COMMISSION STAFF WORKING DOCUMENT Enhanced Surveillance Report - Greece, February 2020 Accompanying the document 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

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 26.2.2020  SWD(2020) 45 final  COMMISSION STAFF WORKING DOCUMENT Enhanced Surveillance Report - Greece, February 2020 Accompanying the document COMMUNICATION FROM THE COMMISSION Enhanced Surveillance update - Greece, February 2020 {COM(2020) 100 final}  
 
 
ABBREVIATIONS 

AIA: Athens international airport 
ANFA: Agreement on net financial assets 
AROPE: at risk of poverty or social exclusion 
CBD: Consolidated banking data 
DEPA: Δημόσια επιχείρηση αερίου (public gas corporation of Greece) 
ECB: European central bank 
EFKA: Ενιαίος φορέας κοινωνικής ασφάλισης (unified social security fund)  
ENFIA: Ενιαίος φόρος ιδιοκτησίας ακινήτων (unified property tax) 
ETAD: Εταιρεία ακινήτων δημοσίου ΑΕ (public properties company) 
ESM: European stability mechanism 
EYATH  A.E.:  Εταιρεία  ύδρευσης  και  αποχέτευσης  Θεσσαλονίκης  Α.Ε.(Thessaloniki 
water supply and sewerage company S.A.) 
EYDAP  A.E.:  Εταιρεία  ύδρευσης  και  αποχέτευσης  Πρωτευούσης  A.E.  (the  Athens 
water supply and sewerage company S.A.) 
HCAP: Hellenic corporation of assets and participations 
IAPR: Independent authority for public revenue 
ICT: Information and communication technologies 
LEPETE:  Λογαριασμός  επικούρησης  προσωπικού  εθνικής  τράπεζας  της  Ελλάδος 
(national bank of Greece supplementary pension fund) 
NBG: National bank of Greece 
NECP: National Energy and Climate Plan 
NOME:  Nouvelle  organisation  du  marché  de  l’electricité  (new  organization  of  the 
electricity market) 
NPE: Non-performing exposure 
NPL: Non-performing loan 
OSDDY:  Ολοκληρωμένο  σύστημα  διαχείρισης  δικαστικών  υποθέσεων  (integrated 
management system for judicial cases) 
OTC: Over-the-counter 
PDMA: Public debt management agency 
SEK: Σύνδεσμος Ελλήνων κτηματομεσιτών (Greek real estate agents association)  
SMP: Securities markets programme 
SSI: Social solidarity income 
TOMY: Τοπική μονάδα υγείας (primary health care unit) 
TSA: Treasury single account 
UCoA: Unified chart of accounts 
VAT: Value added tax 

i 

 
ACKNOWLEDGEMENTS 

This  report  is  prepared  as  accompanying  document  to  the  Commission's  assessment 
pursuant Article 3(5)  of  Regulation  (EU) 472/3013  published as Communication  from 
the Commission – Enhanced Surveillance – Greece, February 2020. It was prepared in 
the  Directorate  General  Economic  and  Financial  Affairs,  under  the  direction  of 
Maarten Verwey, Director General, Declan Costello, Deputy Director General, and the 
coordination of Paul Kutos, Head of Unit and Milan Lisicky, Deputy Head of Unit. 

Contributors: 

Chris  Allen,  Giuseppe  Carone,  Fotini  Dionyssopoulou,  Matteo  Duiella,  Sotirios 
Giannoulis,  Christos  Gofas,  Andras  Hudecz,  Alexander  Ioannidis,  Paul  Kutos,  Eloïse 
Lecouturier,  Milan  Lisicky,  Vasileios  Maroulis,  Benedetta  Martinelli,  Vasilis  Nikitas, 
Zoltan  Petrov,  Eleni  Polemidiotou,  Angelos  Rammos,  Marie-Luise  Rud,  Alexandros 
Tavoutsoglou, Andreas Trokkos, Vasiliki Vasilopoulou, Irene Vlachaki, Rainer Wichern, 
Alkistis Zavakou. Assistance was also provided by Fotini Louka. 

The  European  Central  Bank  (ECB)  Staff  participated  in  the  drafting  of  this  report  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.  Staff  of  the  European  Stability  Mechanism  (ESM)  contributed  to  the 
preparation  of  this  report  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.  IMF  staff  participated  in  the 
context of its Post Program Monitoring cycle. 

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

Paul Kutos 

European Commission 

Unit ECFIN-F-2 

CHAR 14/103 

B-1049 Brussels 

e-mail: ECFIN-GREECE-REQUESTS@ec.europa.eu 

ii 

 
 
 
CONTENTS 

Commission Staff Working Document  

1. 

Introduction 

2.  Macroeconomic developments 

3. 

Fiscal and fiscal-structural policies 

FISCAL DEVELOPMENTS AND OUTLOOK 
TAX POLICY 

3.1. 
3.2. 
3.3.  REVENUE ADMINISTRATION 
3.4.  PUBLIC FINANCE MANAGEMENT 

 Arrears 

3.4.1. 
3.4.2.  Treasury Single Account 
3.4.3.  Chart of Accounts 

4. 

Social welfare 

4.1.  PENSIONS 
4.2.  HEALTHCARE 
4.3. 

SOCIAL SAFETY NETS 

5. 

Financial sector 

5.1. 
FINANCIAL SECTOR DEVELOPMENTS 
5.2. 
FINANCIAL SECTOR POLICIES 
5.3.  HELLENIC FINANCIAL STABILITY FUND 

6. 

Labour and product markets 

LABOUR MARKET 

6.1. 
6.2.  PRODUCT MARKETS AND COMPETITIVENESS 

7.  Hellenic Corporation of Assets and Participations (HCAP) and privatisation 

7.1.  HELLENIC CORPORATION OF ASSETS AND PARTICIPATIONS 
7.2. 
IMPLEMENTATION OF THE ASSET DEVELOPMENT PLAN 

8. 

Public administration and justice 

8.1.  PUBLIC ADMINISTRATION 
8.2. 
8.3.  ANTI-CORRUPTION 

JUSTICE 

9. 

Sovereign financing and capacity to repay 

SOVEREIGN FINANCING 

9.1. 
9.2.  DEBT SUSTAINABILITY 

Annex 

LIST OF TABLES 

Summary of the main macroeconomic variables 

2.1. 
3.1.  Key Performance Indicators of the Independent Authority (fourth quarter of 2019) 
3.2.  Arrears clearance plan 

7 

9 

11 

13 

13 
18 
19 
22 
22 
24 
24 

25 

25 
26 
27 

29 

29 
33 
38 

39 

39 
41 

49 

49 
51 

55 

55 
60 
61 

63 

63 
64 

66 

26 
35 
36 

iii 

 
5.1.  Main financial stability indicators 

LIST OF GRAPHS 

2.1.  Real GDP and growth contributions 
3.1.  Pensions timeline 
5.1.  Bank deposits (left) and total borrowing from the Eurosystem (right) 
5.2.  Non-performing loans as a % of total customer loans (left) and changes in their stock in the 

third quarter of 2019 (right: million EUR) 

5.3.  Bank credit to non-financial corporations and households 
9.1.  Credit ratings (left) and 10-year government bond spreads to the Bund (right) 
9.2.  Debt sustainability indicators 

46 

25 
31 
44 

45 
46 
78 
79 

iv 

 
 
 
 
Commission Staff Working Document 

 
 
 
1. 

INTRODUCTION 

Economic  developments  and  policies  in  Greece  are  monitored  under  the  regular 
economic  surveillance  framework  for  euro-area  Member  States  under  the 
European  Semester  for  economic  policy  co-ordination  and  under  the  enhanced 
surveillance  framework  according  to  Regulation  (EU)  No 472/2013 (1).  Following 
its  third  prolongation,  enhanced  surveillance  for  Greece  is  currently  in  place  for  six 
months as from 21 February 2020 (2). The implementation of enhanced surveillance for 
Greece  acknowledges  the  fact  that  over  the  medium  term,  Greece  needs  to  continue 
implementing  measures  to  address  the  sources  or  potential  sources  of  economic  and 
financial  difficulties,  while  implementing  structural  reforms  to  support  a  robust  and 
sustainable economic growth.  

Greece made a general commitment at 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  programmes  are  safeguarded.  In  addition,  Greece 
made  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, 
the  modernisation  of  public 
administration (3). In this context, 10 specific commitments were made with a deadline 
of  end-2019,  progress  on  which  is  assessed  in  this  report,  while  follow-up  actions  to 
previous commitments are also monitored.  

(v)  privatisation  and 

(vi) 

This  report  is  based  on  the  findings  of  a  mission  to  Athens  between  22 and  24 
January 2020 and regular dialogue with the authorities. The mission was 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.  

(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)  2020,  C(2020)901,  of  19  February  2020  on  the 

prolongation of enhanced surveillance for Greece. 

(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. 

7 

                                                           
 
Commission Staff Working Document -  

Chapter 1 - Introduction 

Enhanced  surveillance  provides  a  comprehensive  framework  for  monitoring 
economic developments and the pursuit of policies needed to ensure a sustainable 
economic  recovery.  To  this  end,  this  report  includes  an  assessment  of  economic 
conditions  in  Greece  (chapter  2);  an  assessment  of  implementation  of  reform 
commitments given by  Greece to  the European  partners  (chapters 3-8);  and an update 
on sovereign financing conditions and debt repayment capacity (chapter 9). This report 
is  issued  alongside  the  Country  Report  for  Greece,  prepared  in  the  context  of  the 
European Semester of economic and social policy coordination. 

The  Eurogroup  on  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 this end, the 
implementation  of  some  of  the  agreed  debt  measures  –  the  abolition  of  the  step-up 
interest  rate  margin  related  to  the  debt  buy-back  tranche  of  the  European  Financial 
Stability  Facility  (EFSF)  programme  as  of  2018  and  the  restoration  of  the  transfer  of 
equivalent amounts to the income earned by euro-area national central banks on Greek 
government bonds held under the Agreement on Net Financial Assets (ANFA) and the 
Securities  Market  Programme  (SMP)  –  will  be  made  available  to  Greece  subject  to 
compliance  with  its  commitments  on  reform  continuity  and  completion,  based  on 
positive  reports  under  enhanced  surveillance.  The  return  of  these  income  equivalent 
amounts would be made available to Greece in semi-annual tranches of some €640 m up 
to  mid-2022.  The  waiver  of  the  step-up  interest  rate  margin,  for  part  of  the  loans 
extended by the European Financial Stability Facility, would reduce interest payments 
by  some  €220 m  annually.  It  would  be  waived  on  a  semi-annual  basis  until  2022  and 
permanently  after  2022.  Following  the  Eurogroup  on  4  December  2019,  the  second 
tranche of policy-contingent debt measures has been completed, inter alia based on the 
assessment  of  the  implementation  of  Greece’s  commitments  for  mid-2019  in  the 
enhanced  surveillance  report  adopted  by  the  Commission  on  20  November  2019 (5). 
The current report assesses the implementation of Greece’s specific reform completion 
commitments  for  end-2019,  the  continuous  commitments  and  its  general  reform 
continuity commitment.  

(5)  https://ec.europa.eu/info/sites/info/files/economy-finance/ip116_en.pdf. 

8 

 
                                                           
2.  MACROECONOMIC DEVELOPMENTS 

The  economic  recovery  continued  in  2019  and  is  expected  to  strengthen  going 
forward. With an average 0.7% quarter-on-quarter growth in the first three quarters of 
2019, economic growth strengthened somewhat in 2019 and is expected to reach 2.2% 
for the year overall, well above the euro area average of 1.2%. GDP growth was mainly 
driven by exports, with a strong contribution of government consumption in the second 
quarter of 2019. A particularly positive tourism season boosted service exports but also 
goods exports remained resilient despite the lower growth in the euro area, which is the 
main  export  market  for  Greek  products.  Despite  increases  in  disposable  income, 
consumption  growth  remained  low  in  the  first  three  quarters  of  2019,  indicating  that 
households continued to deleverage. Investment  growth remained lower than expected 
in 2019, despite the sizable investment gap compared to the euro area average and the 
high  economic  sentiment  indicators  in  the  second  half  of  2019.  Public  investment  is 
expected to have supported growth to a lesser extent than forecast given that the Public 
Investment Budget was not executed fully in 2019. 

For  2020  and  2021,  the  main  drivers  of  growth  are  likely  to  be  investment  and 
private consumption, while exports are expected to grow at a slower pace. Positive 
expectations,  on  both  producer  and  consumer  side,  and  the  tax  reform  package  that 
reduces the corporate income tax in 2020 suggest that investment should be one of the 
main  drivers  of  GDP  growth  in  2020  and  2021.  Private  consumption  is  likely  to  be 
supported  by  increasing  wages  and  disposable  incomes,  and  the  steadily  improving 
situation  on  the  labour  market.  Export  growth  is  likely  to  remain  below  the  rates 
reached in 2018 and 2019 given the slower growth of Greece’s main export markets.  

Graph 2.1:  Real GDP and growth contributions 

Source: European Commission  

The  recovery  of  the  labour  market  is  expected  to  continue  whereas  inflation  is 
forecast  to  remain  muted  in  the  short  term.  In  line  with  the  domestic  driven 
economic recovery, employment is expected to increase steadily. Unemployment, while 
still  the  highest  in  the  EU,  decreased  to  16.5%  in  November  2019  (national  data), 

9 

-3-2-101234520172018201920202021%, pps.Private consumptionPublic consumptionInvestmentNet exportsChange in inventoriesGDPForecast  
Commission Staff Working Document -  

Chapter 2 - Macroeconomic developments 

substantially down from its peak of 27.5% in 2013, and is expected to decrease further 
to 14% in 2021. Employment growth remained stable at 2.1% average quarterly year on 
year  growth  in  the  first  three  quarters  of  2019  despite  the  minimum  wage  increase  in 
February 2019. Inflation reached 0.5% in 2019, mostly on account of subdued growth of 
energy prices and the decreases in value added tax rates on certain goods in May 2019. 
For  2020  and  2021,  inflation  is  forecast  to  gradually  increase  up  to  0.9%,  as  wages 
increase.  

The  forecast  remains  subject  to  both  upside  and  downside  risks.  Latest 
developments  in  leading  indicators  together  with  recent  statistical  revisions  point  to 
upside  risks  for  2019  and  2020.  Depending  on  the  development  of  the  tourism  and 
transport industries, service exports could  surprise with  strong  growth again.  Greece’s 
export market shares continued to strengthen in 2019 and the forecast assumes that the 
trend  will  remain  modest  given  the  slowly  increasing  unit  labour  cost.  Keeping  wage 
growth in line with productivity developments would be instrumental in supporting the 
investment  recovery  and  export  growth.  Other  downside  risks  are  related  to  the 
uncertain geopolitical situation and lasting political tensions in the wider region as well 
as the under-execution of the Public Investment Budget and the related negative effects 
on the recovery of 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.  

Table 2.1:  Summary of the main macroeconomic variables 

Source: European Commission  

10 

2018201920202021Real GDP1.92.22.42.0Harmonised index of consumer prices0.80.50.70.9Annual percentage change 
  
 
3. 

FISCAL AND FISCAL-STRUCTURAL POLICIES 

3.1.  FISCAL DEVELOPMENTS AND OUTLOOK 

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. In view of the emerging fiscal space based on updated revenue and expenditure 
estimates  towards  the  end  of  2019,  and  following  consultation  with  the  European 
institutions,  the  authorities  distributed  €186 million  of  social  benefits  to  vulnerable 
households  and  cleared  a  pending  public  service  obligation  to  the  Public  Power 
Corporation  with  an  amount  of  close  to  €200 million  from  the  ordinary  budget  rather 
than from the contingency reserves. The amount of the social dividend was calibrated to 
safeguard a distance of 0.2% of GDP compared to the fiscal target to cater for possible 
statistical  revisions.  The  primary  surplus  is  expected  to  reach  around  4%  of  GDP  in 
2019 including these payments,  above the 3.8% of GDP projected in the 4th enhanced 
surveillance  report,  which  had  not  included  these  measures.  The  headline  surplus  is 
expected to have reached around 1.6% of GDP (6) in 2019, compared with the euro area 
average deficit of 0.8% of GDP expected in the Commission 2019 autumn forecast.  

The  expected  over-performance  can  be  attributed  mainly  to  a  better  revenue 
outturn  at  the  end  of  the  year,  which  is  partly  due  to  one-off  factors.  General 
government revenues turned out stronger than expected in the previous report, primarily 
due  to  higher  receipts  from  social  contributions  by  around  0.2% of GDP,  which  are 
partly  linked  to  the  start  of  the  120  instalment  scheme,  and  higher  tax  revenues  by 
around 0.1% of GDP, after deducting tax refunds. In addition, some one-off repayments 
contributed to the revenues in December by 0.1% of GDP, inter alia from the European 
Investment Bank. Net of the end-year payments, expenditure would have been lower by 
0.2% of GDP compared to the forecast in November 2019, mainly on account of lower 
consumption  expenditure,  which  comes  on  top  of  the  sizeable  reduction  in  spending 
ceilings in 2019 implemented together with the 2020 budget. 

While  having  a  broadly  neutral  impact  on  the  balance,  general  government 
investment was by 1.1% of GDP lower than initially planned, marking 2019 as yet 
another  year  of  very  sizeable  underspending.  Based  on  preliminary  data,  general 
government investment expenditure is estimated to be lower by 0.6% of GDP compared 
to the authorities’ latest projection from November 2019. However, the observed under-
execution  comes  on  top  of  the  downward  revision  of  0.5%  of  GDP  implemented  in 
November 2019, which raises the overall underspending on investment to 1.1% of GDP 
(€2.2  billion)  compared  to  the  initial  plan.  The  lower  execution  was  accompanied  by 
lower  drawing  of  EU  funds,  which  broadly  neutralised  the  impact  on  the  general 
government balance.  

Continued  undershooting  of  investment  expenditure  weighs  on  growth  and  is  a 
growing  concern.  Efforts  to  remedy  the  situation  are  in  early  stages  of 

(6)  This  includes  the  disbursement  of  the  second  tranche  of  the  ANFA-SMP  income  equivalents  worth 
0.3% of GDP, which could not be taken into account in the 2019 autumn forecast, as at the time it was 
conditional on a future decision at the Eurogroup. 

11 

                                                           
Commission Staff Working Document -  

Chapter 3 - Fiscal and fiscal-structural policies 

implementation.  From  a  fiscal  perspective,  the  low  capacity  to  monitor  and  forecast 
investment  spending  hinders  effective  management  of  fiscal  policy  and  results  in 
significant  deviations  between  execution  and  forecasts,  which  impairs  an  efficient 
budget allocation. To address this problem, the authorities have started to implement a 
detailed  action  plan  adopted  in  November  2019,  as  discussed  in  the  4th  enhanced 
surveillance  report.  According  to  the  progress  report  shared  with  the  European 
institutions  in  January  2020,  the  actions  that  were  scheduled  to  be  completed  by  end-
2019 have been implemented and detailed time-plans were shared regarding the future 
actions. From a structural perspective, the persistent underspending points to operational 
and administrative issues and a lack of a pipeline of mature projects. According to the 
National  Development  Plan,  which  is  currently  being  drafted  and  would  apply  from 
2021,  government  entities  will  be  expected  to  set-up  a  programme  of  investments, 
including strategic  goals and medium-term  policy targets.  Additionally, the authorities 
plan  to  create  an  investment  project  preparation  facility  as  a  fast  track  mechanism  to 
prepare  major  bankable  investment  projects,  whether  nationally  funded  or  co-funded 
with EU funds. This is expected to help to a more targeted and increased execution of 
the public investment budget, also in relation to the technical work on the possible use 
of the SMP-ANFA income equivalent amounts for agreed investments (see also below). 

The measures included in the 2020 Budget are being implemented and will be re-
assessed in the next enhanced surveillance report. A quantitative re-assessment will 
be necessary for the increase in  municipality  levies. Since its  adoption in autumn, the 
government  amended (7)  this  measure,  waiving  the  retroactive  billings  for  those  who 
declare  the  correct  surface  area  of  their  real  estate  by  the  end  of  March  2020.  This 
change raises concerns from a structural perspective, as it could be considered as a tax 
amnesty  and  thus  eroding  payment  discipline.  It  also  disadvantages  those  who  had 
already submitted correct declarations and hence had to pay the retroactive amounts in 
the  past.  Moreover,  the  retroactive  payments  were  an  important  part  of  the  fiscal 
revenues  expected  from  the  measure  and  cancelling  them  reduces  the  fiscal  space.  At 
the  end  of  November  2019,  the  government  also  adopted  a  measure  on  the  tax-
deductibility  of  40%  of  service  costs  relating  to  building  upgrades  from  the  personal 
income  tax  as  long  as  they  were  paid  through  electronic  means  of  payment.  This 
measure is consistent with Greece’s strategy in its National Energy and Climate Plan to 
promote energy efficiency, which could possibly help investments under the European 
Green  Deal.  It  is  expected  to  have  a  fiscal  impact  only  from  2021.  The  European 
institutions  will  provide  an  updated  fiscal  projection  in  the  6th  enhanced  surveillance 
report, along with the assessment of Greece’s Stability Programme.  

While  potential  further  growth-friendly  fiscal  measures  for  2021  are  yet  to  be 
fleshed  out,  the  Greek  authorities  announced  their  intention  to  adopt  a  set  of 
additional measures for 2020 subject to fiscal space. Since the adoption of the 2020 
budget,  the  government  has  announced  a  number  of  possible  further  tax  reduction 
measures,  conditional  on  emerging  fiscal  space.  Among  others,  the  government  is 
aiming to further reduce the ENFIA property tax while increasing its base, aiming for a 
fiscally neutral rebalancing. In addition, the authorities are planning a gradual reduction 
of the special solidarity levy, a further reduction of social security contributions, which 
would probably lead to the postponement of the reduction of the corporate income tax to 

(7)  Law 4626/2019, article 51, paragraph 2. 

12 

                                                           
Commission Staff Working Document -  

Chapter 3 - Fiscal and fiscal-structural policies 

20%,  announced  in  July  2019.  A  quantitative  and  qualitative  assessment  of  such 
measures will be carried out when the exact timing and parameters will become known. 

Given the accelerating migration flows, the authorities pointed out that the current 
migration adjustor (8) does not capture fully the total costs of the migration crisis. 
Based  on  a  report  shared  by  the  authorities,  the  actual  expenditure  related  to  the 
management  of  the  migration  flows  is  much  higher  than  the  expenditure  currently 
included in the programme adjustor. The ceiling of the adjustor was set at 0.2% of GDP 
during  the  programme,  but  based  on  the  current  methodology  the  actual  amounts 
deducted  from  the  primary  balance  are  consistently  well  below  this  level.  The  issues 
that  have  hindered  the  use  of  the  migration  adjustor  are  currently  investigated,  with  a 
view  to  clarifying  the  eligible  costs  that  adequately  reflect  the  current  situation.  The 
authorities also committed to identifying and addressing factors that obstruct the full use 
of  the  available  EU  funding,  bearing  in  mind  that  the  adjustor  is  designed  to  cover 
domestic costs and hence defined in net terms (after deducting EU migration funds). 

The authorities are planning to address the aspects of the 2016 pension reform that 
were found unconstitutional  by the Council of State in a fiscally neutral  manner. 
Sustaining the cost within the spending ceiling of the Ministry of Labour is in line with 
the  commitment  given  by  the  authorities  in  the  2020  budget.  The  authorities  are 
currently  legislating  accordingly  to  replace  the  current  13th  pension  with  an  annual 
social  budget  reserve. The fiscal  neutrality is  achieved by using part of  the fiscal  cost 
currently budgeted for the 13th pension. The remaining part will cover the cost of other 
social welfare and health policies in view of high poverty rates among non-pensioners 
and the compressed health care budget. Section 4 provides an overall assessment of the 
pension reform.  

The  2020  Medium-Term  Fiscal  Strategy  will  need  to  accommodate  the  cost  of 
clearing the stock of already called state guarantees for bank loans worth 1.1% of 
GDP within five years. The stock may increase further in the future, given that the total 
stock  of  outstanding  state  guarantees  in  question  is  estimated  at  €3.4  billion  (1.8%  of 
GDP). As discussed in section 5.2, the authorities have provided a plan, which includes 
the necessary actions to shorten the examination period of the called guarantees to less 
than  four  years.  Additionally,  a  detailed  time-plan  of  payments  was  prepared  which 
comprises a small payment of €77 million by end of the year, while for the next years an 
average  clearance  of  €480  million  is  planned.  Given  that  the  length  of  the  payment 
period is partly a function of external factors outside the control of the authorities, i.e. 
court cases, the authorities also shared data on the amount of claims under litigation that 
are prone to delays, and thus might affect the fiscal impact and/or its timing. A proper 
risk  management  based  on  data  on  the  not-yet-called  guarantees  would  facilitate 
assessment  of  fiscal  risks  for  the  coming  years.  Finally,  the  timely  implementation  of 
the  plan  depends  on  the  banks’  cooperation  regarding  the  upload  of  necessary 
documentation to the e-repository (see Section 5.2 for further analysis).  

(8)  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  

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Greece’s  fiscal  and  economic  outlook  has  improved  overall.  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 substantially narrowed in the past year and the improved outlook for 
the Greek economy has led to gradual 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 
with  respect  to  ongoing  court  cases,  which  are  difficult  to  quantify  at  this  stage. 
Notwithstanding  the  Council  of  State  rulings  of  2015 (9)  and  2019 (10)  regarding  the 
2012  pension  cuts  and  2016  pension  reform  respectively,  a  large  number  of  cases 
claiming  retroactive  payments  to  pensioners  are  still  pending  in  courts,  while  some 
lower courts have ruled against these decisions. To solve this problem, the Council of 
State decided to rule on all retroactive claims in a so-called pilot trial. This will ensure a 
harmonised approach and prevent contradictory court decisions. The Plenary session of 
the  Council  of  State  will  have  to  address  three  key  issues  related  to  retroactivity  (see 
also graph 3.1):  

1.  Could  the  2016  pension  law  apply  retrospectively?  The  pension  reform  kept  the 
existing pensions at the levels existing on 31 December 2014, i.e. after the pension 
cuts  implemented  in  2012.  However,  according  to  a  June  2015  Court  of  State’s 
ruling, the 2012 pension cuts became unconstitutional from the date of the ruling’s 
publication, creating a window between the June 2015 ruling and May 2016, when 
the  pension  reform  came  to  effect,  for  which  the  pilot  trial  will  need  to  clarify 
whether possible retroactive amounts can be awarded.  

2.  Was  it  legal  that  the  2016  pension  law  indirectly  re-enacted  the  2012  cuts?  As 
mentioned, the May 2016 pension reform kept existing pensions at levels following 
the cuts implemented in 2012, while putting in place a new pension formula for new 
pensions  and  a  notional  recalculation  of  old  pensions  (the  freeze  of  pension 
indexation  will  result  to  the  elimination  of  positive  differences  to  actual  pensions 
over time via inflation, or repaid if the actual pension was lower than under the new 
formula). The pilot trial will clarify possible retroactive amounts from the period of 
May 2016 to the January 2019 recalculation of pensions. 

3.  Is it consistent with the European Convention of Human Rights that pensioners who 
had not filed a petition before the 2015 Council of State ruling were excluded from 
receiving the retroactive amounts? Based on the 2015 Court of State’s ruling, only 
claims submitted before the date of its publication are eligible for a refund and the 

(9)  In 2015, the Council of State ruled against the reductions of main and supplementary pensions and the 
abolition  of  seasonal  bonuses  which  came  into  effect  in  2012  and  2013  respectively.  However,  it 
decided that the unconstitutionality comes into effect from the date of the ruling’s publication in June 
2015 and only claims submitted before that date are eligible for a refund. Finally, the period of refund 
starts  from  the  date  of  reduction  and  goes  up  until  to  the  end  of  2014,  as  the  following  period  is 
covered by 2016 pension reform. 

(10) In 2019, the Council of State confirmed the main pillars of 2016 pension reform and granted no rights 
for retroactive compensation of benefits for the parts of the reform that were found unconstitutional. 

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period  of  refund  starts  from  the  date  of  the  reduction.  This  decision  will  clarify 
possible retroactive amounts for the period January 2013 until June 2015. 

Graph 3.1:  Pensions timeline 

Source: European Commission 

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 (ETAD). The case is ongoing, as the Public Real Estate Company has 
filed petitions for the annulment of recent arbitration awards, currently pending before 
the Athens Court of Appeal. 

Additional  fiscal  pressures  might  be  caused  by  the  planned  arrangements 
concerning  the  private  supplementary  pension  fund  (LEPETE)  of  the  National 
Bank  of  Greece  (a  private  commercial  bank).  According  to  the  plan  that  is  under 
negotiation between the government and the National Bank of Greece, the cost of future 
pensions  would  be  shared  between  the  two  parties.  The  plan  foresees  that  some 
€40 million  would be borne by the National  Bank of Greece annually until  2030. The 
remaining cost will be taken over by the State. The risk to public finances lies in the fact 
that  if  and  when  the  State  formally  would  take  over  the  pension  obligations  of  the 
supplementary  pension  fund  of  National  Bank  of  Greece,  this  would  be  recorded  as 
capital  transfer  in  the  year  of  the  decision,  with  a  negative  impact  on  the  general 
government  balance  equal  to  the  net  present  value  of  future  pension  obligations.  The 
final impact will also depend on the rulings in two pending court cases, one concerning 
pensioners’ claims against the bank and the other concerning the bank’s claims against 
the state.  

Technical  discussions  on  the  possible  use  of  SMP-ANFA  income  equivalents  for 
reducing  gross  financing  needs  or  other  agreed  investments  have  started.  This 
follows  up  on  the  respective  mandate  given  by  the  Eurogroup  in  December  2019 (11). 
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, and the European institutions are engaging with the authorities at 

(11) 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 on Greece of 4 December 2019:https://www.consilium.europa.eu/en/press/press-
releases/2019/12/04/eurogroup-statement-on-greece-of-4-december-2019/. 

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technical  level,  with  a  view  to  reporting  back  to  the  Eurogroup  in  June  2020.  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  the  constraints  on  the  structural 
balance  in  the  context  of  compliance  with  the  EU  fiscal  framework  and  debt 
sustainability. 

3.2.  TAX POLICY 

Important progress has been made towards the broadening of the tax base for the 
2020  ENFIA  Property  tax  exercise,  widening  the  inclusion  of  the  national 
population  covered  by  the  zonal  system  from  85%  to  98%.  The  existing  10 200 
objective  property  tax  value  zones  have  been  digitised  and  an  additional  3 600  new 
property  tax  zones  have  been  defined  covering  the  remainder  of  the  urban  planned 
areas.  A  new  nationwide  revaluation  exercise  using  certified  valuers  is  planned  to  be 
completed  by  March  2020.  The  new  objective  tax  values  including  those  for  the  new 
zones  are  planned  to  be  finalised  by  May  and  are  expected  to  align  the  objective  tax 
values  to  market  prices,  which  is  a  mid-2020  specific  commitment.  In  parallel,  a 
detailed  tax  policy  assessment  will  be  made  of  the  impact  of  the  new  valuations  on 
property tax revenues. The 2020 budget implies an almost fiscally-neutral property tax 
exercise  based  on  the  new  values,  with  a  small  increase  of  €140  million  in  ENFIA 
revenues compared to 2019. The base widening might give scope to restructure property 
tax rates and thresholds. The property tax reforms will benefit from technical support by 
the European Commission.  The key objectives  are to  expand the objective value zone 
system to the rest of the country, digitally link the property value system to the cadastre, 
and improve valuation methods particularly of commercial properties. 

The Authorities adopted a Tax Law in December 2019, including the agreed 2020 
budget tax measures and a number of other welcome tax reforms. Key non-budget 
tax reform measures included stronger regulations on digital short-term rental platforms, 
the  abolition  of  withholding  tax  on  corporate  bonds  to  open  up  the  domestic  bond 
market,  and  some  tax  concessions  to  encourage  the  development  of  share  option 
schemes,  employer  funding  of  annual  passes  for  public  transport,  and  the  take-up  of 
electronic vehicles. Concerning the 3-year time-limited value-added tax exemption for 
construction,  the  authorities  adopted  the  secondary  legislation  by  the  end  of  January 
2020  for  the  applicable  procedure  and  the  required  documentation  that  must  be 
submitted  by  the  applicants.  Overall,  some  60  pieces  of  secondary  legislation  are 
required  for  the  implementation  of  the  Tax  Law  and  these  will  be  provided  by  April 
2020. 

3.3.  REVENUE ADMINISTRATION 

Staffing  numbers  increased  at  the  Independent  Authority  for  Public  Revenue 
during  2019  but  fell  short  of  the  end-2019  target  (a  specific  commitment).  The 
number of staff at the Authority increased in 2019 to 11 902 compared to 11 487 at the 
start  of 2019. However, given the accumulation of previous delays, the actual staffing 
level remained lower than the intermediate target set for end-2019 at 12 500. The new 

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permanent staff recruited in 2019 (540 in total) are currently undertaking a nine-month 
induction  training  and  are  expected  to  take  up  their  respective  job  assignments  by 
August 2020. Technical support is provided through the European Commission to tailor 
the  training  in  accordance  to  the  needs  of  the  core  functions  and  integrating  best 
practices. 

The complementary measures agreed in view of the undershooting of the staffing 
target,  have  seen  overall  good  progress,  in  particular  as  concerns  the  human 
resources  reform  and  housing  issues,  while  more  limited  progress  has  been 
achieved  on  the  IT-related  issues.  All  three  measures  are  expected  to  advance 
further  until  the  end  of  April  2020.  On  human  resources  reform,  the  supplementary 
grading  legislation  has  been  adopted (12).  The  supplementary  wage  grid  legislation, 
which  will  define  the  remuneration  framework  depending  on  the  official’s  grading,  is 
expected to be adopted by the end of April, which should allow for the new system to be 
implemented  as  of  1  July  2020.  Regarding  the  IT  framework,  although  five  key 
areas (13) have been identified where competencies and resources between the Authority 
and  the  General  Secretariat  for  Information  Services  of  the  Public  Administration 
(Ministry of Digital Governance) will need to be clarified, a timeline has not  yet been 
shared  by  the  authorities.  It  is  expected  that  the  competencies  and  resource  allocation 
will  have  been  confirmed  by  April  2020,  which  should  allow  for  the  Service  Level 
Agreement  to  be  agreed  by  mid-2020.  Finally,  regarding  the  move  of  the  Authority’s 
headquarter  services  into  one  location,  a  detailed  roadmap  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.  A 
swift  implementation  of  these  complementary  measures  would  be  instrumental  in 
getting  the  staffing  target  back  on  track  and  underpinning  the  effectiveness  of  the 
Authority. 

The authorities are planning to adopt a more ambitious plan to combat smuggling, 
including strengthening the operational capacity of the Operational Coordination 
Centre  (SEK),  which  has  seen  its  capacity  reduced  as  the  secondments  have  not 
been  renewed  and  primary  legislation  to  address  this  issue  remains pending.  The 
Centre, which was established as a programme commitment, has the mission to fight the 
smuggling  of  excisable  products,  through  the  coordination  of  the  services  involved  in 
prosecution,  and  to  collect  and  analyse  intelligence  in  order  to  optimize  the 
effectiveness  of  controls  carried  out  by  law  enforcement  authorities  in  the  context  of 
joint  actions.  The  ambitious  plan  being  developed  by  the  authorities  would  see  the 
membership  of  the  steering  committee  governing  the  Centre  at  the  level  of  deputy 
ministers  of  the  relevant  service (14)  and  with  the  participation  of  the  Authority  at  the 
Governor  level.  This  more  high-level  buy-in  is  expected  to  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. As a first step, legislation to 

(12) OJ A 32/2020.02.14 (Article 36). 
(13) 1.  Computing  and  storage/software  licenses;  2.  Applications  for  core  public  revenues;  3.  Database 

management and administration; 4. Computer peripherals and PCs ; and 5. Web services. 

(14) The Independent Authority for Public Revenues, National Authority for Transparency, Police, General 

Secretariat of Commerce, Hellenic Coast Guard and the Economic Crime Unit. 

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extend  the  secondments  periods  allowed  and  upgrading  the  Centre’s  top  management 
position is expected to be adopted shortly. The authorities are also committed to review 
the  intelligence  legislation  with  technical  support  provided  through  the  European 
Commission, in order to bring it closer to best practices.  

Work is ongoing on a number of key projects, including 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  model  collection  office  has  been  launched  as  a  pilot  office  for 
introducing  modern  collection  tools  with  technical  support  provided  through  the 
European Commission. Secondary legislation on indirect  audit methods is expected to 
be  adopted  by  March  2020.  In  addition,  a  successful  roll-out  of  the  model  collection 
office  by  mid-2020  will  require  appropriate  premises  to  be  identified  and  the  needed 
staff to be transferred. As concerns indirect audit methods, a guideline manual has been 
finalised, which should  allow for the integration of these methods to complement and 
support  the  overall  audit  function.  The  Independent  Authority  is  also  advancing  in  its 
digital  transformation  through  the  introduction  of  the  Digital  Accounting  and  Tax 
Application  ‘myDATA’  and  the  implementation  of  electronic  bookkeeping,  while 
electronic invoicing is expected to be introduced during 2020. In addition to developing 
a  robust  software,  it  is  important  that  the  analytical  capacity  of  the  Independent 
Authority to process the collected data is further strengthened. Finally, plans are being 
developed  to  move  towards  a  system  of  online  cash  registers,  and  primary  legislation 
has been drafted to further strengthen the relevant legal framework, including the legal 
sanctions foreseen for tampering with the software. 

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.  Most  of  the  key  performance 
indicators (see table 3.1) of the Independent Authority were met for 2019, in particular 
targets  were  met  or  exceeded  on  areas  linked  to  the  application  of  modern  collection 
tools, for example prioritizing that no new debt is created. Further, while the target for 
proportion of fresh tax audit cases compared to the overall number of completed audits 
(see  Key  Performance  Indicator  4)  was  not  met,  significant  progress  was  still  made 
compared to the situation in 2018, although important work remains to be done in this 
area, such as establishing proper IT systems to facilitate the analytical work. 

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Table 3.1:  Key Performance Indicators of the Independent Authority (fourth quarter of 2019) 

Source: Independent Authority for Public Revenue 

The Joint Centre for the Collection of Social Security Debt met its debt collection 
target for 2019. The actual collection exceeded the target by 7.6%, as €1 471 million 
were collected compared to a target of €1 367 million. New debt was slightly reduced in 
2019, but since a significant contributing factor may have been the new 120 instalment 
scheme, it remains to be seen if this trend reversal will be maintained in 2020. The Joint 
Centre has also set a more ambitious target for 2020 as it aims to collect €1.38 billion of 
debt.  However, the secondary legislation that would  allow the Joint Centre to  directly 
apply  the  classification  of  ‘uncollectable’  debt  used  by  the  Independent  Authority 
remains pending. 

The revised basic instalment scheme came into effect on 1 January 2020, while the 
decision to reopen the 120 instalment scheme for social security contributions has 
raised  serious  concerns  about  further  abetting  the  already  weak  payment 
discipline in Greece. In autumn 2019, the Greek government had signalled that the 120 
instalment  scheme  for  tax  and  social  security  debt  would  be  the  final  opportunity  for 
debt  settlement  under such favourable terms.  The schemes, which follow a number of 
similar  ad  hoc  schemes  adopted  in  the  past  decade,  were  closed  as  planned  by  early 
October, but the instalment scheme for social security contributions was then re-opened, 
with the authorities arguing that many debtors had involuntarily dropped out due to an 
error  in  the  IT  system.  However,  the  adopted  legal  provision  that  made  re-entering 
possible  did  not  limit  the  eligibility  to  debtors  that  had  experienced  IT  issues,  which 
meant  that  debtors  who  genuinely  failed  to  comply  with  the  rules  could  also  re-enter. 
This  implicitly  represents  an  extension  of  the  instalment  scheme.  The  adopted  legal 
provision  allows  for  re-entry  up  to  end-May  2020,  which  appears  disproportionately 
long  to  address  the  underlying  technical  issues.  It  is  therefore  welcomed  that  the 
authorities have submitted an amendment  to  this law that will shorten the window for 
re-entry from the end of May to the end of March 2020 and will also limit the eligibility 

19 

Q4 2018TargetResultResultsKPI 1Collection of tax debts as of the end of the previous year (€ millions)2 9002 7882 878KPI 2Collection of new debts in the current year (percent of new debt in the year)27%34.2%28.8%KPI 3Collection of debts by Large Debtor Unit (€ millions)675746852Audits of fresh tax cases by the whole AuthorityKPI 4Percent of fresh tax audit cases in total completed audits70%46.7%28.4%Tax audits and collection of large tax payersKPI 5Collection after audits in the year (percent of assessed tax and penalties)40%101.7%40.9%Tax audits and collection of high wealth individualsKPI 6Collection after audits in the year (percent of assessed tax and penalties)40%33.6%52.2%Tax refundsKPI 7Percent of value added tax tax refund claims processed within 90 days95%84.7%86.7%Compliance and enforcementKPI 8Percentage of total tax paid on time for value added tax, income and property taxes84%81.1%80.8%Percentage of total tax paid on time for value added tax, income and property taxesKPI 9Percentage of debtors under enforcement measures66%70.7%64.1%Pre-litigation phaseKPI 10Percentage of cases closed by explicit decision of the Dispute Resolution Unit85%95.7%96.2%Prosecution audits by Mobile UnitsKPI 11Prosecution audits by Mobile Units  (Customs Administration)20 00023 66620 248Debt collectionQ4 2019 
  
 
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to  re-enter  to  those  who  dropped  out  due  the  IT  issues  mentioned  above.  The  revised 
basic instalment scheme – assessed in the 4th enhanced surveillance report – is expected 
to become operational at end-February 2020. The scheme will provide an opportunity, 
under  specific  conditions,  for  tax  and  social  security  debt  to  be  repaid  in  up  to  24 
monthly instalments, and up to 48 instalments for specific categories of taxes (e.g. the 
inheritance tax).  

3.4.  PUBLIC FINANCE MANAGEMENT 

3.4.1.  Arrears 

The stock of net arrears reached €1.2 billion at end-2019, €220  million above the 
targets set in the October 2019 clearance plan. Compared to August 2019, the stock 
of  net  arrears  decreased  by  €50 million.  On  the  one  hand,  some  subsectors  show 
encouraging results. The Independent Authority for Public Revenue paid its tax refunds 
in line with the targets set in the plan. Hospitals fully cleared their net arrears already in 
October 2019 and they have been decreasing their gross stock since July. Clearance in 
Social security funds and extra-budgetary funds is broadly on track. On the other hand, 
problems  remain  with  pension  claims,  local  governments  and  state  arrears.  More  than 
half of the €220 million slippage can be attributed to pension claims, which have been 
increasing between May and December 2019, contrary to the plan. This deviation is due 
to inefficiencies and complexities in the clearance process and in computing accurately 
the  net  stock  of  arrears (15);  the  authorities  also  report  an  unforeseen  increase  in  the 
number  of  applications  due  to  the  instalments  scheme (16).  Slippages  in  local 
governments  and  the  state  account  for  the  other  half  of  the  underperformance.  The 
authorities  expect  part  of  the  local  governments’  arrears  to  be  written-off  as  their 
limitation  period  has  elapsed.  This  would  reduce  the  stock,  but  without  injecting 
liquidity to the private sector through actual clearance.  

Table 3.2:  Arrears clearance plan 

Source: European Commission 

The  authorities  have  prepared  additional  measures  to  remedy  the  observed 
slippages against the clearance targets, focusing in particular on pension arrears, 
and  have  already  started  implementing  some  of  them.  In  this  regard,  the  recently 
established  Steering  Committee,  which  oversees  the  implementation  of  the  clearance 

(15) For  the  purpose  of  enhanced  surveillance,  the  gross  stock  of  domestic  arrears  and  other  payment 

claims is defined in continuity with the European Stability Mechanism programme. 

(16) The settlement of obligations through the instalment scheme allowed applicants to file for a pension 

claim. 

20 

M1M2M3M1M2M3M1M2M3M1M2M3M1M2M3M1M2M3M1M2M3M1M2M3M1M2M31.Social security funds2.Extrabudgetary funds3.Pension claims4.Hospitals5.Local governments6.Tax refund claims7.StateQ4Q1SubsectorsQ1Q2Q3Q4201920202021Q2Q3Q4 
  
 
                                                           
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plan, proved helpful to facilitate the exchange of information and best practises among 
the  subsectors.  In  addition,  the  General  Accounting  Office  passed  a  number  of 
legislative amendments to regulate payments of certain arrears, and implemented a new 
electronic  platform  with  a  view  to  improving  the  monitoring  and  reporting  of  arrears 
across general government entities. Moreover, hospital procurement is being redesigned 
within  a  medium-term  framework  that  involves  a  centralization  of  procurements 
through  the  seven  regional  health  organisations (17).  Finally,  new  actions  are  being 
prepared to speed up processing of pension claims, including additional training, setting 
quantitative targets  per employee, sharing of experience between the Health Fund and 
the Pension Fund, and reallocating personnel. In addition, an increase in the temporary 
pensions is being considered.  

With a view to abiding by the clearance targets set in the October 2019 clearance 
plan, the authorities expect to deploy the new IT system as of June 2020 and that 
the measures would be sufficient to fully clear the old pension claims by mid-2021. 
The deployment of the IT system would free up resources to work with the old pension 
claims. Accelerating the increase or reallocation of personnel  before June 2020 would 
be instrumental in clearing the long outstanding pension claims. Overall, the authorities 
remain committed to the October 2019 clearance plan, despite the temporary slippage. 
To  achieve  this,  further  mitigations  actions  may  help  the  subsectors  that  are  lagging 
behind. 

While the net stock decreased in 2019, new arrears continue to be created, which 
points  to  weaknesses  in  the  payment  chain  and  internal  control  functions.  The 
steering committee oversees the full implementation of the remaining recommendations 
suggested by the Hellenic Court of Auditors and monitors the whole clearance process. 
Additional  streamlining  of  the  payment  chain  would  improve  the  timeliness  of 
payments.  Specific  recommendations  to  this  effect  were  provided  through  a  European 
Commission technical support project delivered by the International Monetary Fund in 
January  2020.  The  General  Accounting  Office  committed  to  carefully  examine  the 
recommendations  and  to  adopt  mitigation  actions  when  necessary.  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 Auditors have 
recently been phased out. The Court is conducting a broad survey on internal controls 
across  the  government  and  any  other  public  entity  with  a  view  to  accelerating  the 
establishment of effective internal control systems in the public sector until the end of 
the current year, providing guidance if necessary (18) . 

3.4.2. Treasury Single Account 

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 

(17) See  section  4.2.  According  to  the  authorities,  this  new  procurement  design  would  allow  Greece  to 
comply  with  its post programme  commitment  to achieve  a share of centralised procurement in total 
hospital expenditure of 30% by mid-2020 and 40% by mid-2022. 

(18) See  section  8.3.  The  National  Authority  for  Transparency  plans  to  work  together  with  the  Hellenic 

Court of Auditors to design and implement effective internal control mechanisms.  

21 

                                                           
 
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Chapter 3 - Fiscal and fiscal-structural policies 

being  implemented  (both  are  end-2019  specific  commitments).  All  significant 
general  government  entities  have  opened  accounts  at  the  Bank  of  Greece,  which 
administers the Treasury account system, and use it to receive state grants or subsidies. 
However, some small entities have not joined the scheme yet. Even if these entities do 
not  have  significant  cash  reserves,  the  General  Accounting  Office  is  aware  of  the 
importance of including them in the scheme and foresee to take steps shortly to ensure 
full compliance. Excess liquidity of general government entities is being transferred to 
the  Treasury  Single  Account  under  the  supervision  of  the  Public  Debt  Management 
Agency, which is closely monitoring the entities’ accounts in commercial banks. A pilot 
project  on  cash  forecasting  for  the  entities  with  a  budget  of  more  than  €50  million 
started at the end of 2019. By October 2020, the authorities plan to develop a strategy 
for  rolling  out  the  cash  forecasting  project  to  the  rest  of  the  entities.  In  view  of  its 
complexity, the project would be assessed based on an interim report due by end-March 
and  a  draft  roll-out  strategy  by  end-April.  In  addition,  the  authorities  are  progressing 
with the rationalisation of cash accounts, including the reduction of payment orders in 
paper form. 

3.4.3. Chart of Accounts 

The overall implementation of the Unified Chart of Accounts is progressing, but its 
implementation  in  the  Public  Investment  Budget  remains  a  challenge.  The 
governance structure of the Chart of Accounts project has been considerably reinforced 
and benefitted from a high-level  political  commitment. The Chart of Accounts is  now 
regarded  as  a  broad  public  finance  management  tool,  encompassing  procurement  and 
e-invoicing.  Steps  are  underway  to  ensure  proper  staffing  of  the  implementing  entity 
and  to  enhance  the  Chart  with  functional  classifications  with  a  view  to  designing  an 
efficient new budgetary framework that could also be used as a performance budgeting 
tool. The implementation of the Chart of Accounts in the Public Investment Budget is 
not  showing  sufficient  progress.  The  revised  plan  prepared  by  the  authorities  only 
partially addresses the issues, as it focuses mostly on the execution phase of investment 
budget, with little attention paid to the budget planning phase and the implementation of 
accrual accounting principle. 

22 

 
4. 

SOCIAL WELFARE 

4.1.  PENSIONS 

In order to comply with the Council of State decision on the 2016 pension reform, 
new (increased) accrual  rates for careers above 30 years are set to be introduced 
retroactively  as  from  1  October  2019.  This  adjustment  is  to  ensure  that  the 
replacement  rates  for  long  insurance  periods  will  be  slightly  higher  than  50%  as 
requested  by  the  Council  of  State.  According  to  the  actuarial  projections  by  the 
authorities, expenditure should remain virtually unchanged as a share of GDP until 2047 
compared  with  the  trajectory  before  this  adjustment.  This  is  because  the  projected 
impact of the new measures is below 0.5% of GDP and the authorities plan to finance 
this  by  eliminating  the  annual  one-off  benefit  (i.e.  the  13th  payment  to  pensioners 
introduced in 2019) to finance the additional costs. The measure will lead to very high 
average replacement rates by European standards. This is especially the case for those 
with long careers with pensionable earnings at or below the average wage.  

In  order  to  comply  with  the  Council  of  State  decision,  the  authorities  are  also 
planning to replace the current system of contributions for the self-employed. The 
authorities  plan  to  introduce  a  new  system,  which  will  give  the  self-employed  the 
freedom to choose amongst six levels of contributions unrelated to their actual income. 
Currently  80%  of  self-employed  are  paying  the  minimum  contribution  of  €130  per 
month, which is less than the envisaged lowest contribution level (€155 per month). The 
authorities expect that around 80% of the self-employed will chose the lowest level of 
contributions, and thus the fiscal impact is likely to be broadly neutral in the short-term. 

The Council of State also ruled unconstitutional the cut of supplementary pensions 
introduced in 2014 for persons whose combined supplementary and main pension 
exceeded  €1 300,  and  the  authorities  are  planning  to  reinstate  the  pre-2014 
supplementary  pension  rules.  The  fiscal  cost  is  estimated  at  €290  million  annually, 
plus  €72  million  for  retroactive  payments  for  the  three  last  months  of  2019.  The 
measure  will  lead  to  an  overall  deficit  of  the  supplementary  pension  system  of  some 
€1.1 billion over the period 2020-2024, which the authorities plan to cover through the 
sale of a part of the assets of the Supplementary Pension Fund (ETEAEP). 

The  authorities  have  developed  an  action  plan  to  remedy  the  delays  with  the 
completion  of  the  setup  of  the  Single  Social  Security  Fund  (EFKA),  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.  The 
authorities’ action plan  envisages the unification  of the  IT systems of  all  the previous 
funds  and  the  digitalisation  of  all  services  provided  by  the  end  of  2020.  The 
digitalisation of pension awards should be completed by June 2021. As for the progress 
of pending pension applications, the authorities stated that they have missed their end-
2019 target, and they committed to taking corrective measures (see also section 3.2.1 on 
arrears). The authorities have also announced the decision to merge the Supplementary 
Pension Fund into the Single Social Security Fund in order to improve the efficiency of 
the pension system also through reduced administrative costs.  

23 

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Chapter 4 - Social welfare 

4.2.  HEALTHCARE 

Administrative procedures for the clawback collection (a continuous commitment) 
have  resumed,  but  the  process  will  take  longer  to  be  finalised,  also  due  to  the 
introduction  of  a  new  instalment  scheme  in  2019.  Concerning  pharmaceuticals, 
typically the largest source of clawbacks, for the first semester of 2019 the largest part 
was  collected  (€330  million  out  of  €410  million).  The  second  semester  of  2019  will 
have to be collected by June 2020. For providers (private clinics, as well as providers of 
diagnostic and other health care services), collection has not started for the years 2018 
and 2019, but the relevant Ministerial Decision to introduce the 120 instalments scheme 
should  be  published  soon.  The  delay  is  due  to  a  late  (end-2019)  definition  of  the 
expenditure  ceilings  for  2019  by  item  of  spending.  The  definition  of  2020  spending 
ceilings for each category of private providers is also still outstanding.  

The  authorities  are  planning  to  take  structural  measures  to  limit  the  size  of  the 
clawback  amounts.  The  clawback  amounts,  especially  as  concerns  pharmaceuticals, 
are still increasing. The estimated amount to be collected for 2019 stands at €1.3 billion, 
which  represents  an  increase  of  €200  million  (18%)  from  2018.  For  providers,  a 
clawback of €300 million is  expected for 2019, in line with  the level  of 2018. With a 
view to correcting this trend, the authorities are planning to strengthen the efforts on the 
implementation  of  compulsory  prescription/treatment  protocols,  which  aim  to  curb 
inappropriate  prescribing  behaviours,  and 
in 
pharmaceuticals  price  negotiation.  The  latter  is  expected  to  yield  substantial  savings 
considering the current sizeable share of the budget going to high-cost drugs, which is 
expected to increase in the future due to the arrival of new innovative drugs. To further 
promote the reduction of the clawback, the European institutions have encouraged the 
authorities to consider a revision/redesign of the clawback mechanism to strengthen all 
stakeholder engagement, such as, for instance, by including an element of risk-sharing. 

their  capacity 

strengthen 

to 

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. The authorities submitted a new action plan, where the provision of primary 
health  care  is  based  on  a  network  of  existing  Health  Centres  and  private  contracted 
doctors.  According  to  the  new  project,  the  remaining  120  Local  Health  Units  (the 
‘TOMYs’)  can  become  operational  within  the  premises  of  existing  Health  Centres, 
which  would  then  offer  an  expanded  set  of  services.  Overcoming  the  infrastructural 
issues  previously  due  to  the  need  to  find  new  suitable  premises  for  the  Local  Health 
Units,  progress  may  accelerate  over  the  coming  months,  so  the  revised  strategy  is  a 
welcome  step  that  should  speed  up  the  achievement  of  the  Eurogroup  commitment. 
However, the recruitment of additional family doctors is still lagging behind schedule, 
and an adequate number of family doctors to achieve full population coverage is not yet 
available.  This  gap  still  acts  as  a  bottleneck  to  the  full  rollout  of  the  primary  care 
network. Fundamental features of the commitment such as compulsory registration and 
gatekeeping are still only partially implemented. As only 1.6 million citizens have been 
able  to  register  with  a  family  doctor  so  far,  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  of  the  primary  health  care  system  and  to  fully  implement 
gatekeeping and referral by the end of the year.  

24 

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Chapter 4 - Social welfare 

Reaching  the  target  of  a  30%  share  of  centralised  procurement  (a  mid-2020 
specific  commitment)  will  be  challenging  in  view  of  accumulated  delays,  but  the 
planned launching 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. 
With this new strategy, the commitment to achieve a substantial (30%) share of goods 
procured by centralised procurement by mid-2020 appears ambitious but authorities are 
confident to be able to achieve it. It seems that the Price Observatory, a key element of 
efficient  procurement  at  decentralised  level,  has  not  been  used  consistently  in  the  last 
years. However, the authorities plan to  re-operationalise it to  ensure that all avoidable 
inefficient spending is rectified as swiftly as possible. 

Having declined over the course of the last decade, health care spending has fallen 
below  the  EU  average.  Careful  monitoring  of  the  needs  and  an  increase  of  the 
financing  of  the  sector  need  to  be  considered  by  the  authorities  to  ensure  that 
sufficient  resources  are  available.  Measured  as  a  share  of  GDP,  public  health  care 
spending in Greece currently stands at around 4.9%, having decreased from 2009, when 
it  stood  at  6.5%  of  GDP.  Although  this  data  understates  the  actual  expenditure  and 
needs  to  be  adjusted  upward  with  the  level  of  yearly  clawbacks,  as  these  are  not 
captured by the official statistics, an overall below EU average spending and reports of 
operational  disruptions  in  some  hospitals  may  be  indicative  of  a  need  to  increase  the 
financial envelope. The budget of public hospitals has to be of adequate magnitude to 
continuously  meet  the  needs  of  the  population.  With  a  view  to  this,  the  use  of  future 
available  fiscal  space  and  a  redistribution  of  social  spending  should  be  targeted  to 
alleviate  this  pressure  and  to  ensure  uninterrupted  patient  access  to  high  quality 
services. 

4.3.  SOCIAL SAFETY NETS 

The reform of the disability benefits framework (a mid-2019 specific commitment) 
is advancing but with significant delays outside the control of the authorities. While 
the  upgrading  and  simplification  of  the  administrative  processes  to  determine  the 
disability status is progressing, the new approach based on both medical and functional 
assessment is still to be adopted. The new methodology should have been developed on 
the  basis  of  the  evaluation  of  a  pilot  project.  This,  however,  encountered  significant 
delays  for  reasons  outside  the  control  of  the  authorities.  A  first  draft  final  report  was 
delivered in December 2019, while the final evaluation report is pending. Some issues 
have  emerged  already  from  the  draft  report,  which  point  to  potential  difficulties  in 
implementing  the  new  methodology  (notably,  how  to  ensure  the  reliability  of  a  self-
reported  assessment  of  functionality).  In  view  of  these  issues,  the  authorities  have 
agreed to provide a new revised timeline for its national rollout by April 2020. Finally, 
the  authorities  have  announced  their  intention  to  prepare  a  National  Action  Plan  on 
Disability  shortly,  going  beyond  the  revision  of  disability  assessment,  to  review  the 
whole  set  of  benefits  and  services  for  the  disabled,  in  view  of  strengthening  the 
provision  of  in-kind  benefits  and  services  for  the  disabled.  The  reform  of  disability 
assessment should be an element of this broader Action Plan. 

25 

Commission Staff Working Document -  

Chapter 4 - Social welfare 

Regarding  the  review  of  the  system  of  subsidies  for  local  public  transport,  the 
evaluation  study  (an  end-2019  specific  commitment)  will  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.  

Major steps have been taken to improve the efficiency, effectiveness and adequacy 
of the social welfare system, however poverty remains high (the highest in the EU 
at 31.8%). According to the latest available data, between 2017 and 2018, the share of 
people at risk of poverty or social exclusion (AROPE) declined from 34.8% to 31.8%, 
while  the  percentage  of  severe  material  deprivation  decreased  from  21.1%  to  16.7%.  
The introduction of a guaranteed minimum income scheme and the housing benefit for 
rental costs for vulnerable households have been significant measures. Nevertheless, the 
level of the guaranteed minimum income scheme (at €200 per month) remains low and 
there  is  no  permanent  support  for  vulnerable  homeowners  with  a  mortgage.  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 in  April 2020. Therefore, part of the 13th pension could  be used for social 
welfare  policies  such  as  an  increase  in  the  guaranteed  minimum  income  scheme  or  a 
housing scheme for vulnerable homeowners with a mortgage. 

26 

 
5. 

FINANCIAL SECTOR 

5.1.  FINANCIAL SECTOR DEVELOPMENTS 

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, growing by 4.8% after the lifting of the capital 
controls.  This  has  further  reinforced  the  liquidity  situation  of  Greek  banks  (see  graph 
5.1), which should facilitate compliance with the Liquidity Coverage Ratio requirement 
by  mid-2020.  Banks’  profitability  is  showing  signs  of  recovery,  supported  by  an 
improving economy and continuous efforts to reduce recurring operating and headcount 
costs,  reflected  in  an  average  cost-to-income  ratio  comfortably  below  the  EU  average 
(51.4% compared to 64.2%). However, their Return-on-Equity is still among the lowest 
in the EU (2.9% annualised compared to an EU average of 6.2%) and is partly driven by 
non-recurrent trading income stemming from the banks’ government bond portfolio. As 
a result, the profitability outlook of Greek banks remains low and exposed to the current 
environment  of  subdued  evolution  in  interest  income,  given  the  relatively  small 
contribution  of  commission  income  to  operating  profit.  The  quality  of  revenues,  in 
particular,  is  adversely  affected  by  high  amounts  of  interest  income  from  non-
performing  loans,  which  are  accrued  but  may  not  be  collected,  implying  that  sales  of 
non-performing loans  also have a negative impact  on net  interest  income. As a result, 
banks are i) adjusting their business models towards a higher share of fee income, trying 
to  balance  client  reaction  over  a  recent  upward  trend  in  transaction  fees  with  a  more 
sustainable growth of their e-payments, bancassurance and asset management business, 
while ii) looking at ways to increase lending by expanding their client base. 

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.  Banks’  average  common  equity  tier  1  ratio  on  a  consolidated 
basis stands at 15.9% at the end of September 2019, up from 15.6% in June 2019, partly 
due to the issuance of a Tier 2 capital instrument by one systemic bank in July and an 
overall reduction of risk-weighted exposures. Deferred Tax Credits of the four systemic 
banks as of end of September 2019 continue to represent a substantial part (55.5%) of 
the  systemic  banks’  Common  Equity  Tier  1  capital,  amounting  to  €15.5  billion. 
Deferred  tax  credits  greatly  increase  the  sovereign-bank  nexus.  More  specifically, 
deferred  tax  credits  may  be  converted  into  tax  credits,  i.e.  irrevocable  claims  towards 
the  Greek  state,  while  in  exchange  banks  would  need  to  issue  equity  in  favour  of  the 
State. Moreover, Greek banks are exposed in the near future to the upcoming increase in 
capital  demand  (19)  and  the  implementation  of  new  rules  leading  banks  to  gradually 
write  down  non-performing  exposures  (20),  as  well  as  the  cost  of  the  non-performing 
loans’ reduction strategy and the necessary gradual phasing out of beneficial transitional 

(19) Caused by the fact that, from 29 December 2020, banks' own funds held under Pillar II Guidance will 

no longer be eligible to meet any other regulatory requirement. 

(20) Regulation  (EU)  2019/630  amending  Regulation  (EU)  No  575/2013,  as  complemented  by  further 

supervisory guidance by the European Central Bank. 

27 

                                                           
Commission Staff Working Document -  

Chapter 5 - Financial sector 

prudential arrangements (21). At the same time, credit institutions are regaining access to 
the market for long-term unsecured subordinated debt, while funding costs are declining 
but are still high.  

Graph 5.1:  Bank deposits (left) and total borrowing from the Eurosystem (right) 

Source: European Central Bank, International Monetary Fund  

The  pace  of  reduction  of  non-performing  loans  accelerated  in  2019  but  non-
performing loan ratios remain very high. The decline in the stock of non-performing 
loans has accelerated in 2019, falling by €36 billion from its peak of €107.2 billion in 
March  2016,  reaching  €71.2  billion  by  end-September  2019  (see  graph  5.2), 
representing  a  ratio  of  42.1%  of  total  customer  loans,  compared  to  43.6%  in  the 
previous quarter. This was mainly driven by a reduction in the stock of consumer and 
business non-performing loans by more than 7% in the third quarter of 2019, compared 
to a more lacklustre performance in residential non-performing loans (-1.5% fall in the 
stock). The difficulties in tackling the mortgage non-performing loan book partly reflect 
the  effect  of  restrictions  in  collateral  enforcement  and  the  related  strategic  defaults. 
However,  the  recent  rebound  in  real  estate  prices,  albeit  geographically  uneven  and 
from  very  low  levels,  is  a  first  sign  that  collateral  valuation  conditions  may  improve 
going  forward,  when  the  real  estate  market  gains  momentum  and  depth  in  terms  of 
transactions.  Notwithstanding  the  progress  made,  the  still  very  high  levels  of  non-
performing  loans  severely  hamper  banks’  credit  intermediation  capabilities,  thus 
preventing them to lend to the economy and consequently support growth. 

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.  Sales  of  non-performing  loans  have 
exceeded €7.1 billion (22) in the first nine months of 2019, while write-offs contributed 
an additional €3.1 billion of NPL reduction. The secondary market for non-performing 
loans  is  expected  to  grow  further  on  the  back  of  significant  sales  and  securitisations, 
some of which have already been launched and are expected to be completed within the 
first  half of 2020, supported by the newly  adopted asset protection scheme. However, 

(21) These transitional arrangements refer to the  phasing in of  the new International  Financial Reporting 
Standard 9 on impairments of financial assets and the implementation of new rules leading banks to 
more  quickly  write  down  non-performing  exposures,  according  to  Regulation  (EU)  2019/630 
amending  Regulation  (EU)  No  575/2013,  as  complemented  by  further  supervisory  guidance  by  the 
European Central Bank. In the medium-term, banks will also need to issue bail-inable debt in order to 
meet the minimum requirement for own funds and eligible liabilities set by the resolution authorities. 

(22) Amounts sold or for which binding offers have been received.  

28 

0510152025303540450204060801001201401601802007200820092010201120122013201420152016201720182019Borrowing from the ECBECB liquidity as % of liabilities (rhs)bn EUR%05010015020025030035040010111213141516171819MFIsHHNFCCentral Governmentbn EUR  
                                                           
Commission Staff Working Document -  

Chapter 5 - Financial sector 

the  amount  of  ‘cured’  non-performing  loans,  i.e.  the  rate  of  non-performing  loans  for 
which repayments have re-started, was weaker in the third quarter of 2019 relative to a 
quarter  before,  and  fell  below  the  amounts  of  newly  created  non-performing  loans. 
Moreover,  re-default rates on restructured loans  with  re-negotiated terms remain high, 
while  collections  and  liquidations  remain  at  low  levels.  Overall,  banks  continue  to 
accelerate  their  efforts  to  reduce  their  stock  of  non-performing  loans,  mainly  through 
outright sales compared to loan restructuring solutions.  

Graph 5.2:  Non-performing loans as a % of total customer loans (left) and changes in their stock 

in the third quarter of 2019 (right: million EUR) 

Source: Bank of Greece 

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  (23),  which  will  run  over  an  18-month  period  with  a  planned  envelope  of 
maximum  €12  billion  of  state  guarantees,  aims  at  allowing  banks  to  securitise  and 
transfer  non-performing  loans  out  of  their  balance  sheets.  Under  the  scheme,  a  state 
guarantee  will  be  provided  for  the  senior  notes  of  the  securitisations,  against 
remuneration priced at market terms. 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.  The  banks  plan  to  frontload  their  actions  to  the 
extent  possible  given  the  implied  cost  of  capital  of  these  transactions  and  the  banks’ 
timely 
current  capital  position.  The  focus  now  falls  on 
implementation  of  the  scheme.  The  value  of  the  portfolios  that  are  envisaged  to  be 
securitised  under  the  Hercules  asset  protection  scheme  will  also  be  affected  by  the 
progress made in the implementation of the policy actions outlined below. 

the  successful  and 

(23) The scheme was assessed as not containing elements of State aid. State aid case SA.53519 and press 

release IP/19/6058: https://ec.europa.eu/commission/presscorner/detail/en/IP_19_6058. 

29 

 35.0 40.0 45.0 50.0 55.0 60.0 65.0Dec 2014Mar 2015Jun 2015Sep 2015Dec 2015Mar 2016Jun 2016Sep 2016Dec 2016Mar 2017Jun 2017Sep 2017Dec 2017Mar 2018Jun 2018Sep 2018Dec 2018Mar 2019Jun 2019Sep 2019% NPL ratioConsumer LoansResidential Loans7537421381346368145537735759607371241010 00020 00030 00040 00050 00060 00070 00080 00090 000  
                                                           
Commission Staff Working Document -  

Chapter 5 - Financial sector 

Table 5.1:  Main financial stability indicators 

(1) As % of total loans 
(2) Annualised data 
Source: ECB - CBD2 - Consolidated Banking data; own calculations 

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 rebound in net bank lending to companies has 
continued unabated in 2019, although with a somewhat reduced pace towards the end of 
the year. According to the Bank of Greece, this recovery in credit growth was driven by 
loans to large corporations, while the year-on-year change of credit towards small- and 
medium-sized  companies  remains  negative.  However,  the  Survey  on  the  Access  to 
Finance  of  Enterprises  pointed  to  an  improvement  in  access  to  credit  for  small  firms. 
The growth rate of loans to households continued to remain negative in the same period, 
particularly  for  mortgage  lending,  which  reflects  to  a  large  extent  the  evolution  of 
demand,  as  evidenced  by  the  Bank  Lending  Survey(Graph  5.3).  Bank  lending  rates 
followed a mild downward trend in 2019 despite higher loan demand, reflecting overall 
a  decline  in  risk-free  market  reference  rates  on  account  of  further  monetary  policy 
accommodation.  While  the  lending  spread  for  non-financial  corporations  remained 
unchanged over the course of the year, the one for households declined over the second 
half of 2019 but remained overall at an elevated level, 109 basis points higher than the 
one  for  corporates  as  of  end-December  2019.  Normalisation  of  the  banking  sector  is 
vital to restore banks’ capabilities to provide credit to the economy. 

Graph 5.3:  Bank credit to non-financial corporations and households 

Source: Bank of Greece 

30 

Jan.2014: -5.3%Dec. 2019: 1.9%Dec. 2019: -2.8%-7-6-5-4-3-2-10123201120122013201420152016201720182019Νοn-financial corporationsHouseholdsDec.2019:-3.4%Dec.2019:-1.3%-7-6-5-4-3-2-10123%Housing loansConsumer loansNon-performing loans /139.746.846.345.045.444.943.541.641.639.637.8o/w foreign entities-----------o/w NFC & HH sectors41.849.550.449.449.248.447.346.345.643.842.3o/w NFC sector44.752.553.951.451.149.447.946.144.542.840.5o/w HH sector38.545.946.347.147.047.346.646.546.845.144.4Coverage ratio43.548.548.246.749.549.047.848.047.746.745.0Return on equity /2-10.6-24.2-7.5-1.30.7-2.4-0.8-0.41.62.62.9Return on assets /2-1.0-2.8-0.9-0.20.1-0.3-0.1-0.10.20.30.4Total capital ratio14.116.517.017.116.416.416.316.015.616.516.9CET 1 ratio13.816.316.917.015.815.815.715.314.915.615.9Tier 1 ratio13.816.316.917.015.815.815.715.314.915.615.9Loan to deposit ratio79.172.375.983.578.878.476.074.775.874.376.8  
 
  
 
Commission Staff Working Document -  

Chapter 5 - Financial sector 

5.2.  FINANCIAL SECTOR POLICIES 

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 specific  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  planned  to 
be adopted by the end of April 2020, in line with commitments, replacing several of 
the currently existing mechanisms for facilitating debt restructuring (24). Further to 
the  elaboration  of  a  concept  paper,  a  draft  version  of  the  National  Private  Debt 
Resolution Strategy was delivered to the authorities in mid-December 2019, supported 
through technical support of the European Commission. The Working Group set up by 
the  authorities  is  currently  working  on  the  draft  legal  text  of  the  new  insolvency 
framework with a view to adopting the legislation by end-April 2020. Independently of 
the  implementation  of  the  new  framework,  the  Primary  Residence  Protection  scheme 
will also expire by end April.  

The  new  integrated  insolvency  framework  should facilitate  dealing  with  the  total 
outstanding  debt,  amounting  to  approximately  €244.5  billion,  by  addressing 
existing  legal  shortcomings.  The  total  outstanding  business  debt  in  the  economy 
amounts  to  €158.2  billion,  while  that  of  individuals  to  €86.3  billion.  The  authorities 
relayed broad outlines of the reforms, although key details about the regime remain to 
be  clarified.  In  that  regard,  the  new  system  is  expected  to  tackle  current  statutory 
obstacles  to  dealing  with  excessive  indebtedness,  such  as  the  non-availability  of  a 
bankruptcy procedure for non-merchants (25), procedural complexity and inefficiency of 
the currently existing framework, departure of several of the existing mechanisms from 
bankruptcy  principles,  non-complementarity  and 
insolvency 
mechanisms and the risk of procedural abuses, especially as to judicial suspensions. The 
new system also aims at addressing general obstacles observed in procedures legislated 
and  used  to-date,  such  as  informational  asymmetry  and  limited  cooperation  among 
creditors,  slow 
lack  of  a  sound  payment  culture  and 
disproportionality between profitability/disposable income and overall debt levels. The 

judicial  processes, 

fragmentation  of 

(24) These include the Primary  Residence Protection scheme, the Out-of-Court Workout  mechanism, the 
Household Insolvency law and law 4307/2014 (“Dendias law”). These schemes have either outlived 
the necessity that brought them forth in the wake of extraordinary circumstances (e.g. the household 
insolvency and the Primary Residence Protection law) and/or have not attained fully their main goal, 
i.e.  the  conclusion  of  successful  multilateral  restructurings  of  viable  business  debt  (the  out-of-court 
workout law and law 4307/2014). 

(25) Under the Greek Insolvency Code, a prerequisite for a physical person or legal entity to be declared 
bankrupt by the court is that such person or entity be a merchant, either in the substantive sense (i.e. 
being or having been engaged in the conduct of merchant activity) or in the formal sense (i.e. being or 
having been engaged in the conduct of an activity considered by law as being merchant activity).  

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new  framework  will  be  designed  to  facilitate  restructurings  and  expedite  liquidation 
while  ensuring  harmonisation  with  EU  Directive  1023/2019  on  restructuring  and 
insolvency (26). 

A preliminary outline of the draft law has been prepared by the authorities and is 
currently under assessment by the institutions, pending further elaboration. Based 
on  preliminary  information,  the  authorities  are  contemplating  a  framework,  which 
would  initially  rely  on  pre-judicial  settlement,  supported  by  electronic  means,  in  an 
attempt to reach an amicable debt restructuring. Failing that, a judicial procedure could 
automatically be engaged, to define the settlement and mandate the liquidation of assets 
and the distribution of the proceeds to the creditors by an insolvency administrator. The 
authorities are aiming to provide tailored mechanisms to address the specific needs and 
circumstances  of  each  class  of  debtors:  large  corporations,  small  and  medium-term 
enterprises,  small  traders  and  non-merchants.  The  authorities  are  also  considering 
standardized  proposals  for  creditors  with  small  debts,  while  large  ones  would  be 
channelled  to  a  negotiation  process  with  creditors,  facilitated  by  an  insolvency 
administrator.  An  auditing  mechanism  would  be  established  to  identify  strategic 
defaulters  and  ex  post  controls  to  that  end  would  also  be  introduced.  In  general,  the 
design of the pre-judicial phase would aim at avoiding undermining the payment culture 
with automated solutions, which cannot be objected to by creditors. 

The  authorities  relayed  that  the  revamped  bankruptcy  proceedings,  including 
those for personal insolvency, will ensure that, in line with bankruptcy principles, 
the  right  of  secured  creditors  to  liquidate  assets  and  enforce  on  collateral, 
including  primary  residences,  is  not  in  any  way  adversely  affected.  The  current 
situation allows for overly lengthy periods of suspension of enforcement actions, mainly 
as a result of appointing distant hearing dates for household insolvency cases, a situation 
very detrimental for the resolution of non-performing loans. The reform will ensure that 
foreclosure  procedures  will  not  be impeded  by  insolvency  proceedings.  The  claims  of 
all  creditors,  public  and private,  will  be  eligible  for  a  write-off,  and  their  hierarchy  in 
distributing the proceeds of liquidation  will be defined according to  the Code of Civil 
Procedure  and  in  line  with  the  provisions  of  the  above-mentioned  EU  Directive  on 
restructuring  and  insolvency.  Mechanisms  incentivising  an  early  start  to  collective 
bargaining  proceedings  will  be  introduced.  Discharge  of  indebted  individuals  would 
ensue within a reasonable timeframe, while safety nets for the most vulnerable debtors 
will  be  provided  as  a  matter  of  social  policy,  outside  the  context  of  the  insolvency 
framework and will not affect the rights of creditors. An insolvency observatory will be 
created to monitor the implementation of the new framework and identify the need for 
potential revisions. 

The  successful  implementation  of  the  new  framework  will  crucially  hinge  on 
effective acceleration and optimization of judicial insolvency processes. Congestion 
in  courts,  particularly  the  largest  ones,  coupled  with  lack  of  financial  expertise  and 
insufficient IT skills are the main causes of the slow processing rate of cases (see also 

(26) Directive  (EU)  2019/1023  on  preventive  restructuring  frameworks,  on  discharge  of  debt  and 
disqualifications, and on  measures to increase the efficiency of procedures concerning restructuring, 
insolvency and discharge of debt, and amending Directive (EU) 2017/1132 (Directive on restructuring 
and insolvency). 

32 

                                                           
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below  Section  8.2).  Dealing  with  them  will  be  instrumental  to  safeguarding  the 
unhindered implementation of the new  framework. Broadening the use of  IT and of  a 
digitised reporting system to collect reliable statistical data from the courts would help 
to simplify or eliminate unnecessary clerical tasks, assist the bankruptcy court officials 
(judges, insolvency administrators) in the performance of their duties and accelerate the 
conduct  of  proceedings.  In  addition,  the  swift  creation  or  expansion  of  collateral 
databases, including the cadastre (see also below Section 6.2), would help courts and the 
insolvency practitioners in locating assets and in identifying fraudulent asset transfers. 

Clearing of the household insolvency backlog 

The  Greek  authorities  submitted  an  update  on  the  state  of  play  of  the  ongoing 
efforts  to  develop  an  action  plan  for  accelerating  the  clearance  of  the  household 
insolvency  backlog,  which  they  have  committed  to  present  by  end-March  2020. 
According  to  the  Ministry  of  Justice,  86 174  cases  were  pending  at  end-December 
2019 (27), a lacklustre performance compared to a target of 61 910 for December 2019. 
Moreover, more than 40% of the cases have a hearing date scheduled for after 2020. 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.  

Based on preliminary information, the new action plan 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.  These  will  include  the  mandatory  rescheduling,  by  means  of  an  electronic 
platform, for cases with a hearing date beyond January 2021, the electronic servicing of 
documents  and  the  abolition  of  the  hearing  in  favour  of  a  trial  in  chambers,  the 
introduction  of  a  predefined  minimum  documentary  content  accompanying  petitions, 
and the introduction of a mechanism for the objective determination of the commercial 
value  of  primary  residences  at  the  pre-trial  stage.  Upon  finalization  of  the  plan,  the 
relevant software for the electronic platform will be designed and the relevant logistics 
planned. All legal provisions required for the implementation of the action plan will be 
drafted and posted for public consultation by end-April 2020, and tabled in Parliament 
for adoption by mid-May 2020. Recent experience also indicates that the possibility to 
bring  forward  court  hearings  of  household  insolvency  cases  through  the  Primary 
Residence Protection scheme platform, offered to creditors as of November 2019, failed 
to meet its envisaged effect. Actions to ensure that the information is appropriately used 
in  ongoing  judicial  processes  could  be  covered  in  the  context  of  the  action  plan  to  be 
delivered soon. 

Clearing the backlog of called state guarantees 

The authorities have committed to accelerate the implementation of the action plan 
for the clearance of the backlog of called guarantees, which remains considerable. 
Existing bottlenecks in the clearance process have resulted in a backlog of unprocessed 
guarantee  claims,  which  entails  735 912  claims,  amounting  to  approximately  €2.1 
billion. The backlog of called and not processed guarantees has been gradually building 
up  since  2012,  making  the  solution  increasingly  problematic,  while  it  may  increase 

(27) On the basis of data collected from 127 out of the 145 Magistrates Courts. 

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Chapter 5 - Financial sector 

further  in  the  future,  given  that  the  total  stock  of  outstanding  state  guarantees  in 
question exceeds €3 billion. As some of the calls are reaching their statute of limitation, 
the banks tend to take recourse to litigation with a view to preserving their claims. Such 
a set-up presents high costs for both the banks and the state. Moreover, it puts additional 
pressure on the already existing court congestion.  

Notably,  the  authorities  intend  to  speed-up  the  processing  compared  to  the 
October 2019 action plan from seven to four years with a view for a swift clearance 
of the backlog. The plan foresees the processing of all currently called guarantees for 
corporate loans by end 2022 and loans for natural person by end 2023. The payment of 
claims is expected to follow immediately after the examination of each claim has been 
finalised, except for claims that (i) 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  in  a 
period  of  one  additional  year  after  the  processing  of  the  claim,  latest  by  end  2025.  In 
addition  to  upgrading  the  existing  IT  platform  (e-repository),  the  revised  action  plan 
aims to increase the number of staff to deal with the backlog. While the latest plan is a 
significant improvement, 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 as well as a swift resolution of cases under litigation 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. As mentioned in section 3.1, the fiscal cost 
of the envisaged clearance path is expected to be incorporated in the 2020 update of the 
Medium-term  Fiscal  Strategy.  The  implementation  of  the  action  plan  for  clearance  of 
called state guarantees will be carefully monitored. 

Other initiatives 

The  performance  of  e-auctions  by  banks  to  liquidate  their  collateral  continues  to 
have  limited  impact  and  to  fall  short  of  expectations.  The  share  of  e-auctions  that 
were cancelled or unsuccessful in the fourth quarter of 2019, remains at very high levels 
(above  75%),  despite  a  rebound  in  the  number  of  conducted  e-auctions,  following  a 
poor third quarter.  Legal issues that impede the success  of e-auctions  mainly relate to 
legal  challenges  available  to  debtors  to  suspend  enforcement,  which  usually  require 
court  involvement.  Moreover,  the  high  percentage  of  ‘barren’  auctions,  i.e.  auctions 
which  took  place  but  no  bids  were  placed,  which  account  for  around  55%  of  those 
conducted, signals that in these cases the initial reserve price is too high to settle in the 
current  market,  even  by  the  creditor  triggering  the  auction.  A  price  reduction 
mechanism  comprising  elements  of  automaticity  could  significantly  contribute  to  the 
success  of  the  auctions  in  this  respect.  In  approximately  75%  of  the  cases (28),  the 
successfully  auctioned  real  estate  assets  were  still  acquired  (re-possessed)  by  banks. 
This  is  a  particular  concern,  given  the  growing  stock  of  foreclosed  assets  of  Greek 
banks.  A  thorough  identification  and  assessment  of  impediments  leading  to  the 
cancellation or suspension of e-auctions has been undertaken.  

Progress  in  addressing  the  impediments  to  successful  e-auctions  remains  limited, 
as  the  authorities  have  so  far  not  presented  a  comprehensive  analysis  of  the 

(28) Source: Hellenic Banking Association 

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Commission Staff Working Document -  

Chapter 5 - Financial sector 

underlying  reasons,  including  a  proposal  with  possible  legislative  remedies.  The 
authorities acknowledged the existence of impediments leading to the frequent failures 
of  e-auctions  conducted  by  banks  to  liquidate  their  collateral.  They  commit  to 
implement actions to prevent cases of procedural abuse, including by putting in place an 
effective procedural mechanism for dealing with price adjustment requests, so as to deal 
with  the  high  percentage  of  unsuccessful  auctions  and  avoiding  a  lengthy  process  of 
judicial  adjustment  of  the  price.  Concretely,  the  authorities  plan  to  entrust  an  inter-
ministerial working group, involving the Ministries of Finance, Justice and Growth and 
Investments,  real-estate experts and legal  practitioners, with  proposing amendments  to 
the Code of Civil Procedure, notably in  relation  to the setting of the reserve price and 
the conduct of repeat auctions according to the Code of Civil Procedure. The authorities 
also intend to adopt legislative amendments prescribed by the findings of the working 
group by end-April 2020. Finally, the authorities plan to enhance  the user-friendliness 
of the platform, notably by uploading photographs of the properties as well as detailed 
descriptions  accessible  by  non-specialists.  These  efforts  are  aimed  at  accelerating  the 
conduct  of  successful  e-auctions  in  2020.  A  review,  and  further  streamlining,  of  the 
to  debtors  for  suspending  or  challenging  enforcement 
legal  means  available 
proceedings, also covering legislation outside the Code of Civil Procedure, could further 
improve the success rate of e-auctions.  

The  primary  residence  protection  scheme,  which  is  due  to  expire  by  end-April 
2020,  shows  little  signs  of  being  used  by  debtors  to  help  start  repaying  their 
mortgages. Pursuant to the introduction of a number of amendments to the law, adopted 
last  fall  and  simplifying  the  requirements  for  applying  to  the  platform,  the  pace  of 
participation has picked up but remains feeble. According to data provided by the Greek 
authorities  on  17  February  2020,  44 924  users  have  started  drafting  an  application,  of 
whom only 2 218 eventually concluded and submitted it to the relevant bank. Over the 
same period, banks extended 836 proposals to debtors, 380 of which were accepted by 
the latter. Only 240 requests for a state subsidy have been accepted, with  another 140 
pending.  The  success  rate  of  the  long-term  restructuring  plans  envisaged  by  and 
provided  under  the  scheme  remains  unknown.  The  authorities  have  reiterated  their 
commitment that the Primary Residence Protection will expire at end-April 2020. 

The authorities completed their assessment of the implementation of the reformed 
Code of Civil Procedure, and formulated proposals for the legislative adoption of 
improvements  in  line  with  commitments.  The  working  group  that  was  formed  in 
February  2019  with  the  mandate  for  assessing  the  implementation  record  of  the 
reformed Code of Civil Procedure issued its comprehensive evaluation report in January 
2020,  based  on  the  collection  of  stakeholders’  feedback  to  questionnaires.  The  report 
contains  concrete  proposals  for  potentially  needed  legislative  amendments.  It  will  be 
followed  by  the  formation  of  a  law-drafting  committee  that  will  be  entrusted  with 
examining  the  proposals,  assessing  the  need  for  legislative  action  and  drafting  the 
requisite amendments and accompanying explanatory report by mid-July 2020.  

The authorities submitted a draft legislative proposal for the creation of a special 
department for the provision of training magistrate court judges, who are the ones 
dealing with household insolvency cases. The authorities intend to enact the relevant 
amendments  to  the law  on the National  School  of Judges by  end-March 2020 and are 
expected  to  provide  by  that  time  information  on  the  syllabus  regarding  the  financial 

35 

Commission Staff Working Document -  

Chapter 5 - Financial sector 

training  of  judges,  that  would  include  courses  on  financial  and  accounting  subject 
matters, with an emphasis on issues frequently encountered in the course of the judicial 
processing of  financial  and insolvency  cases. The authorities are also  proceeding with 
the appointment of successful candidates for clerical court positions based on recently 
completed Supreme Council for Civil Personnel Selection competition. 

An amendment reinstating the favourable tax treatment of loan write-offs that had 
expired at the end of 2018 has been adopted and will provide an incentive for debt 
restructurings.  The  relevant  provision (29)  stipulates  that  the  amount  of  the  write-off 
(for restructurings concluded up to end-2019) will not be considered as an income of the 
debtor  and  will  thus  be  exempted  from  the  tax  levied  on  donations.  This  measure 
effectively  addresses  the  disincentives  to  restructurings  caused  by  the  expiry  of  the 
previous tax treatment. An extension of the treatment to restructurings conducted after 
2019 would provide an additional relief.  

The  authorities  are  considering  adjusting  the  legislative  framework  on  deferred 
tax credits to ensure smooth operability. Notably,  clarifying the use  of deferred tax 
credits  in  resolution  has  been  an  outstanding  issue  for  a  long  time.  Completing  and 
implementing the primary and secondary legislation is very important to help safeguard 
the loss-absorbing capacity of the banks’ capital. 

5.3.  HELLENIC FINANCIAL STABILITY FUND  

The Fund continued exercising its shareholding rights in the four systemic banks, 
focusing on improving the banks’ governance, assessing their business models, and 
progressing with the implementation of its Exit Strategy. During the last months, the 
Fund (i) has been actively involved with the Ministry of Finance and other stakeholders 
in  the  development  of  the  Hercules  law;  (ii)  has  been  working,  as  a  part  of  its  Exit 
Strategy, on an initiative to  develop  and communicate its shareholder expectations for 
all  systemic  banks,  challenging  their  strategies  and  business  plans,  with  the  view  to 
promote  value-enhancing  initiatives,  and  (iii)  continued  its  efforts  to  facilitate  the 
management and resolution of the non-performing exposures of the systemic banks. 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. 

(29) Article 62 of law 4389/2016 (OJ A 94) as amended by article 42 of law 4646/2019 (OJ A 201). 

36 

 
                                                           
6. 

LABOUR AND PRODUCT MARKETS 

The authorities are preparing a new National Growth Strategy.  The new Strategy, 
which is due to be completed by mid-2020, is expected to introduce a set of measures to 
be  implemented  over  four  years,  including  on  addressing  reform  priorities,  improving 
framework conditions and developing key economic sectors with a view to addressing 
competitiveness issues, and boosting exports and investment. Following the adoption of 
the  Development  Law  in  October  2019,  the  authorities  are  also  working  towards  the 
preparation  of  secondary  legislation,  as  the  issuance  of  relevant  ministerial  decisions 
and presidential decrees is a pre-condition to making operational specific provisions of 
the new framework. 

6.1.  LABOUR MARKET 

Labour 

The  authorities  committed  to  safeguard  competitiveness,  as  a  continuous 
commitment, when carrying out an annual update of the minimum wage, based on 
the ex post assessment of the recent increase in the minimum wage by the World 
Bank  and  mindful  of  the  requirement  of  the  Greek  legislation  to  also  safeguard 
purchasing  power.  The  ex  post  assessment  of  the  10.9%  increase  of  the  minimum 
wage as well as of the abolition of the sub-minimum wage for youth, which took place 
in  February  2019,    is  now  under  preparation  with  the  technical  support  of  the  World 
Bank provided through the European Commission and the report will be completed by 
end-March.  The  launch  of  the  consultation  process  with  the  social  partners  and  all 
relevant stakeholders for the next update as prescribed by the Law 4172/2013 took place 
on  15  February  2020.  Following  this  consultation  and  a  report  with  recommendations 
by  a  committee  of  independent  experts  specifically  appointed  for  this  purpose,  the 
government  shall  determine  the  new  level  of  the  minimum  wage.  The  law  posits  that 
this should be based on a sound economic analysis taking into account the state of the 
the  growth  rate,  productivity,  prices,  competitiveness,  employment, 
economy, 
unemployment, incomes and wages as well as the findings of the ex post evaluation of 
the previous increase. The procedure is expected to be concluded in June of 2020 with 
the issuance of a ministerial decision establishing the new level of the minimum wage. 

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 2017-2019 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 it. In January 2020, the fines for undeclared 
work were revised based on the following  criteria:  (i) the  gravity of the infringement; 
(ii) the number of employees; (iii) the repeated penalties for similar infringements; (iv) 
the number of workers affected; and (v) the size the business. The new fines range from 
€300  for  small  offences  in  firms  with  1  to  10  employees  to  €8 000  for  very  high 
offenses in firms with more than 250 employees. The authorities are preparing for the 
first time a code of ethics for inspection as well as training and education of inspectors 
inspired by best EU practices. A series of workshops are foreseen for the exchange of 

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technical expertise. These measures have been accompanied by a number of additional 
recent  steps to  limit  the abusive use of part-time work, which often masks undeclared 
full-time work. These notably include an increase in the overtime remuneration for part-
time workers, the recording of working time in a new digital platform as well as an e-
registry for no-compliant firms. 

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.  Historically,  active  labour  market  programmes  in  Greece 
have  consisted  mainly  of  temporary  wage  subsidy  programmes  and  public  work 
schemes. The updated action plan gives a more strategic focus on promoting long-term 
and sustainable employment growth by pursuing a more integrated approach, centred on 
the  provision  of  quality  measures  (including  vocational  education  and  training, 
reskilling and upskilling programmes) that are targeted to the needs of the local labour 
markets  and  are  tailored  to  characteristics  of  the  individual  jobseekers.  Following  an 
initial pilot project, the authorities are preparing an action plan in collaboration through 
a  European  Commission  technical  support  project  delivered  by  the  World  Bank  to 
expand  the  new  delivery  model  to  three  other  regions  capturing  sufficient  diversity  in 
the  settings 
technology, 
manufacturing, agribusiness,  etc.). These will be targeted to  i) older workers, ii) long-
term  unemployed,  iii)  female  labour  force  participation,  iv)  technical  professions;  v) 
apprenticeships  and  the  youth  to  combat  brain  drain.  Given  the  complexity  of  the 
project and the time needed for the implementation of the pilot projects, it was agreed 
with  the  previous  administration  that  full  rollout  of  the  labour  market  (re-integration) 
elements  of  the  Social  Solidarity  Income  scheme  by  end-2019  is  not  achievable,  and 
that the nation-wide expansion will take place in July 2020. 

(urban,  suburban  and 

rural)  and  sectors 

(tourism, 

Education 

The  Greek  authorities  have  embarked  on  an  ambitious  agenda  for  a 
comprehensive education reform.  This  goes  beyond Eurogroup  commitments, but  is 
relevant macroeconomically and from the social policy perspective, as it addresses skill 
mismatches,  enhances  growth  and  helps  to  reduce  poverty  and  improve  the  social 
situation.  The  reforms  aim  to  address  the  challenges  described  in  the  Country  Report 
2020,  such  as  the  need  to  enhance  the  quality  of  public  schools,  upgrade  vocational 
education  and  training  and  improve  the  quality  of  higher  education  institutions  to 
address the skills gap. Specifically: 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%). 

A new law on higher education has been adopted upgrading the quality assurance 
agency and linking funding of the universities with performance. The new agency 
will  assess  the  higher  education  institutions  and  the  degrees  that  they  offer,  and 

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will  propose  restructuring  when  needed.  80%  of  the  public  funding  will  be 
distributed  based  on  quantitative  criteria,  and  20%  will  be  based  on  achievement  of 
agreed  performance  targets.  The  law  also  liberalizes  research  grants,  which  will  bring 
new sources of income to the universities. The link of research with industry is a matter 
that requires attention, as only a small portion of the research is turned into new patents. 
To boost internationalization of the Greek higher education system, legislation is being 
developed to introduce double and joint degrees with foreign universities as well as to 
offer study programmes in foreign languages. The authorities plan in the near future to 
reform  the  university  governance  and  increase  the  autonomy  and  accountability  of 
universities.  

A number of changes  to compulsory education are in the pipeline.  The authorities 
are  proceeding  with  the  full  implementation  of  the  pre-school  mandatory  two-year 
programme. They also announced measures to address the poor educational outcomes of 
pupils  and  the  wide  performance  gap  between  different  areas  and  schools.  Model 
schools will be strengthened to act as a role model for other schools. Regarding soft and 
digital  skills,  the  authorities  plan  to  promote  critical  thinking  by  introducing  multiple 
books, to introduce changes in the curricula and to increase the number of subjects that 
are  examined.  School  self-evaluation  is  planned  to  be  implemented  as  from  the  next 
academic year coupled with massive teacher training of 40 000 teachers. The authorities 
have also embarked on the recruitment of 15 000 permanent teachers over two years to 
renew the aging teacher population that will replace temporary posts in accordance with 
the annual hiring plan.  

The  authorities  support  a  higher  degree  of  pedagogical  and  administrative 
autonomy  for  schools  and  promote  extroversion  by  increasing  foreign  language 
courses  and  exchanges  with  foreign  schools.  It  will  be  important  to  link  greater 
autonomy  with  the  necessary  support  for  educational  staff  and  well-designed 
accountability.  The  authorities  envisage  to  use  private-public  partnerships  for  school 
building, and to make a wider use of the private sector when it comes to IT and training. 

To address the gap between education and actual needs of the labour market the 
government plans to introduce early career guidance from the beginning of lower 
secondary education.  It also aims to upgrade the status of the vocational pathway, to 
promote  internships  for  high  school  students  and  to  encourage  the  collaboration  of 
universities and companies through the institutionalization of internships. 

6.2.  PRODUCT MARKETS AND COMPETITIVENESS 

Competitiveness  and  export  performance  have  improved  over  the  last  years  in 
response to broad-based structural reforms, but the projected deterioration in net 
exports  calls  for  a  stronger  focus  on  boosting  productivity  and  attracting 
investment.  Export  levels,  in  part  aided  by  increased  cost  competitiveness,  reached 
36.1%  of  GDP  in  2018.  However,  with  growing  wages  and  domestically  driven 
economic  growth,  and  the  economic  slowdown  in  Greece’s  export  markets,  a  more 
pronounced  approach  to  addressing  remaining  structural  weaknesses  would  enhance 
non-price competitiveness, leveraging both exports and investments.  

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Economic diplomacy 

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  institutional  arrangements.  Legislation  enlarging  the 
mandate and responsibilities of the Ministry of Foreign Affairs on economic diplomacy 
– originally planned for end-2019 – is now expected by March 2020. The strategy itself 
is expected to be completed by April 2020. A solid legal footing for the single authority 
on all relevant initiatives would allow the government to reap the synergies and policy 
cohesiveness  associated  with  a  coordinated  approach.  Further,  in  the  absence  of 
adjustments to governance structures and inter-ministerial arrangements, the Ministry of 
Foreign  Affairs  has  no  official  role  in  terms  of  the  work  conducted  on  removing 
administrative  impediments  to  trade.  In  fact,  limited  progress  has  been  achieved  in 
implementing  the  revised  Action  Plan  that  sets  out  trade  facilitation  initiatives  for  the 
next years, notably relating to the setting-up of the integrated Single Window system for 
imports and exports. Further, whilst the tendering process for important projects under 
the  export  promotion  Action  plan  led  by  the  said  Ministry  is  progressing,  the  Action 
Plan  would  benefit  from  greater  links  with  the  wider  trade  facilitation  and  investment 
promotion perspective. 

Investment licensing  

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  Better  Regulatory  Delivery  Directorate  in  charge  of 
coordinating the investment licensing reform and will receive further technical support 
from the European Commission, to be delivered by the World Bank. The scope of the 
new project will include support to the authorities for i) the extension of the licensing 
reform to selected key sectors not yet covered; ii) the extension of the implementation 
of  the  inspections  reform  framework;  iii)  capacity  building  and  outreach  of  the  Better 
Regulatory Delivery  Directorate; and iv) the development  of the  IT system.  These are 
positive steps, which are expected to accelerate progress in light of the high workload 
that remains to be completed.  

Regarding the full deployment of the relevant IT system to support the investment 
licensing framework (end-2019 specific commitment), the tendering process for the 
procurement of the system has been delayed, due to an appeal that was submitted 
against the awarding of the contract. It is noted that given the size of the project and 
the  anticipated  length  of  the  tendering  procedure,  it  was  agreed  with  the  previous 
administration that full implementation of the IT system by end-2019 is not achievable 
and  that  the  commitment  would  be  assessed  on  the  basis  of  the  conclusion  of  the 
relevant tendering procedure by end-2019 and a 34-month implementation timeline for 
the  completion  of  the  project,  which  was  also  included  in  the  tender  documents.  The 
revised  action  plan  agreed  with  the  current  administration  is  also  in  line  with  this 
implementation  horizon,  with  the  conclusion  of  the  project  being  scheduled  for 
November  2022.  In  view  of  the  pending  appeal  case,  more  clarity  will  be  provided 
following the decision of the responsible appeal review body in March, with April being 
the most optimistic scenario for the signature of the contract, depending on the outcome 
of this appeal review.  

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Work  on  the  implementation  of  the  inspections  framework  law,  a  mid-2020 
specific commitment, is progressing largely on track with the revised action plan, 
save  for  few  delays.  Most  sector-specific  tools  regarding  food  safety  have  been  fully 
developed  and  are  ready  to  be  legislated,  with  the  exception  of  the  enforcement 
management model and the complaint management system. As regards the tools for the 
environmental protection domain, despite few delays with respect to the revised action 
plan, work seems to be at a mature stage and is expected to be completed by end-April. 
The  on-site  training  of  inspectors  regarding  these  domains  has  been  completed. 
Regarding product safety, the authorities expect to develop sector-specific tools by end-
May, with the support of an external advisor. 

The  authorities  remain  committed  to  meeting  the  mid-2020  specific  commitment 
for  the  extension  of  simplification  of  the  investment  licencing  procedures  in  the 
remaining  sectors  of  the  economy,  despite  some  delays.  The  authorities  drafted 
primary legislation on the simplification of the primary sector, which according to the 
revised  action  plan  was  due  to  be  adopted  by  end-2019.  The  relevant  services  would 
thus  need to  swiftly proceed with  the finalisation and adoption of all relevant  primary 
and secondary legislation in order to avoid further delays in this respect. Regarding the 
simplification  of  the  next  sector  (i.e.  transport),  the  authorities  aim  to  complete  the 
mapping  of  activities  shortly,  with  a  view  to  concluding  the  review  and  finalise  the 
proposals for simplification by end-April. Regarding the post-secondary education and 
vocational  training sector, the authorities established the relevant  structures  and began 
to  work  on  this  sector,  with  the  aim  of  finalising  proposals  for  simplification  by  end-
May.  The  mid-2020  deadline  is  considered  challenging  for  the  last  two  sectors  (i.e. 
transport and post-secondary education and vocational training). 

The  authorities  aim  at  concluding  the  revision  of  the  nuisance  classification  by 
mid-2020, well ahead of the mid-2021 specific commitment. The authorities signed a 
contract with a technical advisor to support them in the steps needed for the alignment 
of  nuisance  classification  with  the  environmental  classification  system,  leading  to  the 
issuance  of  a  Joint  Ministerial  Decision  by  mid-2020,  as  per  the  relevant  provision 
adopted  in  the  Development  Law  in  October  2019.  Work  is  largely  on  track  with  the 
revised action plan, with the first deliverable completed. This concerns the preparation 
of  the  report  on  the  assessment  of  the  current  situation,  which  was  presented  by  the 
advisor to the Working Group and social partners in January. The next steps include the 
specification and implementation of the methodology for the categorisation of activities. 
The authorities remain committed to the ongoing engagement of social partners in the 
process, which is considered highly beneficial to this reform area. 

The  authorities  are  also  working  on  further  measures  to  improve  aspects  of  the 
licensing  framework,  in  particular  the  environmental  licensing  and  inspection 
frameworks. To this end, they are drafting primary legislation to simplify the process 
for renewing and amending environmental permits, due by March 2020, and secondary 
legislation for the certification of external environmental assessors, with a view to issue 
the relevant Presidential  Decree by mid-2020 – the latter being a pending requirement 
since the ESM programme. With respect to inspections, the said primary legislation will 
also  contain  provisions  to  re-organise  the  administrative  framework  for  carrying  out 
inspections,  whilst  the  authorities  are  also  preparing  secondary  legislation  for  the 
certification of external inspectors, with a view to submit the draft Presidential Decree 

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to the Council of State by March 2020. The latter would be an important step towards 
addressing the weaknesses of the enforcement framework, as well as creating new jobs 
in the private sector. 

The  authorities  remain  committed  to  ensuring  continuity  of  reforms  adopted 
under  the  programme.  They  are  reviewing  provisions  legislated  by  the  previous 
administration in the area of thematic tourism (30) to identify and address any potential 
deviations  with  the  principles  of  the  investment  licensing  reform  by  September  2020. 
To this end, and also with a view to streamlining the administrative burden on producers 
and buyers of milk, it would be helpful to review secondary legislation on measures to 
control the milk market (31) and adopt any necessary amendments. Given that other bills 
containing  provisions  relevant  to  licensing  are  currently  being  prepared  by  various 
services  within  the  administration,  the  ongoing  engagement  and  enhanced  role  of  the 
BRDD in the scrutiny of these would act as a safeguard. 

Cadastre 

The cadastre project is progressing overall well despite some delays mainly due to 
a slow response of the public in declaring their properties. Additional delays  were 
encountered  in  five  contracts  that  were  not  awarded  as  lawsuits  were  filed  by 
unsuccessful bidders. As a result, it is estimated that only 33% of the cadastral mapping 
will be completed by June 2020, while the Eurogroup target of 45% will be reached by 
May 2021. 

After  two  years  of  implementation,  the  Road  Map  for  the  completion  of  the 
cadastre  has  been  revised.  The  authorities  have  moved  the  deadline  for  the  final 
completion of the cadastral mapping, which is a mid-2021 specific commitment, to May 
2022. The problem with the delayed declarations has been overcome and in all but three 
contracts  the  number  of  declarations  received  allows  to  go  to  the  next  phase  of  the 
mapping. The completion of the remaining 6% of forest maps, that for technical reasons 
remained  pending  in  relation  to  the  mid-2019  commitment,  is  on  track  and  the  whole 
exercise of ratification of the forest maps will be completed on time by December 2020 
for the entire country. The Management Information System, that was set-up to monitor 
progress of the cadastre surveys and report monthly is preforming well and proved its 
usefulness as a management tool.  

Progress towards a full establishment of the cadastral agency, a mid-2020 specific 
commitment, has been limited. As of today, only six cadastral offices have opened. In 
order to accelerate the transition, the Hellenic Cadastre plans to open 17 offices, one in 
each  Regional  Unit  (Regions  and  portions  of  Regions  in  Regions  with  a  large 
population) and delegate the opening of the 72 sub-offices to the Regional Offices. For 
this sufficient  administrative and financial autonomy will be delegated, without  which 
this commitment would be at risk. 

In  order  to  migrate  to  a  fully  digitalized  system,  the  Road  Map  foresees  to 
accelerate the digitalization of deeds.  This  is a major exercise as it is estimated that 

(30) This refers to primary legislation (Law 4582/2018). 
(31) This  refers  to  a  Joint  Ministerial  Decision  issued  by  the  Ministry  of  Finance  and  the  Ministry  of 

Agricultural Development and Food on 21 March 2019. 

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there  are  approximately  1  billion  pages  to  scan  and  digitalize.  The  Hellenic  Cadastre 
also is working on the completion of the recruitment of the management team with the 
appointment of three Deputy General Managers, the recruitment of a “migration team” 
needed  for  the  transition  from  mortgage  offices  to  cadastral  offices,  and  the  re-
integration of a number of lawyers to supervise the legal part of the cadastral mapping. 

In  the  longer  term,  the  authorities  intend  to  examine  the  introduction  of  some 
simplifications in the structure of Hellenic Cadastre given that at the final stage all 
transactions  will  be  done  electronically.  This  will  be  made  possible  after  the  full 
digitization of all of deeds, which will allow the gradual abolition of the 72 sub-offices.  

Energy 

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.  Following  the  failure  of  the  lignite 
divestment  in  July  2019,  in  November  2019  Greece  communicated  its  intention  to 
submit  revised  remedies  by  January  2020  to  address  the  outstanding  competition 
concerns related to the privileged access to lignite-fired generation granted by the Public 
Power  Company  and  finally  comply  with  the  Commission’s  decision  and  Court’s 
judgements, in line with the programme commitment.  

In  the  past  few  months,  Greece  has  engaged  in  discussions  with  the  Commission 
about options for allowing Public Power Company’s competitors to compete on the 
market  by  having  access  to  a  share  of  the  existing  and  operating  lignite-based 
generation until the full phase out of lignite in the country. Once these revised remedies 
are made binding, the authorities will be expected to support and fully implement them. 
Addressing  the  longstanding  distortions  on  the  wholesale  market  will  increase  the 
degree  of  competition  in  the  Greek  electricity  market,  setting  the  basis  for  further 
investments and helping Greece reform its energy sector.  

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  will, 
based  on  new  timelines,  be  completed  and  submitted  to  the  regulatory  authority  for 
approval by January 31st. Regular stakeholder workshops and trainings are taking place 
in order to prepare the market participants for the new market. Although there are some 
delays  in  the  delivery  of  some  balancing  market  components  by  the  contractor,  the 
deadline of the go-live of the local day-ahead, intraday and balancing markets remains 
June  2020.  Further  work  for  the  coupling  with  the  Bulgarian  and  Italian  markets  has 
taken place ensuring that the local market will be coupled without undue delays after the 
spot market go-live.  

The  National  Energy  and  Climate  Plan  (NECP)  adopted  in  December  2019  in 
accordance  with  Regulation  (EU)  2018/1999  on  the  Governance  of  the  Energy 
Union  and  Climate  Action  outlines  the  2030  energy  strategy  of  Greece,  based 
around  the  early  decommissioning  of  lignite  plants.  Greece  submitted  its  plans  in 

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advance  of  other  Member  States,  including  its  2050  Long-term  Climate  Strategy.  The 
final  National  Energy  and  Climate  Plan  showed  renewed  ambition  compared  to  the 
2019 version with an increase of targets in renewable generation, energy efficiency and 
a  decrease  in  CO2  emissions.  Much  of  this  is  a  result  of  the  plan  for  early 
decommissioning of lignite. There will be many social challenges to face, particularly in 
certain  regions  that  are  highly  dependent  on  the  lignite  industry  (see  also  the  2020 
Country  Report).  However,  in  line  with  the  Commission’s  Green  New  Deal  and  Just 
Transition  Mechanism,  targeted  support  to  those  regions  is  at  hand,  so  that  the 
opportunities  such  a  move  provides  can  be  explored,  in  cooperation  with  the 
Commission. At a national level, Greece set up an inter-ministerial committee to discuss 
the transition. Finally, Greece also pre-notified two state aid schemes, for interruptibility 
and flexibility.  

The  Public  Power  Corporation  presented  its  new  business  plan,  giving  details  on 
its planned timeline for lignite plants decommissioning and ideas for new business 
ventures. Further details  are  yet  to  be fleshed out,  including the timing of its  planned 
closures  of  the  mines,  which  feed  the  generation  plants.  However,  it  is  clear  the 
company  is  aiming  for  a  bold  transformation  in  coming  years,  founded  on  the 
decommissioning plan that underpins Greece’s energy strategy. After its strong efforts 
to stabilise its finances, the results of which were seen in its positive annual report, the 
further development and implementation of the business plan will be its mid-term focus. 
The  Public  Power  Corporation  provisions  of  the  recent  energy  law  puts  in  place 
corporate governance rules, which are being implemented, giving the company a chance 
to operate more at an “arm’s length” from the government and engage in procurement in 
line with best practices. As of December 2019 (32), its retail share in the interconnected 
system stood at 71.8%, slightly higher than November’s 69.8%. However this generally 
continues a downward trend, though it should be noted that this varies substantially by 
customer class. The Public Power Company remains more or less the sole provider to 
high  voltage  consumers,  whilst  at  medium  voltage  and  low  voltage  these  shares  are 
much  lower,  at  52.5%  and  73.5%  respectively.  Given  the  opening  of  the  market, 
discussions are ongoing about the rules for universal supply, to make sure that any new 
obligations  on  certain  providers  to  supply  to  all  customers  will  be  applied  in  a 
proportionate way. 

Initial  estimates  are  that  the  Renewable  Energy  Sources  Special  Account  will 
remain in slight surplus for 2019 despite dipping in the 3rd quarter, in the context 
of  the  programme  commitment  to  achieve  a  sustained  surplus.  This  was  likely 
caused by the elimination of the supplier surcharge and the reduction of the renewable 
energy levy. Greece has announced intentions to take a sustainable approach to keep the 
account in balance, such as increasing the inflows of Emissions Trading System carbon 
allowances. Such an approach for a predictable balance going forward is welcome; the 
forthcoming  projection  of  the  Special  Account  from  the  renewables  market  operator 
(DAPEEP) will be an important element. Views from market participants indicate that 
cash-flow  issues  have  stabilised,  which  is  an  encouraging  sign.  The  final  renewable 

(32) Monthly  Wholesale  and  Retail  Penetration  and  Market  Share  Report,  December  2019, 
http://www.enexgroup.gr/fileadmin/groups/EDSHE/FEP/MonthlyReports/FEPAS_MonthlyReport_20
1912_EN_V01.p 

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energies  auction  of  2019  took  place  in  December  with  some  success,  though  it  is 
unclear what system will be in place for the future. 

From  a  more  international  outlook,  Greece’s  development  as  an  ‘energy  hub’ 
made  strides  with  the  agreement  between  Greece,  Israel  and  Cyprus  on  the 
EastMed  gas  pipeline.  Leaders  from  Greece,  Cyprus  and  Israel  signed  an  accord  to 
start the ambitious project of nearly 2 000 km of pipeline designed to bring gas from the 
Cyprus  area  onto  European  markets,  connecting  to  projects  such  as  the  TransAdriatic 
Pipeline.  Other  opportunities  in  gas  are  positive,  such  as  the  Greece-Bulgaria 
Interconnector  currently  in  construction  and  the  already  applicable  rules  for  reverse 
flow on the Trans-Balkan pipeline, while electricity  connections such as  the EuroAsia 
with Cyprus explored may develop further.  

Water 

The  information  system  to  monitor  the  performance  of  water  companies 
throughout the country completed its first year of operation. The platform includes 
information on cost recovery, infrastructural investments, planned human resources and 
drinking water quality across the country, among others. In the first  year of operation, 
the authorities took several actions to ensure that the system is operational and that the 
information  received  is  reliable  and  proceeded  to  continuous  verifications  and 
corrections  on  the  information  received  in  2017-2018.  As  of  today,  the  number  of 
registered  users  representing  water  supply  service  providers  has  increased  to  719,  up 
from 456 reported in the fourth enhanced surveillance report, but only 205 of these have 
introduced  data  for  2018.  The  reliability  of  the  data  is  a  concern,  in  particular  in 
agriculture, which accounts for about 85% of the total water consumption. The data is 
often inconsistent, incorrect, or ignores major components such as the cost of energy.  

There  has  been  no  progress  on  the  implementation  of  the  2019  strategic  and 
operational  plans  that  will  inter  alia  streamline  the  authorities’  supervisory 
activities.  Many  municipalities  and  irrigation  suppliers  lack  the  appropriate  staff  and 
competence to be able to feed the system with valuable information and they are in need 
of support with training if the information system is to become operational and fulfil its 
purpose. 

Regarding  sewerage,  the  government  intends  to  pass  legislation  that  would  allow 
subsidising  private  connections.  The  authorities  also  intend  to  involve  the  private 
sector in the supervision of the construction and the operation of the sewage treatment 
plants.  This  will  be  useful  in  particular  for  small  municipalities  that  do  not  have  the 
technical capacity to properly supervise the works nor to manage the sewage treatment 
plants.  

Transport and Logistics 

The  authorities  adopted  the  Strategic  Transport  Master  Plan  for  Greece.  The 
Master Plan identifies future policies and investments in the transport sector. The plan 
covers  all  transport  modes  for  the  years  2027  and  2037,  the  necessary  supporting 
planning tools as well as accompanying capacity-building activities. The next step now 
is to proceed to the operational use of the Master Plan including actions that will enable 
the  use  of  structural  funds  from  the  programming  period  2021-27.  These  include 

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Chapter 6 - Labour and product markets 

regional plans and work on urban mobility in order to satisfy the enabling condition for 
2021-2027 EU funding of transport projects.  

There  are  long  delays  in  the  construction  of  co-financed  infrastructure  projects. 
This  undermine  the  development  of  railways  in  Greece  and  may  lead  to  the  loss  of 
already paid  out  or committed EU financial resources. To address  this situation in  the 
railway  sector,  the  authorities  are  considering  to  restructure  the  public  company  in 
charge  of  constructing  and  equipping  the  railway  network.  Several  contracts  for  new 
projects continue to be delayed (Athens metro line 4, Patra-Pyrgos motorway, Amvrakia 
– Aktio highway, Athens and Thessaloniki busses). The development of projects for the 
accessibility of the port of Thessaloniki has also encountered delays. While the port has 
a  great  potential  as  a  freight  gateway  to  the  Balkans  and  Eastern  Europe,  and  has 
recently been privatized, its functioning is seriously hampered by poor or inexistent rail 
and road connections to the hinterland. 

The  Thriasio  logistics  complex  remains  unutilized.  Once  fully  operational,  this 
investment – co-financed with EU funds – could give a big boost to rail freight and the 
overall competitiveness  of the country.  The concession contract  for the private freight 
centre  has  not  been  activated  as  the  contract  was  ratified  before  notification  and 
clearance by  relevant  Commission Services for the involved State Aid. The tender for 
the  management  and  operation  of  the  park  of  1 450  hectares  is  also  severely  delayed. 
The  European  Commission  has  started  the  procedures  for  recovering  EU  structural 
funds contributions by the Cohesion Fund and European Regional Development Fund. 

The  situation  of  the  Public  Transport  Company  of  Thessaloniki  (OASTH) 
continuous  to  raise  concerns.  The  government  nationalized  the  company  in  2017  in 
order  to  undertake  a  substantial  restructuring  and  generate  savings  on  an  expensive 
private concession. The  authorities have recently decided to  extend the lifetime of the 
company to 2022, as opposed to initial plans to liquidate it and replace by a new entity. 
The authorities have expressed their intention to prepare a restructuring plan in order to 
reduce the operating costs to a sustainable level.  

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7.  HELLENIC CORPORATION OF ASSETS AND 

PARTICIPATIONS (HCAP) AND PRIVATISATION 

7.1.  HELLENIC CORPORATION OF ASSETS AND PARTICIPATIONS 

The work of the Corporation on the key areas covered by the commitments to the 
Eurogroup is continuing. The implementation of the strategic plan is ongoing and the 
review of the Boards of state-owned enterprises is in its final phase. The transfer of the 
Olympic Athletic Centre (OAKA) will be delayed due to practical complexities, which 
are  unavoidable  due  to  the  status  of  the  asset.  Since  the  publication  of  the  fourth 
enhanced surveillance report in November 2019, progress has been made in improving 
the 
in  state-owned  enterprises.  The 
corporate  governance 
coordination mechanism, which governs the interaction between the authorities and the 
Corporation regarding the mandates, objectives and assignment of ‘special obligations’ 
to state-owned enterprises under the Corporation, either continued or was launched for 
all  enterprises;  the  mandates  for  eight  enterprises  were  finalised  and  submitted  to  the 
Cabinet Committee. 

implementation  of 

The  authorities  have  exhibited  strong  engagement  and  support  to  the  important 
work  of  the  Corporation.  The  authorities  have  coordinated  the  engagement  between 
line  ministries  and  the  Corporation  through  the  agreed  coordination  mechanism  and 
significant  progress  has  been  achieved  in  the  implementation  of  the  coordination 
mechanism. Work is underway in updating the ministerial guidance, which will include 
financial return targets for the assets held by the Corporation.  

The  authorities  have  stated  their  intention  to  clarify  their  expectations  for  the 
financial performance of the portfolio of companies held by the Corporation. This 
would  be  done  by  setting  out  targets  and  benchmarks  in  Ministerial  Guidance,  as 
provided for in the law on governing the functioning of the Corporation. The ministerial 
guidance is currently being drafted. The authorities have advised an intention to set out 
robust and commercial benchmarks.  

The  Corporation  is  continuing  with  the  implementation  of  its  strategic  plan  (a 
continuous  commitment),  which  incorporates  its  overall  approach  for  better 
management  and  use  of  the  assets  of  the  Greek  State  that  became  part  of  its 
portfolio.  The  Corporation  is  implementing  its  strategic  plan  and  monitoring  the  key 
performance  indicators  it  has  set  for  its  direct  subsidiaries  and  the  non-listed  other 
(state-owned  enterprises  with  majority  participations).  The  key 
subsidiaries 
performance indicators cover the following areas: enhancement of economic and public 
value,  improvement  of  financial  performance,  corporate  governance,  improvement  of 
quality  of  services  offered  to  customers,  operational  efficiency  and  innovation.  The 
Corporation is currently in the process of evaluating the progress made on the indicators 
for 2019 and finalising the ones for 2020. The strategic plan will be updated following 
the issuance of Ministerial Guidelines. 

The Corporation’s real estate portfolio shows some signs of improvement following 
its restructuring but these are below expectations. Achieving the full potential of the 

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real  estate  portfolio  remains  a  key  challenge  and  should  be  a  primary  source  of  value 
creation.  As  yet,  performance  of  the  Public  Properties  Company  is  not  reaching  this 
potential. In November 2019, its two executive posts (the Chief Executive Officer and 
the second executive director) were filled. Furthermore, the Public Properties Company 
faces  legal  cases,  which  go  back  many  years  with  great  uncertainty  in  claims  and 
economic impact. (see also section 3.1).  

The authorities have made some progress in evaluating a further package of real 
estate  for  transfer  to  the  Corporation.  While  a  large  package  of  real  estate  was 
identified for transfer in 2018, screening indicates that many properties are ineligible for 
the transfer. The authorities expect the screening process to be completed shortly. 

The  Corporation  has  continued  its  work  on  corporate  governance,  in  particular 
regarding the review of the boards of the state-owned enterprises (a specific mid-
2019  commitment),  and  improving  internal  and  external  audit  capabilities.  The 
Corporation’s  Board  has  recently  completed  the  review/replacement  of  the  Boards  of 
Directors  of  the  Central  Market  of  Athens  (OKAA).  The  assessment  of  the  Board  of 
Directors for the subsidiaries of the Athens Urban Transport Organisation, responsible 
for  bus  and  metro  transport,  is  expected  to  be  completed  in  the  coming  weeks. 
Regarding  the  remaining  state-owned  enterprises,  the  assessment  of  the  Board  of  the 
Hellenic Exhibition Organisation and the process for the selection of the new Board of 
the  Greek  Saltworks  are  about  to  commence.  Candidates  for  the  Chairs  of  the  Audit 
Committees have been selected for all subsidiaries of the Corporation, which constitutes 
an  important  step  forward  in  improving  the  governance  culture  generally.  So  far,  the 
Corporation has identified and appointed some 65 Board members (executive and non-
executive) in its enterprises through open, professional and transparent procedures.  

Elaboration  of  new  remuneration  policy  by  the  listed  state-owned  enterprises  is 
being implemented. Following the preparation of the principles and guidelines for the 
remuneration  policy  for  the  listed  state-owned  enterprises  in  September  2019,  the 
Remuneration Committees of the Water Utility Company of Thessaloniki (EYATH) and 
the Public Power Corporation elaborated new remuneration policies with the assistance 
of external consultants. These policies were approved by the Corporation in the General 
Assemblies  of  the  two  companies  in  December  2019.  Moreover,  new  remuneration 
policies  for  the  Board  of  Directors  of  the  Hellenic  Post  and  Athens  Urban  Transport 
Organisation were approved by the Board of the Corporation.  

In addition to the extensive work on governance, the Corporation is increasing its 
focus  on  operational  improvements  in  state-owned  enterprises,  following  the 
development  of  new  business  plans  in  2018.  A  key  challenge  will  be  to  effectively 
address the significant operational and financial issues in the Hellenic Post, which also 
faces a serious liquidity problem. The restructuring approach has not been finalised. The 
company  will  need  to  be  restructured  to  reduce  its  cost  base  and  to  develop  new  and 
sustainable revenue streams over the medium to long term to ensure its viability.  

The  authorities  and  the  Corporation  are 
implementing  the  coordination 
mechanism and have completed the process of mandates for eight companies.  The 
Cabinet  Committee  has  met  regularly  since  its  reconstitution  in  November  2019.  This 
has required coordination across various ministries to enable the government to ‘speak 

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with  one  voice’  on  the  priorities  regarding  activities  of  state-owned  enterprises  under 
the  coordination  mechanism  and  expedite  the  procedural  steps.  In  early  February,  the 
mandates  for  eight  enterprises  were  finalised  and  are  expected  to  be  approved  by  the 
Cabinet Committee in the coming weeks.  

The  transfer  of  the  Olympic  Athletic  Centre,  which  was  a  specific  end-2018 
commitment, proves to be very complex, involving multiple stakeholders as well as 
a series of administrative (including maintenance requirements) and procurement 
steps. These include procurement for the repair or overhaul of significant facilities, in 
order to ensure that the asset is provided in a satisfactory condition. The authorities have 
taken  a  number  of  steps  to  proceed  with  this  work,  which  include  (i)  the  hiring  of  a 
technical advisor in July 2019 to review the current status of all the infrastructures and 
to prepare the tender documents for a main technical study, and (ii) the assignment of 
the  responsibility  of  the  project  to  the  Ministry  of  Sports  in  order  to  streamline  the 
management of the process. These measures are considered to be positive. 

7.2. 

IMPLEMENTATION OF THE ASSET DEVELOPMENT PLAN 

Implementation  of  the  Asset  Development  Plan  of  the  Hellenic  Republic  Asset 
Development  Fund  (TAIPED)  is  key  to  stimulate  private  investment,  increase 
efficiency,  and  provide  financing  to  the  state.  In  June  2018,  the  authorities  made  a 
specific  commitment  to  the  Eurogroup  to  implement  the  Plan,  which  will  be  updated 
every six months, and in this context to complete the transactions on Hellenic Petroleum 
(HELPE) and the Marina of Alimos by mid-2019. Further, the authorities committed to 
complete  the  transactions  on  Egnatia,  Public  Gas  Corporation  (DEPA)  Commercial, 
Athens International Airport shares, Water Supply and Sewerage Companies of Athens 
and  Thessaloniki  and  the  regional  ports  of  Alexandroupoli  and  Kavala.  Additional 
commitments were taken for beyond 2019. Last, but not least, the Hellinikon transaction 
(development of the site of the former Athens International Airport, a specific end-2018 
commitment) remained pending.  

The  authorities  maintained  momentum  in  the  privatisation  process  and  are 
making continued progress in the implementation of the Asset Development Plan. 
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. In particular: 

Hellinikon (an end-2018 specific commitment): Despite the strong engagement of the 
authorities  and  intensified  efforts  to  complete  the  conditions  precedent  to  allow  the 
transfer of shares to the preferred investor (Lamda), the financial closing is delayed due 
to complications in the tender process for the award of the casino licence. The current 
state of play on key elements is as follows:  

The tender process for awarding the casino licence is still ongoing. Complications have 
arisen  in  the  process.  The  evaluation  of  the  legal  documents  submitted  by  the  two 
bidders for the casino license led to the exclusion of one of the two bidders from the 
process. The excluded bidder has appealed against the decision and this could lead to 
a delay in the completion of the process by several months.  

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The  clarification  of  a  number  of  issues  through  Joint  Ministerial  Decisions  was  a 
condition precedent, which has been completed with the adoption of four Decisions 
between  late  August  and  early  October  2019  (on  the  metropolitan  park,  the 
development zones for the casino area and beyond, and the urban planning zones). 

The relocation  of  the public users still on the site can be completed soon without  any 
problems; there is a problem with only one private user against whom two civil court 
litigations  were  pending,  one  of  which  resulted  in  September  2019  in  a  second 
instance  court  decision  issued  in  favour  of  Hellinikon  S.A.,  the  Hellenic  Republic 
and the Fund, paving the way for its enforcement and the resolution of the issue. 

Regarding the partition of the Hellinikon site, an agreement has been reached between 
all  involved  parties,  which  will  be  reflected  in  a  contractual  binding  document 
planned to be executed and ratified by Parliament.  

Demolition of current buildings on the site: A legislative provision has been adopted on 
12  February  2020  (Law  4663/2020),  which  makes  possible  the  demolition  of 
buildings on the site by Lamda. 

Marina of Alimos (a mid-2019 specific commitment): the Marina of Alimos is one of 
the  largest  marinas  in  the  South-Eastern  Mediterranean,  located  on  the  South-Eastern 
waterfront of Athens. The preferred investor was selected on 16 April 2019. 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):  The  authorities  are  yet  to 
decide on the approach to be followed after the failure of the first tender in mid-2019; a 
tentative  timetable  is  expected  by  March  2020.  No  binding  offers  had  been  submitted 
for the joint sale (along with PanEuropean Oil and Industrial Holdings S.A., the other 
strategic shareholder of Hellenic Petroleum) of a majority stake (50.1%) and thus there 
was  no  positive  outcome  of  the  specific  transaction.  The  financial  closure  is  thus 
inevitably subject to significant delays. The ultimate decision as to the structure and the 
timing lies with the Greek authorities and it is expected to be determined on the basis of 
what provides the best commercial and strategic value for Greece. 

Sale of 30% of Athens  International  Airport (an end 2019 specific commitment): 
The  tendering  process  is  proceeding  well.  Ten  investment  parties  expressed  their 
interest  to  acquire  a  30%  stake  in  the  first  phase  of  the  process  concluded  in  October 
2019.  Following  the  evaluation  of  the  investors’  proposals,  on  31  January  2020  the 
Board  of  Directors  of  the  Fund  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 
amendment  of  the  Energy  Law  was  adopted  in  November  2019 (33).  It  includes  the 
provisions for the partial demerger of the company, in  line with  the agreed termsheet. 

(33) Law 4643/2019 (OJ A 193/3.12.2019). 

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The law also includes provisions for the sale of the whole stake owned by the Fund, i.e. 
65%,  in  both  DEPA  Commercial  and  DEPA  Infrastructure.  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  deadline  for  the  submission  of  expressions  of  interest  has 
been extended to 21 February 2020. Indications are that the tender is attracting strong 
interest,  with  the  decision  by  the  authorities  to  sell  the  whole  stake  being  a  major 
contributing factor. At the same time, the national energy regulator is expected to adopt 
a decision shortly on the regulatory framework for distribution system operators, which 
would  bring  further  clarity  to  potential  investors.  The  international  tender  process  for 
the sale of 65% of the share capital of DEPA Commercial was launched on 23 January 
2020. The deadline for the submission of expressions of interest is 6 March 2020.  

Egnatia (an end-2019 specific commitment): The privatisation process for the Egnatia 
motorway  entails  the  award  of  a  long-term  concession  for  the  operation  and 
maintenance  of  the  motorway  and  its  three  vertical  axes.  The  transaction  has  been 
characterised  by  systematic  delays  and  problems,  showing  a  lack  of  ownership.  The 
authorities have stressed their commitment to proceed with the transaction.  

Following  extensive  discussions  with  all  involved  stakeholders,  the  Fund  decided  to 
extend  the  deadline  for  the  submission  of  binding  offers  to  26  June  2020.  The 
extension  of  the  deadline  gives  adequate  time  for  the  completion  of  all  required 
actions.  Since  the  4th  enhanced  surveillance  report,  three  frontal  toll  stations  in 
Oreokastro  (Thessaloniki),  Asprovalta  and  Strymoniko,  whose  construction  was 
completed  in  late  2018  or  early  2019,  were  put  into  operation,  while  during  the 
enhanced  surveillance  mission  in  January  a  detailed  roadmap  was  given  to  the 
institutions, with a specific timetable for the implementation of all required pending 
actions  by  May  2020.  There  has  been  some  progress  but  crucial  actions  remain 
pending and thus continuous follow up is required. In brief, progress has been made 
on the following actions: 

An Agreement has been achieved on the implementation of the new toll pricing policy 
approved by the Commission (specific timetable for a gradual implementation).  

The construction of more toll stations has been initiated. In total, 23 lateral toll stations 

are under construction since July 2019.  

The  Tunnel  Licensing  Authority  has  confirmed  the  necessary  works  for  unrestricted 

licensing of tunnels (Category A licensing).  

A number of actions however remain pending and the Ministry and Egnatia S.A. 
are  expected  to  demonstrate  commitment  so  that  these  will  be  completed  before 
May 2020, namely: 

Completion of the construction and operation of all toll stations (frontal and lateral); 

Licensing  of  all  tunnels under  category  E  (dangerous  cargos  excluded)  by  the  Tunnel 

Licensing Authority (there have been extensive delays so far).  

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Establishing clarity on the works needed for bridges to be classified as safe. Egnatia is 
expected to clearly define the measures to be taken as well as the cost for the bridges 
to be completely safe in the coming weeks. Once this is done, the specification of the 
allocation  of  risk  between  the  concessionaire  and  the  State  will  be  set  out  in  the 
concession agreement. 

Resolution  by  Egnatia  S.A.  of  the  open  issues  related  to  the  motor  service  stations 
contracts regarding Eleftherochori, Oraiokastro, Ardanio and Sostis, that have been 
inactive since 2011. The Board of Egnatia has to decide immediately as to how they 
will  proceed  with  these  contracts  in  order  for  the  issue  to  be  handled  in  the 
concession agreement accordingly.  

Completion of the necessary actions (advisor appointment) for all the preparatory work 
necessary  for  the  remaining  land  expropriations,  by  Egnatia  S.A.  Signing  of  the 
agreement with the advisor and full engagement remains pending.  

Provision  of  all  necessary  pending  environmental  licensing  by  DIPA  (Ministry  of 

Environment). 

Regional  Ports  (an  end-2019  specific  commitment):  The  privatisation  structure 
agreed with the previous government was the granting of sub-concessions for selected 
activities in each of the ten regional ports. The tender process was stalled following the 
May elections. Different options for the potential privatisation structures are available, 
namely  (a)  sale  of  majority  share  capital  of  each  regional  Port  Authority  to  a  private 
party,  and  (b)  granting  of  the  right  to  operate  specific  and/or  combined  port 
activities/services for the ten Port Authorities i.e. sub-concession of specific activities of 
each port.  

The  authorities  are  positive  with  respect  to  providing  flexibility  of  choice  on  the 
privatisation  transaction  structure  (i.e.  sub-concession  or  sale  of  equity)  so  as  to 
allow  the  best  privatisation  transaction  structure  to  be  chosen  for  each  port.  An 
agreement on the final text of the required legislative changes was reached in January 
2020, giving the Fund the flexibility of choice (i.e. sub-concession, sale of equity). The 
legal  amendment  was  adopted  by  Parliament  on  12  February,  whereas  the  Fund 
proceeded  at  the  beginning  of  February  to  the  launching  of  the  Request  for  Proposal 
process for recruiting external consultants for the sale of equity for four ports.  

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8. 

PUBLIC ADMINISTRATION AND JUSTICE 

8.1.  PUBLIC ADMINISTRATION 

Appointments of senior management positions 

The  appointments  of  the  Permanent  Secretaries  in  the  public  administration  are 
progressing  and  the  selection  process  for  Directors  has  resumed.  The  job 
announcements  for Permanent  Secretaries were published on 26 November 2019. The 
Supreme  Council  for  Civil  Personnel  Selection’s  (ASEP)  has  published (34)  the 
provisional reserve list for each ministry. According to the authorities, the appointments 
for  the  Permanent  Secretaries  posts (35)  should  be  completed  by  March  2020.  This  is 
linked to the specific commitment by mid-2019 for completing the appointments of the 
top  public  officials,  previously  named  as  Administrative  Secretaries.  Regarding  the 
selection procedures for directors and heads of division, the authorities are planning to 
introduce legal amendments for posts, for which the process has not yet been initiated, 
including attaching greater significance to previous experience, while at the same time 
safeguarding the Supreme Council’s (ASEP) role in chairing the selection panels. The 
remaining director posts are expected to be completed by August 2020. Finally, there is 
no progress in the exercise of appointments of managers of National Strategic Reference 
Framework  (European  Structural  and  Investment  Funds)  related  structures,  a  process 
that was launched back in 2017 (36). 

The  authorities  have  made  some  progress  in  setting  up  an  open  selection  process 
for senior management posts at public sector entities (37), expected to be in place by 
May  2020  and  to  come  into  effect  on  1  September  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, establish clear criteria underpinning such exceptions, 
and set out clear minimum standards for the appointments in these entities. It could also 
be  considered  to  adopt  a  similar  approach  as  for  ministries,  i.e.  splitting  policy  and 
administrative responsibilities of senior management  (see the next  paragraph), thereby 
safeguarding  institutional  continuity.  Further,  for  the  other  management  posts 
(middle/junior) in these entities, a common selection procedure that mirrors the ongoing 
procedure at the ministries would also enhance transparency and could be considered by 
the  authorities.  The  recent  adoption  of  a  specific  selection  procedure  for  the  Hellenic 
Cadastre (38)  sends  a  worrying  signal,  as  the  selection  panel  is  established  based  on  a 

(34) Published on 4 February 2020. 
(35) Thirteen  posts  in  total,  one  in  each  ministry  with  the  exception  of  Ministry  of  Foreign  Affairs, 
Ministry of Defense, Ministry of Citizens’ Protection and Ministry of Ministry of Shipping and Island 
Policy. 

(36) Separate  selection process of  managerial posts as  set out  in Law 4314/2014 (OJ A 265/2014.12.23) 

and Ministerial Decision 133426/2017 (OJ B 4273/06.12.2017). 

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

entities of private law. 

(38) OJ A 204/16.12.2019, Article 72. 

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Chapter 8 - Public administration and justice 

decision of the Board of Directors, whose members have been directly appointed by the 
relevant minister.  

Improving the human resource management in the public administration 

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.  The 
requirement  that  any  general  government  entity  needs  to  have  completed  its  digital 
organigram and job descriptions for all posts in order to request new staff is expected to 
strengthen  the  incentive  for  the  remaining  entities  to  complete  these  steps.  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.  At  the  same 
time,  the  tenders  on  Human  Resources  System  Support  Services  and  Information 
System Operation Services are planned to be launched by April 2020. 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  are  expected  to  verify  full  compliance  with  this  framework 
by 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. The mobility cycle launched in December 2019 maintained the 
positive trend seen  from previous cycles, as  both the number of entities took  part and 
overall  posts  increased (39).  The  authorities  are  planning  to  strengthen  the  link  of  the 
mobility cycle with the annual hiring plan and reduce the number of cycles from three 
to  two.  Moreover,  the  authorities’  intentions  to  firm  up  on  the  timeframe  through 
applying strict deadlines by when the transfers for each cycle need to be completed are 
welcome.  This  should  reduce  the  risk  of  multiple  selection  procedures  proceeding  in 
parallel.  Overall,  the  authorities  have  shown  ownership  to  this  reform  and  to  further 
strengthen it. As concerns performance assessment, the participation of public officials 
continued to increase (40).The authorities are planning to extend the assessment period 
from four to six months in order to facilitate the process. The authorities, with technical 
support provided through the European Commission, are also carrying out a review of 
the  assessment  methodology  with  the  aim  to  make  it  more  targeted  for  specific  staff 
categories (e.g. nurses). At the same time, introducing goal-setting into the assessment 
framework  would  facilitate  the  process  and  in  the  medium-term  also  allow  the 
assessment  to  be  more  closely  linked  to  the  promotion  exercise.  The  authorities’ 
intentions in this respect are yet to be confirmed. 

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’s  (ASEP)  with  the  aim  to  simplify  and  accelerate  the 
recruitment  processes.  In  this  context,  it  would  be  important  that  the  planned 

(39) A  total  of  350  entities  participated  (compared  with  165  for  the  previous  cycle)  and  7 195  positions 

were published (compared to 5 440 positions for the previous cycle). 

(40) For the assessment of 2018, 176 539 officials participated compared to 174 261 for 2017. 

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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. As concerns the job classification, an updated 
inventory of all classifications is expected to be completed by March 2020 that  should 
then form the basis on how to proceed to streamline the current system and link it with 
the function groups in the job description. 

Digital governance 

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. 

Legal codification 

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, which includes laws that have been amended several times, 
and  to  adopt  a  single  codification  law  while  at  the  same  time  repealing  obsolete  laws 
and  provisions.  A  number  of  relevant  legal  provisions (41)  included  in  the  Executive 
State Law have come into effect, including reestablishment of the Central Codification 
Committee that is mandated to prepare a manual for the codification methodology. The 
Committee  will  also  set  out  an  annual  programme  for  the  codifications  planned  for 
2020.  The  preliminary  plan  is  to  initiate  the  legal  codification  in  a  number  of  key 
sectors,  including  taxation  and  customs.  In  this  regard,  allocating  sufficient  resources 
for  the  Secretariat  for  General  for  Legal  and  Parliamentary  Affairs  and  the  Central 
Codification  Committee  to  carry  out  the  programming  and  to  closely  monitor  the 
implementation, including taking full advantage of EU funds that are available for this 
task, would be instrumental in completing the project by mid-2020. Finally, as concerns 
the national gateway for legal codification (a mid-2022 specific commitment) the tender 
is expected to be launched by April 2020. 

Implementation of the Executive State Law 

The  new  provisions  of  the  Executive  State  Law  on  good  law-making  came  into 
effect  on  8  January  2020 (42)  and  are  expected  to  improve  the  quality  of  laws  in 
accordance  with  best  practices  for  better  regulation  and  to  significantly  reduce 
unrelated  and  last-minute  amendments.  The  authorities,  with  technical  support 
provided through the European Commission, are in the process of finalising a detailed 
legislative methodology manual and a template for a comprehensive impact assessment 

(41) OJ A 133/07.08.2019, Articles 65-67. 
(42) OJ A 133/07.08.2019, Article 59 (point 5). 

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that will accompany each draft law. Further, each draft law will be published for open 
consultation  for two  weeks, and an expert committee is  mandated to  carry  out  quality 
control of each draft law prior to its tabling in Parliament. The proper enforcement of 
these  good  law-making  provisions  will  serve  as  a  litmus  test  for  whether  good  law-
making  practices  would  be  applied  in  practice (43).  Finally,  the  authorities  are 
progressing with  enhancing the legal  drafting and political  analyst  skills  at  the central 
administration,  with  the  first  group  of  selected  public  servants  to  receive  targeted 
training expected to be in place by September 2020. 

Provisions  adopted  as  part  of  the  Executive  State  Law  for  the  delegation  of 
signature  powers  to  the  non-political  level  have  come  into  effect  on  8  February 
2020. This entails a major reform at the core of the public administration, as one of its 
main characteristics had been the high degree of centralisation in the decision-making. 
Once  enforced,  it  is  estimated  that  approximately  80%  of  all  decisions  taken  in  each 
ministry will now be signed off at Director-General level. In order to ensure a smooth 
implementation of this provision, the authorities have issued a number of circulars and 
are  planning  to  carry  out  tailored  training  sessions  for  the  Director-Generals.  An 
amendment  introduced  to  the  Parliament  on  11  February  2020,  included  transitional 
provisions  that  maintain  the  signature  powers  at  the  Minister  level  for  some  cases.  It 
would be important for these provisions not to become extended to other cases and also 
to be phased-out in an orderly manner within a reasonable time frame.  

Controlling the size and cost of public sector 

Hiring  of  permanent  staff  is  proceeding  in  compliance  with  the  staffing  plan. 
According to preliminary data, the number of permanent officials hired during 2019 was 
significantly  below  the  number  of  public  officials  that  left  the  public  administration, 
mainly  due  to  retirement.  The  hiring  plan  for  2020  will  therefore  also  include  the 
number of positions that were not filled in 2019 (the “carryover”) while also adding the 
temporary posts that are planned to be converted into permanent posts (see below).  

The increasing trend of temporary staff has slowed down and the overall level is 
expected to be reduced during 2020. The reinstatement of the need for an approval of 
the  Ministerial  Cabinet  Act  (33/2006)  for  all  hiring  decisions  along  with  removing  a 
number of exceptions (44) that had been granted where such a cabinet approval was not 
required is also expected to increase control of the hiring procedures for temporary staff. 
At operational level, the authorities are planning to establish a link between the census 
database and the information system of the Ministry of Labour (‘Ergani’), which should 
enable the temporary staff data to be reported in terms of a full-time equivalent, which 
will  enhance  monitoring  and  steering  capabilities.  The  overall  number  of  temporary 
staff is expected to be reduced during 2020, also taking into account the ongoing hiring 

(43) The EIs are assessing the consistency of a recently adopted amendment (OJ A 21/03.02.2020, Article 
30) with the good law-making provisions, while the European institutions have also taken note that a 
number of the laws adopted since 8 January 2020 have included amendments that do not seem directly 
related to the law adopted. 

(44) Examples for such exceptions: (i) contracts for the needs of cleaning, catering, security (Article 63 of 
Law  4430/2016);  (ii)  contracts  for  the  cleaning  of  central,  decentralised  and  all  buildings  of  the 
Ministry of Health (Article 97 of Law 4468/2016); (iii) and contracts for the needs of cleanliness and 
care (Article 8 of Law 4506/2017). 

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procedures  that  will  convert  temporary 
(approximately 13 000 posts in total) to permanent ones. 

teaching  and  ‘home  assistance’  post’ 

While  new  salary  provisions  adopted  during  this  reporting  period  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. For example, 
extending and adjusting the allowance for managerial responsibilities (45), extending the 
scope of an allowance for public officials carrying out controlling tasks (46) and specific 
reimbursement provisions for legal entities of public and private law (47). However, the 
authorities have shown their commitment to strengthen control of the unified wage grid 
and  hiring  procedures  and  is  expected  by  end-February  2020  to  establish  an  inter-
ministerial  committee (48)  with  a  mandate  to  ensure  overall  coherence  and  reinforce 
control. The authorities are also reflecting on a range of additional measures, which are 
closely linked to the new legislative process introduced by the Executive State Law (as 
described previously in this section), in order to ensure compliance with the hiring plan 
and  the  unified  wage  grid.  Possible  measures  being  considered  would  entail  that  the 
Ministry  of  Interior  and  Ministry  of  Finance  will  provide  a  reasoned  opinion  if  draft 
legal  provision  is  consistent  with  the  hiring  plan  and  the  unified  wage  grid.  Another 
specific measure that could also prove efficient and enhance transparency is to restrict 
any remuneration-related amendments to dedicated wage grid laws to be adopted at pre-
set periods (e.g. twice a year). This would also be consistent with the good law-making 
process  that  is  now  in  force.  Finally,  as  concerns  the  allowance  for  hazardous 
occupations, the inter-ministerial committee is on track to finalise its work by mid-2020, 
paving the way for a Joint Ministerial Decision to be adopted by September 2020 that 
would set out a clear methodology on who is eligible to receive this allowance. 

legislation (49) 

to  allow 

the 
The  authorities  have  adopted  primary 
reorganisation  of  the  Single  Payment  Authority.  This  step  allowed  for  the 
implementation  of  an  important  IT  project (50),  which  had  been  significantly  delayed, 
aiming  to  establish  an  integrated  and  fully  digitized  payroll  system  for  all  general 
government employees, which will be managed by the Single Payment Authority. The 
calculation,  clearance,  payment  and  attribution  of  social  security  contributions  and 
deductions at a single point for all general  government officials is  expected to bring  a 
number  of  benefits,  including  lower  administrative  costs.  Once  the  IT  system  is 
operational,  it  will  allow  for  the  calculation  and  management  of  remunerations  for 
approximately 650 000 public officials by the Single Payment Authority. 

for 

(45) OJ A 204/16.12.2019, Article 16. 
(46) OJ A 204/16.12.2019, Articles 40 and 70. 
(47) OJ A 12/24.01.2020, Article 57. 
(48) Members of this committee are expected to be the Ministry of Finance (General Accounting Office), 
Ministry  of  Interior  (Secretariat  General  for  Human  Resources  in  the  Public  Sector)  and  the 
Presidency office (Secretariat General for Coordination of Internal Affairs). 

(49) OJ A 201/12.12.2019, Article 62 
(50) Contract was signed on 31 December 2019 and is expected to be completed by July 2021. 

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8.2.  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  in  terms  of  IT 
infrastructure,  staff  training  and  awareness-building  and  the  time  needed  for  the 
implementation  of  the  pilot  projects,  it  was  previously  agreed  that  full  rollout 
throughout all courts by end-2019 is not achievable and that the commitment would be 
assessed  on  the  basis  of  progress  in  the  second  phase  of  the  Integrated  Judicial  Case 
Management System (see below) or 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,  which  is  a 
specific  commitment  for  mid-2020.  While  the  drafting  of  the  call  for  bids  was 
finalized  in  November  2019,  a  change  in  the  governance  of  the  process  (with  the 
conduct  of  the  tender  procedure  moved  to  the  new  Ministry  of  Digital  Governance) 
entailed  a  delay  in  the  procedure,  attributed  by  the  authorities  to  technical  problems 
(data transfer difficulties) that prevented its completion by the original deadline of end-
2019. The  authorities intend to  publish the call for bids  by  end-February 2020. Given 
the size and scope of the project and the anticipated length of the tendering procedure 
whose launch, originally planned for June 2019, was delayed by several months due to 
reasons not attributable to the current administration, it was agreed with the latter that 
full  implementation  of  the  second  phase  of  the  Integrated  Judicial  Case  Management 
System by mid-2020 is not achievable and that the commitment would be assessed 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 (51).  

Following the adoption of a number of legal amendments ensuring conformity of 
the mediation framework with the Greek Constitution and EU law, 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,  most  notably,  redefined  the  categories  of  disputes  subjected  to 
mandatory mediation, the minimum cost of mediation, and a number of procedural and 
technical aspects, particularly regarding the training of mediators and the recognition of 
their  professional  qualifications.  The  implementation  of  the  first  stage  of  compulsory 
mediation  started  on  15  January  2020  and  covers  family  law  disputes,  barring  certain 
categories of high public-order relevance. The second phase will follow in March 2020 
and will cover all disputes falling under the general competence of all formations of first 
instance  courts  whose  value  exceeds  €30 000.  Regarding  non-compulsory  mediation, 
and  given  the  low  degree  of  penetration  of  an  alternative  dispute  resolution  culture  in 
Greek  society,  the  authorities  are  considering  allocating  resources  for  increasing 
awareness of the availability of mediation amongst legal practitioners and stakeholders. 
The European institutions intend to monitor closely the developments following the full 

(51) Section  6.2.1  of  the  draft  call  for  bids,  as  submitted  by  the  authorities  following  completion  of  the 

public consultation stage. 

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deployment  of  mandatory  mediation,  relying  on  statistical  data  to  be  collected  by  the 
Ministry of Justice on a regular basis.  

8.3.  ANTI-CORRUPTION 

The  newly  created  National  Authority  for  Transparency  is  being  built  up 
gradually,  while  implementation  of  the  National  Anti-Corruption  Action  Plan  is 
ongoing and warrants some minor adjustments in the short term. The Authority is 
planned to be staffed with 500 persons by March 2020 and to be completely operational 
in November 2020. The latest biannual progress report on the Action Plan, which aims 
at  prevention  of  corruption  in  specific  sectors,  promotion  of  integrity,  strengthening 
coordination  and  raising  awareness,  concluded  that  the  implementation  of  the  Action 
Plan was on track overall since 33% of the actions were already completed and a great 
majority was on going. In effect, according to the National Authority for Transparency, 
only  4%  of  actions  have  not  been  started  yet.  The  next  report  is  due  to  be  published 
before March 2020. The current Action Plan runs until 2021 and will need to be slightly 
amended based on the current state of play. Before end-2020, the authorities envisage to 
draft  a  new  Action  Plan  for  the  period  after  2021.  Ahead  of  this,  with  a  view  of 
improving  the  monitoring  of  the  plan,  the  purpose  of  each  action  will  be  extensively 
documented including its scope, the key stakeholders, milestones and expected results. 
At the same time, the National Transparency Authority is assessing the various avenues 
for an independent assessment of the implementation of the Action Plan. This would be 
in  line  with  one  of  the  recommendations  included  in  the  2014  EU  Anti-corruption 
report (52).  

Despite  the  progress  made,  key  actions  remain  to  be  completed.  For  instance,  the 
mechanism  for  the  asset  recovery  office  and  asset  management  offices,  which  are 
essential to detect, trace and freeze assets deriving from cross-border criminal activities, 
are  currently  being  strengthened.  Regarding 
institutional  framework  for 
transparency, oversight and sanctions on political party financing, the latest reports on 
political  party  financing  and  on  asset  declarations  of  the  Members  of  Parliament  are 
dated  from  2017.  Moreover,  it  is  noted  that  no  sanction  has  yet  been  applied  by  the 
Special Audit Committee in charge (53) of these cases. An in-depth analysis of how the 
legislative  framework  has  been  enforced  in  practice  could  shed  some  light  whether 
specific adjustments might be needed.  

the 

In  some  other  fields,  the  reforms  are  still  being  developed  but  go  in  the  right 
direction. While the national framework for integrity in public institutions, the plan on 
health  and  the  national  plan  to  raise  public  awareness  are  under  preparation,  the 
National  Authority  for  Transparency  collaborates  with  the  United  Nation  Office  on 
Drugs  and  Crime  in  order  to  enhance  the  functioning  of  the  European  Anti-Fraud 
Coordination Office in Greece, in accordance with EU regulations. This would support 
Greece’s efforts in fighting the misappropriation of Europeans structural funds and state 
aid. Building on the technical support provided, the Authority is expected to establish a 
holistic action plan to strengthen the role and capacity of the Anti-Fraud Coordination 

(52) Annex 8 on Greece to the EU Anti-corruption Report of 3 February 2014. 
(53) See the section Strengthening the rule of law and ramping up efforts to fight corruption in the OECD 

2020 Economic Survey 

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Office. Regarding internal audit, the Authority plans to work together with the Hellenic 
Court of Auditors to  design  and implement  effective internal  control mechanisms that 
would help detecting and addressing corruption cases (54).  

The Organisation for Economic Co-operation and Development and the Group of 
States  against  Corruption  welcomed  the  amendment  of  the  law  modifying  the 
Criminal Code and the Criminal Procedure Code, though some concerns remain. 
Following  the  amendments  of  June 2019,  the  main  active  bribery  offence  had  been 
declassified  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).  Full  implementation  of  the  Group  of  States  against 
Corruption’s recommendations is a specific commitment for mid-2021. The authorities 
have  established  a  committee  with  a  view 
the  remaining 
recommendations of the Group of States against Corruption in the area of the criminal 
codes before end-2020. The National Transparency Authority will be given an observer 
status in this committee. 

implementing 

to 

(54) See section 3.4.1. The Hellenic Court of  Auditors is conducting a broad survey on internal controls 
across  the  government  and  any  other  public  entity  with  a  view  to  accelerating  the  establishment  of 
effective internal control systems in the public sector.  

60 

                                                           
9. 

SOVEREIGN FINANCING AND CAPACITY TO REPAY 

9.1.  SOVEREIGN FINANCING  

Greece  strengthened  its  presence  on  the  sovereign  bond  market,  by  issuing  new 
bonds in January 2020. At the end of November 2019, Greece carried out the partial 
early repayment of its International Monetary Fund loan as was foreseen in the previous 
report.  In  January  2020,  the  Public  Debt  Management  Agency  (PDMA)  conducted  a 
liquidity  management  exercise,  by  entering  into  a  bond  swap  agreement  with  the 
National Bank of Greece (NBG), a commercial bank. In this operation, the Public Debt 
Management Agency swapped three bonds held by the National Bank of Greece which 
would have matured between 2023 and 2026, with a new government bond that has a 
30-year  maturity.  Both  the  market  value  and  the  nominal  amounts  of  the  exchanged 
bonds were the same, therefore this exchange had no direct impact on the level of public 
debt, but reduced the refinancing risks of the Greek state. Following its funding strategy 
published  in  December  2019,  and  a  few  days  after  the  most  recent  upgrade  (see  next 
paragraph), the Public Debt Management Agency issued €2.5 billion of a new 15-year 
sovereign  bond  at  the  end  of  January  2020.  Amidst  strong  investor  interest,  the  final 
order  book  was  close  to  €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 since the crisis that Greece issued a bond with 
such  a  long  maturity  on  an  open  auction,  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  decreased,  and  Greece’s  rating  is  now  two  to  four 
notches  below  investment  grade.  Since  the  last  report,  Greece’s  sovereign  yield 
spreads have further decreased, in particular in the first half of February, reaching levels 
around 140 basis points over the German government bonds on a 10-year maturity. On 
24 January 2020, Fitch Ratings upgraded Greece’s credit rating by one notch to BB with 
a  positive  outlook.  The  upgrade  was  underpinned  by  improving  debt  sustainability, 
sustained  GDP  growth,  good  fiscal  track  record  and  stable  political  environment.  The 
positive outlook reflects that Fitch Ratings expects that the implementation of growth-
friendly policies will continue while the fiscal targets will continue to be met in 2020.  

Greece  continues  to  maintain  its  significant  cash  buffer.  State  cash  reserves  are 
estimated  to  have  reached  €23.5 billion  at  the  end  of  2019,  of  which  €15.7 billion 
remain  intact  on  the  cash  buffer  account.  These  reserves  are  sufficient  to  cover 
financing needs for more than two years if the primary balance targets are met. 

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Graph 9.1:  Credit ratings (left) and 10-year government bond spreads to the Bund (right) 

Source: European Commission 

9.2.  DEBT SUSTAINABILITY 

A  sequential  update of  the  debt  sustainability  analysis  has  been  carried  out.  The 
current Debt Sustainability Analysis continues to assume full compliance with the post-
programme  agreed  primary  balance  path,  reflecting  the  government’s  commitment.  It 
furthermore  assumes  the  full  implementation  of  all  medium-term  measures  agreed  in 
June 2018 to ensure debt sustainability. The income equivalents from the SMP-ANFA 
profits  are,  on  a  technical  basis,  assumed  to  be  disbursed  and  used  for  debt  service 
purposes only. The Debt Sustainability Analysis also takes into account the partial early 
repayment  of  the  International  Monetary  Fund  loan,  which  took  place  in  November 
2019, and all issuances up until end-January 2020.  

The  current  Debt  Sustainability  Analysis  presents  two  scenarios,  both  of  which 
build on the macro-fiscal assumptions of the so-called baseline scenario.  

In  the  first  scenario  all  the  usual  assumptions (55)  are  updated  except  for  the  interest 
rates  as  modelled  under  the  current  framework.  Compared  to  the  baseline  of  the 
previous report, this scenario shows a marginal positive impact on debt sustainability of 
the  improved  macroeconomic  outlook  for  Greece  and  the  new  bond  issuances.  Under 
this  scenario,  gross  financing  needs  reach  around  13.5%  in  2060,  while  debt  remains 
above 100% of GDP until 2040. 

The  second  scenario  shows  the  additional  debt-reducing  impact  of  the  revision  of  the 
interest  rates  under  the  current  framework.  Graph  9.2  shows  that  this  improves  gross 
financing  needs  further  to  close  to  12%  in  2060,  while  the  debt  level  in  this  scenario 
remains above 100% of GDP until 2039.  

(55) These  are:  updated  macroeconomic  forecast,  updated  interest  and  amortisation  payments  on  non-

official loans, new issuances and updated privatisation schedule. 

62 

AAAAA+AAAA-A+AA-BBB+BBBBBB-BB+BBBB-B+BB-CCC+CCCCCC-CCCDAaaAa1Aa2Aa3A1A2A3Baa1Baa2Baa3Ba1Ba2Ba3B1B2B3Caa1Caa2Caa3CaC​20072008200920102011201220132014201520162017201820192020Credit ratingsMoody'sS&PFitchS&P,FitchMoody's00.511.522.533.544.5509/201810/201811/201812/201801/201902/201903/201904/201905/201906/201907/201908/201909/201910/201911/201912/201901/202002/2020%YieldsPortugalIrelandGreeceItaly  
                                                           
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Chapter 9 - Sovereign financing and capacity to repay 

Graph 9.2:  Debt sustainability indicators 

Source: European Commission 

A  more  comprehensive  revision  of  the  framework  of  assumptions  underlying  the 
Debt Sustainability Analysis used by the European institutions is ongoing and will 
be  presented  in  the  6th  enhanced  surveillance  report.    The  review  will  reassess, 
among others, the interest rate, financial and macroeconomic assumptions underpinning 
the current framework, which was put in place during the stability support programme. 

63 

40801201602002018202020222024202620282030203220342036203820402042204420462048205020522054205620582060%Gross government debt4th Report Baseline scenarioFirst scenarioSecond scenario0246810121416201920212023202520272029203120332035203720392041204320452047204920512053205520572059%Gross financing needs4th Report Baseline scenarioFirst scenarioSecond scenario  
ANNEX 

Progress  with  the  implementation  of  end-2019  specific  commitments  and  relevant  continuous  commitments  (*)  given  to  the 
Eurogroup (Annex to the Eurogroup statement, 22 June 2018)  

Commitment 

State of play and next steps 

* 

Fiscal  and  fiscal  structural.  The  authorities  will  complete  the 
full offsetting and collection of the clawback by June every year 
for the previous calendar year. 

Public  financial  management.  Complete  the  cash  monitoring 
and  forecasting  for  the  General  Government  Treasury  account 
system by end-2019. 

Tax  administration.  Reach  the  agreed  permanent  staffing 
positions at the Independent Authority of Public Revenue (IAPR) 
of 12 500 by end-2019. 

1 

2 

64 

Administrative procedures for the clawback 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 measures to address the issue. 

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. A pilot project on 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  number  of  staff  at  the  Independent  Authority  for  Public  Revenue 
target.  The 
increased  during  2019  but  fell  short  of 
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  end-2019 

 
Commitment 

State of play and next steps 

Commission Staff Working Document -  

Chapter - Annex 

  The  supplementary  grading  legislation  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.  

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. 

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).  Additional  measures,  focusing  in  particular  on 
pension  arrears,  are  being  prepared  and  some  have  already  started  to  be 
implemented.  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.  

* 

Arrears.  The  authorities  will  implement  the  arrears  clearance 
plan and avoid the accumulation of new arrears. 

3 

Social  welfare.  Complete  the  rollout  of  all  three  pillars  of  the  The authorities have prepared an action plan for the nationwide expansion of 
a  new  delivery  model  for  active  labour  market  policies,  thus  progressing 

65 

 
Commission Staff Working Document -  

Chapter - Annex 

Commitment 

State of play and next steps 

Social Solidarity Income (SSI) scheme by end-2019. 

towards completing the rollout of the Social Solidarity Income scheme. 

4 

* 

Social welfare.  Review the system of subsidies for local  public 
transport by end-2019. 

The  evaluation  of  the  system  of  subsidies  for  local  public  transport  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  stability.  Greece  will  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  (i.e.  household  and  corporate 
insolvency,  out-of-court  workout,  NPL  sales,  e-auctions)  and 
taking all necessary actions to this effect.  

The pace of reduction of non-performing loans accelerated in 2019 but non-
performing  loan  ratios  remain  very  high.  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  actions  outlined  below  are  monitored  and  assessed  under  enhanced 
surveillance: 

  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. 

  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. The authorities also 

66 

 
Commitment 

State of play and next steps 

Commission Staff Working Document -  

Chapter - Annex 

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 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  and  commit  to 
implement actions to prevent cases of procedural abuse. 

  Other  initiatives:  The  favourable  tax  treatment  of  loan  write-offs 

67 

 
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State of play and next steps 

Commission Staff Working Document -  

Chapter - Annex 

that  had  expired  at  the  end  of  2018  has  been  reinstated.  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  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. 

5 

Labour market.  Implement action plan on undeclared work by 
end-2019.  

The authorities have completed the implementation of the 2017-2019 action 
plan  to  fight  undeclared  work  and  are  now  in  the  process  of  preparing  a 
follow up. 

* 

Labour markets, product markets and competitiveness.  

The  authorities  are  preparing  a  new  National  Growth  Strategy.  The  new 
strategy is due to be completed by mid-2020.  

The  authorities  committed  to  safeguard  competitiveness  when  carrying  out 
an annual update of the minimum wage. 

The authorities have embarked on an ambitious agenda for a comprehensive 
education reform. 

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 institutional arrangements. 

6 

Justice.  In  the  context  of  implementing  the  Three-Year  Action 
Plan  on  Justice,  implement  the  electronic  filing  of  legal 

The  gradual  switching  to  the  mandatory  electronic  filing  and  processing  of 
legal documents is progressing, starting from the administrative jurisdictions. 

68 

 
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State of play and next steps 

Commission Staff Working Document -  

Chapter - Annex 

documents 
tendering procedure by end-2019. 

throughout 

the  Courts,  having  completed 

the 

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.  

7 

8 

Investment 
licensing 
reform, and to this end fully deploy the relevant ICT (end-2019). 

licensing.  Complete 

investment 

the 

Energy. With a view to completing reforms in the energy sector, 
implement the measures agreed as part of the joint assessment on 
the NOME auction system. 

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 signature of the contract for the procurement of the IT system, which is 
the first step towards the full deployment of the IT system, has been delayed 
given  a  complication  that  arose  within  the  tendering  procedure  outside  the 
control of the authorities. 

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. 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.  

Greece  adopted  its  National  Energy  and  Climate  Plan  in  December  2019, 
ahead of some other Member States. 

69 

 
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State of play and next steps 

Commission Staff Working Document -  

Chapter - Annex 

* 

HCAP and privatisation. The Asset Development Plan and the 
Strategic  Plan  of  HCAP  will  be  implemented  on  a  continuous 
basis. 

in 

improving  corporate  governance 

The work of the Hellenic Corporation of Assets and Participations on the key 
areas covered by the commitments to the Eurogroup is continuing. Progress 
has  been  made 
in  state-owned 
enterprises,  while  the  Corporation  is  increasing  its  focus  on  operational 
improvements  in  state-owned  enterprises.  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 
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  authorities  maintained  momentum  in  the  privatisation  process  as 
reflected  in  the  good  progress  on  several  transactions.  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. 

9 

Privatisation.  With  a  view  to  swiftly  attracting  investment  to 
support  a  sustained  economic  recovery,  complete  by  end-2019 
the transactions on Egnatia, DEPA commercial, regional ports of 
Alexandroupoli and Kavala, AIA shares, EYDAP and EYATH. 

Sale  of  30%  of  Athens  International  Airport:  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 

70 

 
Commitment 

State of play and next steps 

before the end of the year.  

Commission Staff Working Document -  

Chapter - Annex 

Public Gas Corporation: 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: 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:  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.  

The  authorities  have  made  continued  progress  in  developing  a  Human 
Resources  Management  Strategy,  whereas  a  majority  of  the  digital 
organigrams  and  job  descriptions  have  been  completed.  That  said,  some 

71 

10  Public 

integrated  HR 
Management  System  (digital  organigram  for  all  public  entities 

administration.  Complete 

the 

 
Commitment 

State of play and next steps 

Commission Staff Working Document -  

Chapter - Annex 

and link with single payment authority) by end-2019. 

large entities 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.  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  taking  steps  to  advance  on  digital  governance,  which  is 
one of the least advanced in the EU. 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. 

Progress with the implementation of mid-2020 commitments to the Eurogroup (Eurogroup annex 22 June 2018)  

Commitment 

1 

Tax  policy.  Greece  will  undertake,  by  mid-2020,  a  nationwide 
valuation exercise of property tax value based on market values 
and  will  update  property  tax  values  for  ENFIA  and  other  taxes 
fully in line with market values by mid-2020. 

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. 

2 

Social safety nets. The set up of the single pension fund EFKA 
will be completed by mid-2020. 

The authorities have developed an action plan to remedy the delays in setting 
up  the  Single  Social  Security  Fund.  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 

72 

 
 
 
 
Commitment 

3 

Health care. Greece will ensure the rollout of the primary health 
care system, in particular by opening all 240 primary health care 
centres (TOMYs) by mid-2020. 

4 

5 

Health care. Achieve a share of centralised procurement in total 
hospital expenditure of 30% in mid-2020. 

Justice.  In  the  context  of  implementing  the  Three-Year  Action 
Plan  on  Justice,  phase  II  of  the  establishment  of  the  e-justice 
system (OSDDY-PP) will be completed by mid-2020. 

Commission Staff Working Document -  

Chapter - Annex 

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.  

Progress in setting up a comprehensive network of primary health care units 
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.  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  will  be 
challenging but the planned launch of decentralised procurement at regional 
level has the potential to speed up the process. 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 authorities are moving forward, with some delay, with the call for bids 
for  the  second  phase  of  the  Integrated  Judicial  Case  Management  System. 
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 

73 

 
 
Commission Staff Working Document -  

Chapter - Annex 

Commitment 

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. 

Investment licensing. Greece will finalise inspection legislation 
by mid-2020. 

Work  on  the  implementation  of  the  inspections  framework  law  is 
progressing, save for few delays.  

Investment  licensing.  Greece  will  finalise  the  simplification  of 
investment licensing procedures in the agreed remaining sectors 
(mid-2020). 

The  authorities  remain  committed  to  meeting  the  deadline  for  the 
simplification  of  licencing  procedures  in  the  remaining  sectors  of  the 
economy, despite some delays. 

6 

7 

* 

licensing.  Greece  will 

Investment 
the  nuisance 
classification  (mid-2021,  the  authorities  aim  to  complete  this 
action by mid-2020). 

revise 

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. 

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.  In  order  to  accelerate  progress  towards  the  full 
establishment  of  the  cadastral  agency  the  authorities  plan  to  immediately 
open regional offices across Greece and give them the authority to open the 
envisaged local sub-offices. 

8 

Cadastre.  Greece  will  fully  establish  the  cadastral  agency  and 
complete 45% of cadastral mapping by mid-2020. 

74 

 
 
Commitment 

9 

Energy.  The  Target  Model  will  be  fully  launched  by  mid-2019 
(rescheduled to mid-2020). 

10  Legal  codification.  In  view  of  enhancing  legal  certainty  and 
access  to  law  through  legal  codification,  the  Labour  Law  Code 
and  Code  of  Labour  Regulatory  Provisions  will  be  adopted  by 
mid-2020. 

Commission Staff Working Document -  

Chapter - Annex 

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. 

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.  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 last-minute amendments. 

75