the privatisation transaction structure 
(i.e.  sub-concession,  sale  of  equity)  so  as  to  allow  the  best  privatisation  transaction 
structure  to  be  chosen  for  each  port.  The  relevant  legal  amendment  was  adopted  by 
Parliament  on  12  February,  whereas  the  Asset  Development  Fund  has  started  the 
process for recruiting external consultants for the sale of equity for four ports.  

PUBLIC ADMINISTRATION 

The  authorities  are  taking  steps  to  advance  on  digital  governance, which  is  one of the 
least  advanced  in  the  EU.  Despite  some  delays,  a  new  ‘Digital  Bible’  is  expected  to  be 
completed  by  March  2020,  setting  out  projects  for  the  public  administration  as  well  as 
measures  to  enhance  overall  digital  performance.  Clarity  on  the  roles  and  responsibilities 
within the administration will be key for its effective implementation. Progress is being made 
on  important  projects,  such  as  the  creation  of  a  unified  platform  (gov.gr)  for  electronic 
services,  increasing  the  interoperability  of  public  systems,  and  the  simplification  and 
digitalisation of processes affecting citizens. Further simplifying processes that pose a burden 
to businesses would also be a priority for Greece. 

The appointment of Permanent Secretaries in the public administration is progressing 
and  the  selection  process  for  Directors  has  resumed.  According  to  the  authorities,  the 
appointments for the Permanent Secretaries posts should be completed by March 2020, while 
director  posts  are  expected  to  be  completed  by  August  2020.  It  will  be  key  to  ensure  that 
planned  legal  amendments  for  future  appointments  of  directors  and  heads  of  division 

16 

 
safeguard  the  role  of  the  Supreme  Council  for  Civil  Personnel  Selection  (ASEP)  in  the 
process. 

The  authorities  have  made  some  progress  in  setting  up  an  open  selection  process  for 
senior  management  posts  at  public  sector  entities (10),  expected  to  be  in  place  by  May 
2020.  Implementing  an  open  selection  process  as  a  standard  framework  for  these  legal 
entities  will  be  instrumental  in  strengthening  their  professional  management  and  sending  a 
clear message for further depoliticisation of the public administration. In case some entities 
are  not  made  subject  to  the  standard  framework,  in  view  of  specific  public  policy  roles,  it 
would be warranted to keep exceptions to a minimum, based on clear criteria, and to ensure 
that the framework provides for effective management of these entities.  

The  authorities  have  made  continued  progress  in  developing  a  Human  Resources 
Management  Strategy,  whereas  a  majority  of  the  digital  organigrams  and  job 
descriptions,  an  end-2019  specific  commitment,  have  been  completed.  That  said,  some 
large  entities  (incl.  the  Social  Security  Fund  (EFKA)  and  the  Employment  Fund  (OAED)) 
still need to be fully included in the exercise, which constitutes a priority for the authorities 
with  a  view  to  completing  the  rollout  by  end-April  2020.  The  mobility  system  and 
performance  assessment  have  been  firmly  established  across  the  public  administration  and 
adjustments to further improve their efficiency are planned. In October 2019, the authorities 
put in place a framework enabling public sector entities to link each job holder with a specific 
job description, thus creating the link with the Single Payment Authority. The authorities to 
expected to verify full compliance with this framework by April 2020.  

The authorities are planning to proceed to improve the personnel selection system and 
establish  a  coherent  approach  to  streamline  the  job  classification  system.  A  committee 
has been established to review the enabling law of the Supreme Council for Civil Personnel 
Selection (ASEP) with  the aim to  simplify and  accelerate the recruitment  processes.  In this 
context, it would be important that the planned reorganisation of the Supreme Council would 
also  enhance  its  capacity  to  efficiently  undertake  the  new  responsibilities  it  has  been 
allocated, such as overseeing the selection of managers in the public administration. 

The authorities have confirmed their intention to adopt a new codification law for the 
Labour Law Code and Code of Labour Regulatory Provisions by mid-2020, in line with 
the specific commitment. The authorities are highly committed to the initiative as they see 
the codification process as an opportunity to carry out a thorough review of the current legal 
framework. A number of legal provisions of the Executive State Law will help in this respect, 
including  the  reestablishment  of  the  Central  Codification  Committee,  while  it  will  be 
important to devote sufficient resources to the task given its complexity. 

The new provisions of the Executive State Law on good law-making came into effect in 
January  2020  and  are  expected  to  improve  the  quality  of  laws  and  to  significantly 
reduce  unrelated  and 
involves 
comprehensive  impact  assessments,  standard  public  consultations  and  enhanced  quality 
control,  while  relevant  training  to  selected  staff  will  be  provided.  The  initiative  has  the 
potential to greatly enhance the clarity and coherence of law-making, with positive effects on 
the investment climate, and thorough implementation will be critical. The Law also includes 

last-minute  amendments.  The  new 

framework 

(10)  In  the  Greek  context,  these  public  sector  bodies  are  referred  to  as  legal  entities  of  public  law  and  legal 

entities of private law. 

17 

 
                                                 
provisions  for  the  delegation  of  signature  powers  to  the  non-political  level  that  came  into 
effect  in  February  2020.  Once  enforced,  it  is  estimated  that  approximately  80%  of  all 
decisions taken in each ministry will now be signed off at Director-General level. 

Hiring of permanent staff is proceeding in compliance with the staffing plan, while the 
increasing  trend  of  temporary  staff  has  slowed  down  and  the  level  is  expected  to  be 
reduced  further  during  2020.  According  to  preliminary  data,  the  number  of  permanent 
officials  hired  during  2019  was  significantly  below  exits,  mainly  due  to  retirement.  The 
number  of  temporary  staff  is  expected  to  be  reduced  in  2020,  following  the  planned 
conversion of temporary teachers and home assistance posts into permanent posts in line with 
the hiring plan. At operational level, the authorities are planning steps to enhance monitoring 
and steering capabilities related to temporary staff. 

While new salary provisions raise concerns about the integrity of the unified wage grid, 
progress  has  been  made  to  strengthen  central  control  over  the  wage  grid  and  hiring 
procedures.  A  number  of  legal  amendments  have  introduced  further  exceptions  to  the 
unified wage grid, notably with regard to allowances. In order to manage risks to the integrity 
of  the  wage  grid,  the  authorities  decided  as  a  first  step  to  establish  an  inter-ministerial 
committee with a mandate to ensure overall coherence and reinforce control, while additional 
measures  are  being  contemplated  and  would  further  help  to  contain  risks.  On  the  upside, 
recent primary legislation to allow for the reorganisation of the Single Payment Authority has 
enabled  the  implementation  of  a  long-delayed  IT  project,  aiming  to  establish  an  integrated 
and fully digitized payroll system for all general government employees. The authorities are 
considering how to proceed with implementing the final phase of this reform, which would 
entail mandating the Single Payment Authority to also carry out the clearing of all salaries.  

JUSTICE 

The  gradual  switching  to  the  mandatory  electronic  filing  and  processing  of  legal 
documents  is  progressing,  starting  from  the  administrative  jurisdictions,  an  end-2019 
specific commitment. Given the complexity of the project, it was previously agreed that full 
rollout  throughout  all  courts  by  end-2019  is  not  technically  achievable  and  that  the 
commitment would be assessed on the basis of progress in the second phase of the Integrated 
Judicial  Case  Management  System  for  the  full  rollout  to  be  implemented  over  a  36-month 
period from the activation of the relevant contract. 

The  authorities  are  moving  forward,  with  some  delay,  with  the  call  for  bids  for  the 
second phase of the Integrated Judicial Case Management System, a mid-2020 specific 
commitment.  Following  some  delays  due  to  internal  governance  changes,  the  authorities 
committed  to  publish  it  shortly.  Given  accumulated  past  delays,  full  implementation  of  the 
second  phase  of  the  Integrated  Judicial  Case  Management  System  is  not  technically 
achievable  within  the  original  mid-2020  deadline.  It  is  therefore  warranted  to  assess  the 
commitment on the basis of the conclusion of the relevant tendering procedure, by end-2020, 
and  of  a  36-month  implementation  plan  for  the  completion  of  the  project,  which  is  also 
stipulated in the draft tender documentation.  

Following  the  adoption  of  a  number  of  legal  amendments,  the  mandatory  mediation 
framework,  whose  entry  into  force  had  been  twice  postponed,  is  being  phased  in. 
Legislation  adopted  in  November  2019 introduced  a  reformed  mediation  framework  that 
redefined the categories of disputes subjected to mandatory mediation, the minimum cost of 
mediation, and a number of procedural and technical aspects. The implementation of the first 

18 

 
stage  of  compulsory  mediation  started  on  15  January  2020  covering  certain  categories  of 
family  law  disputes,  and  the  second  phase  will  follow  in  March  2020,  extending  it  on 
ordinary proceedings in first instance.  

The  newly  created  National  Authority  for  Transparency  is  being  built  up  gradually, 
while  implementation  of  the  National  Anti-corruption  Action  Plan  is  proceeding.  The 
Authority is planned to be fully operational in November 2020. Implementation of the Action 
Plan is broadly on track, though some crucial decisions remain to be adopted. For instance, 
the legislative frameworks for the asset recovery office and asset management offices are still 
in the drafting stage, implying further delays before this crucial instrument in the fight against 
corruption  is  put  in  place.  Close  monitoring  on  the  implementation  of  the  framework, 
including on political party financing, combating of financial crimes and internal audit, will 
be critical.  

The amendment of the law modifying the Criminal  Code and the Criminal  Procedure 
Code  is  welcome,  though  some  concerns  remain.  An  amendment  in  June 2019  had 
downgraded the main active bribery offence from a felony into a misdemeanour. While this 
downgrading was phased out in November 2019, it will affect a number of ongoing cases (see 
the 2020 Country Report for additional details). The authorities have established a committee 
with a view to implementing the remaining recommendations of the Group of States against 
Corruption  in  the  area  of  the  criminal  codes  by  end-2020.  The  National  Transparency 
Authority will be given an observer status in the committee. 

19